Consumer Portfolio Services Inc. Reports 1998 Fourth Quarter and Annual Results; Annual Earnings Up 39%.

IRVINE, Calif.--(BUSINESS WIRE)--March 3, 1999--Consumer Portfolio Services Inc. (Nasdaq: CPSS) Wednesday announced financial results for the fourth quarter and year ended Dec. 31, 1998.

For the fourth quarter, total revenues increased 67% to $37.2 million, compared with $22.2 million for the same period in the prior year. The Company's net earnings increased 53% to $7.9 million, or $0.44 per share, on 18.7 million diluted shares outstanding, compared with $5.2 million, or $0.32 per share, on 16.4 million diluted shares outstanding for the same period in the prior year.

For the year ended Dec. 31, 1998, total revenues increased 68% to $126.3 million, compared with $75.3 million in the prior year. Net earnings increased 39% to $25.7 million, or $1.50 per share, on 17.5 million diluted shares, compared with $18.5 million, or $1.17 per share, on 16.1 million diluted shares in the prior year.

For the year ended Dec. 31, 1998, purchases of contracts from automobile dealers increased 71% to $1,078.3 million, compared with $632.1 million for the prior year. Contracts sold during the year in the form of asset-backed securities increased 65% to $948.3 million, compared with $573.3 million for the prior year. The aggregate outstanding balance of contracts serviced by the Company at Dec. 31, 1998, increased by 70% to $1,538.9 million, compared with $902.7 million at Dec. 31, 1997.

Balances of accounts past due over 30 days represented 5.1% of the servicing portfolio at Dec. 31, 1998, compared with 6.8% at Dec. 31, 1997. The annualized net charge off rates for the three and twelve month periods ended Dec. 31, 1998, were 6.7% and 6.5%, respectively, compared with 6.2% and 5.9% for the three and twelve month periods ended Dec. 31, 1997. The Company's prospective non-discounted allowance for credit losses equaled $169.1 million, or 12.4% of the contracts sold that it serviced as of Dec. 31, 1998. The on-balance sheet allowance for credit losses was $2.8 million, or 1.6% of contracts held for sale at Dec. 31, 1998.

"Overall, we are very pleased with the Company's performance for the fourth quarter and all of 1998," said Charles E. Bradley, Jr., president and chief executive officer. "We are maintaining our emphasis on credit quality in originations and diligent collections. We believe our efforts in these areas are paying dividends through somewhat better performance in contracts originated in 1998, as compared to earlier periods. Delinquent accounts represented only 5.1% of the servicing portfolio, continuing a trend of lower delinquencies in 1998 compared to 1997. As of Dec. 31, 1998, our inventory of repossessed vehicles declined to 2.0% of the servicing portfolio, compared to 2.4% for Dec. 31, 1997."

"The Company had many accomplishments in the fourth quarter," continued Bradley. "We relocated our headquarters to a new and larger facility in November. The Company issued $25 million in subordinated debt to increase our liquidity. We entered into an agreement with our bond insurer, FSA, which provides for the securitization of $560 million in asset-backed securities (of which $250 million remains) with only a 3% initial spread account deposit. We also renewed one of our warehouse lines of credit and completed a $310 million asset-backed securitization. We are especially pleased to have completed all of the above transactions given the market conditions our industry has had to face as of late."

Forward-looking statements in this news release include the Company's allowances for credit losses and expectations as to portfolio performance, which necessarily depend on present expectations as to future events. In addition to risks relating to the economy generally, the fulfillment of such expectations may be adversely affected by various factors, including the following: The Company's servicing portfolio could suffer increased delinquencies, foreclosures and losses on retail installment contracts, which would decrease the value of the Company's retained interest in such contracts. Qualified personnel, especially collections personnel, could be unavailable, which could result in a deterioration in portfolio performance. There could be adverse changes in the market for securitized receivables pools, increases in the amounts required to be set aside as credit enhancement to support future securitizations, or adverse changes in the terms on which warehouse financing is available, each of which could restrict the Company's ability to obtain cash for new contract purchases, and could increase the Company's capital requirements. Meeting existing or increased capital requirements could be costly, or impracticable if there should be adverse changes in the market for securities of consumer finance companies. Any inability to meet capital requirements could adversely affect the Company's ability to service its portfolio. There could be increased competition from other automobile finance sources, or other factors, which could result in a reduction in the number and amount of acceptable contracts submitted to the Company by its automobile dealer network. There could be changes in bankruptcy laws or other laws affecting consumer credit, which could adversely affect the collectibility of the consumer installment obligations that constitute the Company's servicing portfolio. There could be declines in the market prices of used vehicles, which could adversely affect the Company's realization upon repossessed vehicles. More generally, past performance is no assurance as to future results, and no inference as to future results should be drawn on the basis of the past performance reported herein.

Consumer Portfolio Services purchases, sells and services retail installment sales contracts originated predominantly by franchised dealers for new and late model used cars. The Company has approximately 4,000 dealers under contract across the United States.

          Consumer Portfolio Services Inc. and Subsidiaries
              Condensed Consolidated Statements of Income
                 (In thousands, except per share data)

                     Three Months Ended            Year Ended
                       December 31,                December 31,
                  1998              1997     1998              1997
Revenues:
Gain on sale
 of contracts   $ 23,656         $ 12,034  $ 58,306         $ 35,044
Interest income    6,186            5,221    41,841           23,526
Servicing fees     7,265            4,593    25,156           14,488
Other                 91              400       977            2,193

                  37,198           22,248   126,280           75,251
Expenses:
Interest           7,532            2,491    22,019            9,184
Employee costs     8,129            4,954    28,812           15,875
General and
 administrative    4,707            4,654    20,618           14,147
Other expenses     3,151            1,191    10,511            4,086

                  23,519           13,290    81,960           43,292

Earnings before
 income taxes     13,679            8,958    44,320           31,959
Income taxes       5,741            3,772    18,617           13,427

  Net earnings  $  7,938         $  5,186  $ 25,703         $ 18,532

Earnings per share:
  Basic         $   0.51         $   0.36  $   1.67         $   1.29
  Diluted       $   0.44         $   0.32  $   1.50         $   1.17

Number of shares used in computing earnings
per share:
  Basic           15,659           14,514    15,412           14,332
  Diluted         18,711           16,383    17,500           16,053


                 Condensed Consolidated Balance Sheets
                            (In thousands)

                              December 31,          December 31,
                                 1998                   1997


Cash                          $  3,559                $  1,745
Contracts held for sale        165,582                  68,271
Residual interest in
 securitizations               217,848                 124,616
Other assets                    44,973                  31,263

Total assets                  $431,962                $225,895

Warehouse lines of credit     $151,857                $ 61,666
Residual financing              33,000                      --
Subordinated debt               65,000                  40,000
Related party debt              20,000                  15,055
Other liabilities               43,024                  26,567

Total liabilities              312,881                 143,288

Shareholders' equity           119,081                  82,607

  Total liabilities and
  shareholders' equity        $431,962                $225,895