Q2 2022 Consumer Portfolio Services Inc Earnings Call

July 26, 2022

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Good day, everyone and welcome to the consumer portfolio services 2022 second 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 state.

<unk> made during this call that are not statements of historical facts may be deemed forward looking statements statements regarding current or historical evaluation of receivables because dependent on estimates of future events are also 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 15th 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 is Mr. Charles Bradley Chief Executive Officer and Mr.

Jeff Fritz Chief financial.

<unk> officer of consumer portfolio services, I will now turn the call over to Mr. Bradley.

Thank you and welcome to our second quarter earnings call.

As you can go up in the press release the numbers, we are certainly very happy with the results there.

Literally the best results for our quarter, we've had in the company.

Broke box of records.

The most resonating as ever in a month over $200 million in June . We also had the most realizations in the quarter with 548 in the second quarter portfolio.

Portfolio went over $2 5 billion so.

There are all these years, we kept saying well we need to grow we need to do this is nice to say we knew exactly what we've been planning on going through several years insensitive, but what we wanted to grow to the way we wanted to run our portfolio kind of loans, we wanted to by expansion of our dealer base. All these different things and so all of those things are going exactly the way we wanted them to.

And probably even exceeding our expectations.

Results in terms of the earnings are obviously very strong.

Couple of other sort of good things we renewed.

Both of our warehouse lines and Upsized two.

$200 million apiece from 100 million each so now we're in a position where we can continue to buy as much papers, we want always being mindful that we want to buy the paper, we want not just by a lot of paper.

There's lots of other little highlights we can talk about.

Through all of those after Jeff runs through the financials.

Thank you Brad welcome everybody.

I'll begin with the revenues for the quarter, which were $82 million with a 10% increase over $74 4 million in our first quarter this year and 23% increase over $66 8 million in the second quarter of 2021.

The six month revenues for this year $156 4 million, a 20% increase over the first six months of 2021 and.

And so we have the typical drivers of revenue the legacy portfolio continues to shrink its currently at $152 million.

It presents only 6% of our total portfolio at yielding in the high teens. So it continues to perform strongly even as it winds down.

The fair value portfolio is $2 4 billion, 94% of the total yielding about 11, 4%.

And of course that yield being on a fair value basis is net of the related credit losses.

Revenues include for this quarter of markup by the fair value portfolio of $4 $7 million, which represents essentially the reversal of some of the Covid markdowns that we took back in 'twenty and I think primarily during 2020, where we took these markdowns to their fair value portfolio.

But those covered losses simply haven't materialized.

Also included in the revenue when you haven't talked about this much in the past but.

About $1 $2 million for the quarter represents revenue on our third party portfolio, which has grown to about $100 million and this is a partner for whom we.

Originates some receivables that really are generated from our turn downs.

And that portfolio is not on our balance sheet, we have no credit risk, but we're earning.

Nice as I said this quarter $1 $2 million in servicing and origination fees on that portfolio that program has really been very successful.

Moving to expenses $47 8 million for the quarter, that's a 6% increase slight increase over our first quarter of this year of $45 million, but a 10% decrease compared to $53 million in the second quarter of 2021.

Six month expenses $92 8 million is a decrease of 14% compared to $108 1 million.

<unk> expenses for the first six months of 2021.

Expenses include a reversal of provision for credit losses on the seasonal.

Or the legacy portfolio. So this quarter, we reversed the allowance of reduced the allowance.

The legacy portfolio by about $8 million again, just that portfolio continues to season out and it simply hasn't had as much credit losses as we previously predicted.

The loss provision for the quarter really just mentioned that negative 8 million $8 $8 million.

That follows a $9 $4 million reduction in the allowance a reversal of credit losses that we posted in the first quarter. This year. So.

For the first six months, we have reduced the allowance and the old portfolio by $17 $4 million, which is gone right into the P&L.

