Q3 2021 Consumer Portfolio Services Inc Earnings Call

October 28, 2021

Ladies and gentlemen, todays conference is scheduled to begin shortly please continue to standby. Thank you for your patience.

[music].

Good day, everyone and welcome to the consumer portfolio services 2021 third quarter 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.

This call that are not statements of historical facts may be deemed forward looking statements.

Payments regarding current or historical valuations have receivables because depending 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.

<unk> 10th footprint clarification.

The company assumes no obligation to update publicly any forward looking statements whether as a result of new information further 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, I will now turn the call over to Mr. Bradley.

Thank you and welcome to our third quarter earnings call.

I guess, the simplest way to say it we had a very good quarter I just wanted to first quarters we've had.

It's.

Really having everything functioning really well across all points of the company marketing originations collections every day. So it's nice to see that you know when you start doing things right you can get the reward so we did.

And just to go through a couple of the highlights year over year, we had 232% earnings growth.

The numbers are really starting to come through.

And although we will continue to do that forever, but that was a real good growth number from year over year and somewhat just as interesting is during the same period of time, we cut expenses, 24% so to be able to do both those things.

I said, it doesn't get any better than that.

Originations, we had 14% quarter to quarter, 87% originations growth year over year third quarter was our highest quarter since second quarter 2016, and the second highest quarter in our company history of 30 years, So again real good numbers there.

Not to be outdone servicing continues very strong everybody you know a lot of there's a lot of talk about the pandemic and the stimulus.

Stimulus is kind of over at this point and yet our collections still remains very very strong. So there's a lot of those stimulus my yeah.

We still have a very strong DQ charge offs were down 41% year over year. So it's easy to say, we're doing an awful lot right on that category as well you know we owe a lot of it to our you know we've added scorecards across the board in collections. So we have a lot of AI a lot of alternative data, that's really helping us direct as to how to get the.

Best performance out of the portfolio and I'll talk a little bit more about that later.

Securitization market is still very strong at another very successful securitization in the third quarter.

And also while we noted that we've purchased just about 2 million shares out.

Out of the market. So again, we're trying to do what we can to increase our shareholder value I'll go into more detail on all of those subjects after that Jeff walked through the financials for you. Thanks.

Thanks, Brad welcome everybody will begin with the revenues, which were $68 $6 million for the quarter Thats up 3% from our second quarter of this year and down 3% compared to our third quarter of last year. The nine month numbers $198 4 million is down about 5% compared to $208.

<unk> 7 million in the nine months of.

2020.

And pretty simple breakdown the components of revenue in the legacy portfolio.

<unk>.

Yielding about 20%, but that's only about 13% of our managed portfolio right now $287 million continues to decline pretty rapidly as we move along the fair value portfolio continues to grow its 1.9 billion, 87% of our total yielding predictable 11, 1% this quarter and as you know that yield is net of.

Losses, and so it's a you know as I said, it's got the losses baked in so we don't have the offsetting provisions for credit losses that we've had in the past with the legacy portfolio.

No fair value marks in the third quarter.

So it's a pretty straightforward from a sort of breaking down the revenue standpoint.

The expenses 49 million for the quarter, that's a 7% decrease from our second quarter of this year at $52 nine and a 24% decrease over the third quarter of.

2029 month numbers $157 1 million at a 19% decrease in expenses compared to the nine months of 2020 and.

Across the board, we've had significant reductions in all of these expense categories.

Significantly lower interest expense as the Securitizations you are putting on are coming in at lower yields than the ones running off.

No provisions for credit losses. This year in fact, we're going to talk about a reversal of provision in a minute here, which.

Which contributed to the earnings this quarter with lower head counts and better all around efficiencies, which has really contributed to the lower expense profile.

Provisions for credit losses was a negative $1 6 million. So this is pretty sure first time in the history of the company, we've actually rolled back a portion of the allowance and as I've said this a legacy portfolio the <unk> portfolio.

Is winding down it has a significant allowance for loan losses first because we established a lifetime loss allowance for this portfolio back in January 2020, and then we made some additions to that allowance during 2020 for the pandemic and the reality is as that portfolio is performing pretty well and its a its remaining life suggest that.

The allowance is more than adequate which is why we shaved off $1.6 million of that allowance this quarter.

