Consumer Portfolio Services Inc (CPSS) 2010 Q3 法說會逐字稿

Good day everyone, and welcome to the Consumer Portfolio Services 2010 third-quarter operating results conference call.

Today's call is being recorded.

Before we begin, management has asked me to inform you that this conference call may contain forward-looking statements 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. Jeff Fritz, Chief Financial Officer, of Consumer Portfolio Services.

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

Thank you, and welcome to our third-quarter earnings call.

I think overall we're very pleased with our results of the quarter. As I've said in previous calls and it seems like I've now been saying for a few years, or a couple of years, it is a process to rebuild from a recession, this particular recession being one of the worst ever, and the process is taking a little longer.

But in comparison it really hasn't taken too much longer. We have improving results now. It would appear we've made it through all the problems. We've been able to manage the portfolio and our expenses to keep them in line with a declining portfolio as we got through it, and I think we have truly turned the corner in terms of working our way back.

The results are better. We're beginning to see a little growth. The industry seems to be much more rational in terms of what the dealers are doing and what the finance companies are doing. And Wall Street -- other than today -- appears to have recovered as well, and the markets have loosened up significantly.

I will touch on all that in a little bit, but I'm going to have Jeff Fritz run through the results for the quarter, and then I'm going to have Robert Riedl go through the credit metrics and the securitization market.

Thanks Brad. Good morning everybody.

Looking at the results for the quarter, the revenues were $36.8 million. That is down about 4% from $38.5 million in the second quarter this year, and down about 30% from $52.8 million for the third quarter of 2009.

On a year-to-date basis through the first nine months of this year, revenue is about $120 million, and that is down about 32% from the first nine months of 2009.

Our revenues are shrinking pretty much in the same ratio as our portfolio, which has shrunk about 4% in the most recent quarter and about 30% compared to a year ago. And so as a result, those are driving -- the portfolio shrinkage is driving revenues down, although we did originate significant receivables, over $30 million, if each in the last two quarters, and so that is helping to shore up the revenue somewhat.

On the expenses for the quarter, operating expenses were $40.3 million. That is down about 8% from $43.9 million for the second quarter this year, and down about 29% from $57.1 million for the third quarter of 2009.

On a year-to-date basis the expenses for the nine months was $134.6 million. That's down about 28% from $188 million for the first nine months of 2009.

Again, most of these expenses are tied to servicing and originating the portfolio and have come down ratable with the reduction in the size of the business.

The loss provision was essentially flat for the quarter compared to the second quarter this year at $7 million, but down 54% from $15.3 million for the third quarter of 2009.

On a year-to-date basis the first nine months had provision expense of $25.7 million, and that is down about 48% from $49.8 million for the first nine months of 2009.

Although we are originating significant receivables now, our portfolio is still aging significantly. It's probably around a weighted average age of 37 or so months, and so we are seeing general decreases in the credit losses of this seasoned portfolio.

Pretax loss for the quarter was $3.5 million. That is down about 35% from the $5.4 million of the second quarter and down 19% from the $4.3 million loss in the third quarter of last year.

On a year-to-date basis, the pretax loss was $14.7 million, and that is down about 36% -- excuse me -- up 36% from the $10.8 million loss through nine months of last year.

On a net loss basis, the tax expenses for the quarter were $1 million, which reflect an addition to our valuation allowance for our deferred tax asset. So the after-tax loss, the net loss for the quarter was $4.5 million, and that compares to $9 million in the previous quarter or a 50% decrease, and $4.3 million, about the same, for the third quarter of last year.

On a year-to-date basis the net loss is $19.3 million, and that compares to $10.8 million for the first nine months of last year.

Diluted loss per share was $0.26 or about a 49% decrease from last quarter at $0.51 and a 13% increase over last year's third-quarter loss of $0.23 per share.

And on a year-to-date basis, we've lost $1.10, and that is about a 93% increase from the $0.57 loss through the first nine months of last year.