Pretax earnings for the quarter of $34 2 million, 17% increase over the first quarter of this year of $29 3 million and 146% increase over the $13 9 million, we posted in the second quarter last year.

For the first six months this year pre tax earnings of $63 $5 million, which is 191% increase over the $21 8 million, we posted in the first six months of last year.

Net income for the quarter $25 $3 million, 20% increase over our first quarter. This year of $21 1 million and 161% increase over the $9 7 million and net income that we had in the second quarter of last year for the first six months net income of $46 4 million.

211% increase over the $14 9 million, we posted in the first six months of 2021.

Diluted earnings per share 91 this quarter.

Compared to 75, and our first quarter of this year, that's a 21% sequential quarter increase and a 133% increase compared to the 39, we posted for the second quarter of 2021.

Year to date diluted earnings per share of $1 66 is 181% increase over the 59.

For the first six months of 2021.

Moving on to the balance sheet, we continue to have.

Really strong credit performance in the portfolio that has contributed over the last couple of years to a strong liquidity position.

They're all performing.

Credit enhancements are fully fully funded.

Leading to a good liquidity position for us.

As I said the legacy portfolio is winding down and I mentioned, the legacy allowance even though.

We reversed a significant portion of that this year reduced this year.

Reflect.

Better credit performance the seasonal allowance of the legacy allowance is still 24% of that dwindling legacy portfolio.

And as I mentioned, we have about $100 million and portfolio that we're servicing that's not reflected on the balance sheet.

Not much change to the debt picture on the balance sheet, Brad mentioned that we've doubled the capacity of the two warehouse lines from $100 million each to 200 million. Each so we have plenty of warehouse capacity too.

<unk> advantage of the marketplace and the growth that we've experienced.

Moving onto some other performance metrics.

The net interest margin for the quarter was $63 3 million, that's a 9% increase over the first quarter this year of $58 million and a 32% increase over $47 8 million.

NIM in the second quarter of 2021 for six months. The net interest margin was $121 2 million or 35% increase over the first six months of 2021.

And so that's largely being driven by.

A lower blended cost of funds on our ABS portfolio. It was only three 1% this quarter compared to $3 seven in the second quarter of 2021.

Although we're starting to see the pendulum on cost of funds swing back a little bit and we'll talk about that in a minute.

Core operating expenses $37 million for the quarter.

That's down 3% from our first quarter of this year of $38 million in it.

It's up just slightly.

From $34 million in core operating expenses in the second quarter of last year.

Year to date core operating expenses 75 million is up 10% from $68 million in the first six months of last year. So like year over year, we've seen sort of a nominal increase in these core expenses, but it's pretty nominal especially in light of the fact that we've grown the portfolio over 20% and we've doubled that.

Lee originations volume compared to a year ago. So we're really starting to see some operating leverage.

We've been predicting for some time.

Those core operating expenses as a percent of the managed portfolio were 6% in the second quarter of this year and that's down <unk>.

Compared to six 7% in the first quarter this year, and it's down 6% compared to six 4% in the second quarter of 2021. So we're seeing exactly what I was just alluding to better operating leverage as the portfolio grows.

Return on managed assets pretax return on managed assets five 5% for the quarter, that's a 6% increase compared to our first quarter of this year and 102 hundred 12.

12% increase.

Over the two 6%.

We posted in the second quarter of last year.

So primarily yes couple of things going on here. The revenue is growing as we described from the growth of the portfolio. We have also.

Scene.

As we discussed the reversal of provisions for credit losses in the legacy portfolio certainly have contributed to this as well over the last six months.

Credit performance metrics. The delinquency ended June 30, this year at nine 7% that's up from eight 5% in the March quarter, and also up a little bit from eight 3% in the second quarter of last year as of June 30 of last year. So were seeing some what we would describe.

Observe as seasonal softening in credit performance metrics not unexpected this time of year, we're still seeing very strong performance on the credit losses.

An annualized loss rate for the quarter was $3 five 7% that's up just slightly from 3.3% in the first quarter this year and two 8% a year ago.

