Q4 2020 Consumer Portfolio Services Inc Earnings Call
Ladies and gentlemen of todays conference scheduled to begin shortly please continue to stay of buy and thank you for your patience.
[music].
Okay.
Good day, everyone and welcome to the consumer portfolio of services fourth quarter and for year 2020 operating results conference call.
Today's call is being recorded.
Before we begin management has asked me to inform you that this conference call may contain forward looking statements.
Any statements made during this call that are not statements of historical facts may be deemed forward looking statements.
Statements regarding current or historical valuation of receivables because of dependent on estimates of future events also are forward looking statements.
All such forward looking statements are subject to risks that could cause actual results to differ materially from those projected.
I refer you to the company's annual report filed March the 16th and its quarterly reports filed in November of the throughput for further clarification.
The company assumes no obligation to update publicly any forward looking statements, which as a result of new information for the events or otherwise.
With US here now is Mr. Charles Bradley, Chief Executive Officer, and Mr. Jeff Fritz Chief Financial Officer of consumer portfolio services.
Now I'll turn the call over to Mr. Bradley you may begin.
Thank you and thank everyone for joining us on our call I think probably the best way to look at the fourth quarter is that at the end of 2020 and everyone. Certainly US included and are glad to be done with 2020.
That was certainly a up and down year on the difficult year in many ways, but in other ways. It was quite good for us and certainly the fourth quarter reflects that.
You know we had if you take year over year of the fourth quarter of the DQ was 12 versus 15 in the half last year. So that was very strong losses five versus 8% also very strong and the recoveries, where you know it's not.
The unusual but of C well.
Call of historically high 42% versus the normal 33%. So lots of the numbers went the right way we have lots of good things that happened in the fourth quarter. We also renewed our Citibank warehouse line of we can.
They are of very strong partnership with those folks.
A lot of deals with them and have a good working relationship and you know the line. The line continues to improve each time, we renew it.
We look forward of continuing to do our business with them.
One thing we didn't do in fourth quarter, we didn't do an ABS deal given the pandemic and the cutback in volumes, we didn't have enough volume to really make it warranted warrant doing the deal in the fourth quarter. However, we did one pretty darn quick in the first quarter of 2021.
Deal was probably the best ABS deal in the history of the company.
All in costs of 1.1% so that part of worked out really well probably the negative for the fourth quarter and certainly for the year, which I'll talk about the later, it's just the struggled for volume given the pandemic given the.
Financial markets sort of closing or slowing down dramatically for a little bit.
And even just kind of the foot traffic of dealerships struggled struggled in 2020 and certainly in the fourth quarter, continuing what has to get volume in here.
The flip side of that as we were able to really focus on cutting some expenses.
We really focused on core quality of you look at the ABS performance for literally since 2018. It is substantially better every single year and I'm not the issue there's too many companies out there the can say that.
Certainly with the lower cost of funds coming along that's going to sort of.
The higher tide floats all boats. So it's going to help out of few of our overly aggressive competitors, but nonetheless, it's still more of them run probably just as good for us.
So I'll get more into.
The year after Jeff runs through the fourth quarter financials.
Thanks, Brad welcome everybody will begin with the revenues.
$62 4 million for the fourth quarter.
12% decrease over the third quarter of this year and of 27% decrease over the fourth quarter of 2019 the <unk>.
Full year revenues for 2020, $271 2 million as of 22% decrease.
Compared to $3 $45 8 million and the full year of 2019. So there is an important component.
Ponant when you kind of break this down the revenues first of all of the legacy portfolio now is around $500 million, representing 23% of the total portfolio and currently yielding 18, 5%.
The fair value portfolio, which is everything we've originated since January of 2018 is $1 7 billion or 77% of the total portfolio, yielding 10, 3%.
And remember too we've talked about this many times obviously the fair value portfolio yielded net of losses, which is why you see what looks like such a dramatic decrease in revenues year over year. The third component. This year anyway is the markdowns, we've taken and the fair value portfolio, reflecting the COVID-19.
$6 $5 million markdown in the in the <unk>.