Turning to the balance sheet, unrestricted cash on the balance sheet was $11.3 million at the end of September 2010. That is down slightly from $13.4 million in the last quarter at June 30, 2010, and down from $20.4 million a year ago, September of 2009.

We're originating, as I said, significant amounts of receivables now with the two credit facilities that we have in place. So we carry a little less cash on the balance sheet because we're holding more receivables, certainly compared to a year ago at September 2009, when we had only just gotten I think the first of the two credit facilities we have in place now.

Restricted cash balances have remained roughly the same at about $120 million quarter to quarter, but they too are down slightly from $132 million a year ago, and the restricted cash represents primarily credit enhancements and some collections in process for the on-balance-sheet portfolios.

As I said, our finance receivables balances are decreasing. On the balance sheet we had $629.5 million in finance receivables. That is down about 9% from the June quarter of $695 million and down 38% from a year ago, just over $1 billion.

Our net finance receivables, net of the allowance, $608 million for the September period, at the end of September. And that too is down about 9% from the June quarter and 38% from the year-ago quarter.

The debt balances on the -- the debt on the balance sheet consists of our warehouse line of credit, $39.7 million at September 30. That is up about $10 million from the June quarter and up significantly from only $5 million a year ago, when we had just obtained the new warehouse facility that we're using today.

Residual interest financing as paid down based on its amortization rules embedded in that facility, it is $44.3 million at September 30. That is down about $4.5 million from the June quarter and down from almost $60 million a year ago.

Securitization debt reflects the debt on the securitized portfolio, $632.8 million at September 30. That is down from $702 million in the June quarter and $1.012 billion in the year-ago September period.

Our long-term debt has remained roughly the same quarter to quarter, $48 million, and that is up a little bit from $42 million a year ago.

Just talking briefly about the consolidated portfolio -- we do have two portfolios we service that aren't on the balance sheet. The consolidated portfolio was $843 million. That includes, as I said, the balance sheet portfolio and about $150 million of portfolios we service that are not on the balance sheet. That's down about 10% from the June quarter of $931.6 million and down from $1.2 billion a year ago.

We'll look at a couple of the operating metrics.

The net interest margin for the quarter was 12.9. That is down about 9% from 14.2 in the June quarter and down 44% from 23.1 a year ago.

On a year-to-date basis the net interest margin, 43.7 compared to 78.2 -- again, a 44% reduction from the year-ago nine-month period.

The risk adjusted net interest margin, which reflects the provision for losses, $5.8 million for the quarter. That is down about 19% from $7.2 million in the previous quarter, the June quarter, and down 27% from $7.9 million in the third quarter of 2009.

On a year-to-date basis the risk adjusted net margin was $18 million for the nine-month period, and that is down about 36% from $28.3 million the year-ago nine-month period.

Our core operating expenses, which are all of our operating expenses excluding interest and our provision for losses -- $13.2 million for the quarter. That is down 17% from $15.9 million the previous quarter and 16% from the year-ago third quarter in 2009.

Obviously we've been focusing on keeping our operating expenses in track with what it takes to service the declining portfolio, and we've seen significant decreases in most categories of operating expenses throughout 2010.

On a year-to-date basis the core operating expenses were $45.5 million, which is down 10% from $50.8 million for the nine-month period ended September of 2009.

The ratio of the core operating expenses as a percentage of the average managed portfolio -- 6.05% for the third quarter ended September 2010. That's down about 8% from the June quarter 2010 of 6.6% and just up slightly from 5% compared to the third quarter of last year.

And on a year-to-date basis, those core operating expenses as a percent of the average portfolio, about 6.2% compared to 4.9% in the nine-month period ended September of 2009.

I will turn it over to Robert Riedl to talk about the capital markets.

Thanks Jeff. Before we go there, let's talk a little bit about our asset performance metrics. Once again we saw a good quarter on a year-over-year basis.

