California Department of Business Oversight Annual Report 2018
2018
California Department of Business Oversight Annual Report
Operation of Finance Companies Licensed under the California Financing Law
STATE OF CALIFORNIA GAVIN NEWSOM, GOVERNOR
ALEXIS PODESTA, SECRETARY BUSINESS, CONSUMER SERVICES AND HOUSING AGENCY
MANUEL P. ALVAREZ COMMISSIONER OF BUSINESS OVERSIGHT
Division of Corporations Edgar L. Gill, Jr., Senior Deputy Commissioner
Financial Services California Financing Law Mona Elsheikh, Deputy Commissioner
Published June 2019
TABLE OF CONTENTS
Introduction ......................................................................................................................... 1 Executive Summary ............................................................................................................ 2 I. Historical Licensing Data ................................................................................................ 3
Table 1: Licensing Data ........................................................................................................ 3 II. Analysis of Loans Made by CFL Licensees for the Last 10 Years ................................. 4
Table 2: Loan Details ........................................................................................................... 4 Exhibit A - Consolidated Balance Sheet ............................................................................ 5 Exhibit B - Analysis of Loans and Receivables Outstanding ............................................. 6 Exhibit C - Statement of Income and Expenses ................................................................ 7 Exhibit D - Analysis of Income Received ........................................................................... 8 Exhibit E - Loans Made or Refinanced by Size ................................................................. 9 Exhibit F - Loans Made or Refinanced by Type of Security .............................................. 10 Exhibit G - Loans Made or Refinanced by Rate Charged ................................................. 13 Exhibit H - Schedule of Loan Activity by Security Type ..................................................... 29
Table 3: Consumer Loans Serviced - Unsecured and Personal Property ......................................... 29 Table 4: Current Year Loan Activity - Unsecured and Personal Property ......................................... 29 Table 5: Consumer Loans Serviced - Automobiles & Other Motor Vehicles and Auto Title Loans ......... 30 Table 6: Current Year Loan Activity - Automobiles & Other Motor Vehicles and Auto Title Loans ......... 30 Table 7: Consumer Loans Serviced - Real Property and Other Security ......................................... 31 Table 8: Current Year Loan Activity - Real Property and Other Security ......................................... 31 Exhibit I - Default Rates by Security Type and Size of Loan ............................................. 32 Table 9: Consumer Loans Under 2,500 ................................................................................... 32 Table 10: Consumer Loans $2,500 to $4,999 ........................................................................... 32 Table 11: Consumer Loans $5,000 to $9,999 ........................................................................... 33 Table 12: Consumer Loans $10,000 or More ............................................................................ 33 Exhibit J - Online Loan Information ................................................................................... 34 Table 13: Loans Made Online ............................................................................................... 34
INTRODUCTION
In this report, the Department of Business Oversight (DBO) has compiled data submitted by finance lender and broker licensees under the California Financing Law (CFL). The licensees submitted the data pursuant to Financial Code sections 22159(a) and 22160.
Financial Code section 22159(a) states:
22159. (a) Each finance lender and broker licensee shall file an annual report with the commissioner, on or before the 15th day of March, giving the relevant information that the commissioner reasonably requires concerning the business and operations conducted by the licensee within the state during the preceding calendar year for each licensed place of business. The individual annual reports filed pursuant to this section shall be made available to the public for inspection except, upon request in the annual report to the commissioner, the balance sheet contained in the annual report of a sole proprietor or any other nonpublicly traded persons. "Nonpublicly traded person" for purposes of this section means persons with securities owned by 35 or fewer individuals. The report shall be made under oath and in the form prescribed by the commissioner.
Financial Code section 22160 states:
22160. The commissioner shall make and file annually with the Department of Business Oversight as a public record a composite of the annual reports and any comments on the reports that he or she deems to be in the public interest.
This report contains unaudited data provided by licensees for the calendar year ending December 31, 2018. The numbers are statistical in nature.
As of December 31, 2018, the DBO licensed 3,493 lenders and brokers. Of the 3,493 licensees, 3,211 filed their required annual reports. The DBO notified the non-filers of its intent to revoke their licenses.
Data obtained from a small number of licensees who filed annual reports after the aggregate report was compiled is not included. This omission does not materially affect the data in this composite report.
This report and prior years' reports can be found on the DBO' s website at dbo..
California Department of Business Oversight
Page 1 of 35
EXECUTIVE SUMMARY
The number of all consumer loans originated in 2018 increased 9.05 percent, to 1,618,634 from 1,484,257 in 2017. However, the aggregate principal amount of those consumer loans decreased 8.79 percent over the same period, to $33.9 billion from $37.2 billion.
Note that the CFL limits interest rates on consumer loans under $2,500 but does not cap interest rates on consumer loans of $2,500 or higher.
Here are the highlights from the data:
?
The largest category of consumer loans by number was the $2,500-$4,999 range,
which totaled 583,379. Of those loans, 55.51 percent, or 323,818, carried annual
percentage rates (APR) of 100 percent or higher. The principal amount of the triple-digit
APR loans totaled $944 million, which represented 52.15 percent of the aggregate principal
amount in the$2,500-$4,999 range.