The fourth quarter $29 5 million for the full year and so it can be a little confusing. This is the kind of a contra revenue items. So the.
It detracts from the revenue rather than being an expense.
Moving onto expenses $56 million for the fourth quarter, that's of 14% reduction compared to $64 eight for the third quarter of this year, 34% reduction compared to $84 8 million in the fourth quarter of 2019 full year expenses $251 million as of 25% decrease compared to 336.
In 2019.
And we've seen year over year reductions in almost every expense category due in part as Brad alluded to to lower originations volume, but also due to some of the efficiencies that we've built in and technology investments that we've made.
Not only in 2020, but really in the last couple of years of really starting to pay dividends and of course, the biggest decrease in expense comes from the provision for credit losses.
We look at that in a little more details. So we actually zero provision for credit losses in the fourth quarter compared to $7 4 million in the third quarter of 2020, and $21 5 million in the fourth quarter of 2019 for the full year, we had $14 1 million in provisions for credit losses, compared to $86 million and the full year of 2019.
And so remember also that we adopted seasonal for the legacy portfolio in January 2020 of which time, we established what we thought was the lifetime allowance for credit losses, and then of course of the pandemic set in and throughout the year as you know from following this we've been taking except for the fourth quarter, we've been taking.
Some additional provisions for credit losses sort of pandemic related provisions for credit losses.
But none in the fourth quarter as you see.
Pre tax, earning $6 5 million for the fourth quarter of <unk>.
10% increase over $5 9 million in the third quarter of this year and while the huge increase over a $1 million in the fourth quarter of 2019.
The full year pre tax earnings $21 million is over 100% increase compared to $9 2 million for the full year of 2019.
Net income for $1 million for the fourth quarter, 8% increase over the third quarter of 2020.
And a huge increase over really very small.
Full year net at our record fourth quarter net income last year.
Net income for the full year 'twenty $1 $7 million.
Almost of 300 present, an increase over the net income of $5 4 million in 2019.
Talked about this remember too that the net income for 2020 includes an $8 8 million tax benefit that.
That we booked in Q1 of 2020, resulting from the cares Act and how it affected our deferred tax asset.
So those numbers are built in obviously diluted earnings per share <unk> 17 for the fourth quarter.
Just.
Just the penny over the <unk>.
Third quarter of this year and a significant increase over almost of.
Less than a penny in the fourth quarter of 2019 full year diluted earnings per share of <unk> 90 for 2020 compared to 22.
For the full year of 2019 and that tax benefit that I just alluded to that we booked in Q1 of 2020 represents 37.
To the bottom line for 2020.
Moving onto the balance sheet.
It doesn't necessarily come through when you just look at the cash numbers because we.
We use more cash to hold receivables when we have it available, but we have very strong liquidity position thats come about throughout 2020 as the result of better than expected credit performance of the Avs pools, which released resulted more releases of cash from those trusts and then in turn we can rely less on the warehouse financing, which helps us save a couple.
The focus on interest expense, so thats, a very positive standpoint from the balance sheet moving out of the receivables portfolio already talked about a couple of these percentages of the legacy portfolio down to 23% and its meaning life seasonal allowance now represents 16% of that act of portfolio. So it's pretty robust we feel.
Allowance for losses on that segment of the receivables.
Looking at the liabilities I mentioned lower warehouse usage due to the lower volumes and the strong liquidity position.
You may notice of this residual financing transaction is kind of in its pay down mode, It's coming up on three years.
From the time, we originated it and.
Lot of.
Almost with every quarter one of the deals that's pledged to the facility was in a situation, where we call the collateral and so paying down and will continue to pay down as well.
The move along.
Moving onto some of the performance metrics. The net interest margin for the quarter was $39 $5 million of 14% decrease compared to the third quarter. This year, 32% decrease compared to the fourth quarter of 2019.
The full year net interest margin was $169 8 million, 28% increase compared to the $235 million.
And the full year of 2019, and so as we've talked about this we still put this transition to the fair value of receivables taking over the majority of the portfolio, it's driving down that sort of that top line as the losses are baked into the to the.
