Q2 2024 Consumer Portfolio Services Inc Earnings Call
Okay.
Operator: Good day, everyone, and welcome to the Consumer Portfolio Services, 2024, 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-listened statements. Any statement made during this call that are not statements of historical facts may be deemed forward-listened statements. Statements regarding current or historical value-tation of receivables, because dependent on estimates of future events, are also forward-listened statements. All such forward-listened statements are subject to risk that can cause actual results to differ materially from those projected.
Operator: Good day, everyone, and welcome to the Consumer Portfolio Services 2024 second quarter operating results conference call. This call is being recorded.
Speaker Change: Good day, everyone and welcome to the consumer portfolio services 2024 second quarter operating.
Speaker Change: Results Conference call.
Speaker Change: Today's call is being recorded.
Operator: Before we begin, management has asked me to inform you that this conference call may contain forward-looking statements. Any forward-looking statement made during this call that is not a statement of historical facts may be deemed forward-looking statements. Statements regarding current or historical valuation of receivables, because dependent on estimates of future events, are also forward-looking statements. However, all such forward-looking statements are subject to risk that could cause actual results to differ materially from those projected. I refer you to the company's annual report filed March 15, 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.
Speaker Change: We begin management has asked me to inform you that this conference call may contain forward looking statements.
Speaker Change: Any forward looking statements made during this call.
Speaker Change: Not statements of historical facts may be deemed forward looking statements statements regarding current or historical citation of receivables because dependent on estimates.
Speaker Change: Events are also forward looking statements all such.
Speaker Change: These 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.
Operator: 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-listened statements, whether as a result of new information, further events, or otherwise.
Speaker Change: For further clarification.
Speaker Change: The company assumes no obligation to update publicly any forward looking statements.
Speaker Change: Whether as a result of new installations further events or otherwise.
Operator: With us here is Mr. Charles Bradley, Chief Executive Officer; Mr. Daniel Bharwani, Chief Financial Officer; and Mr. Mike Lavin, President and Chief Operating Officer of Consumer Portfolio Services.
Charles E. Bradley: With us here is Mr. Charles Bradley, Chief Executive Officer; Mr. Daniel Bharwani, Chief Financial Officer; and Mr. Mike Lavin, President and Chief Operating Officer of Consumer Portfolio Services. I will now turn the call over to Mr. Bradley.
With us here is Mr. Charles Bradley Chief Executive Officer.
Speaker Change: Mr. Daniel Baldini, Chief Financial Officer.
Speaker Change: And Mr. Mike Lavey.
Speaker Change: Lastly, and Chief operating officer of consumer portfolio services, I will now turn the call over to Mr. Bradley.
Charles Bradley: I will now turn the call over to Mr. Bradley. Thank you, and welcome to our second quarter earnings call. Probably the best way to sum up the quarter was a good quarter, but we're still trying. We're beginning to make the transition from what we'll call watchful waiting on our portfolio to where we can start growing again. We probably need, in terms of being absolutely certain, that credit is made to turn another six to nine months. We have gotten to the point where we're confident enough in the performance of the pools that we've been least starting to grow this quarter.
Charles E. Bradley: Thank you, and welcome to our second quarter earnings call. Probably the best way to sum up the quarter, it was a good quarter, but, you know, we're still trying. We're beginning to make the transition from what we'll call "watchful waiting" on our portfolio to where we can start growing again. We probably need in terms of being absolutely certain that the credit has made the turn in another six to nine months, but we have gotten to the point where we're confident enough in the performance of the pools that we started to grow this quarter.
Speaker Change: Thank you and welcome to our second quarter earnings call.
Speaker Change: Probably the best way to some of the quarter was a good quarter, but you know we're still trying we are beginning to make their transition from what we'll call watchful waiting on our portfolio to where you can start growing again.
Speaker Change: We probably need in terms of being absolutely certain of credit has made the turn another six to nine months, but we have gotten to the point, where we're confident enough in the performance of the pool that we started to grow this quarter.
Charles Bradley: Our quarter over quarter growth is 25%; year over year is 36%, so really putting an effort to start growing again. Mostly because we finally think we're looking at most of what would be the 23C, 23D, and 24A securitizations, 24A being the newest that we're looking at. The performance there has turned a corner enough to where we're confident that the overall performance going forward will be fine. With that, we've been able to start growing again. Still, even at that point, and at least in the second quarter, we're still concerned with making sure our credit is very good.
Charles E. Bradley: Our quarter-over-quarter growth is 25%, year-over-year is 36%, so we're really making an effort to start growing again. Mostly because we finally think we're looking at most of what would be the 23C, 23D, and 24A securitizations, 24A being the newest that we're looking at.
Speaker Change: Our reported growth was 25% year over year, it's 36%, so really putting an effort to start growing again, mostly because we finally think we're looking at most of what would be the 20 <unk> 23 D. In 'twenty four as Securitizations 24, a being the newest and there we're looking at and the performance there has turned to corner enough to where our confidence.
Charles E. Bradley: And the performance there has turned a corner enough to where we're confident that the overall performance going forward will be fine. And with that, we've been able to start growing again. But still, even at that point, at least in the second quarter, we're still concerned with making sure our credit is very good, and we're working on expanding our footprint in terms of sales. And we are, of course, anxiously waiting for some word on whether interest rates will go down towards the end of the year.
