(5) Securitization Trust Debt

12 Months Ended

Dec. 31, 2022

Securitization Trust Debt

(5) Securitization Trust Debt

(5) Securitization Trust Debt

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

											Weighted
											Average
	Final		Receivables				Outstanding		Outstanding		Contractual Debt
	Scheduled		Pledged at				Principal at		Principal at		Interest Rate at
	Payment		December 31,		Initial		December 31,		December 31,		December 31,
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		–		224,825		–		25,846		–
CPS 2017-D		June 2024		–		196,300		–		26,744		–
CPS 2018-A		March 2025		16,642		190,000		12,939		29,518		5.17%
CPS 2018-B		December 2024		20,897		201,823		17,077		36,092		5.61%
CPS 2018-C		September 2025		24,589		230,275		20,222		42,765		6.07%
CPS 2018-D		June 2025		30,015		233,730		25,563		49,634		5.82%
CPS 2019-A		March 2026		38,138		254,400		32,898		62,667		5.49%
CPS 2019-B		June 2026		39,755		228,275		33,897		61,730		5.39%
CPS 2019-C		September 2026		46,903		243,513		41,515		75,065		4.35%
CPS 2019-D		December 2026		60,856		274,313		53,625		98,625		3.71%
CPS 2020-A		March 2027		56,226		260,000		52,705		99,485		3.99%
CPS 2020-B		June 2027		63,849		202,343		41,736		87,048		6.16%
CPS 2020-C		November 2027		86,061		252,200		72,894		138,899		3.24%
CPS 2021-A		March 2028		90,801		230,545		72,076		147,516		1.39%
CPS 2021-B		June 2028		113,723		240,000		101,206		179,856		1.86%
CPS 2021-C		September 2028		165,102		291,000		147,593		250,003		1.60%
CPS 2021-D		December 2028		224,055		349,202		209,277		330,325		1.85%
CPS 2022-A		April 2029		243,580		316,800		222,613		–		2.16%
CPS 2022-B		October 2029		355,224		395,600		325,907		–		4.16%
CPS 2022-C		April 2030		394,782		391,600		346,714		–		5.24%
CPS 2022-D		August 2030		322,973		307,018		292,461		–		7.37%
			$	2,394,171	$	5,945,252	$	2,122,919	$	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 $804.4 million in 2023, $578.9 million in 2024, $339.1 million in 2025, $202.3 million in 2026, $128.1 million in 2027, $55.3 million in 2028, and $0.6 million in 2029.

(2) Includes repossessed assets that are included in Other Assets on our Consolidated Balance Sheets.

Debt issuance costs of $14.2 million and $12.0 million as of December 31, 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 issued in private placement transactions to qualified institutional investors. The debt was issued by our wholly-owned, bankruptcy remote subsidiaries and is secured by the assets of such subsidiaries, but not by any of our other assets.

The terms of the various securitization agreements related to the issuance of the securitization trust debt require that certain delinquency and credit loss criteria be met with respect to the collateral pool, and require that we maintain minimum levels of liquidity and net worth and not exceed maximum leverage levels. We were in compliance with all such covenants as of December 31, 2022.

We are responsible for the administration and collection of the contracts. The securitization agreements also require certain funds be held in restricted cash accounts to provide additional credit enhancement for the Notes or to be applied to make payments on the securitization trust debt. As of December 31, 2022, restricted cash under the various agreements totaled approximately $149.3 million. Interest expense on the securitization trust debt is composed of the stated rate of interest plus amortization of additional costs of borrowing. Additional costs of borrowing include facility fees, insurance premiums, amortization of deferred financing costs, and amortization of discounts required on the notes at the time of issuance. Deferred financing costs related to the securitization trust debt are amortized using the interest method. Accordingly, the effective cost of borrowing of the securitization trust debt is greater than the stated rate of interest.

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 warehouse line of credit. 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 any of our other creditors.