Interest earnings and the fair value portfolio.
Another component of this metric as the cost of the ABS debt. So the the blended cost of all of our ABS debt was four 3% for the fourth quarter and Thats down just a little bit compared to four 4% in Q4, one Q4 of 2019.
Moving onto the risk adjusted NIM $39 5 million for Q4, this year and Thats, an increase of 3% from the third quarter of this year and an increase of 8% compared to the fourth quarter of 2019 full year risk adjusted NIM of $155 $7 million of 4% increase compared to the full year.
<unk> of 2019.
And as I think I've mentioned before.
The risk adjusted NIM and the NIM will converge to be the same metric.
As soon as the legacy portfolio becomes immaterial.
Core operating expenses for the quarter of $33 million that's of 2%.
Kris compared to $32 5 million in the fourth quarter this year, but an 8% decrease compared to $35 8 million for the fourth quarter of 2019 full year core operating expenses of $135 6 million as the 3% decrease compared to $143 million in the full year of 2019, and so think of them.
Mentioned is our operating costs have been impacted by somewhat lower originations volumes in 2020, but as I said, we've done a lot of things to improve our efficiencies which are also influencing these numbers.
Those expenses as a percentage of the managed portfolio were 6% for the fourth quarter of this year.
Just up a little bit from five 9% compared to the fourth quarter of 2019 full year basis five 9%.
Compared to five 8% for the full year of 2019 and.
<unk>.
One positive of this metric as those ratios of nearly flat despite the shrinking portfolio because the portfolio has shrunk a little bit during 2020.
Return on managed assets pretax return on managed assets assets, one 2% in Q4, that's up a little bit from 1% for the.
Third quarter of this year and up huge compared to <unk>, 1% in the fourth quarter of 2019.
Annualized return pre tax return on managed assets of <unk>, 9% for all of 2020, and Thats really over double the 4% that we recognized in the full year of 2019, so good improvement in that important metric.
Brad mentioned the credit performance and this has really been kind of the weird pandemic silver lining of the credit performance has been really much better than we would've expected a year ago. When all of this is setting in.
12 of 12% delinquency at the end of the year as the 300 basis points decrease compared to the 15, 5% that we had at the end of the year in 2019.
Annualized net losses for the year of six 5% compared to almost 8% for the full year of 2019.
And Brad also mentioned the the returns at the auctions were still at 42% in the fourth quarter, that's down a little bit from the 45%.
From the third quarter this year, but as Brad alluded to the normal levels of those or close to 33% and eventually those markets will normalize but it has been quite of benefit to this point.
Brad already mentioned the great success of the 2021 day transaction in January.
So I can turn it back over to him.
Yes.
Thank you Jeff.
Looking back at 2020, certainly the big focus or the big thing with the pandemic.
We started off thinking you'd be whatever year, we might have thought it would be and certainly by March we knew where we were going.
Normally we would've done a deal in early April we Couldnt do a deal no one else good for that matter. So there was no ABS for the.
The moment it looks like 2007, all over again with the mortgage closing down but of course, they didn't which is good.
So but at the moment, we had a problem there and then when they finally started loosening up a little bit sort of in April or may.
Needed more cash the stress levels were.
The rating agencies increase the stress levels. So you needed more cash those kind of things normally and certainly in 2007 would've caused us serious problems.
Ironically, though because of the stimulus.
And then all of the things as part of the care package, we picked up $23 million in cash the.
The stimulus went to all of our customers and as Jeff pointed out all of a sudden we have this tremendous cash flow part of that of course was we've tightened credit over the years and so we now all of a sudden had stimulus tighter credit cash and so we had as well.
We were really the great position shockingly coming through the pandemic. So the next hurdle of course was what we're going to do with people not being able to come to the office.
So we had to come up with strategy for everyone work from home, which we did and so of course that was the problem, which we worked very diligently on and saw so that all of our folks could work from home and get the jobs done of course, the highlight of that was it actually worked everyone continues to do a superior job you have been working from home all of the.