The total number and total principal amount of consumer loans in the $2,500-$4,999 range increased by 6.65 percent and 6.54 percent, respectively, from 2017. The total number of triple-digit APR loans in this category increased by 0.75% while the principal amount of triple-digit APR loans increased by 2.37%
?
The number of unsecured consumer loans under $2,500 increased 13.13 percent, to
558,062 from 493,273 in 2017, while the principal amount of such loans increased 19.46
percent over the same period, to $438 million from $367 million. The number of consumer
loans under $2,500 charged-off increased 27.13 percent, to 66,515 from 52,320 in 2017.
?
The total number of Automobiles and Other Motor Vehicles secured consumer loans
charged-off decreased 16.69 percent, to 44,984 from 53,997 in 2017, while the total
principal amount of such loans charged-off decreased 19.26 percent over the same period,
to $527 million from $653 million.
?
Both the total number and total principal amount of Real Property secured consumer
loans in 2018 fell significantly from 2017. The total number of loans decreased 19.44
percent, to 65,872 from 81,765, and the total principal amount decreased 14.42 percent, to
$23.9 billion from $27.9 billion.
?
The total number of consumer loans made online increased 3.07 percent, to 392,906
from 381,197 in 2017. The total principal amount of such loans increased 8.94 percent, to
$4.96 billion from $4.55 billion. The category of unsecured consumer loans of $2,500 or
higher -- which does not have a cap on interest rates ? accounted for 61.98 percent of the
total number and 54.42 percent of the total principal amount of consumer loans made
online.
California Department of Business Oversight
Page 2 of 35
I. HISTORICAL LICENSING DATA
The table below shows the number of California Financing Law (CFL) licensees (including branches) at the end of each calendar year and the number of license applications the DBO received each year for the last 10 years.
Table 1: Licensing Data
Year
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
Number of Licensed Companies
3,493 3,200 2,963 2,580 2,185 2,155 2,056 2,026 2,261 2,730
Number of Licensed Locations
7,262 6,776 6,521 6,369 5,018 4,776 4,385 4,302 4,327 4,964
Number of Applications for New
Licenses
1,503 1,398 1,517 1,358 1,254 1,191 889 910 1,022 1,097
California Department of Business Oversight
Page 3 of 35
II. ANALYSIS OF LOANS MADE BY CFL LICENSEES FOR THE LAST 10 YEARS
Table 2: Loan Details
Year
2018 2017* 2016* 2015 2014 2013 2012 2011 2010 2009
Number of Loans
Made
Principal Amount of Loans Made
2,467,795 $ 218,597,386,629
2,455,012 $ 194,240,527,082
2,458,476 $ 226,677,922,016
3,271,710 $ 232,654,056,610
2,711,495 $ 217,151,868,159
2,171,948 $ 174,302,457,184
1,876,767 $ 165,639,476,215
3,076,347 $ 139,166,897,599
2,560,497 $ 114,778,811,783
2,207,881 $ 89,287,544,941
Average Size of Loans Made
Consumer Commercial
Loans
Loans
All Loans
$ 20,952 $ 25,084 $ 27,971 $ 24,472 $ 20,674 $ 43,521 $ 60,110 $ 36,097 $ 44,920 $ 42,814
$ 217,490 $ 161,799 $ 188,155 $ 105,661 $ 121,161 $ 106,650 $ 108,137
$ 47,604 $ 44,805 $ 39,932
$ 88,580 $ 79,120 $ 92,203 $ 71,111 $ 80,086 $ 80,252 $ 88,258 $ 45,238 $ 44,827 $ 40,440
*Variances from data published in prior annual report due to late filings by licensees.
California Department of Business Oversight
Page 4 of 35
Exhibit A California Financing Law Licensees
Consolidated Balance Sheet As of December 31, 2018 ($ in thousands)
ASSETS
Cash
$
Investments
California Finance Lenders Loan Receivables
Other Receivables
Reserves and Withholds by Banks and Finance Companies
Real and Personal Property (Net)
Prepaid Expenses and Deferred Charges
Commissions Receivables
Other Assets
Total Assets
$
LIABILITIES AND NET WORTH
Loans and Notes Payable from Third Parties
$
Loans and Notes Payable from Parent Companies, Affiliates, etc.
Bonds, Debentures, and Certificates of Indebtedness Accounts Payable
Dealers' Reserves and Withholds
Accrued Taxes Other Than Income Tax Reserve for Income Taxes
Credit Insurance Premiums Due Insurer
Other Liabilities and Accruals
Total Liabilities Net Worth
Total Liabilities and Net Worth
$
71,403,280 209,560,417 148,928,150 1,082,786,640
3,726,113 156,403,417
6,488,766 2,280,509 656,691,779
2,338,269,072
% of Total Assets
3.05 8.96 6.37 46.31 0.16 6.69 0.28 0.10 28.08
100.00
401,039,773 358,698,562 469,479,307 206,249,583
624,176 768,623 39,667,817 445,340 437,753,435
1,914,726,615 423,542,456
2,338,269,072
% of Total Liabilities
and Net Worth
17.15 15.34 20.08
8.82 0.03 0.03 1.70 0.02 18.72
81.89 18.11
100.00
California Department of Business Oversight
Page 5 of 35
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