Q3 2022 Consumer Portfolio Services Inc Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
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Good day, everyone and welcome to the consumer portfolio services 2022 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 call that are not statements of historical facts may be deemed forward looking statements statements regarding current or historical valuation of 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 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, Mr. Mike.
<unk>, Chief operating officer, and Mr. Danny Bar Ahwahnee, 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 Conference call.
Nice to be able to say we had another extremely strong quarter, it's what we expected and certainly what we want to continue to do.
I'll give a few highlights and I'll turn it over to the guidance, but one.
One of the things we did a lot of things we could timing is everything and we renewed we had mentioned in our last conference call and we renewed one of our lines our Aries facility in June .
We knew that line and increased it from $100 million and $200 million.
Did the same thing in July with Citibank, we renewed and increased that line from $100 million and $200 million. So now we have 400 million and warehousing and it's very nice to not be in the market right now looking for warehousing, we're trying to increase warehousing. So quite happy we accomplish that and got it done before the market started to change and other <unk>.
Interesting thing is the portfolio has been growing enough. This year. So there are core operating expenses have dropped below 6%.
It's always been a target for us we think we can do even better than that I think our target now is to get them below 5%, but.
Given the increasing size of the portfolio and the size of the company.
A strong focus on those core operating expenses very important and it's nice to be able to say, we're doing quite well and achieving those goals.
Also another highlight would be we did the July securitization or excuse Asian during July .
As everyone should know the cost of funds in the market has been going up so we're pretty happy with that deal at about 6% all in costs.
Was up a bit from the deal before but nonetheless, most important thing for US is we are a seller bonds in the marketplace and there was strong demand and we got that deal done easily.
And thinking.
Thinking into the marketplace today as everyone knows everyone's worried about the economy everybody. We're in some sort of a potential recession, we had the fed raising rates hand over fist.
So we're trying to combat that as well and we think we're doing the appropriate thing by raising rates. We've raised our rates over 200 basis points in the third quarter. We've also cut the fees, we pay the dealers across all deals too.
The interesting part about that and we've also tightened credit.
And part of the business isn't particularly slowing down the demand for financing for these cars remember that our number one customer as a person who has to have a car not a person who is just slightly shopping for a car.
So we would expect business to continue.
It does and the fed keeps raising rates, we're going to walk along and raised our rates just as quickly. So that we can continue to try and maintain our margins and there's always problem. Maybe the credit is good but our credit is performing quite well. Many of our competitors are still are citing that they've gone back to pre pandemic levels in terms of delinquencies and losses and we are still well ahead of us.
Levels. So we're very happy with where we sit in that circumstance as well.
As there are more things to talk about but I'm going to turn it over to Danny to go over the financials and then Mike will go over the operations. Thank you Brad going over the financial results for the third quarter our.
Revenues for the third quarter were $90 3 million.
10% over the $82 million, we posted last June and our second quarter and Thats up 32% from the $68 6 million and.
In our third quarter of last year. The main driver for the increase in revenue as the increase in our servicing portfolio.
<unk> is really now driven by the fair value portfolio, if you've been listening to these calls in the past.
Youll remember that we switched over to fair value accounting five years ago, beginning in 2018, and Thats and Thats fair value component is now 96% of our total portfolio.
That has grown we will talk about that more when we cover the balance sheet, but that has grown 8% quarter over quarter, and a 41% year over year. So.
And that is yielding 11, 4% you might recall two have you been on these calls in the past and the yield on our fair value portfolio is.
Net of losses. So the 11 four is after our expected expected loss.
Assumptions the legacy portfolio is now down to 24% of our total <unk>.
That's yielding 24% including included in these numbers for <unk>.
Third quarter is that fair value Mark.
Of $8 2 million that represents some losses covered reserves we posted.
Backing them.
Jim.
The last year or two where we are now realizing that these losses are not materializing.
So we have.
$8 2 million of these reversals in our fair value portfolio that we didn't have last.
Last year in the third quarter.
Going over expenses at $56 million expenses in the third quarter compared to 47 eight in the June quarter and $49 million in the third quarter last year.