The things we're accomplishing all of the legal parts were accomplished without any problems and so what that really is sort of opens the door down the road as a real estate leases kind of renew or expire for us to make some permanent changes in those categories, which would actually save us lots of money. So it's kind of weird. It is definitely the either the silver lining.
Is everything in the pandemic caused an awful lot of problems and we will be glad to see the end of it but it also gave us the opportunity to lots of different things between the the tighter credit the increase of our cash.
We did a bunch of different things we started the near shore of collection of operation. That's proved to be very good we've automated a lot of the collection models. We've spent time doing all of these different things that should in 2021, assuming we can put the pandemic in our rearview mirror at some point and certainly in 2022, we'll all pay off a lot more.
So again it was tough but collections. During this period of time and I don't really think of it was all because of just the stimulus I think that the things we've been working on in the last couple of years, because certainly you can see if you look at our originations and performance even like I mentioned earlier from 2018 18 is better than 17 19 is better than 18, 'twenty will be better than the 19.
And even in 17 is better than 16. So this has been coming all along it's almost like because of the pandemic and the stimulus we got a little bit supercharged in 2020, but nonetheless, it's the program we wanted to pursue and it is becoming more and more successful every day as Jeff pointed out. We also were able to cut some expenses.
You have these kind of problems much like in 2007, a bunch of belt tightenings in order and we did just that and that also has paid off very well of course doing all of that we didn't lose anything in terms of performance.
So it was a busy year, one just dealing with the problems, but also doing all of these other things as Jeff mentioned, we're also going to complete.
Almost not quite this year, but certainly by next year. The completion of our accounting change to fair value again that most of the numbers somewhat but it's an important thing to do in the end of its what we needed to do and so once we get that done by the end of this year it should be nearly done.
So the other negative to all of that is because of the pandemic and everything else growth has been a very big problem and so what's happening today or now even in the fourth quarter and continuing into 2021 is because of the low cost of funds lots of of friendly competitors, becoming exceedingly aggressive because they need the growth to continue the portfolio performance.
Not in that position, we would love to grow, but we're not going to buy super deep the do it we're going to try and buy a little deeper now it was low cost of funds, but you know at some point maybe not this year in 2021 of the cost of funds will go back to sort of the normalized level. So we're going to try and be a little more aggressive without bank of the farm on this thing.
In terms of trying to grow but between the weather lately and all of these other things. It is really stifle the growth and some of the bigger players banks in particular have been able to sort of pushed real hard because of your big enough for you can hide a little bit of aggressiveness of pick up the numbers were not that big yet and so we're still trying to do both we're trying to grow but keep our credit.
Quality, where it is today, so it's a little bit tougher to do it but we think we're doing pretty good at it and over time, it will really pay out.
In terms of the future I think the low cost of funds will continue as we mentioned that January deal was ridiculously low cost in <unk>.
Given what's going on today in the country and the economy I don't really see interest rates going anywhere and I think that will stay for a while and again that'll help lots of other folks because with as much low cost of funds, it's a little easier to hide problems in the credit quality.
The things like that to 10 people continuing to buy deep they'll create new problems, but at the moment. It helps that way and I think we can do it from the rollout of new scoring model I think this week and that will have another big effect. So we're continuing to do things we work on more strategic partnerships. We found that over the last couple of years those of the kinds of things, where you can really get a little more bang for your Buck in terms of getting more.
The paper so we have a few of those programs in the works and should come in during 2021. So we have lot of good things going on but again focusing on 2020. It was all about the pandemic and how you reacted to that I think we did a pretty darn good job and also finding the silver linings and the thing you could do during our as a result of the pandemic and we did that and so.
As I said at the very beginning we're glad to put it in the rearview mirror and hopefully in the next few months or so next quarter. So it really will be and then we can again focus on just running the business and growing as opposed to trying to react to the different problems in the marketplace, but again 2020, given now it started probably turned out way better than we expected and again lots of silver linings.