Annualized net losses for the first six months is two 3% to 4% and Thats actually down compared to four 4% in the first six months of last year.

Contributing significantly to this strong credit performance is continued good returns at the auctions those dose levels have come down a little bit we recovered 56, 7% of our loan balance in the second quarter. This year and that's off a little bit from 61, 4% in the first quarter of this year.

But it is very close to 57, 8% that we realized in the second quarter of last year. So that pendulum is likely to swing back a little bit from <unk>.

Record highs just a few months ago.

But we expect it to normalize rather slowly.

Looking briefly at the ABS market during the quarter in April we completed our 2020 to be securitization, where we observed somewhat higher spreads and benchmarks compared to the previous recent securitization. So we had a blended yield of about four 8%.

Those bonds are.

Our 2022 C transaction is in process right now so we're actually in the market with our bankers selling those bonds were seeing strong demand across the cap structure, but with the slightly wider spreads and benchmarks.

We expect to.

And with that I'll turn it.

Over to Brett.

Alright, Thank you Jeff.

Going through a few of these things are a little more detail in terms of marketing our focus has always been to grow the market with dealer base add the reps we need we've reached a point, where we have probably the right amount of reps in the field. We continue to occasionally lose wanted to add one with the most part that's remained flat, but we have done though is we've increased our funding.

Dealer base by 50% year over year from 2000 dealers to 3000 dealers and that is something we're going to focus on more are continuing to focus on what we really want is we want more penetration out of each of those dealers rather than just keep throwing a big wide net obviously, it's far more effective.

It's more of a relationship.

That we want so it's working very well, but really.

That's going to continue to be the focus and one of the reasons I think we've been able to grow the business significantly.

Looking at originations our scorecards are performing very very well, we're buying really good quality paper even with.

Sort of the money from the pandemic and all of that our paper is still performing very very well and we would we would say that's a lot because of the paper. We buy we still continue to be sticklers prescriptions, but that's I think is what keeps us from running into problems.

Historically other folks have had.

So again between us continuing to be credit minded and looking for proof of things as well.

As to others and keeping our strong.

Credit models, that's doing very well question same thing we spent a lot of time in the last couple of years developing.

Morning models for all areas in our collection Department and we think that's really paying dividends both in terms of not having to hire as Jeff mentioned earlier, we're getting much better leverage in terms of our people and the systems.

It's almost <unk>.

Startling to see how much technology over the years since we've been here a long time and we can do so much more business now with <unk>.

Really the same people and sort of in a relative way far fewer people.

So again as we continue to grow critical mass critical mass is really beginning to pay off as we continue to grow more than it would be even better but you can really really leveraging technology at this point and with our portfolio size.

As Jeff mentioned also also the.

The <unk> went up a little bit, it's probably mostly seasonal and its well within if not below the range. We really would expect a portfolio a format. So we're very comfortable in that area as well in terms of the options. They have moderated slightly we still think in the end of the day, it's going to be a long time before the manufacturers can produce enough cars to catch.

Up to that market.

<unk> will happen, but it's certainly not going to happen. We don't think this year and probably not next.

Gives us sort of a very strong cushion in terms of credit performance and how we sell cars.

At the auction.

So again another very strong.

In terms of looking at the industry.

It's kind of interesting these days.

Aren't a lot of new entrants there really haven't been any new entrants in well over a year if not several certainly you can almost go back to the pandemic and say, yes, I haven't had any real new entrance of any size or magnitude or at least three years, that's kind of very good for the industry. It means that people in this industry are strong.

All hang together and it will all work out we don't really want a lot of disruption in the industry.

But I think the barriers to entry these days are exceedingly strong.

And so the real example of that is the Fintech theres lots of Fintech trying to start up and they are thinking about 10 minutes, they're going to be on building massive portfolios.