That is up 17% over the sequential quarter and 14% year over year. Those results include a similar reversal for losses on our legacy portfolio that did not materialize.
In this case, it's $6 million of <unk>.
Reversals of loss provisions in the current quarter compared to $1 6 million in the third quarter of last year.
Looking at pretax earnings for the quarter of $34 3 million Thats up slightly from $34 2 million in our June quarter, and up significantly from $19 5 million.
In the third quarter of 2021.
For the nine year nine months period ending September .
Our pre tax earnings were $97 9 million compared to $41 4 million, that's up 136% year over year.
Similarly, our net income is $25 4 million.
For the current quarter compared to $25 3 million in the June quarter.
That's up 85% from the $13 7 million we posted.
Last year for the nine months period, we are seeing a 151% increase in net income to $71 8 million compared to $28 6 million a year ago.
Similarly, following these trends our earnings per share.
Is up to 95 for.
For the current quarter was <unk> 52 in the third quarter of last year, that's up 83% for the year to date period $2 61.
Compared to $1 12 last year, which is a 133% increase.
Looking at the balance sheet, a couple of things of note our fair value portfolio like I mentioned, driven by our originations rate for this year, which is at.
Record breaking territories, we're originating.
A large number of loans will cover that later, but the fair value portfolio is up 8% over the June quarter and up 41% year.
Year over year.
Brad discussed the increase in our warehouse capacity to $200 million, which we announced.
Earlier this year.
Our debt levels are up if you look at the balance sheet, but thats commensurate with the rise in our loan portfolio originations this year compared to last year.
Looking at other other metrics, our net interest margin of $66 8 million compared to 63 three in June compared to 52, a year ago, that's a 6% increase over the sequential quarter and a 33% increase year over year.
On a year to date basis, our net interest margin is $188 million compared to $142 million last year, that's a 34% increase.
Core operating expenses of $38 5 million in the current quarter compared to $37 million in June and.
$32 million last year, that's a 4% increase quarter over quarter, and a 19% increase year over year.
Sure.
On a year to date basis, our core operating expenses are $113 six compared to 104, that's a 13% increase.
Taking those core operating expenses as a percentage of the average managed portfolio.
For the quarter, it's five 8% in June was 6%, so it's come down a little bit.
It was also 6% in the third quarter of last year.
On an annualized basis at six 1% this year compared to six 3% for the first nine months of last year.
And finally, our return on managed assets.
For the quarter five 2%.
That's down from five 5% in June and it's up significantly from three 6% in September of last year for the nine months period return on managed assets.
Or five 3% this year compared to two 6% last year I'll turn the call over to Mike.
Thanks, Danny and personnel and facilities. We're currently at 794.
Employees.
Fluctuated between $750 800 employees since we reduced our forests during COVID-19 and 2019 by 22%.
407 of those employees are in servicing 247 are in sales and origination. The rest are in the support departments I think it's important to note and very interesting to note that.
We originated $1 1 billion in originations in 2021 with roughly 750 employees and we've flown by that volume in 2022, so far with the same amount of employees.
We think that's a testament to our investment in new technologies, leading to more personnel efficiencies and I think it's safe to say right now and going forward. We're at we're at scale.
In terms of our office leases, we've been quite fortunate to have four of our five leases come up for renewal post COVID-19. So we've been able to leverage.
The sort of the commercial real estate crash to renew or relocate four of our offices.
And we believe that will save us between <unk>.
$6 million to $7 million a year to the bottom line.
Sales are record setting year continues, albeit with a slight slowdown in Q3.
In Q3, we originated $468 million, which compares to $548 million in Q2.
2021, Thats, a 14% drop but.
But I think as Brad noted earlier, the more interesting thing and the good news is that demand is still strong for our product we had.
653000 applications in Q3.
That compares to 615 applications in Q2, so it's a sequential increase of six 2%. So the demand is still strong.
So despite that Deb I think when you look at the year over year analysis, you'll see that we're in the middle of a record setting year in Q2 2022, we did $468 million like I said that.
That compares to $326 million year over year, that's a 43% increase year over year.
