Consumer Portfolio Services‘ originations increased 16.5% in the second quarter, to $250.1 million, despite the fact that the industry is “exceedingly competitive” and “people are growing like crazy,” Chief Executive Charles Bradley said during an earnings call yesterday.
“That puts pressure on us to eke out our meager growth and our performance amongst these people that are doing very excessive and competitive things,” Bradley said. “So it’s a very tough market that way.”
Even so, CPS lowered operating expenses to $83.6 million from $94.7 million for the comparable 2018 period. Outstandings were flat at $2.3 billion.
CPS also priced its third asset-backed securitization of the year backed by $244.1 million in auto loan receivables. The lender structured the securitization down to a single-B rated class. “That’s allowed us to really maximize the leverage on the securitizations, and it’s very good for our liquidity position,” said company Chief Financial Officer Jeff Fritz during the call.
“With margins tightening, rates coming down some, it’s been a strong demand securitization market up and down all classes of our bonds,” Bradley said. “That’s basically the backbone of how we do business.”
Despite slowing car sales, CPS still expects growth this year. “The fact that we’re growing at all and doing a pretty good job of growth, hopefully, 10% or 15% this year and still getting higher coupons, higher fees, we would look at that as a success with a backdrop that our accounting has to get straightened out in terms our change to fair value,” Bradley said.