Good day everyone and welcome to the Consumer Portfolio Services 2016 Third Quarter 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 are Mr. Charles Bradley, Chief Executive Officer, and Mr. Jeff Fritz, Chief Financial Officer. I will now turn the call over to Mr. Bradley.

Thank you and welcome to our third quarter conference call. I think looking at the results, they may not be the greatest numbers in the world, the numbers we can be happy with and given the circumstances in our industry it’s really not a bad thing. I think in a strange way over the last year or so CPS has become somewhat of a spectator in our own industry and that’s a good thing or a bad thing. The good part is everyone seems to go what is going on in the industry. No one seems to be able to care what CPS is doing. Everybody is happy with what CPS is doing. We are doing well, we’re making money, our numbers look pretty good, in some ways as much as we’re not wonderfully happy with our total overall performance we’ve done pretty well. Ironically compared to lots of people in the industry we’ve done great. And so that puts us in an odd spot and that everyone is waiting to see what everyone else is going to do. How is industry going to shakeout, how are the big players are going to change, what are the small people going to do, the small players going to do. And so we sit in the middle, we are doing well, we’re making money, our results are pretty good, and so we’re going to have to wait and see. I think in terms of some of the highlights if you can call them that, our originations shrank this quarter. We made a decision to tight some credit, maybe raise a little pricing. The sort of the rumor was everyone in the industry was doing that. It doesn’t seem like everyone did but that sort of -- well playing the sort of the…

Thanks Brad, welcome everybody. We will begin with the revenues. Revenues for our third quarter were $108.5 million, that is a 3% increase over the June quarter this year and a 15% increase over the third quarter last year. For the year-to-date the nine months ended just now, $314.1 million that’s a 17% increase over the first nine months of 2015. Now revenues of course are driven by our portfolio growth and even with the sort of the lower volumes that Brad alluded to in the third quarter, our consolidated portfolio did increase 2% for the consecutive quarter and 19% compared to a year ago. For the expenses $96.1 million for the quarter, that’s a 4% increase over the June quarter and 23% increase over the third quarter of 2015. For the nine months 277.1 million and that’s a 24% increase over the nine months ended September 2015. For the most part the expense growth was pretty consistent with the portfolio growth. The big expense item is of course interest expense and provisions for loan losses which we’ll talk about in a minute. I think we have done a really good job controlling our core operating expenses and which is why we’ll see that metric continues to be pretty solid improvement as we have been progressing here. Moving on to the loss provision 46.3 million for the quarter, that’s a 4% increase over the June quarter this year and a 24% increase compared to the 37.4 million in the third quarter of 2015. For the nine months provision to cut our losses 134.9 million, a 27% increase over the nine months in the 2015. The pretax earnings for the quarter $12.5 million, that’s a 2% increase over the $12.3 million in the second quarter this year and its down 20%…

Thanks Jeff. I will try and walk you through some of the areas focusing first on marketing. We made an effort to grow marketing, currently we now had 87 marketing reps versus I think a peak of about 114. Given that we’ve made a conscious decision to sort of slowdown a little bit in the market. We focused on sort of building the reps we have rather than continue to grow. That doesn’t mean we won’t grow them but we’re going to grow them slower and trying to just find qualified individuals we can get up to speed a little quicker. The thing to take away from that is some ways you rather have 87 well seasoned reps who are really doing a great job than 114 we have to keep sort of hiring new wins and getting rid of old one or getting rid of the weaker ones. So as much as the numbers are slightly different I think the results are probably just as good if not better. As we sort of move into next year we’ll probably start hiring again. It should -- with a strong base like that it should be rather easy for us to expand when we see the opportunity. As you probably can guess so far from the call that we don’t really see the opportunity for growth today. Looking at originations we did make a decision a quarter or so ago to sort of tighten credit. Ironically so the rumor in the industry was everyone was going to slowdown and tighten credit and sort of improve their portfolio of performance. And as I mentioned at the top of the call, that probably is a very good idea for a lot of folks in the industry. So following along we thought well we…

[Operator Instructions]. Our first question comes from David Scharf of JMP Securities. Your question please.