Pretax earnings were $19 5 million, that's a 40% increase over just the last quarter of $13 9 million and a 232% increase over the third quarter of last year.

Nine month number is $41 4 million of pre tax earnings of 204% increase over the nine months of 2020.

Net income for the quarter $13 $7 million, 41% increase over the second quarter. This year and a 261 increase over the third quarter of 2020.

Year to date net income $28 $6 million is a 63% increase over the nine months of 2020 and when we look at the net income numbers as I've said before we do have.

Last year in the first quarter, we booked a tax benefit of almost $9 million, which came as a result of the cares Act and so that's kind of baked into those numbers from last year.

Diluted earnings per share of <unk> 52.

Is it 33% increase over the 39 cents from our second quarter this year and a 225% increase over the 16th we posted in the third quarter of 2020 year to date numbers $1 12 for the nine months ended September.

Of this year compared to <unk> 74 to <unk>, 51% increase over the first nine months of last year.

Looking at the balance sheet the.

The better than expected credit performance continues to contribute to a strong liquidity position and we're getting significant releases of cash out of the trusts as those wind down.

That's allowed us to rely somewhat less under warehouse financing, which also helps to the P&L from a lower interest expense and then you'll recall back in the second quarter of this year and June 21, we did raise $50 million and a residual financing at very attractive rates. So the balance sheet and liquidity position is very strong the legacy poor.

Folio as I mentioned continues to wind down.

The remaining allowance and that is about 24%, which is why as I said, we were able to shave off about $1.6 million of debt this quarter.

Moving on to some of the.

Other performance metrics.

Net interest margin for the quarter was $47 $8 million, that's well that's about flat with our second quarter of this year, but a 4% increase compared to the third quarter of last year and the nine months, our net interest margin of $90 million is a.

It's a decrease of 31% compared to the nine months of last year.

But you'll recall that last year, we booked.

We were paying significantly higher blended interest rates on the securitization trust debt compared to what the fed.

That has come down to for instance, this quarter the.

The ABS cost was three 4% compared to four 4% in the third quarter of 2020.

Core operating expense is for the quarter $33 $9 million is flat with Q2 this year.

Just a little bit compared to $32 5 million in the third quarter of last year and.

Nine months numbers, however, $68 1 million in core operating expenses. This year is at 34% decrease compared to the same period of last year. The same nine month period and this is where we've had.

Significant improvements in operating leverage.

Some of the technology and efficiencies that we've been incorporated have really have really improved that that particular metric.

As a percent of the outstanding portfolio of those core operating expenses were six 4% for the quarter.

That's flat.

With our second quarter, this year and up just a little bit compared to five 7% for the third quarter of last year and one thing to point out is although we've kept our operating expenses relatively flat year over year, our portfolio has actually shrunk, even though we had a very good originations quarter.

During.

This last quarter and in originations this year have been steadily increased we.

We had low originations throughout 2020 and that has contributed to a year over year smaller portfolio, which makes this particular metric go up year over year, even though the costs have come down or stayed about the same.

Return on managed assets for the quarter pretax two 6% that's flat compared to our second quarter of this year, but 160% increase over the 1% that we posted in the third quarter of last year and the nine months numbers of return on pretax pre tax return on them.

Managed portfolio is two 1% compared to just <unk>, 8% last year and so this incorporates everything of course, and you've got gains improvement and the spreads from the lower cost of funds and of course last year. We also took marks on the.

The fair value portfolio, we added increased credit protection on the legacy portfolio and had really had none of that this year.

Looking at some of the key credit performance metrics delinquency was 936% at the end of this quarter, that's up seasonally from 828% in the second quarter, but down significantly from 10, 3% in September of 2020.

The net loss picture is really positive two 8%.

For the.

Third quarter.

That's just up a little bit compared to $2, 79% in the second quarter of this year, but down significantly from $6 three 9% for the third quarter of 2020.

The nine months numbers also very positive 385% for the nine months. So far this year, that's down significantly for the.

For the nine months.

'twenty, where it was 693%.

We continue to do very well on liquidating vehicles at the auction 57, 8% of our loan balances are being recovered at the auction that's up from 45, 1% last year and last year's numbers were great and so these numbers are continue to be very good.

