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Edited Transcript of CPSS earnings conference call or presentation 13-Feb-19 6:00pm GMT

Q4 2018 Consumer Portfolio Services Inc Earnings Call

Irvine Mar 1, 2019 (Thomson StreetEvents) -- Edited Transcript of Consumer Portfolio Services Inc earnings conference call or presentation Wednesday, February 13, 2019 at 6:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Charles E. Bradley

Consumer Portfolio Services, Inc. - Chairman, President & CEO

* Jeffrey P. Fritz

Consumer Portfolio Services, Inc. - Executive VP & CFO

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Conference Call Participants

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* David Michael Scharf

JMP Securities LLC, Research Division - MD and Senior Research Analyst

* Kyle M. Joseph

Jefferies LLC, Research Division - Equity Analyst

* Jim Henry

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Presentation

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Operator [1]

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Good day, everyone, and welcome to the Consumer Portfolio Services 2018 Fourth Quarter and Full Year Earnings 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 within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Such forward-looking statements are subject to certain risks that could cause actual results to differ materially from those projected. I refer you to the company's SEC filings for further clarification. The company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

With us here now is Mr. Charles Bradley, Chief Executive Officer; and Mr. Jeffrey Fritz, Chief Financial Officer of Consumer Portfolio Services.

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

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Charles E. Bradley, Consumer Portfolio Services, Inc. - Chairman, President & CEO [2]

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Thank you, and welcome to our year-end conference call. I think, in looking at the numbers, well, first, looking at the numbers, they're a little bit garbled because in both December of this year, the 2018 and December of 2017, we had some tax accounting that affected the overall numbers. Going forward, hopefully, the numbers will be a little cleaner, a little easier to figure out. But dig into those, we actually had a pretty good quarter. I think, importantly, the fourth quarter is probably better than we expected. If you noticed, originations actually grew for the year. We actually thought we might have a down year in terms of portfolio size and in originations, and of course, that wasn't true. For the year, we actually originated $900 million versus $860 million last year. So -- and that's really important because what we don't want as a portfolio, the managed portfolio to shrink. Once it starts shrinking, it's kind of takes a big effort to get back going again.

So one of the things to take away from 2018 is that, in fact, the portfolio didn't shrink at all, it grew a little bit, and somewhat even as important is that the overall originations grew. And so in the year, we thought it would be flat or slightly down, we actually made some progress going up.

On the downside, the delinquencies are up in the fourth quarter. It's probably worse than it looks by a bit because the fourth quarter is always the toughest months for collections and DQ. Also, our portfolio hasn't been growing. We've now been fairly flat for almost 3 years. With that, you're going to start to see the worst of the worst. This is when companies had bad delinquency numbers and they're growing like crazy, that should be a real red flag. But for us, we're a fairly flat portfolio. You're seeing delinquencies up a little bit, but really, if we were growing even a little bit, you wouldn't even notice them. So as much as we certainly are concerned with delinquency and we keep working on that, it's not something we're really concerned about in the fourth quarter number.

On the other side, the losses are down. So again, the losses that hopefully will continue to trend down, but I think, it goes part and parcel, we're not going to get overly excited about the losses being down until they stay down for a long time. But again, it's certainly a good news that they are down in the fourth quarter, which some ways, it's a little more important than delinquencies.

In terms of the full year, we did -- we spent 2018, and I think, I had mentioned in the past, we still think the competition is quite frisky out there. People are still very aggressive in trying to do things. And so we really wanted to sort of spend the time managing our portfolio, making things better, so that when we have an opportunity to grow, we're going to be well set up to do it. We put in this the new scorecard in sort of midyear, but it really probably took effect in August. The results from that new scorecard looked very promising. That was a big project in 2018. The second half of 2018 originations are probably some of best originations we've had. So we think the results there can be promising. I think, we've been talking for probably a couple of years about getting things ready and sort of being ready to grow again. And I think 2018 was better than we expected. However, we're very good and happy that it's over. We're looking forward to 2019 and much better things, which I'll get into more after Jeff runs through the financials.

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Jeffrey P. Fritz, Consumer Portfolio Services, Inc. - Executive VP & CFO [3]

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Thanks, Brad. Welcome, everybody. We'll begin with the revenues. Q4 revenues were $91.2 million, that's a 5% decrease from the third quarter this year of $95.6 million and a 15% decrease from the fourth quarter of 2017.