As much as we back in the day, but maybe you could do things without having to have a dealership presence, but you really can't and so there's those two problems with what we'll call a fintech slight invasion of our industry. One is it still in the end of the day, it's a boots on the ground kind of operation you have to be in those dealerships getting relationship.

With these dealers and Thats something that takes obviously are avoided and when they figure it out they need is going to take a lot of time and secondarily a lot of those models that they're using were built during the pandemic, which probably was the most opportune time for subprime borrowers ever since they are all receiving money from the government so it'll be interesting to see.

I think in the end of the day people should realize we're much more of a fintech and lots of Fintech and we have the operations.

And the people to run the machines would you really need both so.

Carter's has a fintech, but if you want a compares to one that would be easy to do.

Lastly, sort of looking at it.

In terms of the securitization market as Jeff pointed out it was really strong considering sort of the economy, we seem to be in it's very important to us and also very good that is strong.

Actually we have a deal in the market is doing really really well so that continues even in sort of a downturn in the industry.

You've been the economy like we're experiencing now that market is still exceedingly strong certainly the prices swung a little bit.

Only really getting sort of in the range of what we would expect it over the years as a normal cost of funds in our industry and so that's really good as well. So we're not we're very happy with the way that's working.

And lastly, the economy, certainly economies become sort of sluggish we're kind of waiting for the supply chain.

We would sort of be looking for what we hope to be a soft landing.

Unemployment is what we care about most and certainly we're in a very odd sense, where the unemployment remaining low amount of jobs out there is still a lot more than unemployment. So we think that protects us in that area.

The problem is a lot of people kind of sitting at home waiting to get more checks, but eventually they will go back to work, but more importantly, what are people if they happen to lose their jobs. There are jobs out there and they can have so again, we look at that as one of the really important thing and particularly in this economic environment.

Our folks can ask Glen good jobs, when they need one.

Inflation, we don't like inflation any more than the Mexico person. However people are going to stop spending or cut back on things one thing, we're not going to cut back on zircon.

Car.

Out of a car to get around that have been their car to get to work. So as much as inflation is not great.

Customers in general.

We think in the end we're in.

And then one of the more protected spot and the last big in the great recession.

I said to keep their houses and not their cars. We told everybody. It was the opposite and we were right. We would stand in the same thinking today and that the last thing they're going to give up as a car.

So that's.

That's about it for the quarter.

We're very pleased with the results were very very pleased with the way. The company is running right now the way we're growing literally across all fronts. So thank you all for joining us and we look forward to talking to you again next quarter.

Thank you. This concludes today's teleconference replay will be available beginning two hours from now for 12 months via the company's website at Www Dot consumer portfolio Dot Com. Please disconnect. Your lines at this time and have a wonderful day.

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Max maybe deemed forward looking statements statements regarding current or historical valuation of receivables because dependent on estimates of future events are also 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 any.

Report filed March 15th 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.

This year 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 second quarter earnings call.

You can tell from the press release the numbers, we are certainly very happy with the results. They are literally the best results for our quarter, we've had in the company.

Robots were records with them.

Most <unk> ever in a month over $200 million in June . We also had the most realizations in the quarter with 548 in the second quarter.

Portfolio went over $2 $5 billion so while.

There are all these years, we kept saying well we need to grow we need to do this it's nice to say we knew exactly what we've been planning on doing with several years incentive while we wanted to grow to the way we wanted to run our portfolio kind of loans, we wanted to by expansion of our dealer base. All these different things and so all of those things are going exactly the way we wanted them to.

And probably even exceeding our expectations our results in terms of the earnings are obviously very strong.

Couple of other sort of good things we renewed.

Both of our warehouse lines and Upsized two.

$200 million apiece from 100 million each so now we're in a position where we can continue to buy as much paper as we want always being mindful that we want to buy the paper, we want not just by a lot of paper.

There's lots of other little highlights we can talk about.

Through all of those after Jeff runs through the financials.

Thank you Brad welcome everybody.

