CPSS - Earnings call transcript Q2 2020 | Consumer Portfolio Services, Inc.

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Operator

Good day everyone, and welcome to the Consumer Portfolio Services 2020 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 statements made during this call are not the 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. are materially risks, from statements results cause forward-looking differ to those such subject could to actual All projected. for report I annual refer May quarterly report company's X filed filed March you XX and to further clarification. the its company forward-looking whether any information, events as update new statements or of no otherwise. to result The assumes further publicly obligation a us now is here Mr. With Charles Bradley, Chief Executive Officer; and Mr. Officer Jeff Services. Portfolio Fritz, of Chief Consumer Financial the call over turn now I'll Mr. to Bradley

Charles Bradley

have nonetheless to everyone note you, second on earnings call. call welcome must up jobs to my Thank I get I wanted set quarter the people conference - the their and God. business sometimes, oh but

no an So ended been COVID March quarter this our interesting it's showed is in the and real signs. quarter. Certainly - and quarter first that because really March

whether been up not to we the market of went with very has well. quarter But securitizations. able we and happen. quickly knowing or are coaster and any securitization stood to exceedingly roller to problems, securitization. whether from could were had happen, on good going a quarter pricing. without more very wondering going actually The off our the recovered bad, to good the postpone do good things, April, We starting is any get what's news We This

accomplishment. So volumes. that big was a about Everybody the worried is very

Our volumes are well. off a bit, however still pretty functioning and everything's going

as whether Collections going and last, right being of another conservative issue and our terms I sort to to long going a quite is challenge. people was now, liquidity both trying in think all being we. and is big are generally of how to cautious, everybody this maintain liquidity there's be

that of really in how these But and even you problems. and results government efforts sleep your our this wondered can you really our People but good unemployment all are we're money our the drive have is, can't work. customers check would midst been all collection benefits, us. quarter shows paying and that house, with using always in your it motto they're though car, the the Our

The another earnings of that's So will on. best the was XXXX. going since continue. quarter that good, earnings where hoping trend We're what's huge highlight of fourth

So we really to don't the happen. going end the at know of day, what's

to getting a quality preserve We're paper. buying So good liquidity. we're We're tighter. little cautiously, move going

we're things And to back June. up. results normal, So surge are extensions having the in doing flat went just of back very April an almost bunch right. from to there in it We much enormous to in

be. where all they're intents supposed efforts where our for to is to back obviously supposed are So to and collection they're The performance purposes be.

lots Jeff financials. those very So with all through sort little more. of a we've been Again run we'll I'll results. of pleased the let about still unknowns, talk but that

Jeff Fritz

Thanks Brad. everyone. Welcome

quarter Let's a this first the quarter $XXX.X decrease the begin XXXX. and of the first million. second from - were months $XX.X from million. with year for XX% were revenues decrease a quarter six compared the revenues, the to six XXXX. X% of decrease The That's a It's earning revenues XX% month

way about for components. terms at quarter, the So revenues to really I of think the think in look three the

yielding or is portfolio billion, $X.X portfolio then million total of of $XXX fair at that XX% managed total. XX% quarter the ended portfolio That the portfolio. value for is XX.X%. recent legacy more And is fair the Our portfolio value. at our portfolio, the But accounted

losses. remember And So is that XX.X%. that, credit about yielding it's yield net of

basically million fair a on portfolio, it's $X.X have markdown we that. a things, as the a million. with us then you the COVID-related components and a to of - markdown, mean that markdown $X.X of revenue of surrounding a of the combination essentially but it's took result a uncertainty of going while, event is unusual and couple COVID component really which And be I are value negative component two for So a those the a

You a first quarter million may on of portfolio the markdown COVID-related in this year. recall, we had $XX the

down to first $XXX.X six quarter, expense expenses, of the million compared the second X% from million, for XXXX. first down a the six XX% six reduction compared the $XX.X are quarter month to $XX.X quarter - months and numbers of on The XX% for XXXX. first Moving that's that's million, this and to the year, of

$XX.X But had provision quarter, in CECL volumes did older away sales is that a lower the credit we million to quarter costs, second So have last as of for the portfolio. expenses from our operating which year-over-year is That's for as of note, portfolio, nearly our XXXX. gone away, COVID million this result the of a million year. difference categories has of originations million to of expenses, some not core losses, example, provisions Year-to-date year, losses, event. in result compared $X.X originations a biggest XX% down an but decrease the in on for six the interesting and loss inn number tied legacy volumes Provisions we and for compared sequential really quarter. like quarter the of our months the XX% down from expense the significantly QX for first to gone to XX% completely $X.X decreases of first the this credit some credit adoption $X.X are

a there XXXX CECL, so further did on we was credit provisions We that would the lifetime losses And no intent which for that time is the portfolio. at you'll and expectation for standard portfolio. and legacy in allowance that adopted be back that recall January