The full year revenues of $389.8 million, is a 10% decrease from the full year revenues of 2017. And of course, as we've discussed, this year, the story on the revenues, it's really 2 things, primarily the adoption of the fair value methodology of accounting for the 2018 originations. As we've said, the losses are baked into the revenue recognition methodology for fair value, and so we've seen significant decrease in the revenues as a result of that. And then also as Brad alluded to just the overall portfolio has been fairly flat for the year, which is going to add a significant contribution to impact on the revenue recognition.

Moving to the expenses, $86.4 million for the fourth quarter. It's a 5% decrease from the third quarter of this year and a 13% decrease from the fourth quarter of 2017. Full year basis $371.1 million of expenses this year, that's an 8% decrease from $402.3 million last year. And really on the expenses, we've got some increases in core categories, which are largely offset by -- entirely offset by decreases in the provisions for credit losses because there are no provisions for credit losses on the 2018 portfolio, which is being accounted for in a fair value method.

Looking at the provisions for credit losses, $25.1 million for the quarter, that's a 21% decrease from $32 million in the third quarter of this year and a 43% decrease from the fourth quarter of 2017.

On a full year basis, $133.1 million of provisions for credit losses in 2018, a 29% decrease from 2017. Again, all being driven by the legacy -- the shrinking of the legacy portfolio, what we call the legacy portfolio, which was on the books at 12/31 of 2017. Incidentally that portfolio now is 31.5 months old. And so you get kind of a feel for the aging of that portfolio as we go forward here.

Pretax earnings, $4.8 million for the quarter, a 2% increase compared to the third quarter this year and a 41% decrease compared to $8.2 million in the fourth quarter of 2017. Full year pretax earnings $18.7 million, and that's a 42% decrease compared to the $32.1 million in pretax earnings we had in 2017.

Net income $5.4 million for the fourth quarter, that's a 69% increase compared to the third quarter of this year and a 154% increase compared to the $10 million net loss last year. We're going to talk about that here in a minute. The year-to-date full year net income $14.9 million for 2017 (sic) [2018] and that compares to $3.8 million for the full year of 2017.

So let's clarify that a little bit. So this year, in the fourth quarter, we had a $2.1 million net tax benefit that impacted the net income. The bulk of this onetime net tax benefit had to do with our adoption for fair value accounting for the tax books, effective 1-year earlier than we adopted it for the GAAP books. And so without getting too much in the weeds, we basically, as I just said, we just retroactively adopted fair value for tax 1-year earlier and that triggered a little tax benefit that we booked here in the fourth quarter. And then, as Brad alluded to, last year in the fourth quarter, as a result of the change in the corporate tax rate, we wrote down the deferred tax asset on the balance sheet with a big noncash tax adjustment and that flowed through as a tax expense in the fourth quarter of last year. So it's a little tricky comparing those numbers, but we've talked about most of that before.

Diluted earnings per share for the quarter of $0.22, that's a 69% increase compared to $0.13 in the fourth quarter of this year and a big change compared to $0.46 loss in the fourth quarter of last year. Year-to-date basis, $0.59 diluted earnings per share compared to $0.14 for the full year of 2017, again, greatly influenced by those tax numbers last year.

Moving on to the balance sheet. No significant changes in the balance sheet, the financing structures, but you can see now since we break out what we call the legacy portfolio, the finance receivables portfolio, net of the allowance, it continues to shrink. It shrunk 10% in the sequential quarter and it shrunk by 34% compared to last year at this time. And we have a separate line in the balance sheet for the fair value portfolio $821.1 million at December 31, and that's kind of what's left of the $900 million that we originated in 2018.

No significant changes on the debt side of the balance sheet. We continue to do our securitization transactions every quarter, which I'll talk a little bit more about in a minute.

Let's take a look at some of these operating metrics. The net interest margin for the quarter was $64.8 million, that's a 7% decrease compared to the third quarter this year and a 22% decrease compared to the fourth quarter of 2017. For the full year, net interest margin $288.3 million is a 16% decrease compared to the full year of 2017.

The ABS costs have trended up generally throughout the year, although very slowly, but have trended up. And the total blended cost of the ABS debt on the balance sheet in the fourth quarter was 4.25% compared to 3.82% for the fourth quarter of 2017. So you can see that over the full year, there has been a significant increase in the ABS cost of funds.

The risk adjusted net interest margin $39.7 million for Q4, that's up slightly from about 5% from Q3 of this year, and it's down just 1% from the fourth quarter of 2017. The full year risk adjusted NIM $155.2 million is almost flat with the full year risk adjusted NIM from 2017.