All of the things we did so at this point, we're a little bit into 2021, we think it's going to be a very good year and we look forward to not having to discuss how we reacted to the problems and instead of just talk about how we've done things better and succeeded.
With that we'll open it for questions.
Thank you.
Ladies and gentlemen at this time you have a question or comment. Please press Star then one on your Touchtone telephone.
If at any point of your question is answered you may remove yourself from the queue by pressing the couch.
So two accident, while you pose your question Mitch for pickup your handset with the optimum.
John Rowan College of again, if you have a question. Please press Star then one on you touched on the telephone.
Our first question comes from the line of David Scharf with JMP Securities. Your line is open.
Hey, good morning, Thanks for taking my questions and congrats for getting through a very low.
Very challenging year.
Brett maybe maybe two things first off.
I know, it's difficult to predict what volumes are going to look like this year, particularly with the more stimulus coming.
The effects of the vaccine on just foot traffic potentially.
But as we think about sort of the cost structure.
Last quarter you.
Provided an update that.
As much as 20% of the workforce.
There may have been that much of a reduction.
From the combination of belt tightening in the natural attrition given the lower volumes.
If volume is kind of stay at current levels.
Well the employee costs kind of remain at these levels going forward or do you think of us even more room to cut.
The easy answer is there's always more room to cut but probably the safer answer as you know I would say they would stay at these levels I think.
You got it right between the belt tightening of natural attrition through all of this.
Reduce the cost I don't see us sort of rehiring up sort of anticipating growth or something I think with the automation.
Given the 25 years the automation is moving so quickly that you probably can grow and hire all you want without giving up much in terms of expanding the expenses. So that part is really good I think.
The growth is a tough one because of the one hand, it's nice to have low cost of funds increase of your margin, but it also opens the door for just about everybody to get super aggressive if they want to.
The problem you have you think about it just take our deal. We just did the 1% cost of funds and so you could say well, we should get super aggressive because you've got at least an extra two points of three points from that margin all of a sudden but the extent you buy a whole bunch of paper and also in the markets come back, which I don't expect to happen. Soon then all of a sudden you don't have the mark.
Than you expected and so I think a bunch of folks who are doing just that the going let's go let's go fast and hard and we'll sort of worried about the cost of funds. Later now we would love the playing that game and we're going to try and do it.
Very very specific sort of safe as possible way to get some of that growth, but between the pandemic not quite being over in the vaccination is not quite being done in the mass of whether they've had lately, it's really put a damper in terms of whats out there, but what you have seen as you know of capital one of Santander had been quite.
Massive and they can do it so we'll see how that plays but the answer your question I think.
The straight cost line of expense line isn't the bad option and then we'll have to figure out how to get the volume to go up with it the problem one of the problems with our revenues as Jeff pointed out with the change to fair value. It just looks like it's going down a lot of its really not but trying to get the volume up is something we need to focus on.
Got it that's helpful and maybe as a follow up along the lines on the revenue reporting.
In terms of.
The 10, 3% yield which is really sort of of risk adjusted yield on the fair value portfolio using that is.
Sort of a jumping off point.
As we think about.
You know the pretty low delinquency levels, right now and what that might mean for.
Losses this year.
As well as as you had noted maybe.
Maybe going a little deeper.
Unbound pricing just given the lower cost of funding as we think about all of that netting out since the charge offs are basically embedded in that.
GAAP revenue yield.
Should that 10.3.
So the likely to creep up a bit just based on the loss outlook this year or potentially creep down a little bit as you.
Maybe dig a little deeper.
On the pricing front.
Well Theres a lot of moving pieces to the $10 three David as you know so it's the.
<unk> of the losses that makes it the risk adjusted but it's also the coupon on the receivables and it's also the fees, we either pay or charge to the dealers and so as Brad mentioned, we're trying to do pull some levers here to grow the business and one of the levers we can pull instead of maybe put a couple of other a couple of more dollars.
Into the dealers pocket to incentivize the dealer to send us the contract and we can also.
The scoring model in what our risk.
