CPSS - Earnings call 2 2023 | Consumer Portfolio Services, Inc.

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Operator

Good day, everyone, and welcome to the Consumer Portfolio Services 2023 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 that are not statements of historical facts may be deemed forward-looking statements. Statements regarding current or historical valuations are receivables, because dependent on estimated of future events are also forward-looking statements. are differ risks materially statements actual could forward-looking to results from such subject that to cause All those projected.

Portfolio to clarification. no further you XX as a any refer the new report whether annual I information, Officer; Mike With Chief Consumer of Financial Bharwani, filed forward-looking for otherwise. is Lavin, statements, or further to Officer Danny and Services. here events Operating Mr. The Charles and obligation Mr. assumes result Mr. today company us update Bradley, President publicly Chief Chief Executive Officer; company's March of

call I will now to turn the over Bradley. Mr.

Charles Bradley

you, quarter second quarter for Thank earnings good to another was welcome, and us. everyone, call. the It

what continue be consider should strong We with a move to we year. forward very

we've look it couple across was in sort somewhat influx in Sort it of this. the years plus highlights, of of I People event got a With guess, aggressive, The at years the doing of Everything great. a the happening industry. the back everything. windfall pandemic last whole changed you of really the the was all been performed XX sort during pandemic. have money, the but rare government was really of what dynamics to

year first XXXX became back normal we'll to what pre-pandemic we So the sort of we where should got business call kind the of be doing.

that to got because And everyone. be things people as probably out year and aggressive for industry 'XX of result of turned because government as just few of the a funding, out some the came such, in the a a of the about tougher pandemic

hoped, stronger most great not quite doing is in the is probably as much paper It's than 'XX our that, also said we have might it having as industry. but So well.

on progress be have better. we that's should having pandemic. the performing. based even pleased in what be 'XX new really really that And some an making the with to forward, sort then we're So of perform happened paper well. but after struggle, we're very ongoing normal continues It how going

looking again, improving. our that again, year the of We're 'XX, we've to forward it's performance. very the the kind And got good. be of So nice should hands around rest

of the pandemic, again, more and lifeblood run 'XX cost the Probably had 'XX, we the lowest And during our of we securitization kind is of prices. during and quickly. business. of the market, funds very it's important how some And in long certainly of they that long, to with And started able go possible were then, up raising a our along we and course, going time.

much charging today, where And sit is more. though are we even funds we so also cost more, as of the

call entire market -- securitization, And at leveled able we'll actually call was and absorb so not terms of And what performance. we've funds. been to now now securitizations we'll lot with the in actually the share have market what we've of last in problem flat our really a cost normal a new our out the again, or of that of had row X a cost normal funds

securitizations And don't been going what in And now cost, we we've funds looking a we it concerned can need again, not reach the X of we're at to that flattening keep same cost just with is. as for. the up. probably basically row with say We

been spreads rapid That though in even of is very were, go have not cost the the that important. funds to last have rate continued again up, rates week, enough able importantly, even flat. tightened more some to the but we've keep And they very, so

and massively what other we're oversubscribed, tranches just up The fits important down last market that, working clearly as with well our even securitization that's and part is since was securitization doing. of all really is perfectly

us. of backbone work things how the for of sort that's Again,

recession judge, you around out very, the the We having economy, there's So a unemployment very a like days, go it a very important. these Overall of hard be again, other as itself go of It's government the if has to one quarters problem strong. been bit, in about that, goes time. to probably prove -- perfect. couple last can what is going is see continues corner. debate. Even way. economy unemployment, up Are say really it the don't. Generally, the okay. a doesn't to We think we up But always ever. really, little the the landing looks long for soft again have time a not they which up the all to we problems think first remain That's care as lot. Unemployment most good we looks for would

can I'm started very financials. good looking few has the grow we start to exactly to we're as exciting where the that's go is it a comments, to it's to for now, going where a 'XX and and future do. most it most year but the have to as to get over for to going again again, Danny back us, So over rate to us year, more off and normalized I'll turn not a much run still important

Denesh Bharwani

Thank you, Brad.