Looking at the core operating expenses, $34.9 million for Q4 this year, that's up 5% from the September quarter and up about 10% from $31.6 million in the fourth quarter of 2017. The full year core operating expenses $136.5 million is up about 11% from the full year of 2017.

And so again you got a couple of things going down -- going on here in the expenses. There are some increases in core operating expenses, such as employee cost and occupancy, but another big thing happening here as we talked about is the fair value accounting doesn't allow us or precludes us from deferring certain costs associated with originating contracts, which we've incorporated in the prior years. And so I estimate there's probably about $5 million of expenses that we recognized this year that had we not switched to fair value accounting, most of that would have been deferred to be recognized in future periods.

Looking at those numbers as ratios, the core operating expenses as a percentage of the managed portfolio 5.9% is down a little bit from -- excuse me, up a little bit from 5.7% from the September quarter this year and also up a little bit from 5.4% for the fourth quarter of last year. And the full year ratio, operating expense ratio of 5.8%. It is up from 5.3% for the full year of 2017.

Looking at the credit metrics, the delinquency, as Brad alluded to, 13.88% at the end of the year, that's up from a 11.6% in September and 11.3% from a year ago. Seasonally, the fourth quarter is always our most challenging quarter. And as Brad said, with the growth in the portfolio being very nominal, we don't -- those numbers don't benefit from any growth dilution in that denominator. The annualized credit losses were down a little bit in sequential quarter, 7.2% compared to 8% in Q3 of this year and just down slightly from 7.24% last fourth quarter -- last year's fourth quarter.

And the annualized losses for the full year 7.74% compared to 7.68% in all of 2017. One thing you monitor, of course, is what we're getting at the auctions. We have seen continuously a little softening in those markets, 33% for this auction activity in fourth quarter of this year is down a little bit from 34.8% in the third quarter and 34.7% for all of 2017.

Quick look at the asset-backed market. So our fourth quarter securitization 2018-D we completed in October of 2018 that was a $245 million transaction. The markets were very strong and very receptive to our bond offerings at that time. In fact, we achieved the lowest weighted average spread since at least 2011 from any of our securitizations. We have 24 unique investors and achieved a 4.25% blended coupon on that transaction.

And then more recently, you'd seen the release, I think, last week, for the 2019-A transaction, our first quarter of '19 transaction, actually had slightly wider spreads and a little softer market, but the benchmarks actually sunk a little bit during that period of time. So even with the slightly softer demand for the bonds, we achieved a lower blended coupon 4.22% for that securitization. So I guess, the message there is that overall, those bonds markets continue to be very receptive to our offerings and it continues to be relative bright spot of the company's business.

With that, I'll turn it back over to Brad.

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Charles E. Bradley, Consumer Portfolio Services, Inc. - Chairman, President & CEO [4]

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Thank you, Jeff. Again, so looking at sort of where we sit, Jeff mentioned the fair value. So 2018 was the year of making some changes. We're really focused on upgrading our marketing, getting more reps back in the field, connecting with the dealers. As much as everybody things automation is the be all end all, getting into the dealerships, talking to them is still very important. So we sort of changed our strategy slightly there.

Originations, with a new scorecard, our originations quality has improved substantially. We've actually gave up a little bit on the APR and the discount, which we're going to try and get back as we move forward in 2019. We're fairly confident we can do that and then that will add substantial to the bottom line if we accomplish that. And then with the new scorecard, we had sort of a shift mix, where we're actually buying more higher tier. And so as much as the losses there are good and will contribute to the bottom line, we'd still like to have a blend a little more sort of the normal than we've had, which is more profitable by having some of the more profitable deeper paper. So that's the project for 2019.

But more importantly, it sort of shows that what we were doing in terms of the scorecard in originations in 2018 has worked very well. As far as collection goes, our collections is always going to be challenge, but we have 5 branches, all 5 are operating quite well. On occasions where that isn't always true, but it is right now, and so we're in real good shape there. To the extent, we need to expand, there's a little bit of room for expansion in all the branches. So our collection sets up very well.

As Jeff mentioned, the recovery in the auctions was down just a little bit. It would be nice if I can see that come back some. I don't know that, that will happen any time soon. I think, a lot of customers or folks out there would rather buy used cars just because new cars have become so expensive, used cars are of good quality, they're certified new or whatever they call it and so. They get almost more quality buying a used car rather than buying a new car. And as a result of that, that's going to have some effect on the auctions.

