Consumer Portfolio Services, Inc. (NASDAQ:CPSS) Q4 2018 Earnings Conference Call - Final Transcript
Feb 13, 2019 • 01:00 pm ET
The floor is now open for questions. (Operator Instructions). Our first question is coming from David Scharf with JMP Securities. Your line is now open.
Yeah. Good morning and thanks for taking my questions. 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 particular -- which was particularly surprising for which 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?
It's good question. I think we look to 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 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 are not really quite sure how its all going to work out, but it's an interesting avenue of getting some looks at some turndown 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 would be great for 2019. And I agree with you that, the industry has been more like we said was, 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 lot time and so we've been able to set-up some alliances and stuff that should hopefully provide generally good paper regardless of what's happening in the industry.
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?
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 three quarters. So what we would hope is that, the first three quarters of 2019 do jump off from the fourth quarter of 2018, we then maybe get the seasonality back for the fourth quarter of 2019. But there is a little bit -- with the government shutdown, the tax returns and some other stuff,