Well known that there's a.

Sort of a vehicle shortage and it's driving up these values at the auctions.

Quick look at the ABS market, our third quarter securitization was completed in July of 'twenty one.

Continued strong demand pretty much across the stacks of the layers of tranches that we securitize.

<unk> and a blended yield of 155%, which is the second lowest in our history.

So we continued to see good demand for our bonds and 10.

And we expect that to continue here in the near future.

With that I'll turn it back over to Brad.

Thank you Jeff.

Want to focus on a few of the things that sort of are working for the company, we've highlighted them, but maybe in a little more detail in terms of originations one of the things we did even though our application rate was relatively flat, we still were able to increase originations again, we're using a lot more of our gen seven scorecard, which relies heavily on.

On AI and alternative data and so we're getting a seven we got a 17% growth.

Year over year, even though apps were kind of flat and so it's directly related to the ability to sort of dig into the customers and figure out which ones we should buy.

It's become very effective and works very well.

Another thing that's coming on is the inventory issues and I think that's caused a lot of other people to get a little more competitive we've cut our APR to play in that game a bit and it's worked I think when inventory issues subside next year. So that will give us substantial growth increases just because the inventory will be there plus probably the APR market.

It'd be a little less competitive.

Let's see what else we got.

We're still things we're trying to do we're still trying to drive to get our dealer base were around 8000, we want to get into 10. All of these things will help but the better scorecard and then we're about to send out our generation eight scorecard and it's in the works and we think that will be even more effective in terms of using these outside metrics to sort of pick the best customers and continue.

Our growth.

Looking at collections again, it's still the AI and alternative data, but this collection scorecard.

So much more effective when we put that in last year and so now it's really sort of got to the point, where I think it's working very effectively.

In terms of who should recall when should we call and how shall we call a customer and as a result of that we have much better contact much better feel for the customer and what's going on they get lower repossessions better collections same thing. We now have an extension scorecard using the same kind of model and also we use text.

<unk> a far greater extent, so we're really trying to use as much technology as we possibly can and before I don't know a few years ago. The focus is much more on originations in the front end and now we've been able to focus on the backend in terms of collections and I think we're really seeing results now people a lot of people are saying because of the stimulus packages and all of this you are going to have.

This great result, we're beginning to hear in the market as some folks results are beginning to go the other way. So it's very nice to see that ours are not we are flat delinquency way better charge offs. So we're actually at some level bucking the trend are bucking the market, which again, we think will pay off handsomely down the road.

Also during the pandemic, we were able to.

Said in the last call I'll focus on efficiencies you can see that by the amount of them.

Hence we've cut we think we will continue to do that.

<unk> experimented with hybrid.

You can see in terms of people being in the office and out of the office now and with very good results I think down the road as we can focus on occupancy cost all those things come into play. So we're doing a lot of different things that really are going to help as we continue to do things in the future.

As Jeff mentioned, the securitization market is still very strong.

No problem getting deals done on cost of funds remained low so that's again a plus.

In terms of the industry.

Like I said, it's fairly competitive in the lack of inventory is probably the strongest indicator that people are a lot of people really need to grow we don't have to grow it just happened to be growing very well. So I think again when that sort of supply line loosens up things will get better the other interesting thing in the industry as the acquisitions a few of our fellow.

<unk> been purchased recently they've been getting very good values on those purchases. So we hope that will rub off on us at some point.

I think time will tell but it's certainly becoming a little more interesting market and people are beginning to realize the benefit of these platforms and obviously we've been in a long time and our platform is very well built and becoming more successful by the day also mentioned we bought that stock the 2 million shares we've actually bought another half million shares this quarter. So.

Last thing dimension, our focus on shareholder value.

We've tried to do what we can the disappointing thing is today after putting out these great numbers the stock prices down.

It's very very frustrating for us we're going to continue to do everything we can to improve shareholder value. We're certainly an active purchaser of shares in the market.

We will continue to do that.

Until we see something change.

With that we'll open it up for questions.

Thank you the floor is now open for questions. At this time, if you have a question or comment. Please press star one on your Touchtone phone if at any point. Your question Sanjay you may remove yourself from the queue by pressing the pound key.

We do ask that you pose your question that you pick up your handset to provide optimal sound quality.