But nonetheless, we think that's all good. As I said, in terms of growing the portfolio in the fourth quarter, originations wise, we would expect that trend to continue in 2019. So the net of all this is, we've had sort of a down cycle in '15, '16, '17 and '18 or in '16, '17 and '18, I would like to think 2018 is going to be the low point. And from here, we move forward and up, both in terms of originations, originations quality, collections performance. The only sort of downside will be probably the cost of funds in the marketplace goes up a little bit as the rates continue to rise. But if we get some growth and get the sort of better performance that will easily offset there. As Jeff and I alluded, the fair value accounting, that was a significant change to avoid the CECL hit in January of 2020. It's possible that lot of other folks will adopt fair value. If that happens, we'll be ahead of that game as well. So 2018 is as much as it worked out better than we expected. So it's nothing to write home about, we want better results, better everything. But we did accomplish a bunch of different things in 2018 that will help us in the future.

In terms of looking at the industry, everybody is still hanging around and waiting for the consolidation to happen. There's lots of talks out there about what's going to happen. People are all waiting around to see these big companies make decisions. All the private equity-backed companies are still there. There's been a few smaller companies or portfolios in the sort of $100 million, less than $200 million range that are beginning to trickle out, but the really big ones are what everybody is waiting for because once the big companies either the PE companies decide what they're going to do, whether they can establish the market value or not, that also will be the trigger for all the companies to make their decisions. And so we think -- I think in 2016, '17, a lot of people, including myself said, gee, there's going to be consolidation in the industry, but in 2018, the companies involved started saying, they were going to do something. So to the extent that's true, then better they're talking about it than us. And so the fact that some of these companies are saying they're going to make some decisions and try and do some things, hopefully will then start the ball rolling for everyone.

And our whole goal is to be sitting in the right spot at the right time to take advantage of that, either when some of these large companies go away or maybe we can purchase one or any of those things to the extent they get some stunning valuation that tide will float all boats including us. So that would be okay as well. But nonetheless, hopefully, 2019 CE is finally to shake out that some of these folks in the industry. And again, with what we've done in the last couple of years, we're in a great spot for that.

In terms of the big picture, there's been a little bit in the news about delinquencies being up across the industry about sub-prime debt or auto debt being up. I don't think that -- it's somewhat interesting, I guess, that's maybe the result of people growing and being aggressive. I think, the bottom line for us and what we certainly care about and probably even the industry is unemployment. Unemployment is really the answer to everything in terms of performance. If we have a recession, unemployment goes up that affects our production, our performance, everything. But today, unemployment doesn't seem to be a factor at all. So we're not overly worried about that. We think, our delinquencies are fine. I think delinquency trends across the industry might be a little interesting for some other folks, but not for us. So I think 2018 is done, behind us. 2019's started. We have high hopes for 2019. And again, we'll be talking to you soon enough to see how that works out.

So let me open up for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question is coming from David Scharf with JMP Securities.

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David Michael Scharf, JMP Securities LLC, Research Division - MD and Senior Research Analyst [2]

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Brad, I'm wondering how we ought to interpret the very strong volumes to close out the year as we think about the 2019 outlook because your commentary on the competitive backdrop doesn't seem to have changed. And the macro environment hasn't changed. Was the big spike in volume, which was particularly surprising for what's usually the seasonally slowest quarter? Was it somewhat related to buying a lot of higher tiered credits as you were testing your new scorecards? Or is there something else going on that reflects maybe a shift in either demand or competition?

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Charles E. Bradley, Consumer Portfolio Services, Inc. - Chairman, President & CEO [3]

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It's a good question. I think, we've looked for other sources. We've done some sort of not quite joint ventures, but some flow programs with some other lenders. And so we're getting some looks at other sources just above and beyond our normal dealer flow. And so they're still sort of in the beginning of seeing how they go, but that could provide some additional volume during 2019, and certainly, probably did in the fourth quarter. We're not really quite sure how it's all going to work out, but it's an interesting avenue of getting some looks and some turndowns from some banks and other various companies. But that would probably the answer to the volume in the fourth quarter. If that continues to work that will be great for 2019. And I agree with you, the industry has been more like we said, the industry is still quite competitive, people are still out there. They want to put the best possible picture on their company in the hopes of getting something to happen. So until that changes, there's going to be that competitive background. But even having said that, we've been around a long time and so we've been able to set up some alliances and stuff that should hopefully provide a generally good flow paper regardless of what's happening in the industry.