And then applications you can see that we did 653000 again in Q3 2022, which compares to 436000 year over year, which is a 50% increase.
So as Brad also mentioned the slight drop in our sequential originations Q over Q was due to the aggressive nature of our raising rates and the fees.
When you look at our.
Our originations for the entire year of 2022, you can really see the growth we've had.
So so far in 2022, we've originated $1 4 billion.
And that compares to $8, one or 818000.
Over the same time period in 2021, which is a 71% growth rate year over year, which is a record for us.
One of the one of the some of the initiatives that we're concentrating on going forward is to maintain our Rep force of 108, which we think is right around industry standard.
Still working to increase our dealer base upwards, which currently sits at 7717, which we've grown 15%. So far this year with our ultimate goal to get to 10000.
We're also looking to increase the number of funding dealers, we have upwards, which currently sits at 2740, which is a 30% increase year over year.
We're also concentrating on large dealer groups, which has been a point of emphasis for us this year as another lever for growth.
Switching and moving over to servicing.
For delinquencies.
Greater than 30 days, including our repo inventory.
Q3, 2022 ended up at 10 eight 5%.
Which compares to $9 four 4% in Q3 2021.
For annualized charge offs.
We ended up at $4, 93% of the average portfolio, which compares to $2 eight 2% for the third quarter of 2021.
It is important to note.
As Brad mentioned.
The pawn dense the experts have all said that our competitors at pre pandemic levels.
And.
We're just not we're just not there pre pandemic, we are running at 12, 5% DQ and as I previously said, we're running at 10, 5% Q3, which shows that we are.
Significantly, beating pre pandemic levels.
In terms of our extensions, we are well positioned in that and that they are flat year over year and actually a tick below pre pandemic levels. Those extensions are driven by artificial intelligence.
In terms of our repos, they also ticked up a bit.
Sequentially, but we're still running 30% below pre pandemic levels on our repos.
In terms of the recovery market.
<unk> seen quite a drop but were still above historical levels and.
In general the Manheim.
Vehicle value index dropped in Q3.
About 10, 6%.
For us.
Our net recovery in January of 2021 was 41%.
It climbed to the height of.
64% November last year, and it seems to be normalizing back into the mid <unk>.
Currently at the end of Q3.
Couple of miscellaneous things, we continue to build on our artificial intelligence and machine learning platforms in the quarter by entering into a few partnerships that will allow us to further use of robotic process automation that we've concentrated on over the last three to four years spin.
Specifically concentrating in originations and servicing.
That will allow us to do certain things like use bots to extract information from the dealer packages instead of utilizing the processors to do that we think that will cut down the.
The processing time and allow us to fund the packages quicker to dealers, which is what they're looking for a more frictionless experience with us.
And we're also expecting to use box to listen into collection calls and populate the collection notes, which we think will significantly cut down on the ramp time that the collectors use which will allow us to make.
Make more calls per hour and collect more dollars overall on a monthly basis.
Those are the type of things that we think are further bolstering our platforms.
And add into our credit Decisioning algorithms are collection behavior scorecards and.
Improve our overall performance in <unk>.
Contribute to our efficiencies so with that I'll kick it back to Brad.
Thanks, Mike.
Obviously, we've done a lot of things well.
We've taken a lot of time, we've been doing this a long time. So we may expect we should be doing things well and we are looking.
Looking at the industry certainly with the I guess the things going on in the industry are the everyone is doing what they can to madly keep up with the federal government raising the interest rates.
We are of course doing the same.
Done a pretty good job of moving along and I think given how our credit performance has done very well that we're in a pretty good position all of our pools are doing great, but nonetheless.
Don't know what the next six months or nine months a year is going to involve so it's much safer to scale back tightened credit and raise rates and we're doing all those things very efficiently and pretty quickly.
And what's interesting is we're continuing to get a fair amount of volume so if.
If you get all those kind of rates that is real good.
With the CPI coming on today, and being very positive and the market is kind of picking up on that.
One might hope that sometime soon we get to the peak of this and maybe rates start to level off and so on and so forth, but nonetheless, we can't predict anything about that we can just do what we can to stay in front of that curve.
Couple of things to think about though.