Let's quarter. with million go from million, -- in up $XX start over X% that's prior Revenues the $XX.X for quarter, the the revenues. year June

accounted that has period, the up XX.X% only million overall. left. the CECL, revenue legacy million X% yield. for $XX year-to-date portfolio, million, from about $XXX.X is under value really not key fair XXXX. is for which the For driver The It's not portfolio is The $XXX of yielding

not contributing really anything So meaningful to interest it's really income.

of had $X.X and The $X.X value the for million change year second the note total of 'XX a million quarter with markup X-month fair markups prior other thing period. of fair revenue the value in the is

increase for the period. revenue for those XX% year-to-date remove XX% actually is you the and If the quarter markups,

increase June XXXX. for June to $XX.X million the the $XX.X up larger the in securitization $XX.X increase the million are to, funds. the and interest is mainly in year-to-date in rise of the XX% period is alluded by up the from of XX% $XXX itself, year, is the expenses for expenses, to from XXXX. of balance up contributor is -- main $XX.X quarter, Part March, in million that main Brad from increase, due million of current the debt the but in cost on in year-to-date slightly million The the June reason expense, in really Moving the as from The debt.

for to rather it's versus June June this was to the accounted in reserve quarter includes accounted not adjustment under value, for $X legacy adjustment also year. an of quarter portfolio, million expenses our and million to the we fair in That year provision, loss under relates the last portfolio posted had CECL. on reserves the that's periods The reflect loss All this an to portfolio. is legacy for $X.X the the

adjustment by million for which compares million, the loss last in again, $XX.X reduction year-to-date the reserves year. reduction period as that that, to period, year-to-date works is to the legacy provision portfolio. to driven a that $XX.X expense a the For And

earnings the Pretax in second the $XX.X for quarter, of million million, last year. $XX.X down XX% quarter is from

million million year-to-date $XX.X the the year, net the million rates follow pretax rise for in expenses. this quarter mainly period causing for the trends driven year. year-to-date million compared same $XX.X in period, The by earnings last the $XX in For increase interest to XXXX. second income, $XX Again, for

XX% of For reduction the versus net income a year, this X-month or XXXX. million million of $XX.X X compared quarters period, to the $XX.X

debt, compared quarter our we're -- securitizations. structures the is is year. the to necessarily not all of XX% sheet much June couple all The for up last the over but of in value which our go the $X.XX is XXXX. second to in which leverage second per fair the growth the the $X.XX because as compared of to period growth receivables components in point period down that the outpacing share simply to things I our of securitization not $X.XX year-to-date I'll compared as We're of leveraging to billion note. makes earnings XX% value balance the our year, increase quarter year-to-date quarter And current won't in receivables is the for are past. Diluted stronger. for out showing sheet, $X.XX for in used the Comparing $X.X line, balance of the a debt fair last the we that is the our

our Another in year XX% able from same And sheet that the note by million we've million. ago. XX the That's June $XXX in driven year, shareholders' of this been is item shareholders' to a balance we that's equity. $XXX quarters pretax consecutive the up the highest-ever of the profit point posted generate. balance of equity of

the We having the rise pretax equity. are our and shy positive our in XX our profits X of year full of -- shareholders' to years profits sheet strength balance of contributing pretax -- that's

interest quarter, Looking at the current quarter. the rates is the our to portfolio. from in margin the down is in some $XX.X interest rise compression $XX.X net $XX.X but from The partly million by margin slower driven metrics. the value in net last it's yield down XX% million million interest rise That's year. in March in X% the on fair The the other compared

in margins. yield fair rise that's causing the take catch to in little a in portfolio interest bit So the manifest the rates. will moment, net the the that to and compression up longer for And the value interest

operating X% that the X% against in prior the quarter. million now X.X% $XX.X in from and the Our to down of portfolio, is from That's operating the down expenses core million $XX Measured it's X% year. compared in the second and year. of in last up quarter quarter, expense March last core from XX.X% managed X.X% quarter,

in the our growth portfolio flat, our leverage diligence we're the see in metric. and we're expenses operating some to So see beginning in improvement starting the keeping to

the the last down on of X.X% assets managed finally, And return is the in from X.X% March second as quarter, in quarter the year. same X.X%,

call will the due Mike. earlier. X.X% was NIM year-to-date assets period, primarily last on X.X%, the For I down that the the to discussed compression turn we year, also return managed from to over also

Michael Lavin

Thanks, quarter a $XXX $XXX That and million $XXX QX remained of as new purchased Danny. we of second second quarter million solid In the compares during contracts. million whopping XXXX. the in originations, to

headwinds. as was volume to back macroeconomic in reduction that we due certain scaled purposeful Now

the to our continue kept on we with credit product keen tighter consumers. operate We a eye box, our for of a affordability and

to One firm actually average trended relatively our And a is down and tracking is and the our maintaining inflation is for good is The metric payment for In payment, right that in which key good, rates we customers. is QX is over the was affordability, our we're affordability of continue flat ratios. which terms well remained DTI our credit the considering now for payment-to-income hold QX. that and below in remained our the space on average customers. PTI $XXX. indicator quarter, industry good box flat, debt-to-income for monthly the That which raising

As demand product the I reported remains for our strong. quarter, last

is a We than slightly in seasonality, tax to due are expected QX, less X,XXX that's applications getting day, but roughly season cetera. which QX, et