our will losses and the caused portfolio that exceed event has However COVID consider were. us to what January estimates the that

said, million a legacy think million. the quarter also I put allowance this first as to that And portfolio. for so $X.X $X.X I were And earnings compared the in XX% $X.X million to XX% compared quarter. increase in the in increase pretax quarter months last Pretax we million first second earnings, to is first six a The XXXX. compared to year. year this of a the the million quarter of $X.X and increase XX% That's year-to-date $X.X

pattern is us. for positive And so a this

two in time have we $X second, to year-over-year had portfolio quarters able of a of which quarter in income number. compared quarter about XX% adopted earnings it's second the value we've COVID-related Net in consecutive the last in improvement a that show fair spite year, we've newer since these it's our million. pretax to $X.X pretax quarters really improvement year-over-year talk that year. reduction of net was For this a on I'll That's for the increase quarter the XX% in to first in been just the adjustments and of the consecutive million income the compared two first and

to income for $XX.X income in is months net first of six increase year. compared $X.X Our million XXX% million net the year-to-date last

right quarter the recall the same putting you'll the So that in together The event. Act CARES first time the government books that COVID this were closing was we response the year at to of

we $X.X place. quarter this first in benefit result booked of put an CARES year a tax The And of the million the way into got so as Act

of If $X.XX that's of for through net $X.XX and look that's of share numbers. quarter that's income So share from for $X.XX six per $X.XX the year. of at we rippling months, second significantly months for kind XXXX. for per last earnings those Year-to-date first quarter, up six the the from up the

there. tax per be said, EPS would benefit benefit share. around I tax the through first year-to-date is rippling in that $X.XX As Without quarter the

sheet but economy the lines, capacity. in talk million only in you feet run-off on balance you little to Moving the our $XX.X continued you about, using as warehouse kind just may to of legacy back depressed somewhat a not see amortization still million of getting and of know, much the on on portfolio, Because bit. result $XXX there, of volumes notice are we're the too its a warehouse going the that reduction and on the

then and the Moving portion in of portfolio interest down of This because quarter down I value is components from same remember they're continuously as margin think on was a of cost and quarter net the a year million funds, influenced other significant was receivables the, fair of of as some the first cost $XX.X yield quarter of the XX% ago. blended compared the coming the to baked actual bigger the the NIM which other for out the the significantly course, of it in. XXXX. all and the lower for the million being become to are almost second X% being $XX.X And metrics, losses that's X.X%, at quarter ABS

decrease adjusted talk consideration NIM, move this As which deals losses second to risk the year into expenses those from the quarter ago. and the $XX.X year, and almost ABS flat $XX.X have of a compared X% second first we're about that's to first an come XXXX. million decrease for going a XX% takes quarter XXXX from this ABS this in for The the That's list. million quarter. of quarter down further credit provision the the quarter down operating X% Core a deals year, to of our second here compared we

For six months just core of million months expenses operating that to the than pretty bit first little a had million XXXX. close we and $XX.X the six flat is the $XX.X more in

As significant by origination categories some I volumes. are expense mentioned, we've got that directly driven

that. second the result a we decreases of some so, saw as quarter And in

operating last down quarter expenses the, quarter from first down of from as this also that's for core of X.X% X.X% year of portfolio X.X% Our and percentage a the managed of the second year.

and X.X% reductions managed even the second for quarter basis, portfolio quarter impact seeing an operating this in return some increase the managed first expenses. for metric quarter XXXX. of And the those core of that's on year, X.X% to so, compared assets we're the on compared The of increase that an the for is X.X% also of

again, some metric. improvement in year-over-year And we're important so seeing that good

of is of very first happened concerns credit And March than we for XX.X%. delinquency X.X% the and significantly than the end a that's ago. the number the to The of XXXX. had delinquency uncertainty, at spite on year the everything of the in And that we this the June with is the in delinquency number lower quarter. COVID Moving all were XX.X% posted we lower and quarter fact, this since lowest at significantly performance in pleased credit performance,

was it we of well so, a surprise. sort that Obviously, related. know two And COVID things pleasant

customers In jobs. extensions many loans last hard of pleased have the money just and the of benefits they've our lost month mentioned you and their an it went grants bonus of that customers significantly We care June the have from. We're benefits. of from portfolio the that see don't some certainly we the numbers, XX,XXX Frankly, in car assistance, where during compares benefited month care extensions. month month of taken did just just extensions. to April. year. of month unemployment our the We granted First, They're of the quarter. the kind of X,XXX year, down to their April. to of May, in getting, government this Brad comes unemployment more idea Well we the To the extensions June give the X,XXX X,XXX. And extensions to ended. in did in on extent