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David Michael Scharf, JMP Securities LLC, Research Division - MD and Senior Research Analyst [4]

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Got it. And normally, we would be thinking about the first half of the year, both Q1 and Q2 of being strong origination quarters than the fourth. Were these flow programs, extra looks, I mean, should we interpret the fourth quarter as a bit of an outlier? Or is that a good jumping off point for modeling the typical seasonality?

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Charles E. Bradley, Consumer Portfolio Services, Inc. - Chairman, President & CEO [5]

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Well, in terms of typical seasonality, I would look at it as an outlier because I wouldn't expect this fourth quarter of 2019 to have a better volume than the first 3 quarters. So what we would hope is that the first 3 quarters of 2019 do jump off from the fourth quarter of 2018, but then maybe you get the seasonality back for the fourth quarter of 2019, but there is a little bit with the government shutdown and the tax returns and some other stuff that the first quarter may push a little further out. But generally speaking, we would expect first quarter, second quarter, third quarter, particularly first and second to be the growth quarters. And then soften a little bit in the third and then slowdown in the fourth. So the good news is, we kind of hope the fourth quarter is a jumping off point for the next couple of quarters, but I wouldn't bank on that being a change in the seasonality of the fourth quarter.

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David Michael Scharf, JMP Securities LLC, Research Division - MD and Senior Research Analyst [6]

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Got it. And maybe a question for Jeff. The -- obviously, it's 31.5 months that legacy portfolio is becoming quite aged. I know, it's a lot of forecast go into answering this question, but can you give us some sort of ballpark of how we ought to think about maybe quarterly provision expense exiting this year? It seems like sometime in 2020, it should go away. Would it be below $10 million, do you think in the fourth quarter of 2019?

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Jeffrey P. Fritz, Consumer Portfolio Services, Inc. - Executive VP & CFO [7]

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I don't know if I can predict that, but I can tell you, in 2020, it will go away because what will happen, if we adopt CECL for the legacy portfolio, which we -- it turns out we may have an option there that we haven't talked about yet. But if we adopt CECL for the legacy portfolio in 2020, we'll take a provision -- onetime provision to establish the remaining lifetime allowance on that portfolio, right? And so there won't be any provision expense on the legacy portfolio. And in fact, I can tell you really after January 2020, there won't be any provision expense in the legacy portfolio one way or the other. For this year, I mean, I think, what you can do maybe a little bit is look at the progression, the sequential decrease in provision expense during 2018 and probably extrapolate off that a little bit and get you kind of in the right ballpark.

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Operator [8]

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Our next question comes from Kyle Joseph with Jefferies.

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Kyle M. Joseph, Jefferies LLC, Research Division - Equity Analyst [9]

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Jeff, just a quick modeling one. Any outlook on the tax rate for going forward here? Any changes there?

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Jeffrey P. Fritz, Consumer Portfolio Services, Inc. - Executive VP & CFO [10]

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Yes, I think, it might be a little higher than we've used last year. I would do around 35% on the tax rate.

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Kyle M. Joseph, Jefferies LLC, Research Division - Equity Analyst [11]

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Okay. And then just transitioning back to cost of funds. It sounds like the first quarter deal actually had a stable cost of funds with the fourth quarter, but we're seeing the cost of funds up year-over-year. Given we're getting a little bit of pause from the Fed, can you give us a sense for your expectations for your cost of funds going forward?

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Jeffrey P. Fritz, Consumer Portfolio Services, Inc. - Executive VP & CFO [12]

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I think, we feel pretty good about the cost of funds, right? So the Fed seems to suggest that they're going to take their foot off the gas pedal a little bit on rate increases. And even though and as I said, we were maybe a little bit, I don't know if disappointed is the right word? But we observed a little bit less of a, kind of, a demand of a feeding frenzy, if you will, for the January deal compared to the October deal. But even with that, slightly softer market, with a little bit of a depression in the benchmarks, we actually did better on the blended cost of funds. And so it continues -- as I said, it continues to be a part of the business that we're really pretty satisfied with, not too many things to complaint about on the asset-backed front.

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Charles E. Bradley, Consumer Portfolio Services, Inc. - Chairman, President & CEO [13]

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Probably it's worth noting that as much as we've had sort of the tax things in both December '17, December of '18, the accounting rules and also our fair value change, the Wall Street world is working with risk retention. And so they've put in the U.S. risk retention rules earlier this year. Now they're trying to put in the European risk retention rules. And so that affected our first quarter of '19 deal. So assuming they sort that all out, one would assume that the demand should be just as robust as it's been with our interest rates not going up or at least for a little bit. I think, you probably have a fairly good outlook on what's going to happen. The good news overall of that is that the demand for these bonds has been great. It wasn't perfect, as Jeff pointed out, in our first deal 2019, but I think that has much more to do with the European risk retention rules than anything about the market. So one would think once -- it was because of the very beginning of the year I think people weren't sure how it all worked. Now I think, they've sorted it out, it will probably go back to what we would expect going forward. As I said, probably 2 things we care about most in the world is we care a ton about unemployment, we care a ton about the ABS market being there and functioning well. And so the good news is, both those things are great. No unemployment problems and the ABS markets look about as good as it is ever going to be even with adjustments for risk retention both U.S. and Europe.

