CPS Announces Credit Facility Capacity Increase

Rhea-AI Summary

Consumer Portfolio Services (CPSS) has announced an amendment to its two-year revolving credit agreement with Citibank, increasing the facility's capacity from $225 million to $335 million. The amendment, effective December 16, 2024, also applies to the subordinate third party lender announced last month.

The loans under this agreement will be secured by automobile receivables that CPS currently holds or will acquire from dealers. The company can borrow on a revolving basis through July 15, 2026, with options to either repay outstanding loans in full or allow them to amortize over a one-year period after that date.

Positive

• Credit facility capacity increased by $110 million (from $225M to $335M)
• Extended borrowing capability through July 2026 with additional one-year amortization option

Negative

• None.

Insights

Financial Analyst

The credit facility expansion from $225 million to $335 million represents a 48.9% increase in borrowing capacity, significantly enhancing CPS's ability to fund auto loan purchases. This expanded facility, secured by auto receivables, provides important working capital for portfolio growth and operational flexibility through mid-2026. The amendment's timing aligns with current market dynamics where used car financing remains robust despite higher interest rates. The extended amortization option post-July 2026 offers valuable flexibility in managing the company's debt structure. For a company with a market cap of $239 million, this $110 million facility increase is substantial, potentially enabling significant portfolio expansion. The Citibank backing adds credibility and suggests strong institutional confidence in CPS's business model and credit quality.

Credit Risk Analyst

The facility amendment demonstrates strong lender confidence in CPS's credit underwriting practices and portfolio performance, particularly notable given their focus on subprime auto loans. The increased capacity provides a broader cushion for portfolio growth while maintaining diversified funding sources through both securitization and warehouse facilities. The structure allowing for a one-year amortization period post-revolving phase offers important flexibility in managing potential market disruptions. The involvement of a major institution like Citibank, especially with a subordinate third-party component, suggests robust risk management frameworks are in place. This facility's expansion could support approximately 13,400 additional auto loans, assuming an average loan size of $25,000, enabling meaningful market share growth in the specialty finance sector.

LAS VEGAS, Nevada, Dec. 19, 2024 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) today announced that on December 16, 2024, it amended its two-year revolving credit agreement with Citibank, N.A to increase the capacity of the facility. The amendment also applies to the subordinate third party lender, which was announced last month. The amendment increases the capacity of this facility from $225 million to $335 million.

Loans under the amended credit agreement will continue to be secured by automobile receivables that CPS now holds or will acquire from dealers in the future. CPS may borrow on a revolving basis through July 15, 2026, after which CPS will have the option to repay the outstanding loans in full or to allow them to amortize for a one-year period.

About Consumer Portfolio Services, Inc.

Consumer Portfolio Services, Inc. is an independent specialty finance company that provides indirect automobile financing to individuals with past credit problems or limited credit histories. We purchase retail installment sales contracts primarily from franchised automobile dealerships secured by late model used vehicles and, to a lesser extent, new vehicles. We fund these contract purchases on a long-term basis through the securitization markets and service the contracts over their lives.

Forward-looking statements in this news release include the Company's expectation that the revolving period will extend until the revolving period ends, and that an amortization period may follow. The revolving credit agreement that was amended on December 16, 2024, provides for both a revolving period and an amortization period to follow, but it is possible that the Company may suffer certain defaults or events of default that would terminate the revolving period or result in acceleration of maturity of the credit extended. In general, such defaults or events of default would result from losses that the Company might incur in the future. In turn, such losses might result from poor performance of receivables acquired or to be acquired by the Company, from increases in the rate of consumer bankruptcy filings, which could adversely affect the Company’s rights to collect payments from its portfolio; from changes in government regulations affecting consumer credit; or from adverse economic conditions, either generally or in geographic areas in which the Company's business is concentrated.

Investor Relations Contact

Danny Bharwani, EVP/ Chief Financial Officer
949-753-6811

FAQ

What is the new credit facility capacity for CPSS after the December 2024 amendment?

The credit facility capacity was increased from $225 million to $335 million, representing a $110 million increase.

When does CPSS's revolving credit facility with Citibank expire?

CPSS can borrow on a revolving basis through July 15, 2026, after which they can either repay loans in full or amortize them over a one-year period.

What assets secure the loans under CPSS's amended credit agreement?

The loans are secured by automobile receivables that CPS currently holds or will acquire from dealers in the future.

How long can CPSS amortize the loans after the revolving period ends?

After the revolving period ends on July 15, 2026, CPSS has the option to amortize the loans for a one-year period.