I'll begin with the revenues for the quarter, which were $82 million with a 10% increase over $74 4 million in our first quarter. This year and a 23% increase over $66 8 million in the second quarter of 2021.

Six month revenues for this year $156 4 million, a 20% increase over the first six months of 2021 and so we have the typical drivers of revenue. The legacy portfolio continues to shrink. Its currently at $152 million represents only 6% of our total portfolio.

Oh and yielding in the high teens. So it continues to perform strongly even as it winds down.

Fair value portfolio was $2 4 billion, 94% of the total yielding about 11, 4%.

And of course that yield being on a fair value basis is net of the related credit losses. The revenues include for this quarter of markup by the fair value portfolio of $4 $7 million, which represents.

Essentially the reversal of some of the Covid markdowns that we took back in 'twenty and I think primarily during 2020, where we took these markdowns to their fair value portfolio.

Covered losses simply haven't materialized.

Also included in the revenue when you haven't talked about this much in the past but.

About $1 $2 million for the quarter represents revenue on our third party portfolio, which has grown to about $100 million and this is a partner for whom we are.

Origination some receivables that really are generated from our turn downs in that portfolio is not on our balance sheet, we have no credit risk, but we're earning very nice as I said this quarter $1 $2 million in servicing and origination fees on that portfolio that program has really been very successful.

Six month expenses $92 8 million is a decrease of 14% compared to $108 1 million of expenses for the first six months of 2021.

Senses include a reversal of provision for credit losses on the seasonal.

Our the legacy portfolio. So this quarter, we reversed the allowance of reduced the allowance.

On the legacy portfolio by about $8 million.

Then just that portfolio continues to season out and it simply hasn't had as much credit losses as we previously predicted.

The loss provision for the quarter really just mentioned that negative 8 million $8 $8 million that follows a $9 $4 million reduction in the allowance reversal of credit losses that we posted in the first quarter. This year. So.

For the first six months, we have reduced the allowance and the old portfolio by $17 $4 million, which is gone right into the P&L.

Pretax earnings for the quarter, $34 2 million, 17% increase over the first quarter of this year of $29 3 million and 146% increase over the $13 9 million, we posted in the second quarter last year.

For the first six months this year pre tax earnings of $63 $5 million, which is a 191% increase over the $21 8 million, we posted in the first six months of last year.

211% increase over the $14 9 million, we posted in the first six months of <unk>.

2021.

Diluted earnings per share 91 cents this quarter.

Compared to 75, and our first quarter of this year, that's a 21% sequential quarter increase and a 133% increase compared to the 39, we posted for the second quarter of 2021.

Year to date diluted earnings per share of $1 66 is 181% increase over the <unk> 59.

For the first six months of 2021.

Moving on to the balance sheet, we continue to have.

Really strong credit performance in the portfolio that has contributed over the last couple of years to a strong liquidity position.

Trust are all performing.

Credit enhancements are fully in full.

<unk> funded.

Leading to a good liquidity position for us.

As I said the legacy portfolio is winding down and I mentioned, the legacy allowance even though.

Reverse the significant portion of that this year reduced it this year.

To reflect.

To better credit performance the seasonal allowance of the legacy allowance is still 24% of that dwindling legacy portfolio.

And as I mentioned, we have about $100 million and portfolio that we're servicing that's not reflected on the balance sheet.

Not much change to the debt picture on the balance sheet, Brad mentioned that we've doubled the capacity of the two warehouse lines from $100 million each to 200 billion. Each so we have plenty of warehouse capacity to take advantage of the marketplace and the growth that we've experienced.

Moving onto some other performance metrics.

The net interest margin for the quarter was $63 3 million, that's a 9% increase over the first quarter this year of $58 million and a 32% increase over $47 8 million.

NIM in the second quarter of 2021 for six months. The net interest margin was $121 2 million or 35% increase over the first six months of 2021 and two.

So that's largely being driven by.