Speaker Change: Is that the overall performance going forward will be fine with that we've been able to start growing again, so but still even even at that point in at least in the second quarter, we're still concerned with making sure our credit is very good and.
Charles Bradley: We're working on expanding our footprint in terms of sales, and we, of course, anxiously waiting for some word on whether interest rates will be down towards the end of the year. We'll go through some of the other highlights, but basically, we're about to turn the corner. We're really focused on growing again, and hopefully this timing will all go together towards the end of the year when interest rates come down. I'll talk more about that for the moment.
Speaker Change: We're working on expanding our footprint in terms of sales.
Speaker Change: Sure.
Speaker Change: Anxiously waiting some word on whether interest rates will be down towards the end of the year. So I think we'll go through some of the other highlights but basically we're about to turn the corner, we're really focused on growing again and hopefully this timing, we'll all go together towards the end of the year when interest rates come down I'll talk more about that at the moment I'll turn it over to Danny for the financial stuff.
Charles E. Bradley: So I think we'll go through some of the other highlights, but basically, we're about to turn the corner. We're really focused on growing again, and hopefully, this timing will all go together towards the end of the year when interest rates come down. I'll talk more about that. But for the moment, I'll turn it over to Danny for the financial stuff. Thanks, Brad.
Daniel Bharwani: I'll turn it over to Danny for the financial stuff. Thanks, Brad. Going over the financial results for the quarter, revenues were 95.9 million, which is a 5% increase over the 91.7 last quarter. And a 13% increase over the 84.9 million in the June quarter last year. For the six months, 187.6 million is a 12% increase over the 168 million last year. Included in the revenue numbers are a mark to a finance receivables on our fair value portfolio. It's a mark that shows the 5.5 million mark shows the outperformance of that portfolio during the quarter. That compares to we didn't have a mark in the same quarter last year.
Denesh Bharwani: Thanks, Brad. I'm going over the financial results for the quarter. Revenues were $95.9 million, which is a 5% increase over the $91.7 million last quarter and a 13% increase over the $84.9 million in the June quarter last year. For the six months, $187.6 million is a 12% increase over the $168 million last year. Also, included in the revenue numbers are a mark to finance receivables on our fair value portfolio. I'd say. The chart that shows the 5.5 million mark shows the outperformance of that portfolio during the quarter that compares to we didn't have a mark in the same quarter last year and for the six months, that mark was 10.5 million in the six months of 2024.
Danny: Thanks, Brad going over the financial results for the quarter revenues were $95 9 million, which is a 5% increase over the $91 seven last quarter and.
Denesh Bharwani: Also included in the revenue numbers are the increase in interest income driven by the growth, as Brad said, in new loan originations. We originated $431.9 million in the second quarter, which is a 25 percent increase over our first quarter and a 36 percent increase over $318.4 million last year. So those two facts are driving the increase in revenues.
Danny: And a 13% increase over the $84 9 million in the June quarter last year for the six months $187 6 million is a 12% increase over the $168 million last year.
Speaker Change: Included in the revenue numbers are a mark to re finance receivables on our fair value portfolio I'd say.
Speaker Change: Mark that shows the.
$5 5 billion Mark shows the outperformance in that portfolio during the quarter.
That compares to a we didn't have a mark in the same quarter last year and for the six months that Mark was $10 5 million.
Daniel Bharwani: And for the six months that Mark was 10.5 million in the six months for 2024. Also included in the revenue numbers are the increase in interest income driven by the growth, as Brad said, the growth in new loan originations. We originated 431.9 million in the second quarter, which is a 25% increase over our first quarter and a 36% increase over the 318.4 million last year. So those two facts are driving the increase in revenues. Moving over to expenses, 89.2 million for the quarter is up 5% over the 85.2 million last quarter, compared to 66.3 million in the second quarter last year.
Speaker Change: In the six months for 2024 also included in the revenue numbers are the increase in interest income driven by the growth as Brad said the growth in new loan originations, we originated $431 9 million in the second quarter, which is at <unk>.
Speaker Change: 5% increase over our first quarter and a 36% increase over the $318 4 million last year. So that those two factors are driving the increase in revenues.
Denesh Bharwani: Moving over to expenses, $89.2 million for the quarter is up 5% over $85.2 million for the previous quarter compared to $66.3 million in the second quarter last year. For the six months, expenses were $174.4 million, which is a 33% increase over the $131 million for the six months last year. A couple of items to note for expenses: we had a reversal in the provision for losses on our legacy portfolio. You might recall our legacy portfolio is the loans we originated prior to 2018, which is mostly gone by now. It's mostly amortized. There are only about 13 million of that left.
Speaker Change: Moving over to expenses.
Speaker Change: $89 2 million for the quarter is up 5% over the $85 2 million last quarter compared to $66 3 million in the second quarter last year for the six months expenses were $174 4 million.
Daniel Bharwani: For the six months, expenses were 174.4 million, which is a 33% increase over the 131 million for the six months last year.
Speaker Change: Which is a 33% increase over the $131 million for the six months last year.