A lot of folks in our industry used forward flow agreements, where they sold the loans to other folks who were just looking for more yields so back when a basic yield was a couple of points couple percent. These forward flow folks would take pay 5%. Those games are all over now so some companies who relied on forward flow commitments to.
Substantial to affirm substantial amounts of their capital are probably looking around now trying to raise capital. We never we haven't done a forward flow program in decades, and we're not relying on any of that so thats, probably a pretty good plus for us compared to some others.
Also in terms of the Investor market and we've also heard that many of the bond investors are looking towards concentrating what theyre buying in season long term players like ourselves with very good track records, rather than supporting new issuers or.
New people in the market and again I think that supports where we are.
And of course, so all these things mean initiatives should tighten up theres lots of good players.
Lots of good players, including US are all doing the right things and center some weaker folks out. There then they may get weeded out they made out of a problem raising capital our cost of capital and things like that so again, we haven't really seen any of that just yet, but we will certainly as always keep our eyes open for any opportunities that might evolve that way, but it's nice to be where we sit.
Rather than trying to raise money or needing money in this particular market.
In terms of the economy as I said, the CPI today with very good one.
I hope that that continues and maybe the fed does in fact lay off a little bit.
Either way I think we will continue to raise rates to keep up with the fed rates raise raising.
Eventually when it stops we should be in a good spot so overall.
Actual results, you'll see that comms anybody down as well, but again nothing we control about that what we can do and we have been doing as we're running our company and it is exactly where we want we're looking to find ways to cut costs. We're looking for ways to become more efficient we're looking for ways to grow and was slightly more difficult environment has in the past, but overall, we've now put to you.
Three super strong quarters for 2022, we're looking forward to do it again in the fourth quarter and closed out the year strong as we can and then sort of be all set up for next year.
So that's about all we have today. Thank you all for attending our call and we look forward to speaking to you probably in February when we do the year end call.
Thank you.
Thank you. This concludes today's conference a 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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Good day, everyone and welcome to the consumer portfolio services 2022 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 call that are not statements of historical facts may be deemed forward looking statements statements regarding current or historical valuation of receivables because dependent on.
Estimates of future events.
So our forward looking statements.
All such forward looking statements are subject to risks that could cause actual results to differ materially from those projected.
Refer you to the company's annual report filed March 15th for further clarification.
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, Mr. Mike Levin, Chief operating officer.
And Mr. Danny <unk>, Chief financial officer of consumer portfolio services.
I'll now turn the call over to Mr. Bradley.
Thank you and welcome to our third quarter Conference call.
Nice to be able to say we had another extremely strong quarter, it's what we expected and certainly what we want to continue to do.
Ill give you a few highlights and I will turn it over to the guidance but.
One of the things we did a lot of things we could timing is everything and we renewed we had mentioned in our last conference call that we renewed one of our lines are Ares facility in June .
We renew that line and increased it from $100 million and $200 million.
We did the same thing in <unk>.
July with Citibank, we renewed and increased that line from $100 million and $200 million. So now we have 400 million and warehousing and it's very nice to not be in the market right now looking for warehousing, we're trying to increase warehousing. So quite happy we accomplish that and got it done before the market started to change.
The interesting thing is the portfolio has been growing enough. This year, so that our core operating expenses have dropped below 6%.
That's always been a target for us we think we can do even better than that I think our target now is to get them below 5%, but given the increasing size of the portfolio and the size of the company.
A strong focus on those core operating expense is very important and it's nice to be able to say, we're doing quite well and achieving those goals.
Also another highlight would be we did the July securitization or a securitization during July .
Everyone should know the cost of funds in the market had been going up so we're pretty happy with that deal at about 6% all in cost it was up a bit from the deal before but nonetheless, most important thing for US is we are a seller bonds in the marketplace and there was strong demand and we got that deal done easily.
And thinking.
Thinking of in the marketplace today as everyone knows everyone's worried about the economy everybody. We're in some sort of a potential recession, we had the fed raising rates hand over fist.
So we're trying to combat that as well and we think we're doing the appropriate thing by raising rates, we've raised our rates over 200 basis points in the third quarter.
