Tax season, as the auto finance industry has traditionally known it, “probably doesn’t exist anymore,” a factor that contributed to lower revenue at Consumer Portfolio Services last quarter, said CEO Charles Bradley during the company’s first-quarter earnings call last week.
The Irvine, Calif.-based lender reported revenue of $88.2 million, down 14.8% from $103.6 million year over year.
“The tax season now tends to be much more drawn out, much smaller,” Bradley said during the call. “You don’t have that big first quarter impact we’ve had for years. Over the last couple of years, it has diminished. This year was probably the most non-existent tax season we’ve ever had,” he added.
CPS Chief Financial Officer Jeffrey Fritz previously voiced concerns to Auto Finance News that smaller-than-average tax refunds, coupled with the government shutdown, might affect earnings in the first quarter of 2019.
New originations last quarter were up 15.4% to $243 million, enough to bump up the subprime lender’s portfolio to $2.4 billion. Annualized net charge-offs decreased year over year to 7.98%, compared with 8.16% a year prior.
Delinquencies, on the other hand, increased to 10.39%, compared with 7.14% in 1Q18, mostly due a decrease in extension offerings.
Fritz also noted during the call that the lender’s fair value portfolio, which is comprised of loans originated since January 2018, represents 43% of CPS’s business as of 1Q19.
“The fair value accounting tends to push earnings into the future, so that has had a negative effect on the earnings,” Bradley said.
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