Daniel Bharwani: A couple of items to note for expenses. We had a reversal in the provision for losses on our legacy portfolio. You might recall our legacy portfolio is the loans we originated prior to 2018, which is mostly gone by now. It's mostly amortized. There's only about 13 million of that left. But during the quarter, we did reverse about 2 million of credit losses that was previously reserved, that was no longer required because the performance had been better than expected. That compares to a reversal of 9.7 million in the second quarter of last year. And for the six-month period, that reversal was 3.6 million for the 24 quarter and 18.7 million last year.
Speaker Change: A couple of items to note for expenses.
Had a reversal in the.
Speaker Change: Our provision for losses on our legacy portfolio, you might recall, our legacy portfolio. The loans, we originated prior to 2018.
Speaker Change: Which is mostly gone by now it's mostly amortized theres only about $13 million of that left but during the quarter. We did reverse about 2 million of credit losses that was previously reserve that was no longer required because the performance had been better than expected.
Denesh Bharwani: But during the quarter, we did reverse about 2 million of credit losses that were previously reserved that were no longer required because the performance had been better than expected. That compares to a reversal of 9.7 million in the second quarter of last year, for the six-month period, that reversal was $3.6 million for the 24-quarter and $18.7 million last year. The other increase in expense was primarily driven by an increase in interest expense, which increased to $46.7 million this quarter compared to $35.7 million last year.
Speaker Change: That compares to a reversal of.
Speaker Change: $9 7 million in the second quarter of last year.
Speaker Change: Yeah.
Speaker Change: For the six months period that reversal was $3 6 million for the 20.
Speaker Change: <unk> 24 quarter and $18 7 million.
Speaker Change: Last year.
Daniel Bharwani: The other increase in expense is primarily driven by the increase in interest expense, which has increased to 46.7 million this quarter, compared to 35.7 million last year. Now, obviously, the increase in interest rates had something to do with that increase in interest expense. But part of that increase is also due to portfolio growth, again driven by the higher origination levels during the year. Moving on to pre-tax income, 6.7 million is comparable to the 6.6 million last quarter versus 18.6 million last year. For the six months, pre-tax income was 13.2 million, down from 37 million last year.
Speaker Change: The other increase in expense, primarily driven by the increase in interest expense.
Speaker Change: Which has increased to $46 7 million this quarter compared to $35 7 million last year.
Denesh Bharwani: Now, obviously, the increase in interest rates had something to do with that increase in interest expense, but part of that increase is also due to portfolio growth, again, driven by higher origination levels during the year. Moving on to pre-tax income, $6.7 million is comparable to $6.6 million last quarter versus $18.6 million last year. For the six months, pre-tax income was $13.2 million, down from $37 million last year. Similarly, net income was $4.7 million for the second quarter, down from $14 million for the second quarter last year.
Speaker Change: Obviously, the increase in interest rates had something to do with that increase in interest expense, but part of that increase is also due to portfolio growth.
Speaker Change: Again, driven by the higher origination levels.
Speaker Change: During the year.
Speaker Change: Moving on to pre tax income $6 $7 million is comparable to the $6 6 million last quarter versus $18 6 million last year for the six months pretax income was $13 2 million down from $37 million last year.
Daniel Bharwani: Similarly, net income is 4.7 million for the second quarter, down from 14 million the second quarter last year. for the six-month period. That income is $9.3 million, down from $27.8 million last year. The same trends follow for earnings per share, $0.19 for the second quarter this year, down from $0.55 last year. For the six months, $0.38 for diluted share compared to $1.9 last year. So again, these trends are all driven by the increase in interest expense and expenses overall, somewhat offset by the increase in revenues from the higher portfolio balance. Moving on to the balance sheet, our finance receivables at fair value is $2.9 million; $960 million is a 6% increase from the first quarter and a 13% increase from the $2.6 billion last year.
Speaker Change: <unk> net income is $4 7 million for the second quarter down from 14 million in the second quarter last year.
Speaker Change: For the six months period.
Denesh Bharwani: Net income is $9.3 million, down from $27.8 million last year. The same trends follow for earnings per share, $0.19 for the second quarter this year, down from $0.55 last year for the six months. $0.38 per diluted share compared to $1.09 last year. So again, these trends are all driven by the increase in interest expense and expenses overall, somewhat offset by the increase in revenues from the higher portfolio balance. Moving on to the balance sheet, our finance receivables at fair value are $2,996,960 million, a 6% increase from the first quarter and a 13% increase from the $2.6 billion last year.
Speaker Change: Yeah.
Speaker Change: Net income is $9 3 million down from $27 8 million last.
Speaker Change: Last year, the same trends follow.
Speaker Change: Earnings per share <unk> 19 for the second quarter. This year down from 55 cents last year for the six months 38 cents per diluted share compared to a $1 nine last year.
Speaker Change: So again these trends are all driven by the increase in interest expense.
Speaker Change: <unk> expenses overall.
Speaker Change: Offset by the increase in revenues from the higher portfolio balance.
Speaker Change: Moving on to the balance sheet, our finance receivables at fair value.
Speaker Change: Two 2 billion 996 $960 million is a 6% increase from the first quarter and a 13% increase from the $2 6 billion last year.