Hi, good morning. Brad some interesting comments about how you feel like sometime is the outside looking unit is observing your own industry and what some other competitors are doing. I am wondering on that theme of sort of taking a step back as you think about the volumes this quarter and going forward is it entirely due to just some of the tightened underwriting and what is still very competitive lending terms out there or do you have any sense for just how much the consumer might be slowing down. I mean obviously we see new vehicles stars showing signs of topping off. I’m just trying to get a sense for whether which should view your outcome on volumes over the next few quarters is being entirely a competitive factor or do you think the consumer is losing a little gas here?

You know it is actually both as I mentioned. We thought we were going tide in an increased price a little bit, maybe give up 10% of our margins or 10% of our growth -- not growth, of our production and we ended giving up about 20%. So the question is where is the other 10% going and so it is very hard to -- I am certainly all we are going to do is to guess. But sort of the safe bet is to say its 50% because of competitiveness in the marketplace and 50% of the consumer. Personally I may tend to think it is more consumer. You know it is funny because it is just sort of getting that feeling that things could slowdown quite a bit and it is more the consumer. Let me say that I get almost nothing in terms of empirical evidence to support it but nonetheless it just seems a little bit likely the consumers are in fact getting little tighter, slowing down a little bit. It will be very interesting to see what the retail sales are for the fourth quarter. If they have a lousy Christmas it is going to get real interesting next year. But having said all that I would imagine things, probably going to guess things trend along probably about where they are for us the rest of the year. Maybe they go down a little bit like they normally do but it wouldn’t surprise me at all if all or something pickup again. Well you know they will in the beginning of the year because you have a tax refund basis, so whatever we’re doing as we roll into January will go up. Whether it is going to go up because it is fun because the market is great or because of competitiveness, it is hard to say. I think we’ll just have to see but having said that we sort of like where we sit in terms of the production.

Got it, got it, subsequent to your changes to some of the fees, it looks like you raised the fee a little bit to dealers at 25 bps, 50 bps. Have you seen any other major players follow suit, I know you commented that they didn't at the time, but just in recent weeks or last month, any sense that the rest of the industry is starting to move in your direction?

You know it's again hard to tell. The way we can tell is what the margin people say in the market. To the extent they say oh, so and so is not buying at all. They’ve really pulled back and then you know to the extent they say so and so hasn’t changed a bit you might think nothing has changed. We’re getting more of the latter than the former. We are not hearing that people are calling back. We’re not hearing that people have tightened or increased pricing. I mean at some level it may have done at some and probably they have, it’s just not a significant amount for us to actually tell in the marketplace. I mean we did it too, to an extent we all did it exactly the same and fine it going to be hard to tell. But certainly the way we hear things we haven't heard too much chatter that the market is getting easier right now. Now part of that though if you think about to extend the business or the dealerships drop down and the consumers aren't quite showing up as often then you’re actually, the competitive nature is going to look the same because you are fighting for fewer and fewer customers. And so that could be very well the answer as everybody did in fact tighten a little and raise price a little but the markets is a little bit bare so people are pushing hard and you are not going to be able to see the pricing differentials.

Got it, got it, just a couple quick ones as follows. Switching to recoveries, as we think about loss rate and obviously the impact that your recovery rate has on it, I seem to recall that after the big drop in used car pricing a year ago, it seemed like the recovery rate was expected to sort of settle in and stabilize around that 40% level. It looks like there was another drop this quarter in terms of what you are getting at auction. At this point, do you feel like 36%, based on all the supply trends and forward indicators, is a trough? Or should we be expecting that to drop lower?