Thank you. Your first question comes from Kyle Joseph with Jefferies.

Hey, good morning, guys congratulations on good quarter.

I know you touched on that but just give us a sense for.

Outlook for used car prices, obviously, you had another uptick.

Recently, when do you think supply chain kind of thought and we get it normalized new car supply and what Youre thinking about for 2022 on that front.

Again, we're sort of crystal ball, a little bit, but my guess is the supply chain improve dramatically going into the first quarter I think.

Most of the manufacturers realize that 2021 is kind of a shot.

Put it past them to slow play the rest of the year. So they have a real good year next year.

So that's my sort of bet on the market, but one would think one way or another that that supply chain will ease up.

The next three to six months.

So that again would give them plenty of time to have a pretty good year next year compared to this year.

It's very hard to tell but at least I'm looking at what we see that's what we would think.

The used car prices are still strong we had another.

Jeff mentioned the auction prices are still strong.

Again, I don't think Thats, a huge effect on us. It's certainly probably does effect as I mentioned earlier, our front end sales of the business. It's a tight market out there because everybody wants to grow and everybody's buying cars.

So the total interest you can almost think the market for financing the cars will be dropping off because of the lack of cars remember that most of our cars are used as much as or more expensive, they're still out there to finance and so I think that part of the market stays strong and then as new cars come in it slows down some are sort of normalizes. So I would guess new cars.

Pick up in the first quarter next year and then at that point, you'll see the used car market start to normalize back to where it should be.

Got it and then just one follow up there Jeff could you remind us for that.

The remaining life on that the legacy portfolio is at this point.

That portfolio has seasoned 50.

<unk> 58 months already okay, and so so it's got probably a remaining expected life of now.

Not much more than 12 months.

There's always a tail some of these loans you know kind of tail out for more extended period, but it's clearly rounding third heading for home.

Okay very helpful. I appreciate the color thanks, guys.

Thank you.

Thank you and I will turn the floor back over to Mr. Charles Bradley for any additional or closing remarks.

Thank you as I said earlier, we are.

Very pleased with the quarter, we just want to keep doing what we're doing and hopefully get people to notice that we all have to stock market day notice.

Start having things happened so like I said the.

The acquisition acquisition market seems to be heating up some I think thats a plus.

We think thats.

Benefit for the industry benefit for us all.

All we can do is keep what we're doing which is produce really good results in becoming more efficient every day.

Thank you all for joining us and we will talk to you probably in February. Thank you.

Thank you and this does conclude today's teleconference and replay will be available beginning two hours from now until November four 2021 by dialing eight eight.

859 casino side. Thanks.

44537406 with conference identification number nine to six to seven 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.

Consumer portfolio Dot com. Please disconnect your lines at this time and have a wonderful day.

[music].

Yes.

[music].

And are not statements of historical facts may be deemed forward looking statements statements regarding current or historical valuations have receivables because 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.

Really from those projected I refer you to the company's annual report filed March 10th for further clarification.

The company assumes no obligation to update publicly any forward looking statements whether as a result of new information further 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, I will now turn the call over to Mr. Bradley.

Thank you and welcome to our third quarter earnings call.

The simplest way to say, we had a very good quarter. That's one of the best quarters, we've had.

It's.

It's about really having everything functioning really well across all points of the company marketing and originations collections every day. So it's nice to see that when you start doing things right you can get the reward and said we did.

And just to go through a couple of highlights year over year, we had 232% earnings growth.

The numbers are really starting to come through.

We will continue to do that forever, but that was a real good growth number from year over year.

And somewhat just as interesting as you're in the same period of time, we cut expenses, 24% so to be able to do both of those things I don't like I said, it doesn't get any better than that originations, we had 14% quarter to quarter, 87% originations growth year over year third quarter was the highest quarter since the second quarter too.

<unk> 16, and the second highest quarter in our company history at 30 years, So again real good numbers there.

To be outdone servicing continues very strong everybody you know a lot of there's a lot of talk about the pandemic and the stimulus.

Hello. This is kind of over at this point and yet our collections still remains very very strong. So there's a lot of stimulus money yet.

Yet we still have a very strong DQ charge offs were down 41% year over year. So it's easier to say, we're doing an awful lot right on that category as well.