Daniel Bharwani: Our total debt balance is $2.9 million as of June 2024 is up 16% from the $2.5 billion last year. And lastly, on the balance sheet, our shareholders' equity, another record high for the company, $280.3 million is up 10% from the $255 million last June of last year. Looking at other metrics and net interest margin, $49.2 million in the second quarter is flat from $49.2 million last year. For the six months, its $99 million is compared to $99.5 million last year. Core operating expenses is down 1% this quarter from last quarter, but it's up 10% from the $40.3 million last year.
Denesh Bharwani: Our total debt balance is $2.9 million as of June 2024, is up 16% from the $2.5 billion last year, and lastly, on the balance sheet, our shareholders' equity, another record high for the company, $280.3 million, is up 10% from the $255 million in June of last year. Looking at other metrics, the net interest margin, $49.2 million in the second quarter, is flat from $49.2 million last year.
Speaker Change: Our total debt balance is $2 9 million for as of June 2024 is up 16% from the $2 5 billion last year.
Speaker Change: And lastly on the balance sheet, our shareholders' equity.
Speaker Change: Another record high for the company $283 million.
Speaker Change: Is up 10% from the $255 million last June of last year.
Speaker Change: Looking at.
Speaker Change: Other metrics the net interest margin $49 2 million in the second quarter is flat from $49 2 million last year for the six months, its 99 million as compared to $99 5 million last year core operating expenses is down 1% this quarter from last quarter.
Denesh Bharwani: For the six months, it's $99 million as compared to $99.5 million last year. Core operating expenses are down 1% this quarter from last quarter, but it's up 10% from $40.3 million last year. On a year-to-date basis, core operating expenses were $89.3 million, which is up 10% from the $81.2 million in the June quarter of last year. As a percentage of the managed portfolio, core operating expenses were down to 5.7% from 6% in the first quarter, but it's up from 5.5% in the second quarter of 2023.
Speaker Change: But it is up 10% from the $43 million last year on a year to date basis core operating expenses were $89 3 million.
Daniel Bharwani: On a year-to-date basis, core operating expenses are $89.3 million, up 10% from the $81.2 million in the June quarter of last year. As a percentage of the managed portfolio, core operating expenses is down to 5.7% from 6% in the first quarter, but it's up from 5.5% in the second quarter of 2023. And lastly, the return on managed assets 0.9% in the second quarter compared to 2.6% in the second quarter last year. The same numbers for the year-to-date period, 0.9% for the six months compared to 2.6% for the six months of 2023.
Speaker Change: Is up 10% from the $81 2 million in the June quarter of last year.
Speaker Change: As a percentage of the managed portfolio of core operating expenses is down to $5 seven from 6% in the first quarter, but it's up from five 5% in the second quarter of 2023.
Denesh Bharwani: And lastly, the return on managed assets, 0.9%, in the second quarter compared to 2.6% in the second quarter last year. The same numbers for the year-to-date period, 0.9% for the six months compared to 2.6% for the six months of 2023. I'll turn the call over to Mike. Thanks, Dan.
Speaker Change: Lastly, the return on managed assets <unk>, 9%.
Speaker Change: In the second quarter compared to two 6% in the second quarter last year. The same numbers for the year to date period <unk>, 9% for the six months compared to two 6%.
Speaker Change: Six months of 2023.
Michael Lavin: I'll turn to call over to Mike. Thanks, Danny. In operations, a couple follow-up comments in originations and sales. The demand for sub-prime business remains strong. We received 310,000 apps in the second quarter of 2024. That compares to 281,000 apps in the second quarter of 2023. That's a 10% increase in apps year-over-year. That's in light of the fact that we did 500 million less in 2023 than what we're projected to do this year. In terms of sales, we hired 14 new reps in the second quarter, going from 72 reps to 86 reps. That's a 19% increase.
I will turn the call over to Mike Thanks, Danny.
Michael T. Lavin: Thanks, Danny. In operations, a couple follow-up comments and originations and sales. The demand for subprime business remains strong. We received 310,000 applications in the second quarter of 2024. That compares to 281,000 apps in the second quarter of 2023. That's a 10% increase in light of the fact that we did $500 million less in 2023 than what we're projected to do this year. In terms of sales, we hired 14 new reps in the second quarter, going from 72 reps to 86 reps. That's a 19% increase.
Mike: Operations, a couple of follow up comments and originations and sales.
Mike: The demand for subprime business remains strong.
Mike: We received 310000 apps in the second quarter of 2024 that compares to three or 281.
Speaker Change: Thousand apps in the second quarter of 2023, that's a 10% increase in apps year over year.
Speaker Change: That's in light of the fact that we did $500 million less in 2023.
Speaker Change: Then what were projected to do this year.
Speaker Change: In terms of sales, we hired 14, new reps in the second quarter going from 72 reps to 86 reps, that's a 19% increase.
Michael Lavin: and as Brad and Danny mentioned, as we continue to grow the business, we will continue to grow our outside sales and our inside sales team with a goal to be around 110 reps at the end of the year and growing that rep force even further as we dig into 2025. One aspect of growing the business in the second quarter and beyond was we continue to expand our large dealer group base. That's dealer groups with more than 10 rooftops under their umbrella. We reached 99 large dealer groups in the second quarter, taking that from 76 in the second quarter of 2023.