Delinquencies for the September quarter ended at 8.6, and that compares to 8.8 last year in September. We're up slightly from the June quarter, from 6.8%, but we would typically see that as part of the seasoning effect moving from the June quarter to the September quarter.

In terms of net losses, the annualized losses for this quarter ending September were about 7%. Once again, that is down from 8.8% a year ago, and that is another favorable comparison -- second time since our portfolio started shrinking that we've seen favorable year-over-year comparisons.

That also is favorable versus our June quarter, where the annualized net loss was 9.3%.

Year-to-date annualized net losses, 9.7% this year versus 10.4% last year. And once again, a favorable comparison and goes back to one of the things Jeff had mentioned about the aging of the portfolio being about three years weighted average seasoning.

We also are -- continue to see very good net loss performance from our newer originations. From the second half of 2008 forward, we see net losses that are tracking in line with our better 2003 2004 originations.

In terms of the capital markets, as many of you know and have seen, they continue to remain very strong, especially the securitization market.

As we announced last month, we closed our first securitization in over 2.5 years. That was a [10,000 A] transaction. It was a senior subordinated deal. It was rated by S&P.

We rated three tranches -- a single A tranche, a BBB tranche, and a BB tranche -- and sold the first two tranches at a weighted average coupon of about 3.2%.

What was interesting about that deal, we also saw a lot of interest for the subordinated tranches and for the BB tranche as well.

The blended advance rate down to the BBB level was 81%, and down to the BB level was 86.25%, which are higher than three or four years ago but still in the range of expectations.

In terms of other issuers out there, AmeriCredit continues to be a regular issuer in the market and continues to get tighter spreads and lower funding costs, as do several of the other issuers.

So the capital markets continue to remain strong for our long-term funding.

With that, let me turn it back to Brad.

Thanks Robert.

In terms of looking at a few of the company items more specifically, it's nice to see that we're starting to focus more on marketing today. We spent the last few years sort of hanging onto what we're doing. Now we're beginning to change our focus to where we want to start growing the marketing base, improving the originations and growing the portfolio again.

We're getting to the point where the portfolio will start growing. As you've seen in the numbers, we have in fact started originating significantly more recently. Compared to last year it's tons more. So it's really a good step in the right direction, even though it's still sort of just the beginning.

In terms of origination, as Rob points out, the originations quality of our loan originations today is probably very close to the best we've ever had, as a combination of both tighter buying guidelines, better scoring internally, the economy. As much as most people say it is still kind of languishing along, it has improved some to where our folks are paying better and just the outlook on the performance is that much better.

In terms of collections, you can also see that the collection numbers have turned to where now, other than delinquency, which is up a little bit due to the shrinking portfolio size, the losses have turned around, and so, as I think both Jeff and Robert pointed out, now that the portfolio has aged to where it is three years or so, you've really gotten through the loss part, the greatest loss section of those portfolios, and so we would expect to see steady improvement in the performance. The overall brunt of the recession is now past, so again, we would expect that to contribute as well.

So with that improvement, in focusing on the industry, we've now seen that the dealers are -- have come back to the market in strength. They're looking to sell some cars. I think customers are coming back a little more slowly, but again, I think the combination is good.

The competition in the industry, it is still there, but it's far more rational than before. Everyone is trying to buy correctly.

I think in our industry, through the recession we've proven that auto is far more rational than other industries, since our asset class did far better than almost all the rest. So I think that, again, will really help us going down the road.

With rational competition, an increasing economy -- or slightly at least moving in economy -- that will eventually get the buyers back out there, the customers, and as I said, the dealers are already looking to sell more cars.

In terms of Wall Street -- other than today, sliding a little bit -- as Robert points out, the bond demand is terrific. It's somewhat amazing that for two years you couldn't find anybody to talk to on Wall Street, and today there's many, many companies and banks looking to lend money. And so we're looking to work on that and take advantage of it. It seems to be a growing segment that is really improving, so the opportunity there is very good as well.