People do in the office is tell us when we can buy something that maybe it looks a little bit deeper, but it doesn't have necessarily greater loss expectation. So when we think the business plan works pretty well at around the $10 five or so percent.
The risk adjusted yield with the pricing.
So we're kind of I think it's safe to say thats a target for us.
And it's going to fluctuate a little bit with the.
The levers but.
So we're pretty comfortable at that level.
Great. Thank you very much thank.
Thank you.
Our next question comes from the line of John Rowan with Janney. Your line is open.
Good afternoon guys.
John.
I just want to focus day in a little bit on what happens when the legacy portfolio finally matures off.
Jeff you mentioned the size of the portfolio in the 18% yield and that would imply that there was about $24 million and correct me if I'm wrong there on <unk>.
Revenue that you are booking through the legacy portfolio, which obviously is in run off and you are not booking any provisions against it I'm wondering if there are any other cost offsets offsets in that number even if that number is correct because without that it.
It doesn't look like.
Just based off of the fair value portfolio that the company is profitable.
Well there are a couple of other nuances that the leg of that come along with the legacy portfolio of for instance.
<unk>.
As you know, we either pay a charge dealers fees and.
In conjunction with the acquired in those contracts and so embedded into the.
The net yield on the legacy portfolio.
Additional.
It's really of net fees that we have.
That we charge the dealers that are being accreted into income over the life of that portfolio. So thats kind of thats not a giant piece, but that's that's a piece of the revenue picture for the legacy portfolio and and.
And I think that I think.
John actually with the.
As we talked about the 10, 5% yield on the fair value portfolio and at our cost structures kind of coming down a little bit with some efficiencies.
I think.
I think the company is profitable.
So is there a finer point that you could put on how much revenue you actually generated off of the fair value net of the dealer fees that youre talking about.
Obviously at some point in 2021, the fair value of the legacy portfolio is going to go away.
Unless <unk>.
Costs come down quite a bit off of where they are.
If there is like the 20, some odd million dollar run rate on the.
On the legacy portfolio. It just doesn't the math doesn't seem to indicate that there is much profit in 2021, unless there's a big decline in funding costs I'm, just trying to foot that up because maybe you could just answer how much revenue came this quarter off of the legacy portfolio.
Well remember too that we all set for the year $29 $5 million marks on the fair value portfolio, which come out of the revenue.
And so when those are there's a little bit of of fair value adjustment there, but the vast majority of that is pandemic I mean really it's all of pandemic related and so that if you're trying to really.
Look at the fair value of revenue component.
The bulk of the rate there and.
Yeah.
We do of schedule in the 10-K, and Unfortunately don't have of with me right now, but we do of schedule in the 10-K, where we break out the fair value revenue and the and the legacy portfolio revenue.
And the more tabular fashion that might be helpful for you.
Okay, and then just lastly, the.
The losses in the legacy portfolio.
The 11% you have.
14, some odd percent if I'm not mistaken.
Allowance in that portfolio as you get towards 16% rather as you get through the end of the year, if you don't materialize, 16% losses.
Do you credit the differential back through the provision expense rate, obviously that those allowances were transferred there of based on seasonal but and we're not of charged to earnings do they become a credit to earnings. If you don't use up that 16% allowance through charge offs as that book, which horse off from 'twenty one.
Yeah.
I mean that would be the mechanics theoretically rate.
And in fact I've seen.
We're a couple of the institutions banks, these where that that file their earnings reports already had.
Had clawed back some of the.
Provisions that they had made earlier in the year pandemic related provisions.
They go back through the P&L, let's sort of negative provision credit losses.
And there would be no I just want to make sure. It was the same in the run off portfolio rate. Those are still portfolio of set of growing so just to make sure that that's still that's still the mechanics and the runoff scenario. It wouldn't make any difference I don't think okay. Alright, that's it from me. Thank you.
Thank you.
Thank you.
Our next question comes from the line of Kyle Joseph with Jefferies. Your line is open.
Hey, good morning, guys. Thanks for having me on.
Congratulations on wrapping up 2020.
Yes on the <unk>.
