Good day, everyone, and welcome to the Consumer Portfolio Services 2021 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. 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 of receivables which are dependent on estimates of future events, also are forward-looking statements. All such forward-looking statements are subject to risks that could cause actual results to differ materially from those projected. I refer you to the company's annual report filed March 10 for further clarification. The company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, further 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 guess simplest way to say we had a very good quarter, and it's one of the best quarters we've had. It's easy -- it's about really having everything functioning really well across all points of the company, marketing, originations collections, everything. So it's nice to see that when you start doing things, right, you can get the reward. And so we did. I'm just going to go through a couple of highlights. Year-over-year, we had 232% earnings growth. The numbers are really starting to come through. Don't know if we'll continue to do that forever. But that was a real good growth number from year-over-year. And somewhat just as interesting is during the same period of time, we cut expenses 24%. So to be able to do both those things, like I said, doesn't get any better than that. Originations, we had 14% quarter-to-quarter, 87%, originations growth year-over-year. Third quarter was the highest quarter since second quarter 2016, and the second highest quarter in our company history of 30 years. So again, real good numbers there. Not to be outdone, servicing continues very strong. Everybody's -- a lot of -- there's a lot of talk about the pandemic, and the stimulus. Stimulus is kind of over at this point. And yet, our collection still remains very, very strong. So there's a lot less stimulus money, yet, we still have a very strong DQ, charge-offs were down 41% year-over-year. So it's easy not to say we're doing an awful lot right on that category as well. We owe a lot of it to our -- we've added scorecards across the board in collections. So we have a lot of AI, a lot of alternative data that's really helping us direct us to how to get the best performance out of the portfolio. And I'll talk a little bit more about that later. The securitization market is still very strong, another very successful securitization in the third quarter. And also, we noted that we purchased just about 2 million shares out of the market. So again, we're trying to do what we can to increase our shareholder value. I'll go into more detail on all those subjects after I let Jeff walk through the financials for you.

Thanks, Brad. Welcome, everybody. We'll begin with the revenues, which were $68.6 million for the quarter. That's up 3% from our second quarter of this year, and down 3% compared to our third quarter of last year. The nine month number's $198.4 million is down about 5% compared to $208.7 million in the nine months of 2020. And a pretty simple breakdown of components of revenue, the legacy portfolio is yielding about 20%. But that's only about 13% of our managed portfolio right now, $287 million continues to decline pretty rapidly as we move along. The fair value portfolio continues to grow. It's 1.9 billion, 87% of our total yielding a predictable 11.1% this quarter. And as you know that yield is net of losses. And so it's, as I said, it's got the losses baked in. So we don't have the offsetting provisions for credit losses that we've had in the past with the legacy portfolio. No fair value marks in the third quarter. So it's pretty straightforward from a sort of breaking down the revenue standpoint. The expenses $49 million for the quarter. That's a 7% decrease from our second quarter of this year of $52.9 million and a 24% decrease over the third quarter of 2020. Nine month numbers are $157.1 million. It's a 19% decrease in expenses, compared to the nine months of 2020. And across the board, we've had significant reductions in all these expense categories. Significantly lower interest expense as the securitizations are putting on are coming in at lower yields than the ones running off. No provisions for credit losses this year. In fact, we're going to talk about that reversal a provision in a minute here, which contributed to the earnings this quarter. We have lower head counts, and better all-around efficiencies,…

Thank you, Jeff. So I just want to focus on a few of the things that sort of are working for the company. We've highlighted them, but maybe a little more detail. In terms of originations, one of the things we did, even though our application rate was relatively flat, we still were able to increase originations. Again, we're using a lot more of our Gen 7 scorecard which relies heavily on AI and alternative data. And so we're getting a -- we got a 17% growth, year-over-year, even though apps were kind of flat. And so it's directly related to the ability to sort of dig into the customers and figure out which ones we should buy. And it's become very effective and works very well. Another thing that's going on is the inventory issues. And I think that's caused a lot of people to get a little more competitive. We've cut our APR to play in that game a bit. And it's worked. I think when inventory issues subside next year that will give us substantial growth increases, just because the inventory will be there. Plus, probably the APR market will be a little less competitive. Let's see, what else we got. We're still -- things we're trying to do. We're still trying to drive to get our dealer base. We're around 8,000, we want to get it to 10,000. All these things will help. But the better scorecard that we're about to send out our Generation 8 scorecard is in the works. And we think that'll be even more effective in terms of using these outside metrics of sort of pick the best customers and continue our growth. Looking at collections, again, it's still the AI and alternative data. But this collection scorecard, it's so much more…

Thank you. Thank you. Our first question comes from Kyle Joseph at Jefferies.

Hey, good morning, guys. Congratulations on a good quarter. I know you touched on that. But just give us your sense for outlook for used car prices, obviously had another uptick recently. When do you think supply chain kind of thaws and we get normalized new car supply and what you're thinking about for 2022 on that front?

Again, we're sort of crystal balling a little bit, but my guess is as blockchain improves dramatically going into the first quarter, I think most of the manufacturers realized that 2021's kind of shot. I wouldn't put it past them to slow play the rest of the year. So they have a real good year next year. So that's my sort of bet on the market. But one would think one way or another that supply chain will ease up in the next three to six months. So that again will give them plenty of time to have a pretty good year next year compared to this year. It's very hard to tell, but at least in looking at what we see, that's what we would think. I mean, the used car prices are still strong. We had another -- as Jeff mentioned, the auction prices are still strong. Again, I don't think that's a huge effect on us. It certainly probably does affect, as I mentioned earlier, the front end sales of the business. It's a tight market out there because everybody wants to grow and everybody's buying cars. So in total you'd almost think the market for financing the cars would be dropping off because of the lack of cars, remembering that most of our cars are used as much, are more expensive they're still out there to finance. And so I think that part of the market stays strong. And then as new cars come in, it slows down some or sort of normalizes. So I would guess new cars pick up in the first quarter next year and then at that point, you'll see the used car market start to normalize back to where it should be.

Got it, and then just one follow up there, Jeff, just remind us what the remaining life on the legacy portfolio is at this point.

So that portfolio is seasoned 58 months already, okay. And so it's got probably a remaining expected life of not much more than 12 months. There's always a tail, some of these loans kind of tail out for more extended period, but it's clearly rounding third, heading for home.

Okay, very helpful. Appreciate the color. Thanks, guys.

Welcome.

Thank you.

Thank you. And I will turn the floor back over to Mr. Charles Bradley for any additional or closing remarks.

Thank you. As I said earlier, we were very pleased with the quarter. We just want to keep doing what we're doing and hopefully get people to notice. We want the stock market to notice and started having things happen. So I guess as the acquisition market seems to be heating up some I think that's a plus. We think that's a benefit for the industry, benefit for us. All we can do is keep what we're doing which is produce really good results and becoming more efficient every day. Thank you all for joining us and we will talk to you probably in February. Thank you.

Thank you and this does concludes today's teleconference. A replay will be available beginning two hours from now until November 4, 2021 by dialing 855-859-2056 or 404-537-3406 with conference identification number 9262788. 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.