A lot of it too.

We've added scorecards across the board in collections. So we have a lot of AI a lot of alternative data, that's really helping us direct as to how to get the best performance out of the portfolio and I'll talk a little bit more about that later.

The securitization market is still very strong at another very successful securitization in the third quarter.

And also while we noted that we purchased just about 2 million shares.

Out of the market. So again, we're trying to do what we can to increase our shareholder value.

I'll go into more detail on all of those subjects after that Jeff walked through the financials for you.

Thanks, Brad welcome everybody I will begin with the revenues, which were $68 $6 million for the quarter, that's up 3% from our second quarter of this year and down 3% compared to our third quarter of last year. The nine month numbers $198 4 million is down about 5% compared to 208.

$7 million in the nine months.

2020, and pretty simple breakdown the components of revenue in the legacy portfolio.

It's yielding about 20%, but that's only about 13% of our managed portfolio right now $287 million continues to decline pretty rapidly as we move along the fair value portfolio continues to grow its 1.9 billion, 87% of our total yielding predictable 11, 1% this quarter and as you.

No that yield is net of losses and so it's a as I said, it's got the losses baked in so we don't have the offsetting provisions for credit losses that we've had in the past with the legacy portfolio.

No fair value marks in the third quarter.

It's a pretty straightforward from that sort of breaking down the revenue standpoint.

Expenses 49 billion for the quarter, that's a 7% decrease from our second quarter of this year of $52 nine and a 24% decrease over the third quarter of <unk>.

2029.

Nine months numbers $157 1 million, a 19% decrease in expenses compared to the nine months of 2020 and Cros.

Across the board, we've had significant reductions in all of these expense categories.

Significantly lower interest expense.

Securitizations you are putting out are coming in at lower yields than the one churning off.

No provisions for credit losses. This year in fact, we're going to talk about a reversal of provision in a minute here, which.

Which contributed to the earnings this quarter, we have lower headcounts and better all around efficiencies, which has really contributed to the lower expense profile.

Winding down has a significant allowance for loan losses first because we established a lifetime loss allowance for this portfolio back in January 2020, and then we made some additions to that allowance during 2020 for the pandemic and the reality is as that portfolio is performing pretty well and its remaining life suggests that the.

The allowance is more than adequate which is why we shaved off $1.6 million of debt allowance this quarter pre.

Pretax earnings were $19 5 million Thats, a 40% increase over just the last quarter of $13 9 million and a 232% increase over the third quarter of last year.

Nine month number is $41 4 million of pre tax earnings of 204% increase over the nine months of 2020.

Net income for the quarter $13 7 million, 41% increase over the second quarter. This year and a 261 increase over the third quarter of 2020.

And year to date, net income $28 $6 million or 63%.

Increase over the nine months of 2020 and when we look at these net income numbers as I've said before we do have.

Last year in the first quarter, we booked a tax benefit of almost $9 million, which came as a result of the cares Act and so that's kind of baked into those numbers from last year.

Diluted earnings per share of <unk> 52.

Is it 33% increase over the 39 cents from our second quarter this year and a 225% increase over the 16, we posted in the third quarter of 2020 year to date numbers $1 12 for the nine months ended September.

<unk> of this year compared to <unk> 74, a 51% increase over the first nine months of last year.

Looking at the balance sheet.

The better than expected credit performance continues to contribute to a strong liquidity position and we're getting significant releases of cash out of the trust as those wind down.

That's allowed us to rely somewhat less under warehouse financing, which also helps the P&L from a lower interest expense and then you'll recall back in the second quarter of this year and June 21, we did raise $50 million and a residual financing at very attractive rates. So the balance sheet and liquidity position is very strong the legacy.

Folio as I mentioned continues to wind down.

The remaining allowance and that is about 24%, which is why as I said, we were able to shave off about $1 6 million of that this quarter.

Moving on to some of the.

Other performance metrics.

The net interest margin for the quarter was $47 $8 million.

That's about flat with our second quarter of this year, but a 4% increase compared to the third quarter of last year and the nine months, our net interest margin of $90 million.

As a decrease of 31% compared to the nine months of last year.

But you'll recall that last year, we booked.

We were paying significantly higher blended interest rates on debt securitization trust debt compared to what.