A lower blended cost of funds on our ABS portfolio. It was only three 1% this quarter compared to $3 seven in the second quarter of 2021.

Although we are starting to see the pendulum on cost of funds swing back a little bit and we will talk about that in a minute.

Core operating expenses $37 million for the quarter.

That's down 3% from our first quarter of this year of $38 million in it.

It's up just slightly from.

From $34 million in core operating expenses in the second quarter of last year.

Year to date core operating expenses 75 million is up 10.

Sent from $68 million in the first six months of last year, so like year over year, we've seen sort of a nominal increase in these core expenses, but it's pretty nominal especially in light of the fact that we've grown the portfolio over 20% and we doubled the quarterly originations volume compared to a year ago. So we're really starting to see some.

Operating leverage.

Which we've been predicting for some time.

Those core operating expenses as a percent of the managed portfolio were 6% in the second quarter of this year and that's down.

Return on managed assets pretax return on managed assets five 5% for the quarter, that's a 6% increase compared to our first quarter of this year and 112 112.

12% increase.

Over the two 6% that.

That we posted in the second quarter of last year.

So primarily yes couple of things going on here. The revenue is growing as we described from the growth of the portfolio. We have also seen.

As we discussed the reversal of provisions for credit losses in the legacy portfolio is certainly have contributed to this as well over the last six months.

Credit performance metrics. The delinquency ended June 30, this year at nine 7% that's up from eight 5% in the March quarter, and also up a little bit from eight 3% in the second quarter of last year as of June 30 last year. So were seeing some what we would describe it.

Observe as seasonal softening in credit performance metrics not unexpected this time of year, we're still seeing very strong performance on the credit losses.

And annualized loss rates for the quarter was $3 five 7% that's up just slightly from 3.3% in the first quarter this year and two 8% a year ago.

Annualized net losses for the first six months is two 3% to 4% and Thats actually down compared to four 4% in the first six months of last year.

Contributing significantly to this strong credit performance is continued good returns at the auctions those those levels have come down a little bit we recovered 56, 7% of our loan balance in the second quarter. This year and that's off a little bit from 61, 4% in the first quarter of this year.

But it's very close to the 57, 8% that we realized in the second quarter of last year. So that pendulum is likely to swing back a little bit from.

Our record highs just a few months ago.

But we expect it to normalize rather slowly.

Our 2022 C transaction is in process right now so we're actually in the market with our bankers selling those bonds were seeing strong demand across the cap structure, but with a slightly wider spreads and benchmarks, where we expected.

And with that I'll turn it back over to.

Brett.

Alright, Thank you Jeff.

Going through a few of these things are a little more detail in terms of marketing our focus has always been to grow the market the dealer base and the reps we need we've reached a point, where we have probably the right amount of reps in the field and we continue to occasionally lose wanted to add one but the most part debt remained flat while we have done though is we've increased our funds.

<unk> dealer base by 50% year over year from 2000 dealers, a 3000 dealers and that is something we're going to focus on more are continuing to focus on what we really want is we want more penetration out of each of those dealers rather than just keep throwing a big wide net obviously, it's far more effective it's.

More of a relationship.

That we want so it's working very well, but really.

It's going to continue to be the focus and one of the reasons I think we've been able to grow the business significantly.

Looking at originations our scorecards are performing very very well, we're buying really good quality paper even with.

Sort of the money from the pandemic and all of that our paper is still performing very very well and we would we would say that's a lot because of the paper we buy we still continue to be sticklers prescriptions.

That I think is what keeps us from running into problems.

Historically other folks have had so again between us continuing to be credit minded and looking for proof of things as opposed to others and keeping our strong credit models and that's doing very well.

<unk> same thing we spent a lot of time in the last couple of years developing scoring models for all areas in our collection Department and we think that's really paying dividends both in terms of not having to hire as Jeff mentioned earlier, we're getting much better leverage in terms of our people and our systems.

It's almost.

Startling to see how much technology over the years since we've been here a long time and we can do so much more business now with <unk>.