XX%. of The the to that bit amount is Our of down ticked directly a about $XX,XXX, quarter-over-quarter which down XXXX. in And good, financed was is rate for to moving used of average the $X,XXX QX XX% cost up which approval related course, in cars. QX, from and is $X,XXX quarter

Most continue quarter-over-quarter higher of and APR higher hold important, of we strong about was QX is APR we in QX, registered point where average XXXX, to XX.XX%, XX.XX%. in which the average APR X significantly than an a which

that about the to despite know march a is February credit that we did our important XXXX. tighten tightening thing towards into and continuing our in early of XXXX to So higher box APR

sort on of terms And continued of quarter, pull their our banks smaller out some we correlates sort of That friendly and banks, of completely competition, back last in demand. seen we've competitors strong originations. the more regional into In our competitors space. the of cutting saw

reps tremendous in of of that, an application. that, X,XXX roughly market XX,XXX of the X,XXX us to an remains end, dealers funded sufficient with that performance. with contract population currently historically look could a send second basis to grow dealers application. There circular to To us have as upside the we that deploy we good on us send And sales to us portfolio this quarter And and year. dealers a for territories a in that do continue

the unemployment But in interest as raising that also in the Brad of certainly there definitely a recent macroeconomic weighing on Brad which that of are important that Inflation beginning remain last in as fantastic is the last is some for issues half more us. Moving mentioned, to our are year, were of that's of performance. portfolio more rates acknowledged. some balanced rate, market year. vintages in the headwinds with and metric an out There's

total the quarter, to in inventory DQ, the So portfolio of in up same repossession the including XXXX. ended our quarter XX.XX% X.XX% compared as at in

quarter. and quarter, Our of for of repossessions losses quarter in were slightly of annualized climbed net recovery Good Extensions as quarter XX.XX% compared rates. on X.XX% the to the charge-offs which which, helps as continued recoveries the in in up the news the to were the XXXX. portfolio front, rising recovery in same course, offset the X.XX% trend

is course, dipped where into mid-XXs. beginning in they year from percentile rates, XX now about XX% they in XX below the again, the rising of recovery That, but to down COVID-related percentile, now were -- of historical they're, well from the at the and the this the

So that's trend. a good

to when performance. collector is good quarter, otherwise accounts we improve to to performance. allow market. lower One in employ in to will labor So amount and several a do good us tends for strategic improve continue collectors that we changes us our in That that, were the tough per what trend successful hiring of is a we unique our

our are but third-party to A to journey on success. our from to of complete. more stack technology We miscellaneous set, couple our collection X-year best more to practices to customers. nearly leverage our with sunset dealers we intelligence-driven items continue of artificial great nearshore business for technologies, is system bonds legacy nearly our and the also The employ make technology our mostly is margins continue vendors add our program efficient

time, and is quarter, us For we down really allow fund care dealers, cut launched designed processing is they for an will faster originations in what AI-driven to the which that we about. technology to think example, on the which

per bot will think of that collectors' help expense operation us lower to servicing, in should contacts we intelligence-driven we nearly Some ancillary streamlines percentage continue is like originations. efficient expense complete the to hour, collection employed, the And with to that more servicing. benefits which pilot employ in allowing that our performance. is artificial workflows are calls more more of help hour In an the like improve strategies be operating it AI per will our product originations

that, I'll Brad. it kick So with back to

Charles Bradley

Mike. you, Thank

can kind of rebuilding overall, as you think like 'XX years, much we tell I So year. exciting as been slightly has

up had the 'XX ourselves let's forward of got is for 'XX, pandemic we out benefits So 'XX. the you've is the Again, the of set around then And normal make going 'XX your be. move all sort 'XX and in sure to we that the and in 'XX hands figure future. was what you

So point, sense. we we at this bit in the think we're through more exactly a where year, and the to year, than little want halfway obviously, we're be that halfway through

let's bigger. we're now so grow, get And back to mode, let's the

do things all Let's can. we

should depending that in Again, is that potentially important relatively healthy. know that financial which the flat our markets down soft are you the know we things side We cost be on take. recession of of and funds landing

So of we our knowing in move the economy, waiting at things arms can we've we of point, in of our on. this terms around have performance, And terms in like forward. those the cost sort been are terms things funds, probably we and of feel that, again, of those

much build we out we for all So all portfolio. see how you have of forward the With over we to that, that's going in speaking get next, and to grow you into can our year and quarter. attending. the for again think next Thank and I rest today, let's look this and

Operator

This will this have now concludes at the your day. teleconference. X Please hours beginning a today's lines available XX disconnect months be and at company's for A from wonderful website replay time, www.consumerportfolio.com. via

Consumer Portfolio Services (CPSS) 3 Aug 232023 Q2 Earnings call transcript