That has come down to for instance, this quarter the.

The ABS cost was three 4% compared to four 4% in the third quarter of 2020.

Core operating expense is for the quarter $33 $9 million is flat with Q2 this year.

Just a little bit compared to $32 5 million in the third quarter of last year and.

Nine months numbers, however, $68 1 million in core operating expenses. This year is at 34% decrease compared to the same period of last year. The same nine month period and this is where we've had significant improvements in operating leverage.

The technology and efficiencies that we've been incorporated have really have really improved that particular metric.

As a percent of the outstanding portfolio of those core operating expenses were six 4% for the quarter.

It's flat.

With our second quarter, this year and up just a little bit compared to five 7% for the third quarter of last year and one.

One thing to point out is although we've kept our operating expenses relatively flat year over year, our portfolio has actually shrunk, even though we had a very good originations quarter.

During the.

This last quarter.

Originations this year have been steadily increased we.

Return on managed assets for the quarter pretax two 6% that's flat compared to our second quarter of this year, but 160% increase over the 1% that we posted in the third quarter of last year and the nine month numbers of the return on pretax pre tax return on them.

The fair value portfolio, we added increased credit protection on the legacy portfolio and had really had none of that this year.

Looking at some of the key credit performance metrics delinquency was 936% at the end of this quarter, that's up seasonally from $8 two 8% in the second quarter, but down significantly from 10, 3% in September of 2020.

The net loss picture is really positive two 8%.

For the.

Third quarter.

That's just up a little bit compared to $2, 79% in the second quarter of this year, but down significantly from $6 three 9% for the third quarter of 2020.

The nine months numbers also very positive 385% for the nine months. So far this year, that's down significantly for the.

For the nine months of <unk>.

'twenty, where it was 693%.

We continue to do very well and liquidating vehicles at the auction 57, 8% of our loan balances are being recovered at the auction that's up from 45, 1% last year and last year's numbers were great and so these numbers are continue to be very good.

Well known that there is a.

Sort of a vehicle shortage and it's driving up these values at the auctions.

Quick look at the ABS market, our third quarter securitization was completed in July of 'twenty one.

Continued strong demand pretty much across the stacks of the layers of tranches that we securitize.

<unk> and a blended yield of 155%, which is the second lowest in our history.

So we continue to see good demand for our bonds and.

We expect that to continue here in the near future.

With that I'll turn it back over to Brad.

Thank you Jeff.

Want to focus on a few of the things thats sort of our working for the company, we've highlighted them, but maybe in a little more detail in terms of originations one of the things we did even though our application rate was relatively flat, we still were able to increase originations again, we're using a lot more gen seven scorecard, which relies heavily on.

On AI and alternative data and so we're getting a seven we got a 17% growth.

Year over year, even though apps were kind of flat and so it's directly related to the ability to sort of dig into the customers and figure out which ones we should buy.

It has become very effective and works very well.

Another thing that's coming on is the inventory issues and I think that's caused a lot of people will get a little more competitive we've cut our APR to play in that game a bit and it's work I think when inventory issues subside next year that will give us substantial growth increases just because of the inventory will be there plus probably the APR market.

It'd be a little less competitive.

Let's see what else we got.

We are still things we try to do we're still trying to drive to get our dealer base were around 8000, we want to get into 10. All of these things will help but the better scorecard and then we're about the same.

That our generation eight scorecard and it's in the works and we think that will be even more effective in terms of using these outside metrics to sort of pick the best customers and continue our growth.

Looking at collections again, it's still the AI and alternative data, but this collection scorecard.

So much more effective and we put that in last year and so now it's really sort of gotten to the point, where I think it's working very effectively.

In terms of who should recall when should we call and how shall we call a customer and as a result of that we have much better contact much better feel for the customer and what's going on we got lower repossessions better collections same thing. We now have an extension scorecard using the same kind of model and also we use text.

<unk> a far greater extent, so we're really trying to use as much technology as we possibly can and before I don't know a few years ago. The focus is much more in originations in the front end.

Now we've been able to focus on the backend in terms of collections and I think we're really seeing results.