Also cut the fees, we pay the dealers across all deals too.
The interesting part about that and we've also tightened credit.
Using part of the business isn't particularly slowing down so the demand for financing for these cars remember that our number one customer as a person who has to have a car not a person who's just lightly shopping for a car.
So we would expect business to continue.
If it does and the fed keeps raising rates, we're going to walk along and raise our rates just as quickly. So that we can continue to try and maintain our margins and there is always a problem maybe the credit is good but our credit is performing quite well. Many of our competitors are still are citing that they've gone back to pre pandemic levels in terms of delinquencies and losses, and we're still well ahead of those.
Levels. So we're very happy with where we sit in that circumstance as well.
Sure.
And as there are more things to talk about but I'm going to turn it over to Danny to go over the financials and then Mike will go over the operations.
Brad going over the financial results for the third quarter.
Revenues for the third quarter were $90 3 million.
Up 10% over the $82 million, we posted last June and our second quarter and Thats up 32% from the $68 6 million.
In our third quarter of last year. The main driver for the increase in revenue as the increase in our servicing portfolio, which is really now driven by the fair value portfolio. If you've been listening to these calls in the past.
You'll remember that we switched over to fair value accounting five years ago, beginning in 2018, and Thats and Thats fair value component is now 96% of our total portfolio.
That has grown and we'll talk about that more when we cover the balance sheet, but that has grown 8% quarter over quarter, and a 41% year over year. So.
And that is yielding 11, 4% you might recall two have you been on these calls in the past and the yield on our fair value portfolio is.
As net of losses, so the $11 four is after our expected expected loss.
Assumptions.
The legacy portfolio is now down to 24% of our total.
That's yielding 24% including included in these numbers for.
Third quarter.
Fair value Mark.
Of $8 2 million that represents some losses covered reserves we posted.
Backing them.
In them.
The last year or two where we are now realizing that these losses are not materializing. So.
So we have.
$8 2 million of these reversals in our fair value portfolio that we didn't have last last year in the third quarter.
Going over expenses, it's $56 million expenses in the third quarter compared to 47 eight in the June quarter and $49 million in the third quarter last year.
That is up 17% over the sequential quarter and 14% year over year. Those results include a similar reversal for losses on our legacy portfolio that did not materialize.
In this case, it's $6 million of.
Reversals of loss provisions in the current quarter compared to $1 6 million in the third quarter of last year.
Looking at pre tax earnings for the quarter of $34 3 million Thats up slightly from $34 2 million in our June quarter, and up significantly from $19 5 million.
The third quarter of 2021.
For the nine year nine months period ending September .
Our pre tax earnings were $97 9 million compared to $41 4 million, that's up 136% year over year.
Similarly, our net income.
$25 4 million.
For the current quarter compared to $25 3 million in the June quarter.
That's up 85% from the $13 7 million reposted.
Last year for the nine months period, we are seeing a 151% increase in net income to $71 8 million compared to $28 6 million a year ago.
Similarly, following these trends our earnings per share.
Is that to <unk> 95 for.
For the current quarter was <unk> 52 in the third quarter of last year, that's up 83% for the year to date period $2 61.
Compared to $1 12 last year, which is a 133% increase.
Looking at the balance sheet, a couple of things of note our fair value portfolio like I mentioned, driven by our originations rate for this year, which is at record breaking territories, we are originating.
A large number of loans will cover that later, but the fair value portfolio is up 8% over the June quarter and up 41%.
Year over year, Brad discussed the increase in our warehouse capacity to $200 million, which we announced.
Earlier this year.
So our debt levels are up if you look at the balance sheet, but thats commensurate with the rise in our loan portfolio originations this year compared to last year.
Looking at other other metrics, our net interest margin of $66 8 million compared to 63 three in June compared to 52, a year ago, that's a 6% increase over the sequential quarter and a 33% increase year over year.
On a year to date basis.
Net interest margin is $188 million compared to $142 million last year, that's a 34% increase our core operating expenses of $38 5 million in the current quarter compared to $37 million in June and.
$32 million last year, that's a 4% increase quarter over quarter, and a 19% increase year over year.