Really the same people and sort of in a relative way far fewer people. So.

Again, as we continue to grow critical mass critical mass is really beginning to pay off as we continue to grow more than it will be even better that you can really really leveraging technology at this point and with our portfolio size.

As Jeff mentioned also on.

The <unk> went up a little bit, it's probably mostly seasonal and its well within if not below the range. We really would expect that portfolio format. So we're very comfortable in that area as well in terms of the options. They have moderated slightly we still think in the end of the day, it's going to be a long time before the manufacturers can produce enough cars to catch.

Up to that market.

<unk> will happen, but it's certainly not going to happen. We don't think this year and probably not next.

Gives us sort of a very strong cushion in terms of credit performance and how we sell cars.

At the auction.

So again, another very strong thing.

Looking at the industry.

It's kind of interesting these days.

Really arent a lot of new entrants there really haven't been any new entrants in well over a year if not several certainly you can almost go back to the pandemic and say you Havent had any real new exits of any size or magnitude of at least three years, that's kind of very good for the industry. It means that people in this industry are strong.

All hang together and it will all work out we don't really want a lot of disruption in the industry.

But I think the barriers to entry these days are exceedingly strong.

And so the real example of that is the Fintech theres lots of Fintech is trying to start up and they all think in about 10 minutes, they're going to build these massive portfolios, but again as much as we back in the day, but maybe you could do things without having to have a dealership presence, but you really can't and so there's those two problems with what we'll call a fintech.

Slight invasion of our industry. One is it still in the end of the day, it's a boots on the ground kind of operation you have to be in those dealerships getting a relationship with these dealers and thats something that takes obviously are avoided and when they figure it out they need is going to take a lot of time and secondarily a lot of those models that they are using were built during the pandemic.

Which probably was the most opportune time for subprime borrowers ever since they are all receiving money from the government. So it will be interesting to see.

At the end of the day people should realize we're much more of a fintech and lots of feedback and we have the operations.

And the people to run the machines would you really need both so.

We don't know the Cogs as a fintech, but if you wanted to compares to one that would be easy to do.

Lastly, sort of looking at.

In terms of the securitization market as Jeff pointed out it is really strong considering sort of the economy, we seem to be in it's very important to us and also very good that this strong.

Actually we have a deal in the market is doing really really well so.

Even in sort of a downturn in the industry.

And the economy like we're experiencing now that market is still exceedingly strong certainly the prices swung a little bit.

Only really getting sort of in the range of what we would expect that over the years as a normal cost of funds in our industry and so that's really good as well. So we're not we're very happy with the way that's working.

Lastly, as the economy, certainly economies become sort of sluggish we're kind of waiting for the supply chain.

The other thing we would sort of be looking for what we hope to be a soft landing unemployment is what we care about most certainly we're in a very odd sense, where the unemployment remaining low amount of jobs out there is still a lot more than unemployment. So we think that protects us in that area.

A lot of people kind of sitting at home waiting to get more checks, but eventually they will go back to work, but more importantly, when our people if they happen to lose their jobs. There are jobs out there. They can have so again, we look at that as one of the really important thing and particularly in this economic environment that our folks can go ahead and get jobs when they need one.

Inflation, we don't like inflation any more than the next person. However people are going to stop spending or cut back on things. One thing, we're not going to cut back on their car. They have to have a car to get around that have kind of a car to get to work. So as much as inflation is not great for customers in general.

And then one of the more protected spot.

Last big in the great recession, and everybody said to keep their houses and not their cars. We told everybody. It was the opposite and we were right. We would stand in the same thinking today and that the last thing they're going to give up as a car.

So.

That's about it for the quarter. We are very very pleased with the results were very very pleased with the way. The company is running right now the way we're growing literally across all fronts. So thank you all for joining us and we look forward to talking to you again next quarter.

Q2 2022 Consumer Portfolio Services Inc Earnings Call

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