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(3) Securitization Trust Debt

6 Months Ended

Jun. 30, 2022

(3) Securitization Trust Debt

We have completed many securitization transactions that are structured as secured borrowings for financial accounting purposes. The debt issued in these transactions is shown on our Unaudited Condensed Consolidated Balance Sheets as “Securitization trust debt,” and the components of such debt are summarized in the following table:

Schedule of Long-term Debt Instruments										Weighted
										Average Contractual
	Final	Receivables				Outstanding		Outstanding		Debt
	Scheduled	Pledged at				Principal at		Principal at		Interest Rate
	Payment	June 30,		Initial		June 30,		December 31,		at June 30,
Series	Date (1)	2022 (2)		Principal		2022		2021		2022
	(Dollars in thousands)
CPS 2017-A	April 2024		–		206,320		–		17,644		–
CPS 2017-B	December 2023		–		225,170		–		12,491		–
CPS 2017-C	September 2024		20,386		224,825		16,045		25,846		5.72%
CPS 2017-D	June 2024		21,508		196,300		17,940		26,744		5.30%
CPS 2018-A	March 2025		24,446		190,000		21,109		29,518		5.09%
CPS 2018-B	December 2024		29,676		201,823		25,645		36,092		5.44%
CPS 2018-C	September 2025		34,544		230,275		30,613		42,765		5.62%
CPS 2018-D	June 2025		42,143		233,730		36,179		49,634		5.41%
CPS 2019-A	March 2026		52,883		254,400		45,191		62,667		5.18%
CPS 2019-B	June 2026		53,660		228,275		45,691		61,730		4.95%
CPS 2019-C	September 2026		62,999		243,513		55,760		75,065		4.05%
CPS 2019-D	December 2026		80,677		274,313		71,050		98,625		3.46%
CPS 2020-A	March 2027		75,756		260,000		71,236		99,485		3.64%
CPS 2020-B	June 2027		83,602		202,343		59,024		87,048		5.37%
CPS 2020-C	November 2027		112,313		252,200		99,770		138,899		2.83%
CPS 2021-A	March 2028		119,399		230,545		102,679		147,516		1.18%
CPS 2021-B	June 2028		144,642		240,000		134,085		179,856		1.54%
CPS 2021-C	September 2028		208,515		291,000		193,836		250,003		1.34%
CPS 2021-D	December 2028		279,643		349,202		267,832		330,325		1.58%
CPS 2022-A	April 2029		293,039		316,800		273,751		–		1.94%
CPS 2022-B	October 2029		411,728		395,600		380,095		–		3.98%
		$	2,151,560	$	5,246,634	$	1,947,529	$	1,771,953

_________________

(1)

The Final Scheduled Payment Date represents final legal maturity of the securitization trust debt. Securitization trust debt is expected to become due and to be paid prior to those dates, based on amortization of the finance receivables pledged to the trusts. Expected payments, which will depend on the performance of such receivables, as to which there can be no assurance, are $377.6 million in 2022, $801.4 million in 2023, $256.8 million in 2024, $249.2 million in 2025, $146.4 million in 2026, $85.8 million in 2027, and $16.9 million in 2028.

(2)

Includes repossessed assets that are included in Other assets on our Unaudited Condensed Consolidated Balance Sheet.

Debt issuance costs of $13.4 million and $12.0 million as of June 30, 2022 and December 31, 2021, respectively, have been excluded from the table above. These debt issuance costs are presented as a direct deduction to the carrying amount of the Securitization trust debt on our Consolidated Balance Sheets.

All of the securitization trust debt was sold in private placement transactions to qualified institutional buyers. The debt was issued through our wholly-owned bankruptcy remote subsidiaries and is secured by the assets of such subsidiaries, but not by our other assets.

The terms of the securitization agreements related to the issuance of the securitization trust debt and the warehouse credit facilities require that we meet certain delinquency and credit loss criteria with respect to the pool of receivables, and certain of the agreements require that we maintain minimum levels of liquidity and not exceed maximum leverage levels. As of June 30, 2022, we were in compliance with all such covenants.

We are responsible for the administration and collection of the automobile contracts. The securitization agreements also require certain funds be held in restricted cash accounts to provide additional collateral for the borrowings, to be applied to make payments on the securitization trust debt or as pre-funding proceeds from a term securitization prior to the purchase of additional collateral. As of June 30, 2022, restricted cash under the various agreements totaled approximately $157.0 million. Interest expense on the securitization trust debt consists of the stated rate of interest plus amortization of additional costs of borrowing. Additional costs of borrowing include facility fees, amortization of deferred financing costs and discounts on notes sold. Deferred financing costs and discounts on notes sold related to the securitization trust debt are amortized using a level yield method. Accordingly, the effective cost of the securitization trust debt is greater than the contractual rate of interest disclosed above.

Our wholly-owned bankruptcy remote subsidiaries were formed to facilitate the above asset-backed financing transactions. Similar bankruptcy remote subsidiaries issue the debt outstanding under our credit facilities. Bankruptcy remote refers to a legal structure in which it is expected that the applicable entity would not be included in any bankruptcy filing by its parent or affiliates. All of the assets of these subsidiaries have been pledged as collateral for the related debt. All such transactions, treated as secured financings for accounting and tax purposes, are treated as sales for all other purposes, including legal and bankruptcy purposes. None of the assets of these subsidiaries are available to pay other creditors.