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Kyle M. Joseph, Jefferies LLC, Research Division - Equity Analyst [14]

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Got it. And then one last one for me, just modeling follow-up question. Jeff, on the $5 million of expenses, you guys have to recognize upfront because of fair value accounting. Which line items were those in specifically?

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Jeffrey P. Fritz, Consumer Portfolio Services, Inc. - Executive VP & CFO [15]

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It's almost all in employee expenses.

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Operator [16]

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(Operator Instructions) Our next question comes from Jim Henry with Automotive News.

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Jim Henry, [17]

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I had a question about affordability. There's a lot being written about it, especially on new cars. Does an affordability problem on new cars creating more demand for you all or do people switch to a cheaper used car? Or is that not so much an issue for you. The issue for you is more availability and availability is good.

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Charles E. Bradley, Consumer Portfolio Services, Inc. - Chairman, President & CEO [18]

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Yes, I think, it's actually positive for us. I mean, at this point, I wouldn't want to be a new car manufacturer. I think they're having a very tough time. They had tight margins before. I think their margin today have to be minuscule. And so, there certainly was an overproduction of cars for the last couple of years. So until that bubble or whatever they created goes through, I think, new cars are going to be a problem. And just to make that problem somewhat worse for them, used cars are better now. Used cars are better made or the cars are better made, so the used cars last longer. I just think -- I think it's -- it is an affordability thing. I think customers are saying why wouldn't I buy a 3-year old car rather than a new one, 3-year-old cars look pretty darn new. And so I think that's going to affect the auction somewhat. But I think it's actually really good for us. I mean, if anything, it's going to continue the trend of the sub-prime lenders and near-prime lenders doing quite well. So like I said, I think, it's very good for us. I'd rather be us than the new car guys. And the dealerships are also -- one of the age-old things that dealership seems to make money and they never made all that much money in the last 10 years or something on new car sales. They still do pretty good on used car and they do even better on sub-prime. So I think, the trend is very positive for us almost regardless of the auctions. At some point, the auctions are going to actually get more competitive in terms of what they pay for the cars and our recovery rate should improve. So yes, I think, it is an affordability question.

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Operator [19]

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If there are no further questions, the operator will turn the floor back over to speaker, Mr. Charles Bradley, for any additional or closing remarks.

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Charles E. Bradley, Consumer Portfolio Services, Inc. - Chairman, President & CEO [20]

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Well, I think, you guys got the gist of what we're doing. 2018 was a better year than we expected, but nothing what we're looking for. We think these next couple of years, particularly 2019, if this industry consolidation ever happens, it should happen soon, and that would be a very good thing for all the players in the industry that aren't looking to be get consolidated like us. And I think, in terms of all the things we've done internally, we're in a great spot. I think, a lot of things we've been waiting to see in terms of collection performance are starting to come together. Like I said, the scorecard is great. We've done the accounting change back to fair -- over to fair value. So we're not going to have a CECL problem next year. We've done as much as, you know, I guess, you could call it housekeeping. But we've done a tremendous amount of housekeeping in 2018 that should bode well for the future. And on top of that, we've actually been able to grow some. So as much as the bottom line numbers aren't quite there yet and the -- aren't there quite there at all yet and the stock price isn't quite there yet, we think we've built the right thing to be in a position to really succeed in 2019. And so I will see how it goes. I think, the market -- I said the ABS market is great, unemployment is great. I think we're in a position to continue to get growing again. So we're looking forward to it.

With that, we'll look to talk to you probably in April. Thank you.

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Operator [21]

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Thank you. This does conclude today's teleconference. A replay will be available beginning 2 hours from now until February 20, 2019, 4:00 p.m. Eastern Time by dialing (855) 859-2056 or (404) 537-3406, with conference identification number 2286988. A broadcast of the conference call will also be available live and for 90 days after the call via the company's website at www.consumerportfolio.com. Please disconnect your lines at this time, and have a wonderful day.