You know I am going to vote trough. It is not too much reason for it to go lower. Now granted to the extent if everything slows down so more it could but we’re getting close to -- we are in a historical low. We are at 36 for the quarter down almost three points from the previous quarter and a point more from the quarter before that. I mean something in the low 30s is sort of the basements or home forever. So if you’re betting for instance, you need to take this is a trough rather than stay lower because too much lower its going to get to the historical bottom for the industry, so or at least for us. So the easy answer is yes, I will say trough but no home to go to.

Got it and then lastly looking out to next year I can't recall maybe in the past cycle how low your efficiency ratio or OPEX per balance is, how far below 5% it got but should we be thinking about that trending below 5% by next year I mean it sounds like you are certainly holding the line in terms of headcount marketing reps?

We would hope so. I mean at some point we’re going to start sort of storing up a little over capacity in that. We still want to do 120 million, 130 million a month so I think the business itself is efficient enough and certainly the way we run it is quite efficient. So now I think that trend should least fall the same. We start growing it will do very well.

Got it, okay I’ll get back in queue, thank you.

Thank you. Our next question comes from the line of Carl Joseph of Jeffries. Your line is open.

Hey, good morning guys, thanks for taking my questions. Just to get back into originations that Dave hit on earlier, just wondering if you can give us any color on the terms on the new deals and what you're seeing. I know you talked about fees a little bit but are there are changes to LTVs or the terms of the deal, sorry, meaning like the duration of the loans?

Let's see we mentioned that the APR is about the same as last quarter. The fees are up a little bit, LTVs are up just a little bit. We had a slight trend towards our upper tier programs Kyle during the quarter and so that also coincided with a slight increase in the extended term, the 72 month contracts. So I mean that mix, that program mix will ebb and flow throughout the course of the year but that was one notice this quarter, slight trend of the upper tier.

Alright, that's helpful, thanks. And then just given the level of new originations -- you guys have been doing this a lot longer than I have. Just wanted to know kind of when you anticipate that sort of impacting credit performance going forward?

We generally say a year to 18 months is the window. So to extend let's just broadly say over the last six months we’ve tightened credit and we would want to see that come out a year from now so you might start to see it.

Okay. And then I know your securitization deal as you seen got execution there recently so from a cost of funds perspective should we anticipate that sort of topping out as we go forward and being relatively flat or do you I am not asking you to predict where securitization pricing is done but just in the near term at least should we see some stabilization there?

Well, you know it has been sort of a funny ride because it was so good before then all of a sudden out of nowhere went up quite a bit and now it seems to have leveled so I think the safe bet is to say its leveled. If you want to see it may be come down but the problem is at the first hint of any kind of problem it is going to go back up. So I think the safe bet is to keep it level and then if it goes down that’s good. I don’t know that it would go up too much higher.

Got it and then and you talked about your expectations for volumes remaining around this level or a little lower in the next quarter, does that change your appetite for share repurchases at all?

No we’re going to buy the shares as often and as much as we can.

Alright, great, thanks a lot for answering my questions. Unidentified Company Representative: Thank you. Thanks Kyle.

Thank you, our next question comes from John Rowan of Janney. Your question please.

Good afternoon guys.

Good afternoon Hi Joe.

One question. Charles, to go back to your comment earlier about the industry having seen kind of an all-time low in recoveries in the low 30% range, maybe just give us a little bit of qualitative information around that. Is that a good foundation to use just when you juxtapose that versus the current environment. Were loan-to-value rates the same? Were durations the same as they are now? Obviously, all those affect how much you lose at auction. So I just wanted to understand kind of historically if we could actually even go lower than that if we are in a more aggressive lending environment. Not necessarily specific to CPSS but the industry as a whole, given where competition has pushed loan terms.?