Michael T. Lavin: And as Brad and Danny mentioned, as we continue to grow the business, we will continue to grow our outside sales and our inside sales team with a goal to be around 110 reps at the end of the year and growing that rep force even further as we dig into 2025. One aspect of growing the business in the second quarter and beyond was that we continued to expand our large dealer group base. That's dealer groups with more than 10 rooftops under their umbrella.
Speaker Change: And as Brad and Danny mentioned as we continue to grow the business. We will continue to grow our outside sales and our inside sales team with the goal to be around 110 reps at the end of the year.
Speaker Change: And growing that Rep force, even further as we dig into 2025.
Speaker Change: One aspect of growing the business in the second quarter and beyond was we continued to expand our large dealer group base, that's dealer groups with more than 10 rooftops under their umbrella.
Michael T. Lavin: We reached 99 large dealer groups in the second quarter, taking that from 76 in the second quarter of 2023 and 61 in the second quarter of 2022. All told, that's a 62% increase over the last two years in our large dealer group additions. What that does is that it's allowed us to add roughly 900 rooftops to our dealer base with only increasing, say, 30 dealerships in total. That's super efficient.
Speaker Change: We reached 99 large dealer groups in the second quarter, taking it taking that from <unk> 76 in the second quarter of 2023 and 61 in the second quarter of 2022 all told.
Michael Lavin: And 61 in the second quarter of 2022. I'm told that's a 62% increase over the last two years in our large dealer group additions. What that's done is that it allowed us to add roughly 900 rooftops to our dealer base with only increasing, say, 30 dealerships in total. That's super efficient. That's a meaningful increase in large dealer groups, as we have taken that footprint from 17% of our business in 2022 to 26% of our business as of the end of the second quarter. We are well on our way to meeting our goal of that being 30% by the end of the year.
Speaker Change: It's a 62% increase over the last two years and our large dealer groups.
Speaker Change: Additions what that's done is that it allowed it's allowed us to add roughly 900 rooftops to our dealer base with only increasing say 30 dealerships in total that super efficient.
Michael T. Lavin: That's a meaningful increase in large dealer groups as we have taken that footprint from 17% of our business in 2022 to 26% of our business as of the end of the second quarter. We are well on our way to meeting our goal of that being 30% by the end of the year. As part of that large dealer group base, we continue to originate volume from the major rental car companies, including Enterprise, Hertz, and Avis.
Speaker Change: That's a meaningful increase in.
Speaker Change: And large dealer groups as we have taken are that footprint from 17% of our business in 2022% to 26% of our business as of the end of the second quarter, we are well on our way to meeting our goal of that.
Speaker Change: Being 30% by the end of the year.
Michael Lavin: As part of that large dealer group base, we continue to originate volume from the major rental car companies, including Enterprise, Hertz, and Avis.
Speaker Change: As part of that large dealer group base, we continue to originate volume from the major rental car companies, including enterprise Hertz and Avis.
Michael T. Lavin: A few other organic metrics of growth: we were able to grow our dealer loyalty in the second quarter. That's how many deals per dealer we do on a monthly basis, so we're able to grow that. We were able to increase our capture percentage in the second quarter. Additionally, we were able to increase our average funding dealers per rep in the second quarter, quarter over quarter, and year over year. And we were able to lower our funding time to get the dealers paid to just over two days. That's the fastest it's been in company history, and we all know that dealers like to get paid fast, and that goes to our efforts to increase our customer service to the dealership.
Michael Lavin: A few other organic metrics of growth. We were able to grow our dealer loyalty in the second quarter. That's how many deals per dealer we do on a monthly basis, so we're able to grow that. We were able to increase our capture percentage in the second quarter. We were able to increase our average funding dealers per rep in the second quarter, quarter over quarter, and year over year. And we were able to lower our funding time to get the dealers paid to just over two days. That's the facets. It's been in company history, and we all know that dealers like to get paid fast, and that goes to our efforts to increase our customer service to the dealerships.
Speaker Change: A few other organic metrics of growth.
Speaker Change: We were able to grow our dealer loyalty in the second quarter. That's how many deals per dealer, we do on a monthly basis. So we were able to grow that we were able to increase our capture percentage in the second quarter.
Speaker Change: We were able to increase our average funding dealers per rep in the second quarter quarter over quarter and year over year.
Speaker Change: And we were able to lower our funding time to get the dealers pay to just over two days.
Speaker Change: Facets, that's the fastest it's been in company history.
Speaker Change: And we all know that dealers like to get paid fast and that goes to our efforts to increase our customer service to the dealerships.
Michael Lavin: In terms of our current risk profile, we're holding a strong 20.49% APR, and that's we've been able to hold that APR strong during our growth inflection so far in 2024. Our FICO's increased to 578, which is higher than our historical FICO 565. That's reflective of our emphasis on getting more upper tier paper. So we're earmarking the upper trance of the subprime branch. Our LTVs remain flat in the second quarter, running around 119, which is down from 120 in 2023. And down from 125 in 2022. So we've made some progress in hammering down our LTVs, moving from 22 into the second quarter of 24.
Michael T. Lavin: In terms of our current risk profile, we're holding a strong 20.49% APR, and we've been able to hold that APR strong during our growth inflection so far in 2024. Our FICO's increased to 578, which is higher than our historical FICO of 565. That's reflected in our emphasis on getting more upper-tier paper, so we're earmarking the upper tranche of the subprime brand. Our LTVs remain flat in the second quarter, running around 119, which is down from 120 in 2023 and down from 125 in 2022.
