Charles Bradley – Chairman, Chief Executive Officer and President Jeffrey Fritz – Chief Financial Officer Robert Riedl – Chief Operating Officer.

David Scharf – JMP Securities John Robert Bizzell – Stephens Inc. Kyle Joseph – Jefferies Kirk Ludtke – CRT Capital Group Jason Stewart – Compass Point.

Good day, everyone, and welcome to the Consumer Portfolio Services 2014 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 future clarifications.

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; Mr. Jeff Fritz, Chief Financial Officer; and Mr. Robert Riedl, Chief Operating Officer of Consumer Portfolio Services.

I will now turn the call over to Mr. Bradley, you may begin..

Thank you, and welcome, everybody to our third quarter conference call. Let’s see I think, to start, we had a very good quarter as probably evident in the numbers but just to sort of run through a few of the highlights. We had a 40% increase in originations volume month-to-month.

And I think that’s a little interesting and then normally the summer is a slow time, but the fact that through think there is a few factors we’re going up but either way our monthly volumes increased rather substantially through the third quarter, that was a real sort of strong point at the quarter.

And we did that while maintaining very consistent margins in terms of our pricing. So we didn’t give up anything, we gained a lot. We did a $270 million securitization, up from a $210 million one.

So our securitization size is going to grow at the same level as our originations growth and the more we can put into the portfolio, the bigger it gets the stronger our position in the market and the industry. We’ve had continued improvement in collections.

We sort of – as I mentioned in the previous calls, we’ve had a sort of [Inaudible] a little bit in terms of the way we do collect the loans and I think the new way we do that is now finally coming around and produced some better results. We also extended the warehouse line with Citibank, which is a sort of a good thing to do at a good timing wise.

And we also fulfilled our financial obligations under the FTC order. So overall, we [didn’t go lot down] [Ph] in the quarter. I’ll go into a little more detail in a minute, first Jeff Fritz will go through the financials..

Thank you, Brad and welcome everybody. We’ll begin with the revenues. Revenues for the quarter were $77.1 million, it’s an 80% increase, compared to the June quarter at $71.6 million and a 20% increase over last year’s third quarter at $64.1 million.

For the year-to-date, nine month revenues, $216.8 million, that’s a 15% increase over $189.1 million from a year ago nine months period. However you might recall that in the last year’s nine month period, we had that significant like $10 million gain from cancellation of debt.

So if we took that out last year’s numbers, then the nine month numbers actually increase 22% year-over-year. Moving to the expenses, $63.2 million in the quarter, that’s up 7% from the June quarter of $59.3 million and up 18% from last year’s third quarter of $53.5 million.

On a year-to-date basis, the expenses were $178.9 million, that’s a 9% increase over the last year’s nine month period. However, again, we did have an unusual expense item last year in the nine month period about $9.7 million of contingent liability accruals.

If you took that out of last year’s number, the year-over-year nine month increase is about 16%. Expense category is generally increasing in line with the growth of the portfolio as well as the growth in the originations volume.

As an example, we had employee expenses increased, our headcount increased to 700 or increased from 729 people at June 30th 2014 to 804 at September 30th. And so we are adding people really across all areas of the company including marketing, and on the servicing side as well.

Provision for losses was $27.3 million for the quarter, that’s a 7% increase over the June quarter and a 35% increase over last year’s third quarter of $20.2 million.

On a year-to-date basis, the provision for loan losses was $76.8 million, that’s a 46% increase over the last year’s nine month period and again it’s directly tied to the increase in volumes, increase in size of the portfolio. The consolidated portfolios increased to 30% compared to last year at this time.

Pretax earnings were $13.8 million, that’s a 12% increase over the June quarter of $12.3 million and a 30% increase over one year ago third quarter of $10.6 million. The nine month pretax earnings were $37.9 million, that’s a 48% increase over last year’s nine month period of $25.6 million.

Net income for the quarter was $7.8 million, it’s an 11% increase over the second quarter of this year of $7 million and a 32% increase compared to $5.9 million in the third quarter of 2013. The nine month net income $21.5 million of 48% increase over the nine month period last year.

Diluted earnings per share $0.24, that’s a 9% increase over the $0.22 we put up in the second quarter of this year, and a 26% increase over the third quarter of last year and the nine month diluted earnings per share of $0.67 or 46% increase over last year’s nine month period.

Moving to the balance sheet, unrestricted cash balances, maintaining pretty steady levels quarter-to-quarter of $13 million at the end of the September compared to $14 million at the end of June. Our restricted cash balance of $175 million includes as usual at the end of each of these quarters.

In this quarter, $87.8 million representing the pre-fund proceeds for our 2014-C securitization, which closed during September, the pre-fund portion of that closed in the first week of October. So those proceeds were received and a big chunk of those ones were paid out for warehouse lines of the credit.

Finance receivables, net of the allowance for loan losses are $1.4 billion, that’s up 12% from the June quarter and up 34% over last year.