That’s an excellent question. You know we’re happy about because I think probably you are going to pick one factor to watch in terms of auction value of LTV, loan to value. If that LTV is going up amongst our friendly competitors yes, if that’s what they are doing just sort of move the needle or whatever it takes and I am not saying they are and I don’t know. I am going to tell you what we are doing which I will in a sec. You have a chance that you got more cars, you are upside down in the car more and more and then you have extended term, you have higher LTVs. Yes, you could build a bigger problem in terms of the auction values. Its CPS, I am just looking for the last three years our LTV hasn’t gone outside of 100 basis points. So we are pretty much LTV conscious all the time and so our LTV is probably well within a 2 point range for the last 5 or 10 years so that’s pretty good for us. So we’re not overly worried about our changes in the auctions, but you are right to the extent people are looking for ways to push the envelope in terms of getting loans and probably even if you ask the rating agencies they would say that extended term higher miles in LTV are the three factors that people been pushing as well. The two factors mostly we ask at all the time are extended term and higher miles. And so to the extent those are the two most operating factors in terms of what you are buying or financing. That LTV generally speaking is going to sneak up and so that’s in fact what everybody is doing. Yes, you could have a bigger problem at the auction. Again I sort of say that in a good way to see business and do that. But it’s an interesting question I don’t know exactly what the industry is doing but if they are yes you see it.

Okay, thanks.

Thank you.

[Operator Instructions]. Our next question comes from the line of Michael Tarkan of Compass Point, your question please.

Thanks for taking my question. Just a little more granular on the origination volume, so you talked about $120 million, $130 million a month as a target. Obviously, we are tracking below that. Any sense as to when we might get back there or is this just more of a wait-and-see approach and the third-quarter level is just a better run rate for us to think about going forward?

I think the third quarter level is better run rate for the rest of the year certainly and you even take historically you know October is supposed to be good and then November and December are going to drop. And so we’re still in October and it seems okay. So I mean conservatively speaking I wouldn’t be surprised that we hung on to our levels for the rest of the year just because we gave up a little bit more than we thought we did before. And again it is a little bit of a guess but probably fair. Next year I mean it is so hard to guess what the first six months and next three will do, the first six months of any new year. Like I said, the environment seems all positive, the new Presidents make all sort of good noises, people go running out and buy boatloads of cars and then we could go up a lot. We are going to go up some no matter what because we can get faster trends in the season which seems to have reassured itself in the last year or so. So, that is an easy way to look at it sort of slow through the rest of the year, flat to the rest of the year. We are going to go up some in the first quarter, second quarter if you have glad tidings or whatever that maybe it goes further. But the good news is we are sitting around waiting to take advantage of it. So if it is there we will go but we can't -- we are not going to push if it is not there.

Understood, thanks. And then just as a follow-up, do you guys disclose what your average long-terms are on the portfolio or what the average age of the cars are?

I don’t think they put anything in the 10-Q filings as regarding like the age of the units. But if there is a lot of that disclosure in the asset back transactions obviously but we could talk offline and I could give you some of that information or we could always expand some of that stuff in the quarterly filings too.

That will be very helpful, thank you.

Okay.

Thank you, as there are no further questions in queue I would like to turn the call back over to Mr. Charles Bradley for any additional or closing remarks. Sir?

Thank you. So, I think given the discussion every sort of flavor for how third quarter went. Like I said it is little different than our normal hopefully aggressive, hard pushing, do the best we can kind of approach. It is a little bit ironic I went back to in 2007 or after we got out in 2007, we are sitting around in 2008, 2009 trying to make all of them work again. One of the things I said was we can get to 50 million a month, we could sit there forever and make a lot of money. And of course then we did get there and then we went to 100 then we kept going. And so, now we are back in the 70 to 80 kind of range, the 70s and 80s and as much as I sort of didn’t listen to myself in the 50s, I am listening to myself a little bit now. I mean this is a good place to be where we are originating pretty good volumes, portfolio is growing. You know awful lot of things are right, we can't control our industry and the environment and so I think the best approach strategically is to wait and see. Sounds strange for us too but it is a very nice spot to fit in given lot of the things going on. So, thanks for attending, we will talk to you in the next quarter.

This does conclude today's teleconference. A replay will be available beginning two hours from now until October 25, 2016 11:59 PM by dialing 855-859-2056 or 404-537-3406 with conference identification number 98489886. 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.