So all in all I think in wrapping it up, we've made it through the recession, it's been a difficult time and obviously was a very difficult time for lots of different folks in the industry, not to mention many other industries. But at this point we can see we've leveled, we've reached the top, or whatever you we want to call it, and I think we're looking for much smoother sailing as we go forward, and we're looking at a good year next year.

With that, we will open it up for questions.

(Operator Instructions) Jim Agah, Millennium Partners.

I just wanted a little more -- go through the numbers a little bit more, because it's been a while since I've looked at the details. The balance sheet has shrunk, but as you guys are originating I guess about 35 million or so a quarter, roughly 12 million a month -- right?

Right.

How many contracts are you buying a day roughly? Is it somewhere around 25 -- it is somewhere around 25,000 a day?

It is probably somewhere between 20 and 40 contracts a day.

So 20 -- sorry. Not thousands. 20 to 40 contracts a day.

All right. Where do you think that can get to?

Well, theoretically we could go back to what we bought before. We used to buy 100 million a month, so that would be -- what would we buy?

About 5,000 contracts a day.

Okay.

That's a month.

A month.

Sorry about that.

Right. So about 250 a day?

Right.

So about 10 times, 12 times -- 10 times what you're doing.

What is going on with the risk adjusted margins? Because those are coming down a lot, even though credit losses and credit costs are coming down. What is happening to the actual top line here? You have -- Rob was talking about the great advance rates you guys are getting selling through to the -- selling through the BBB's, as well as even the BB's, with I think you said a 3.2% weighted average cost of funds through the BB -- through the BBB's?

Right.

Right? Why is there no real robust top line here, in spite of the shrinking originations? What sort of all-in yields are you getting?

Actually the yields are probably the best they've been in several years, but it's not enough to offset the shrinkage just yet.

Once we get -- if we get to say $30 million a month, then you will start seeing -- it's kind of an ironic or quick spring-back in terms of the effect it would have on the portfolio.

As long as the portfolio is shrinking, the company is growing. Until it passes that mark, you're still going to see a negative overall effect. But the actual margins today are better than they were by -- significantly than a couple of years ago. We used to have an all-in APR in the mid 18% range. The APR now sits at around 19% to 20%.

The discount used to be as low as 1%. Our discount now is somewhere between 6% and 9%.

So the actual margin -- forgetting about the -- what we consider to be significantly better credit performance, but if you put all three together, you have a very strong product. Way stronger I think. We would have to really pull out some history to see if we could find a time where it was actually better than it is right now.

Because even when we had the margins -- the discount for instance -- 15 years ago the discount was 10%, but the credit performance wasn't as good. So today you sort of have the best of all three. We have easily the best credit performance we have had in -- I don't know -- six, seven, eight years. We have easily the best discount we have had in at least that long. And then the coupon's improved somewhat since -- over the last few years. There could have been -- might've been a time when the coupon was a little bit higher, but not recently -- and certainly meaning a few years.

But when I go through that, right, how do I come up with a metric than if I had to look at your all-in asset yield --

Jim, it's probably --

You've got 19% to 20% APR's, and then you've got your discount, which is going to filter into that, and then you compare that -- that somehow translates into your interest income; right? And then you divide that by your weighted average receivables during the period and compare it to your cost of funds. What is it now?

Well, the yield on the paper that we're buying today, Jim, is in the mid-20s. Now, remember we're not buying as much as we did years ago, so the portfolio is still shrinking. So in terms of the total blended yield on the portfolio, I don't have that number at the top of my head. I can get it for you later, if you would like it. But on the new stuff that we're buying, between the APR and the discount, we're in the mid-20s asset yield.

I guess maybe it would help if you guys throw percentages in rather than just the dollars, because you basically have a negative speedboat effect right now; right? As you shrink? You've got percentages in for your allowance as well as for your operating expenses as a percent of the average managed portfolio, and as well as for your delinquencies and your losses. If you could put it in for your yields as well, that would help.