Sure.
On a year to date basis, our core operating expenses are $113 six compared to 104, that's a 13% increase.
Taking those core operating expenses as a percentage of the average managed portfolio.
For the quarter, it's five 8% in June it was 6% so it's come down a little bit.
It was also 6% in the third quarter of last year.
On an annualized basis at six 1% this year compared to six 3% for the first nine months of last year.
And finally, our return on managed assets.
For the quarter of five 2%.
That's down from five 5% in June and it's up significantly from three 6% in September of last year for the nine months period return on managed assets.
Or five 3% this year compared to two 6% last year.
I'll turn the call over to Mike.
Thanks, Danny and personnel and facilities. We're currently at 794 employees, we've fluctuated between $750 800 employees since we reduced our forests during COVID-19 and 2019 by 22%.
407 of those employees are in servicing 247 are in sales and origination. The rest are in the support departments I think it's important to note and very interesting to note that we originated $1 1 billion in originations in 2021 with roughly 700.
50 employees and we've blown by that volume in 2022, so far with the same amount of employees.
That's a testament to our investment in new technologies, leading to more personnel efficiencies and I think it's safe to say right now and going forward. We're at we're at scale.
In terms of our office leases, we've been quite fortunate to have four of our five leases come up for renewal post COVID-19. So we've been able to leverage.
Sort of the commercial real estate crash to renew or relocate four of our offices.
And we believe that will save us between $6 million to $7 million year to the bottom line.
<unk> sales are record setting year continues, albeit with a slight slowdown in Q3.
In Q3, we originated $468 million, which compares to $548 million in Q2.
2021, that's a 14% drop but.
But I think as Brad noted earlier, the more interesting thing and the good news is that demand is still strong for our product we had.
653000 applications in Q3.
That compares to 600 in 15 applications in Q2, such a sequential increase of six 2%. So the demand is still strong.
So despite that Deb I think when you look at the year over year analysis, you'll see that we're in the middle of a record setting year in Q2 2022, we did $468 million like I said that.
That compares to $326 million year over year, that's a 43% increase year over year.
And then applications you can see that we did 653000 again in Q3, 2022, which compares to $436000 year over year, which is up 50% increase.
So as Brad also mentioned the slight drop in our sequential originations Q over Q was do you have the aggressive nature of our raising rates and the fees.
When you look at our.
Our originations for the entire year of 2022, you can really see the growth we've had.
So so far in 2022, we've originated $1 4 billion.
And that compares to $8, one or 818000.
Over the same time period in 2021, which is a 71% growth rate year over year, which is a record for us.
One of the one of the some of the initiatives that we're concentrating on going forward is to maintain our Rep force of 108, which we think is right around industry standard.
Still working to increase our dealer base upwards, which currently sits at 7717, which we've grown 15%. So far this year with our ultimate goal to get to 10000.
We're also looking to increase the number of funding dealers. We have upwards. It's currently sits at 2740, which is a 30% increase year over year.
We're also concentrating on large dealer groups, which has been a point of emphasis for us this year as another lever for growth.
Switching and moving over to servicing.
For delinquencies.
Greater than 30 days, including our repo inventory.
Q3, 2022 ended up at 10 eight 5%.
Which compares to $9 four 4% in Q3 2021.
For annualized charge offs.
We ended up at $4, 93% of the average portfolio, which compares to $2 eight 2% for the third quarter of 2021.
It's important to note.
As Brad mentioned.
The pawn dense the experts have all said that our competitors at pre pandemic levels.
And.
We're just not we're just not there pre pandemic, we are running at 12, 5% DQ and as I previously said, we're running at 10, 5% Q3, which shows that were.
Significantly, beating pre pandemic levels.
In terms of our extensions, we are well positioned in that they are flat year over year and actually a tick below pre pandemic levels. Those extensions are driven by artificial intelligence.
In terms of our repos, they also ticked up a bit.
Sequentially, but we're still running 30% below pre pandemic levels on our repos.
In terms of the recovery market.
<unk> seen quite a drop but were still above historical levels and.
In general the Manheim.