Speaker Change: In terms of our current risk profile, we're holding a strong 24, 9% APR and thats.
Speaker Change: We've been able to hold that APR strong during our growth inflection. So far in 2024 are our FICO is increased to $5 78, which is higher than our historical FICO of 565, that's reflected of our emphasis on getting more upper tier paper. So we're earmarking the <unk>.
Speaker Change: Turning to the subprime.
Speaker Change: Subprime branch.
Speaker Change: Our Ltvs remained flat in the second quarter running around $1 19, which is down from $1 20 in 2023.
Speaker Change: And down from 125% in 2022, so we've made some progress and hammering down our ltvs moving from 'twenty two into the second quarter of 'twenty four.
Michael T. Lavin: So we've made some progress and hammering down our LTVs moving from 22 into the second quarter of 24, um, Of exceptional note, we were able to lower our debt to income and our payment to income in the second quarter over our first quarter. So overall, we have a strong risk profile during our growth cycle.
Michael Lavin: Of exceptional note, we were able to lower our debt income and our payment to income in the second quarter over our first quarter.
Speaker Change: <unk>.
Speaker Change: Of exceptional note, we were able to lower our debt to income in our payment to income in the second quarter over our first quarter. So overall, we have a strong risk profile.
Michael Lavin: So overall, we have a strong risk profile during our growth cycle. Switching to portfolio performance, DQ greater than 30 days for the second quarter was 13.29 percent. That's compared to 11.72 percent in the second quarter of 2023. That said, so far in 2024, we've been able to lower the DQ month over month for the first six weeks of 2024, so we're seeing some positive trends in lowering the DQ so far in 2024. Annualized net charge-offs for the second quarter was 7.2 percent. That's compared to 6.29 percent in the second quarter of 2023. As with our DQ, we've also been able to moderately lower our charge-offs month over month in the first six months of 2024, so good trends in the charge-off rate so far in 2024 as well.
Michael T. Lavin: Switching to portfolio performance, DQ greater than 30 days for the second quarter was 13.29%. That's compared to 11.72% in the second quarter of 2023. That said, so far in 2024, we've been able to lower the DQ month over month for the first six weeks of 2024. So we're seeing some positive trends in lowering the DQ so far in 2024. Annualized net charge-offs for the second quarter were 7.2%.
Speaker Change: During our dress cycle switching to your portfolio performance.
Speaker Change: <unk> greater than 30 days for the second quarter was 13, 9% that's compared to 11 seven 2%.
Speaker Change: In the second quarter of 2023 that said.
Speaker Change: So far in 2024, we've been able to lower the DQ month over month for the first six weeks of 2024. So we're seeing some positive trends and learning the DQ so far in 2024 annualized.
Speaker Change: Annualized net charge offs for the second quarter was seven 2% that's compared to $6 two 9% in the second in the second quarter of 2023.
Michael T. Lavin: That's compared to 6.29% in the second quarter of 2023. As with our DQ, we have also been able to moderately lower our charge-offs month over month in the first six months of 2024, so we have seen good trends in the charge-off rate so far in 2024 as well. Our extensions remain flat, in the second quarter, and benchmarking those extensions with our competitors, we remain at the market average. However, we continue to see remarkable success in the use of our extensions.
Speaker Change: As with our <unk>, we have also been able to moderately lower our charge offs month over month and.
Speaker Change: In the first six months of 2024, so good trends in the charge off rates so far in 2024 as well.
Michael Lavin: Our extensions remain flat in the second quarter, and benchmarking those extensions with our competitors, we remain at market average. We continue to see remarkable success and use of our extensions. We do have an extension model that uses algorithms to provide those extensions, and we recently did a study of extensions granted in December of 23 and compared those to accounts that did not get an extension in 23 and ran that study through June of 24, and we found that the accounts that did get extensions versus the accounts that didn't get extensions saw a 41 percent decrease in charge-offs, so our extension methodology is working.
Speaker Change: Our extensions remained flat.
Speaker Change: In the second quarter.
Speaker Change: And.
Speaker Change: Benchmarking those extensions with our competitors we remain at market average, we continue to see remarkable success and the use of our extensions. We do have an extension model that uses algorithms.
Michael T. Lavin: We do have an extension model that uses algorithms to provide those extensions. And we recently did a study of extensions granted in December 23, 23, and compared those to accounts that did not get an extension in 23, and ran that study through June 24, and we found that the accounts that did get extensions versus the accounts that didn't get extensions saw a 41% decrease in charge-offs.
Speaker Change: To provide those extensions and we recently did a study of extensions granted in December of 'twenty, three and compared those two accounts that did not get an extension in 'twenty three and ran that ran that study through June of 'twenty four and we found that the accounts that did get extensions versus the accounts that didnt.
Speaker Change: Get extension saw 41% decrease in charge offs. So our extension methodology is working.
Michael T. Lavin: So our extension methodology is working, um, As Brad said, generally speaking, we're sort of quickly exiting or flushing through the challenging 22 vintages, the second half of 23 is showing market improvement, and while it's early in the game, the 24s are looking great, and we're cautiously optimistic that C&Ls will return to the historical norm. Turning to technology, we continue to layer AI-based technologies into our operations on the front end of the business and the back end of the business. In our latest project, we completed our pilot of a conversational AI voice bot that is actually used by a few of our competitors in the industry. We expect to fully launch this AI voice bot in August.