Okay. We got that.

Okay. So then as we fast-forward, when do you start putting up operating earnings?

Theoretical, if we continue our growth strategy, we're targeting next year.

2011? So would that be for the full year or just for certain quarters, you think?

It's a little hard to tell at the moment, a little -- it's going to depend on how quickly we grow, things like that.

Okay, I'll get back in queue.

I appreciate it.

(Operator Instructions) Ken Liddy, Wells Fargo.

I just have a few questions. At the beginning of the year you talked about trying to get a warehouse line of credit. Where are you in that regard?

We're still finishing the funding on the current two facilities we have, but we are actively talking to several different warehouse providers to get a new line.

Now, do you believe you will need to give up any equity to do that?

Probably not.

And what is holding you off from getting that done sooner rather than later?

Nothing. We're working really hard to get it done sooner rather than later.

Also you got the delinquency notice from the NASDAQ. How concerned are you about your stock price?

We're always concerned about our stock price. We would like to -- we're doing everything we can. There's not a lot you can do, sort of depress a button to make the stock go up to $1. Certainly we're trying to get the results to improve to where somebody pays attention and maybe it goes up to $1 that way.

I think we have a fairly significant amount of time before we have to worry about say a de-listing issue with the stock price.

Now, as far as the -- it is going to be some time, a few quarters before you're showing some operating profit. Until that time should we start seeing the losses finally start narrowing again?

One would hope they continue to narrow from what they have done, yes. In a typical trend line losses narrow, then they turn profitable. We would like to follow a trend like that.

If you look back to almost a decade ago when you went through a similar type of situation, where would you say you are with regards to coming out of the previous credit crunch?

That's actually a good question. If you look back at the last time this all happened in some form or fashion, 1998 was a great year, and 1999, 2000 were both terrible years. 2001 started getting better, and then 2002 you were sort of there.

So if you try and correlate that to the current situation, then you'd have 2007 was an okay year here, and then 2008, 2009 were crummy, and 2010. So if you correlated it back, the three years would be 1999, 2000, 2001, and so 2001 is tracking 2010.

So I'd have to look to see exactly what we did in 2001, but it would be sort of that kind of comparison.

If you call it a three-year issue, the issues then were 1999, 2000, 2001. 2002 we did three securitizations. 2003 we were back on track doing four a year, one a quarter.

So this year or in this situation, much like then, in 2008, 2009 we didn't do any securitizations. In 2010 we did one -- much like we did in 2001. And so next year we would expect to do several.

Now, with the portfolio, the older portfolio, is there any reason to -- what are the benefits of not selling that portfolio or -- and just servicing it? Is there --

Well, the portfolio is already securitized, or technically it already is sold, and the benefit of servicing it is, now that it has aged to such a level, the losses -- well, there's no real surprises and two ways it's helpful. One, people looking at how the company has done can now look at that portfolio with a lot of confidence in terms of our performance.

Two years ago we might have said, the paper is actually going to perform pretty good, and they said, gee, this horrible recession, everything is going to go to hell in a hand basket, and that paper is never going to perform. And as much as we tried to convince them that it was, they wouldn't believe us.

Today, now everybody believes it. Everybody now looks at us saying, you actually were right.

We told people for years that sub-prime auto was tremendously different than sub-prime real estate. Nobody believed us.

They believe as now. Not only do whoever we are talking to believe us, but everyone on Wall Street knows it. And so now all of a sudden, everybody believes that the auto class -- asset class is easily the strongest. It was -- before it was just one of the classes. Now everybody knows it's way better than real estate, it's way better than credit cards, way better than student loans, so literally the list goes on and on.

So that's one very significant change in today's environment versus before.

Secondly, as I said, now that our portfolio has actually performed, everybody a few years ago or so said, your performance is going to turn, is going to go so bad because of the recession that it's going to blow through all the triggers, no one's ever going to get paid.

And we said, no, it's not going to be that bad, the paper is better than that. And we were again right.