So and you know it what the have June even though spike, beginning really of right an at had we month a normalized seems normal of to just extension. the granting crisis, over is extension today, the of number

at the X.X% Net we're with for that. a for quarter, down talked from We've bit just ago. and X.X% previous many year quarter with of partners very recoveries year quarter the compared auction pleased the this from in to the and losses ago. about terms a little from from first X% first in XX% So quarter year also up did down June auctions. liquidation quarter on in the second business an balance - our constituents and numbers. about That's flat actually year our a improvement the in We the of

have auctions the of happened, spite the that pretty values up in turmoil well. have of all So and this held things

very those so April, ABS Well that. second quarter have markets completely April. Brad ABS done pleased again, would And transaction we we’re shutdown. were to our mentioned see in normally our transaction in

a we out our May. to and did let late our went we at their securitizations. had subscription a did the advantage kept We while - peers Street that just of in with was we Wall times that so was oversubscribed. begin in waited of partners, and did And four And open tranche then we markets. in bonds. investment subprime And auto saw June, couple we had these a our in times bided our up And early couple partners window time we The banks. our touch we pleasantly of classes surprised June resiliency XX of one We oversubscribed. - level five we lowest our securitization. took and And again

cost widen, cost markets there Spreads X.XX%, Brad. did is of did we With for bonds it invested of funds blended X%, show higher financing but over to back of a so was still And our think have for nevertheless, a lot very a I'll I X.XX% demand acceptable us. than weighted deal once those turn opened up. those that, of January which

Charles Bradley

Thanks Jeff.

where going is back A to And originations to our of sort made less today. and of of caution levels we're or car point running of view, From we I sort marketing the new is there through the our because try There manufacturers new levels think the our COVID sit out cautiously. problem. and normal grow of cars haven't watchword lot slowly cars.

the our dropped to a have the quality. percentage is buy. those result bit. significantly, of our raise of credit of almost been we mix we've so But improved the We've X% new And a APR We in also to raised as beginning change. also little fees able things, sort cars

ratios Our LTVs down. payment are income are to down, our

getting better So we're paper. of really piece a

the As think can getting to were we not I and we get much those as getting back volumes volumes. we're

get be to industries’ volumes tell to think because the everything cars than other would bit, are. industry seems do and It the But cars. again, think proceeding are normal, seems is like the cars people depressed need liquidity. car down. we little they People sales across I mostly their I little functioning of new hard when have will a are breakdown when like caution with they a it's most slightly plenty though,

so regardless drive almost going our to industry And the of economic that's conditions.

that. take to able been we've of So advantage

had that stuff. doing are fact we've benefit doing the really The the that good. And pointed the level been normalized to we'll large, we extensions what granted, most we we We've very of improved might average But little to we're before. numbers collections. have DQ better collection down a have be than, technologies it been back able call great. As the from government get I a doing got lots The the getting out just and well. part, and think for by new is

as about long for are so be building the new we've there's, been auctions get pointed it has. flat the would them We starts a asked that sort long and about performance, to auctions, starts values as year-over-year. expect time a out, - just car as good the you of And the the until auction great. are waiting rebuilding, car production to of for now it Everybody new going kind

problem. So we don't have that

mentioned, we come markets snapback As have - ABS rather well. the

on Wall liquidity is Street good. the think we So very

thing, many still when right in very all pleased it's we're the end. kind of with ways, So considering midst circumstances, everything's in to going this that's the in the direction, God knows other all COVID how going. we're going of which But than

after And really approach. overall, we're think of the and to the questions. I'll take going the make see just I the comments wait rest

for questions. open up we’ll So

Operator

[Operator Instructions] Thank you.

Our from from first Joseph coming question line of is the Kyle Jefferies.

Your line is open.

Kyle Joseph

quarter. down April, you consistently of recent talked were extensions granted through they more terms that that for performing fell kind the and are the us gradually a sense extensions the or your deferrals the you about or April, you in and have Can deferrals in performance they of how been with high volumes performing? expectations, In the the give

Jeff Fritz

Well, fair long-term of analysis extension effectiveness. we a amount of do of sort

that decisions. show And XX-Q tables basis general, don't that. on really recent that good some on in those so, extensions, put we but document we data regular make we and have a our monitor most In extension any

been I and collections mean, I very do indirectly so cash example that for those that And confident the know I I Kyle, consistent. results, thing, guess one we're think have

amounts numbers May level April, were up made of slightly in were with and payments They compared been June have cash to that dollar the the May. have So actually customers the steady.

mean, customers we're that. one month to so that after that extension, think be and got that getting they've satisfied I And I they are that the then recognize track on

Kyle Joseph

And you of March how the economic what value give fair provision sort then us in the assumptions into terms in credit and can mark, those changed incremental the for those of XX? quarter, baking have forecasts, and sense a since are you