Michael Lavin: As Brad said, generally speaking, we're sort of quickly exiting or flushing through the challenging 22 images.
As Brad said generally speaking we're sort of.
Brad: Quickly exiting are flushing through the challenging 22 vintages. The second half of 'twenty three is showing market improvement and while it's early in the game. The 20 fours are looking great and we're cautious cautiously optimistic that the <unk> were returned to the historical norms.
Michael Lavin: The second half of 23 is showing market improvement, and while it's early in the game, the 24s are looking great, and we're cautiously optimistic that the CNLs were returned to the historical norms. Turning to technology, we continue to layer in AI-based technologies into our operations and the front end of the business and the back end of the business. Our latest project, we completed our pilot of a conversational AI voice bot that is actually used by a few of our competitors in the industry. We expect to fully launch this AI voice bot in August. We're probably going to use it on collecting our potential delinquencies.
Speaker Change: Turning to technology.
We continue to layer in AI based technologies into our operations in the front end of the business in the back end of the business. Our latest project. We completed our pilot of a conversational AI voice bot that is actually used by a few of our competitors in the industry.
Speaker Change: We expect to fully launch this AI voice spot in August.
Michael T. Lavin: We're probably going to use it for collecting our potential delinquencies, that is, one to twenty-nine days, and we expect that will reduce our roll rate and help our collections in the later bucket. The pilot testing revealed incredible efficiency in making a high volume of calls, establishing right-party contact, and converting that RPC to promises to pay, and at least 10% of the time, in real-time payments on the spot. So we're excited about that.
Speaker Change: Probably going to use it on collecting our potential delinquencies, that's 1% to 29 days and we expect that will reduce our roll rate and helped our.
Michael Lavin: That's one to 29 days, and we expect that we'll reduce our role rate and help our collections in the later buckets. The pilot testing revealed incredible efficiency in making a high volume of calls, establishing right-party contact, and converting that RPC to promises to pay, and at least 10 percent of the time in real-time payments on the spot. We're excited about that.
Speaker Change: Collections in the later buckets.
Speaker Change: The pilot testing revealed incredible efficiency, and making a high volume of calls.
Speaker Change: Establishing right party contact and converting that RPC, two promises to pay and at least 10% of the time in real time payments on the spot. So we're excited about that.
Michael Lavin: The other thing we did in the quarter was we launched our second phase. of our Document Processing AI Bot in Originations. We've had the first phase implemented for the last year. The second phase concentrates on checking proof of income up front, which allows us to process the deal faster and pay the deal of the dealer faster. And it's also more accurate and detects fraud up front.
Michael T. Lavin: The other thing we did in the quarter was we launched our second phase of our document processing AI bot in Originations. We've had the first phase implemented for the last year. The second phase concentrates on checking proof of income up front, which allows us to process the deal faster and pay the deal of the dealer faster. And it's also more accurate and detects fraud up front.
Speaker Change: The other thing we did in the quarter. It was we launched our second phase.
Speaker Change: Of our document processing AI bot and originations we've had the first phase implemented for the last year.
Speaker Change: The second phase concentrates on checking proof of income upfront, which allows us to process the deal faster and pay the deal the dealer faster and it's also more accurate and detects fraud upfront.
Michael Lavin: A few miscellaneous things. In the second quarter, or actually in the first six months of 24, we were able to reduce our occupancy cost significantly by renegotiating and renewing four of our five leases. Our fifth lease is up for renewal now, and we are working on that as we speak.
Michael T. Lavin: A few miscellaneous things. In the second quarter, or actually in the first six months of this year, we were able to reduce our occupancy costs significantly by renegotiating and renewing four of our five leases. Our fifth lease is up for renewal now, and we are working on that as we speak.
Speaker Change: A few miscellaneous things in the second quarter are actually in the first six months of 'twenty four.
Speaker Change: We're able to reduce our occupancy cost significantly by renegotiating and renewing.
Speaker Change: For four of our five leases.
Speaker Change: Our fifth lease is up for renewal now and we are working that on that as we speak.
Charles Bradley: So all good things, and with that, I'll kick it back to Brad.
Michael T. Lavin: So all good things. And with that, I'll kick it back to Brad. Thanks Mike. I'm looking at
Speaker Change: So all good things and with that I'll kick it back to Brad.
Charles E. Bradley: Thanks, Mike. And looking at the industry, we sit in a pretty good place. By and large, everyone in our industry is trying to deal with the performance problems created in 2022 and 2023. As we've mentioned in previous calls, we did better than most, if not even better than that. So we're very comfortable with how those pools are performing.
Charles Bradley: Thanks, Mike. Looking at the industry, we've set a pretty good place. By and large, everyone in our industry is trying to deal with the performance problems created in 2022 and 2023. As we've mentioned in previous calls, we've done better than most, if not even better than that. So we're very comfortable with how those pools are performing. We think it's going to take some time for some other folks to work through it. We'll see how that affects the industry. I think it can only affect the positive, positively. If a few of the weaker players go away, the big players will pick them up, so we don't have that problem.