Unfortunately we had to suffer through one of the worst recessions in the last hundred years, but the fact is that paper performed through it. It wasn't as good as we had hoped, but it wasn't as bad either. And it wasn't nearly as bad as everybody said.

So the fact that all the people overall are going to get paid, all of our bonds are going to pay, all that stuff works fine.

On top of that, we hit almost no triggers. We hit a couple of low-level triggers. We didn't hit any of the default triggers or any of those things. So in terms of the credit performance triggers, we did very, very well.

In 1999 and 2000 we hit lots of credit triggers. We hit them all over the place. It didn't work nearly as well.

This time around, if nothing else, we certainly learned from that issue that the credit performance this time around -- it's easy enough to say in 1999 and 2000 credit performance was a major cause of the problems that the industry and our company had during that recession. This time around we got dragged down by everybody else.

Auto did great. Our company did great. But Wall Street stopped. If Wall Street hadn't stopped, very likely we never would have missed a beat. So when Wall Street froze, it had a huge problem, not just for us but for the whole world, and so that is what has happened.

But at the time, two years ago or so, no one believed us when we told them the paper will be fine, don't worry about it. We didn't say don't worry about it, but we said it will be fine. And now after this, what you see today is the paper did perform well, and now you have a lot of confidence building on Wall Street in both our credit class and to some extent our company.

One of the key reasons for your turnaround in this first part of the decade was some really great purchases like I think [Mercury Finance]. Is there anything out there that -- any loan portfolios you could purchase?

We did one portfolio purchase last year with [ACC], or the ACC portfolio. We continually are looking for some. They generally show up when you're least expecting it.

We would be in a very strong position to participate or do some of those purchases today if they showed up. Having said that, there's nothing imminent, and -- but we're keeping our ears -- eyes and ears open, so we will see.

If we had had one of those, we would -- if we could've found a company to buy this year or last year, it would've had a significant softening effect on us coming out of this last recession.

Understood. Do you have any gut feeling as far as how long it might be before you're seeing the originations of $20 million a month?

Another good question. We're working towards that. A lot is going to depend on sort of how quickly -- we don't want to get in too quickly. So we're really just trying to do it in a scheduled way. Having said that, we would like to get there way sooner than later. So --

And again, remember, for us we used to do 100 million. Getting to 25 million should not be that big a deal. So we're looking to do that as soon as we can.

Going back to the stock, obviously you've got a lot of credit, not in the literal sense, but credit with the credit markets. They believe you now. Obviously the stock market thinks you're illiquid. What do you need to do and what can you do to turn investors' confidence around?

If I knew that, I would be a stock picker as opposed to running a company.

But I think obviously the easy answer is earnings. If we start having profitable quarters, that should have a significant effect on the stock. If we start announcing more deals, that should have a significant effect on the stock.

The combination of both eventually will get it there.

I agree with you 100% that right now the stock people or anybody in the public market is still looking at us like maybe it will make it, maybe it won't. So the way to get that to change is to show people we're going to be here for the long haul.

I think if originations continue to improve in terms of, like you mentioned, we start buying 25 million a month -- the easy answer is if originations grow, it's going to have -- and Jim had asked the question that little earlier. When the originations start to grow enough and the portfolio turns to where the portfolio starts to grow rather than shrink, there is a rather dramatic effect on the earnings. So once we get to that point, that should have a -- that should really be a very good indicator as to where we're going.

Now we may actually hopefully do a little better between now and then, but we have that number targeted at 25 to 30 million a month.

Now, previously I think you bottomed out at maybe under 200 million, your loan portfolio. Maybe 150, back -- the first part of the decade. And where do you see the portfolio bottoming out, the shrinkage, at 700 million? $750 million? $650 million?

Somewhere above $500 million. I was actually thinking about that a little earlier. Last time we bottomed out probably -- I don't think it was quite 200 million, but certainly less than 300 million, so this time around we could end up somewhere between 500 million and 600 million at the bottom, which would be significant in terms of how fast we come back, going the other way.