Vehicle value index dropped in Q3.
About 10, 6%.
For us.
Our net recovery in January of 2021 was 41%.
Climbed to the height of.
64% in November last year, and it seems to be normalizing back into the mid Forty's.
Currently at the end of Q3.
A couple of miscellaneous things.
We continue to build on our artificial intelligence and machine learning platforms in the quarter by entering into a few partnerships that will allow us to further you used the robotic process automation that we've concentrated on over the last three years to four years.
Specifically concentrating in originations and servicing.
That will allow us to do certain things like use bots to extract information from the dealer packages instead of utilizing the processors to do that we think that will.
Cut down the.
The processing time and allow us to fund the packages quicker to dealers, which is what they're looking for a more frictionless experience with us.
And we're also expecting to use box to listen into collection calls and populate the collection notes, which we think will significantly cut down on the ramp time that the collectors use which will allow us to.
Make more calls per hour and collect more dollars overall on a monthly basis.
Those are the type of things that we think are further bolstering our platforms.
And add into our credit Decisioning algorithms are collection behavior scorecards and.
Improve our overall performance in <unk>.
Contribute to our efficiencies so with that I'll kick it back to Brad.
Thanks, Mike.
Obviously, we've done a lot of things well.
We've taken a lot of time, we've been doing this a long time, so when I expect we should be doing things well and we are looking.
Looking at the industry certainly with the I guess the things going on in the industry are the everyone is doing what they can to madly keep up with the federal government raising the interest rates.
We are of course doing the same.
Done a pretty good job of moving along I think given how our credit performance has done very well that we're in a pretty good position all of our pools are doing great. But nonetheless, you just don't know what the next six months or nine months a year is going to involve so it's much safer to scale back tightened credit and raise rates and we are doing.
All those things very efficiently and pretty quickly.
And what's interesting is we're continuing to get a fair amount of volume so if.
If you get all those kind of rates that is real good.
With the CPI coming out today, and being very positive and the market is kind of picking up on that.
One might hope that sometime soon we get to the peak of this and maybe rates start to level off and so on and so forth, but nonetheless, we can't predict anything about that.
Can just do what we can to stay in front of that curve.
Couple of things to think about though.
A lot of folks in our industry used forward flow agreements, where they sold their loans to other folks who were just looking for more yields tobacco in a basic yield was a couple of points. A couple of percent. These forward flow folks would take pay 5%. Those games are all over now so some companies who relied on forward flow commitments to.
Our substantial two impairment substantial amounts of their capital are probably looking around now trying to raise capital. We never we haven't done a forward flow program in decades, and we're not relying on any of that so thats, probably a pretty good plus for us compared to some others.
Also in terms of the Investor market and we've also heard that many of the bond investors are looking towards concentrating what they are buying in season long term players like ourselves with very good track records, rather than supporting new issuers or.
New people in the market and again I think that supports where we are.
Oh of course, so all these things mean industry should tighten up theres lots of good players.
Lots of good players, including US are all doing the right things and sensors some weaker folks out. There then they may get weeded out they may have problems with raising capital our cost of capital and things like that so again, we haven't really seen any of that just yet, but we will certainly as always keep our eyes open for any opportunities that might evolve that way, but it's nice to be where we sit.
Rather than trying to raise money or needing money in this particular market.
In terms of the economy as I said, the CPI today with very good one might hope that.
That continues and maybe the fed does in fact lay off a little bit.
Either way I think we will continue to raise rates to keep up with the fed rates rate raising and eventually when it stops we should be in a good spot. So overall the election results, you'll see that comment anybody down as well, but again nothing we can talk about that what we can do and we have been doing as we're running our company is exactly the way we want.
Find ways to cut costs, we're looking for ways to become more efficient we're looking for ways to grow and was slightly more difficult environment has in the past, but overall, we've now put together three super strong quarters for 2022, we're looking forward to do it again in the fourth quarter and closed out the year strong as we can and then sort of be all set up for next year.
So that's about all we have today. Thank you all for attending our call and we look forward to speaking to you probably in February when we do the year end call.
Thank you.
Thank you. This concludes today's conference.
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