Legacy portfolio it looks like a lot of the credit strength in the quarter was actually improvement on the legacy portfolio can you give us a sense for what specifically drove that in the quarter and the.
Outlook for that credit performance on that portfolio going forward.
I think we would attribute that in particularly in the losses, I think where the attributed to the.
To the auction recoveries primarily.
Yeah.
Running at substantially better levels.
Normally with the season of supersede the portfolio like the legacy portfolio it.
It would be pretty rocky.
When it gets end of life, but but I think that the.
The second of all of the whole portfolio for that segment in particular did.
Well for what we liquidated the auctions and then just the overall delinquencies.
Even for such a season portfolio have been have been much better than the legacy portfolio than we would've expected.
Okay.
And I think thats. The good transition can you guys give us kind of your sense for used car price outlook for the used car prices in 'twenty one.
I think our recoveries are going to drop obviously is the sort of the.
The manufacturers catch up then you'll see the demand at the auctions drop and so the recoveries will come down, but I still think at least for the rest of this year that market still remains strong and going back to the other point. If you think about the legacy portfolio. These are the guys that had been in the car for a long long time and probably.
You had some level of bouncing around from current the 30 days of 60 days and so getting the stimulus check gave them a real opportunity the catch up kind of out of the blue rather than running their normal sort of in the bad part and the good part.
Couple of the stimulus check not dimension of another one coming or they've got into I guess another of the third one coming that's the kind of free money. They get that gives them an opportunity to sort of make of movement in that kind of an older alone and so it's easier to see in the legacy as much as it should have the same effect from the fair value, but since of fair values of newer.
You've got a bigger people are sort of it's not so much people are buying cars of the stimulus checks, but you'd see the little more clearly in the legacy portfolio is sort of of free money catch up for our customers. So for back to the to the used car prices or the used car market.
I think youll see I think the them are going to stay strong for the rest of the year.
Got it and then last one for me on the.
Value Mark.
What triggered it in the in the fourth quarter, obviously, we've seen.
Throughout the year, but we kind of known that there is a pandemic the economy has been gradually recovering.
In what scenario do we not see fair value adjustments going forward.
That's a good question I think.
Certainly one of the things we've learned through time is to be cautious and so I think the whole 2020 of the pandemic as much as we pointed out of lots of good things have happened as a result, you're just not sure what's going to happen next I mean, even.
So that's probably the easy answer for most of 2020 and all of the adjustments. We took you just werent sure what the future holds now as we move into 2021.
Depending on who you listen to.
If you're losing some tour from the government and we've got a couple of more years of this but if you don't it's probably over in about six months for three months and we're going to go with that version and so you know at that point you wouldn't see any more.
The effect on the fair value of hits.
We think at this point the thing should be over pretty darn quick so I.
I wouldn't expect.
Don't hold me to it but if I were going to guess I'd say, we wouldn't have any more of this year going forward.
Got it thanks very much for answering my questions. Thank you.
Thank you.
I'm showing no further questions I will now turn the call back over to Mr. Charles Bradley for any additional or closing remarks.
Thank you.
I think we've kind of some of that where we stand in the fourth quarter was a nice way to finish up the year. The year worked out given all the things we have the deal with really really well as we sort of alluded to a lot. During this call 2021 should be a significantly better year in terms of not having to deal with the pandemic, we can really focus.
On doing what we normally do which is running the company and growing the company growing the portfolio growing the profitability and we're kind of that stock price. So thank you all for joining us and we'll speak to rather soon after the first quarter.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
[music].
Yeah.
Ladies and gentlemen.
This does concludes today's conference call of <unk>.
It will be available beginning two hours from now until March the third 2021 by dialing 8558592.
Two zero fab six of for US, they're all for 5373 for US It will fix with the conference.
Timber 39986 to eight.
A broadcast of the conference call will also be available live and for 90 days after the call via the company's website at www.
W consumer portfolio Dot com.
Please disconnect your lines for any time and have a wonderful day.
[music].
Okay.
Moving forward.
[music].
Yes.
[music].
Yes.
[music].
Yes.
Yes.