And of course as Brad mentioned, receivables balance is significantly aided by $279 million of originations in the third quarter and that’s an increase of 30 some percent over the second quarter originations volume. Elsewhere in the balance sheet, Fireside portfolio continues to wind down.

The debt on the balance sheet pretty consistent and we are continuing to utilize our two $100 million warehouse facilities.

The residual, sort of the corporate debt that we have, the residual interest financing and the renewable notes are continuing to amortize down the residual, amortizing down according to its terms of the two ABS deal that it’s tied to and the renewable notes are winding down primarily because we are offering those notes or renewing those notes at significantly lower rates as [Inaudible].

Securitization debt portion is continuing to increase as a result of the 2014 C securitization that we did during the quarter that was a $273 million deal which we’ll talk a little bit more about.

Looking at some of the other financial performance metrics, the net interest margin for the quarter was $64.8 million, that’s a 9% increase over the June quarter of $59.7 million, or a 29% increase over last year’s third quarter net interest margin.

Year-to-date basis, $179.2 million, that’s a 34% increase in the NIM compared to last year’s nine month period. And this is directly related to the continued, really good execution that we get on the ABS deals.

Of course, nine month period, during the two nine month periods, you might recall that we repaid earlier this year $38 million for our senior secured subordinated debt, [Inaudible] coupon and has helped to improve our NIM during the 2014 period.

The risk-adjusted net interest margin which takes into account the provision for loan losses was $37.5 million for the quarter, that’s a 10% increase over the June quarter of this year and a 25% increase compared to the $30 million of last year’s third quarter.

On a year-to-date basis, the risk-adjusted NIM, $102.4 million, a 27% increase over last year’s nine month period. So you can see that we’re improving this metric even with the consideration for the generally increasing and significantly increasing provision for loan losses as the portfolio continues to grow.

Our core operating expenses for the period were $23.7 million, that’s a 9% increase over the June period this year and a 22% increase over the third quarter last year. On a year-to-date basis, core operating expenses increased about 15% to $64.5 million compared to the nine month period last year.

So, clearly, the core operating expenses, expenses to run the business are increasing, but they are increasing relatively in line with the size of the portfolio and as we’ll look at in a minute, we are actually seeing some improvements in economics and the leverage – the operating leverage.

In fact, let’s look at the core operating expenses as a percent of the average managed portfolio at 6.5% for the quarter just ended, that’s flat with the June quarter, but a significant improvement over the third quarter last year with that ratio of 6.9%.

Similarly, on a year-to-date basis, the annualized year-to-date expenses as a percent of the managed portfolio is 6.3%, that’s about a 13% improvement over 7.2% for the same, for the nine month period ended September of 2013, the prior year nine month period.

And of course, kind of summing it all up, return of pretax income as a percentage of our average managed portfolio, 3.8% for the quarter, that’s up a little bit from 3.7% for the June quarter and also the same number, 3.7% a year ago and on a year-to-date basis, for the nine months, 3.7% compared to 3.3% for the nine month period ended last year.

Take a quick look at the credit performance metrics. The delinquency at the end of September was 6.66%, that’s up just a little bit from the June quarter of 6.2% and up again just a little bit from 6.44% for the same quarter last year.

The net – the quarter’s annualized net losses, 6.18%, again up a little bit from the June quarter of 4.98% and the September quarter last year of 4.89%. So essentially we are seeing what we kind of been predicting all along as sort of a reversion to the mean for credit performance.

We are seeing some aging in the portfolio even though we had some significant originations for the quarter and we are still moving up a little bit on the aging curve. To talk briefly about the 2014-C transaction, the asset-backed market continues to be very receptive to the bonds.

So we withheld our 2014-C transaction $273 million, virtually identical structure to the – probably the last four deals now for us. Sequential pay structure on five classes of bonds.

The most senior class earns a Triple A rating from DBRS and a double A from S&P and then we kind of moved down the cap structure toward that bottom class of bonds earns a single A rating..

Single B..

Single B rating. Thank you, Brad.

All-in blended yield of the securitization 2014-C was 2.71%, and that’s up a little bit from the 2.37% that we realized in the second quarter and we’d attribute that somewhat to the increase in the benchmarks, but we also had widening a little bit against the benchmarks of that – what we say, the top of the stack, the highest rated bonds.

But we actually tightened the spreads on the low rated bonds, the bonds with the higher yield. But overall, that was significantly oversubscribed, particularly as you get to the bottom rated bonds.

So we are very pleased with that execution and continue to work with Citi as the lead placement agent on these deals and they do a good job for us and we are looking forward into the fourth quarter deal which will be obviously sometime in December. So, I think, with that, I’ll turn it back over to Brad..

Thanks, Jeff. So, in looking sort of rowing through, sort of the company functions, on marketing, I think I’ve expressed in multiple conference calls that our goal is to continue to expand our footprint on a national basis which we are doing. We continue to add marketing reps.

I think we now stand at about a 127 which is up from about 100 at the beginning of the year. I think our goal is to get to around a 140 by the end of the year. And sort of give them a time to – give the new reps a time to get their feet well and be ready for the growth cycle that usually starts in February and March of next year.