Brad: Thanks, Mike I'm looking at the industry, we sit in a pretty good place.
Brad: By and large everyone in our industry is trying to deal with the performance problems created in 19, and 2022 and 'twenty three.
Brad: As we've mentioned in previous calls we've done better than most if not even better than that so we're very comfortable with how those pools are performing we think it's going to take some time for some other folks to work through it.
Charles E. Bradley: We think it's going to take some time for some other folks to work through it, but we'll see how that affects the industry. I think it can only affect it positively.
Brad: We'll see how that affects the industry I think it can only effect a positive positive.
Charles E. Bradley: If a few of the weaker players go away, the big players will pick them up, so we don't have that problem. One of the things we have pointed out in the past is that the barriers to entry in our industry now are very extreme. No one has come in in the last five or almost 10 years.
Brad: <unk>.
Brad: A few of the weaker players go away the big players and pick them up so we don't have that problem.
Charles Bradley: One of the things we have pointed out in the past is the barriers to entry in our industry now are very extreme. No one has come in in the last five or almost ten years. I think that gives people here a leg up, give people who are doing the correct better than most like us and even bigger leg up.
Brad: One of things, we have pointed out in the past that the barriers to entry in our industry and our very extreme no. One has come in in the last five and almost 10 years and so I think that gives people here a leg up get people who are doing better.
Charles E. Bradley: And so I think that gives the people here a leg up, gives people who are doing credit better than most, like us, an even bigger leg up. And so the real trick now is that we're focused on growth. We want to get in a position where we're growing a lot and we have real production as we roll into the new year and hopefully experience some declining interest rates. Then we'll start making lots of money again. So that's really what the plan.
Brad: Better than most like us an even bigger leg.
Charles Bradley: The real trick now is we're focused on growth. We want to get the position where we're growing a lot and we have real production as we roll into the new year and hopefully experience some declining interest rates. Then we'll start making lots of money again. So it's really the plan.
Brad: So the real trick now as we're focused on growth we wanted to get in a position where we're growing a lot and we have real production as we roll into the new year and hopefully experiencing declining interest rates. Then we will start making lots of money again, so that's really the plan I think.
Charles E. Bradley: I think in terms of the economy, our number one thing is unemployment. Unemployment seems to be fine. We think the economy looks healthy. We'll see what the elections do. [inaudible] So, the second quarter, you know, somewhat like the first quarter, not all exciting, but it's like building blocks.
Charles Bradley: I think in terms of the economy, our number one thing is unemployment. Unemployment seems to be fine. We think the economy looks healthy. We'll see what the elections do.
Terms of the economy.
Speaker Change: Our number one thing is unemployment unemployment seems to be fine, we think the economy looks healthy, let's see what the elections do.
Charles Bradley: But probably we're even more interested in what the rates will do. So, with the current economic conditions, it will appear, and sooner or later, it will begin to lower rates, and that's where it really helps us.
Speaker Change: But probably we are even more interested in what the rates will do so with the current economic conditions. It would appear that sooner or later they'll begin to lower rates and that's where it really helps us. So our goal is to do probably two things in preparation for that time, one is to make sure that our credit is exactly where we think its going into <unk>.
Charles Bradley: So our goal is to do probably two things in preparation for that time. One is to make sure that our credit is exactly where we think it's going, and two to get in a growth position where we're finding lots and lots of loans as we roll into declining interest rates. So second quarter, someone like the first quarter, not all of sighting, it's like building blocks or building things so that when the time is right will be in the best possible position and take advantage of it both economically and financially. We're strong on cash. Having done that residual deal, we have lots of money tied up in our securities; that money's beginning to flow out.
Speaker Change: In a growth position, where were finding lots and lots of loans as we roll into declining interest rates.
Speaker Change: So second quarter.
Speaker Change: Like the first quarter not all that exciting.
Charles E. Bradley: We're building things so that when the time is right, we'll be in the best possible position to take advantage of it, both economically and financially. We're strong on cash. Having done that residual deal, we have lots of money tied up in our securitizations, and that money's beginning to flow out. So we're really in a very good position to take advantage of the next few quarters. So with that, we'll let it go, and we'll see you next quarter.
Speaker Change: Building blocks, we're building things so that when the time is right we'll be in the best possible position to take advantage of it both economically and financially.
Speaker Change: Strong on cash.
Speaker Change: Having done that residual deal we have lots of money tied up in our securitizations that money is beginning to flow out. So we're really in a very good position to take advantage of the next few quarters.
Charles Bradley: So we're really in a very good position to take advantage of the next few quarters.
Charles Bradley: So, with that, we'll let it go and we'll see you next quarter. Thank you all for attending.
Speaker Change: So with that.
Speaker Change: I'll, let it go and we'll see you next quarter. Thank you all for attending.
Operator: Thank you. This concludes today's teleconference. A replay will be available beginning two hours from now for 12 months via the company's website at www.consumerportfolio.com. Please disconnect your lines at this time and have a wonderful day.
Operator: Thank you.
Operator: This concludes today's teleconference. A replay will be available beginning two hours from now for 12 months via the company's website at www.consumerportfolio.com.
Thank you. This concludes today's teleconference. 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.
Operator: Please disconnect your lines at this time and have a wonderful day. for Day.
Speaker Change: And have a wonderful day.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].