Jeff Fritz

straightforward each value a So one that pieces other two the million is The mark, that main kind $X.X one goes there of the it. monthly is on the portfolios One the of bunch into starting to like forecast more mark January from and and granular in fair looking bit a subtle. whole - at little a of portfolios value XXXX. basis is we're is is us just fair these, of of

a And forecast of at so, look we has the in portfolio and future. portfolio, monthly each losses each

maybe window like six-month that be a window six-month predict we've so judgmentally we picked a will the coming up. that - higher. XX% something And window like predict just over losses And

and in, today. mentioned, that that other little an baked then we're mark subtle, that is as richer and And on buying more effect yield we've paper we're yield the the mark. then juicer getting a so, And or the has a Brad

value that, look at your as so when at of look book. And your the we accounting, to fair for current existing value technically sort this of proxy a purchases you're supposed

seen is so, back up so just the paper today. on we've of in fair a And because marked we're yield little buying higher what portfolio cohorts slightly. the the value yield oldest is actually to ever some and went their we We the

yield. more But back you was have the it if that, something to to So in will. give do you order to comparable current

write-up the of part the a yield oldest fair cohorts. value was the so, And of on markdown portfolio to the

Kyle Joseph

for is where can And know give to I then one just volumes us they're talked and ultimately April, how June, goal gradually, were from in volumes trended July? - get May, us they - for you back last about you trending to a sense a one give me. sense the in Can you how

Charles Bradley

than we're - well really But a on with again, expect. we're maybe buying. a we probably up slower going doing would what obviously scale they’re actually Generally, slightly

worth probably adjustments lower So, the volumes. the offsetting yield are

summer growth. its and generally on, a time problem mean given great going summer I to they're going not as to be and the the So try everything's is real push other

would expect we’ll And month somewhat moment increases things that. And month so is, or it to just at dramatically go We to the so, levels, in very we're we doing watchword change react like guess back market be expect to is next XX going let up guess of whatever the don't or what with real I the caution. with that But a problem XX from down want slight the month-to-month. of It's we're to to sort that trend XX% like not those I probably, the to happens thing said, or would get fast unless market. going get to it’s important how the go - would either again, going we're like probably a something it something the causes sort or we We road. have well us COVID but buying. and want wrong at is, that we're something dictate the and fast have or economy to the liquidity - all

we're So, go. we're doing we fine managing as keep with We'll doing. just it what

little to number to grow, going a So we a put it. we hope say it's we were monthly, at hard on would If see. to but we'll a wanted minimum XX%

Operator

the Zhang [Operator Securities. from Jeff Instructions] Next from question of is line coming JMP

open. is line Your

Jeff Zhang

on. just wondering I values I a quick repossession on thoughts and recovery activities just action? you in terms what in regulatory near-term got of future are guys potential one was

Charles Bradley

repossess - now a is, auction I states that of cars to the think them. you is right the strong. about we as of remain going mean, there market five are few I markets There talked cannot sort still

benefit of as be and dramatic auction now maybe to so going as as car as get ramp car new high I the for were the car dramatically not better going COVID it best the perfect thing bubble And could they impact know would for is don’t much cars sales few be We But bubble. repossessions. they're used was so, to having and terms they manufacturers to from a going value. thing I in up going that And has demand certainly And of keeping as the that in in - unless maybe burst much again. burst almost expect say, new back production think the years. up last any kind meantime, built we're the to it's market ways, having to some it's new because going the to

few in states, of So a repossessions but we're it's dramatic. terms missing not

we again up until the be the stronger terms values demand that it it probably production, In catches new to of which happen get this new they're car car auctioned, year. to may not going

the would and rest rest So, be year the auction of values we relatively optimistic of both the year. repossessions the for

Operator

Bradley, don't Instructions] have may [Operator Mr. any continue. questions. I you further

Charles Bradley

you. Thank

improve are And to given about XX So our advantage that to our expenses, really add proceed looking going we're I great. times other I’ll still to to through probably collections, way. the best quarter. We're this of today, our technology, going all as such for we always and on, said, I it's we can. the going we're do. markets I we what but manage We're good guess able that's problems that We're to COVID can. cut operative mean, caution said of as and the course, a going word improve was when way have we quarter amazing second these take

is you you healthy for next attending. And hope get will to that speak Hope quarter. our it. everyone so, stays I Thank and continues, and through safe. this we'll And

Operator

until XXth for the will of website from after conference days Thank XX the number of consumerportfolio.com. a the via your July XXX-XXX-XXXX. be A at you. available identification have by beginning or call be www This The concludes time and two will now XXX-XXX-XXXX and day. disconnect live today's replay A this teleconference. hours call Please company's dialing broadcast the available wonderful lines conference at XXXXXXX.

Consumer Portfolio Services (CPSS) 22 Jul 202020 Q2 Earnings call transcript