A lot of people are saying because of the stimulus packages and all this you've got to have this great results. We are beginning to hit the market as some folks results are beginning to go the other way. So it's very nice to see that ours are not we have flat delinquency way better charge offs. So we're actually at some level bucking the trend are bucking the market, which again, we think will pay off handsomely.

On the road.

Also during the pandemic, we were able to.

You said in the last call focus on efficiencies you can see that by the amount of <unk>.

Spencers, we've cut we think we will continue to do that but we've experimented with hybrid.

Occupancy in terms of people being in the office and out of the office now and with very good results I think down the road, we can focus on occupancy cost all those things come into play. So we're doing a lot of different things that really are going to help as we continue to do things in the future as.

As Jeff mentioned, the securitization market is still very strong.

I'm getting deals done in cost of funds remained low so that's again a plus.

Terms of the industry.

I'd say, it's fairly competitive in the lack of inventory is probably the strongest indicator that people are a lot of people really need to grow we don't have to grow it just happened to be growing very well. So I think again when that sort of supply line loosens up things will get better the other interesting thing in the industry as the acquisitions a few of our fellow competitors.

It been purchased recently.

<unk> been getting very good values on those purchases so.

That will rub off on us at some point.

Becoming more successful by the day.

As I mentioned, we brought that stock the 2 million shares we've actually bought another half million shares this quarter. So last thing dimension, our focus on shareholder value.

We've tried to do what we can the disappointing thing is today after putting out these great numbers the stock price is down.

It's very very frustrating for us we're going to continue to do everything we can to improve shareholder value. We're certainly an active purchaser of shares in the market. We will continue to do that.

So we see something change.

With that we'll open it up for questions.

We do ask that while you're posing the question that you pick up your handset to provide optimal sound quality.

Thank you. Your first question comes from Kyle Joseph with Jefferies.

Okay.

Hey, good morning, guys congratulations on a good quarter.

I know you touched on it but just give us a sense for.

Outlook for used car prices, obviously add another uptick.

Recently.

Do you think supply chain kind of stars and we get it normalized new car supply and what Youre thinking about for 2022 on that front.

Again, we're sort of crystal borrowing a little bit, but my guess is a supply chain improve dramatically going into the first quarter.

Most of the manufacturers realize that 2021 is kind of shot.

Put it past them to slow play of the rest of the year. So they have a real good year next year.

So that's my sort of bet on the market, but one would think one way or another.

Supply chain will use up.

In the next three to six months.

So that again would give them plenty of time to have a pretty good year next year compared to this year.

It's very hard to tell but at least in looking at what we see that's what we would think.

Car prices are still strong we had another.

Jeff mentioned the auction prices are still strong.

So the total interest you'd almost think the market for financing the cars will be dropping off because the lack of cars remember that most of our cars are used as much as they are more expensive. They are still out there finance and so I think that part of the market stays strong and then as new cars come in it slows down some are sort of normalizes. So I would guess new guys.

Pick up in the first quarter next year and then at that point, you'll see the used car market is starting to normalize back to where it should be.

Got it and then just one follow up there, Jeff just remind us for that.

The remaining life on that the legacy portfolio is at this point.

So that portfolio has seasoned 50.

<unk> 58 months already okay, and so so it's got probably a remaining expected life of now.

Not much more than 12 months.

And there's always a tail some of these loans you know kind of tail out for more extended period, but it's it's clearly rounding third headache heading for home.

Okay very helpful. I appreciate the color thanks, guys.

Thank you.

Thank you and I will turn the floor back over to Mr. Charles Bradley for any additional or closing remarks.

Thank you as I said earlier, we are very pleased with the quarter. We just want to keep doing what we're doing and hopefully get people to notice that we all have to stock market day notice.

Start having things happened so like I said.

The acquisition acquisition market seems to be heating up some I think thats a plus.

We think thats.

Benefit for the industry benefit for us all.

All we can do is keep what we're doing which is produce really good results in becoming more efficient every day.

Thank you all for joining us and we will talk to you probably in February. Thank you.

Thank you and this does conclude today's teleconference. A replay will be available beginning two hours from now until November four 2021 by dialing eight eight.

59056, okay.

445.

<unk> seven <unk>.

Thanks.

With conference identification number nine to six to seven eight a broadcast of the conference call will also be available lives.

90 days after the call via the company's web site at <unk>.

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