And will net losses continue till then?

Continue to what? We're going to have net losses for sure.

(multiple speakers) operating losses. Will you have operating losses until the turnaround in the portfolio?

It is a little hard to tell. There's more than the fact of the portfolio shrinkage. It's easy enough to say if the portfolio grows, then we wouldn't -- operating losses are going to shrink. But it's hard to say how that is going to work. There's other things we're trying to do to lessen losses between now and then.

Have you considered perhaps going private and then emerging at another point?

We consider lots of things like that.

Because it seems like your turnaround might come -- obviously it's -- for people that have been in the -- with you for a long time, we have all the confidence in the world, but again, there is a disjoint between reality and the stock price.

Well, I think in terms of whether you privatize the company or not, it would depend on a bunch of different factors.

It's fair enough to say we don't think the stock is fairly valued today. We think the company is worth more. But beyond that, that's about all we'll probably talk about.

And do you have the ability to buy back stock right now?

We have a consistently running stock repurchase program, yes.

Any chance of upping that?

There's a lot of market rules in terms of how you can buy back stock, so it's difficult.

Understood. Well, thanks Brad.

(Operator Instructions) [Kyle Joseph], JMP Securities.

I was just hoping to get a little update on the competitive environment you guys are seeing out there. Is it getting more competitive, less competitive? Or have you seen any effect of AmeriCredit being acquired yet?

We'll start with the last. AmeriCredit -- there is certainly some differing opinions on what AmeriCredit is really going to end up doing. One school of thought is, they're now going to -- and I think GM has said they're going to be their primary finance company. So there's one school of thought that says AmeriCredit will start buying a lot more prime, or at least trying to service that sector of the market more for GM.

The other school of thought says they're going to do that, but they're going to continue to be very aggressive in sub-prime.

So it's a little hard to say. At the moment it looks like AmeriCredit is doing about what they've always done. I don't know that they're particularly trying to grow a ton in sub-prime. I'm sure they're focused on growing their prime segment or working on a platform to do that.

So I would say net/net there hasn't been too much change in terms of AmeriCredit.

In terms of the banks, I think the banks are probably about the same, maybe slightly more aggressive because they're looking for assets to buy. But again, a lot of the banks don't want any part of the market, so maybe that again is a net/net wash, because really for the couple of banks that are more aggressive, there's a few banks that are not even in the market any longer.

So maybe you would point at Wells Fargo. They're not really more aggressive, but if you had to pick somebody, you might pick them.

But you know, Citi is doing almost nothing in the market. They're basically out of it.

So the banks are probably somewhere between a wash in terms of competition and maybe lesser competition, which is a good thing because they would be the biggest piece.

In terms of the independents, you've seen a few independent starting up, and so it tells you something about the strength of our market and the fact that even though it is sub-prime, you have new people trying to start businesses in the market.

From a competitive standpoint, we're not particularly worried about new startups, but they'll help service the sector somewhat.

That is probably the competitive environment in a nutshell.

Okay, great. Thank you.

Thank you. I'm showing no further questions at this time. I would now like to turn the call back over to over to Mr. Charles Bradley.

We appreciate the questions. It's been a little bit of a long road. I think one of the earlier questions about comparing it to the last recession, it is very similar to that. We got through that one and did quite well afterwards. We expect to do the same in this one.

Timing is everything, and I think the new markets and the positioning could be very good for us.

And I appreciate everyone who has hung in there and beared with us during all these problems. The recession was not fun for anyone, but I think it has ended finally, and I think the future prospects are quite good.

So we will talk to you next quarter. Thank you all for attending.

Thank you. This does conclude today's conference.

A replay will be available beginning one hour from now until Monday, November 22 by dialing 800-642-1687 or 706-645-9291, with conference identification number 25285298. A broadcast of the conference call will also be available live and for 30 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.