So marketing is going very well. Originations, I think, have done exceedingly well. We have staffed up this year to experience some significant growth which as I’ve mentioned didn’t really come in at second quarter or first and second quarter when it normally was.

And so we are little surprised and I think we attributed that to some of the companies trying to be a little bit more aggressive and things like that. So we are a little surprised when the growth came in the summer which is almost in our 20 plus years of the industry and almost never does, but this year it did.

And so, we went from an average around $70 million to into the $90 million. And so, that was, the kind of growth we might expect on an annual basis sometimes. But to have in the summer was a little surprising, but the good news is originations are properly staffed. We are able to handle it without any problem at all.

The response rate to dealers was terrific. And so, and sort of a maybe a nod to the good planning we have put together in terms of being able – at the end of that growth. And collections, one of the highlights are we opened a new branch in Las Vegas and that branch is performing really well.

It turns out that there aren’t really much in the way of other collection companies in Las Vegas and so, hiring works out far stronger than we expected. But we are busily building up a very big branch at Vegas and that’s sort of an unexpected plus as well.

Again our slide branch structure and with that we’ll be – well five branch is what we have now, that gives us really a lot of latitude in terms of hiring as we continue to grow. And so that’s all moving along the way we would expect it to.

In terms of looking at the industry, I think one of the things we sort of note at is I think we made – maybe in the previous conference call, I mentioned that a lot of folks probably were pushing a little bit in the beginning of the year and maybe that was sort of true since they all seem to have fall back.

These are some maturities falling back, it’s just I think, some of the companies, some of those companies out there become less aggressive whether they are truly falling back, or they are just sort of easing off. It’s a little hard to tell, but either way, it benefits us greatly.

I think if we were trying to take a look at it, I think some of the companies that might have been pushing; there is a lot of talk about these companies now having backing in the hedge funds in equity world, in those capital markets.

And so, whether they were pushed the mean year results are not, it’s hard to tell, but one might think that certainly a possibility. The other thing to look at is in terms of some of the big players, but due to the banks, there are a lot of issues going around the – issues.

Let’s team with some of the banks and as much of their sketch, but maybe they become somewhat less aggressive. And so that’s really what played in that game but awful lot of business sort of being in the middle. So we’ve got – really got, Wall Street, as Jeff pointed out is still very strong.

There seems to be a very large appetite for the ABS market for a lot of paper and so that’s working around the way as well. Probably, truly worth addressing is all of the – what we call the legal and regulatory issues running around certainly the newspapers have been following them.

I’m not sure they’ve been even more accurate, but nonetheless they are certainly getting some attention. So it’s well worth touching on that.

In terms of the FTC which we announced settlement last quarter, we now have completed all the payments and credits including paying the fine and all the payments and credits to the customers that we really completed everything we needed to do with the FTC. We’ve begun the moderating process. That’s working out really well.

So we sort of have completed everything we need to do there. In terms of the CFPB which is truly become the buzzword around the town, we’ve been following everything very closely with the CFPB. I think we have a sort of maybe a different opinion of lot of folks. We don’t think it’s going to be a problem working with the CFPB.

I mean, I think everyone somewhat realizes that they are interested in making sure the dealers aren’t making bad loans to customers as much we are not making the loans, we are just buying them. The CFPB can have some control over what we do and so far, they ask us to do and they are suggesting we do isn’t the problem.

From our time with FTC, we set up a committee to look into all of these areas of compliance and everything over a year ago. So we’ve got plenty of time to sort of be up to speed and even from when we started doing all the compliance things with FTC two years ago or three years ago.

So we are going to have – sort of a good spot in that – everything that CFPB asks isn’t hard to do and we are more than willing to do it. Probably the best example is desperate impact survey which we’ve done.

To give you an idea of sort of what this is about, the CFPB has asked us to sort of analyze the loans we buy from dealers to see if there a desperate impact amongst customers at those dealers.

In fact, we went through an 8000 dealer base, 8000 dealer base of the people of dealers we work with and general – become 50 out of 8000 combined understood the impact. And so, we sent them letters and alert them to the fact there might be a desperate impact within that dealer’s portfolio.

But I think the most important numbers at least from CPS’s point of view is not the whole sub-prime lending industry, is that, this whole thing so far at least from what we can tell has only affected 50 out of 8000 dealers. And remembering that at least at CPS, we generally on average buy about two loans per dealer.

So the extent of the CFPB said (inaudible) dealers the next day. So, I think, again a lot of press, and there is lots of other things outside showing in the moment. But, focusing on the CFPB, I don’t think really so far it’s been that hard to comply and this is not difficult to do.

And so all the problems that people are saying is going to be so impossible to work with them and so impossible to comply with what they like to do. We just don’t probably believe that here at CPS. I think we can do it. I don’t think it’s a problem. We have tons of automation. It shouldn’t be an issue for us.

And I don’t think it will be an issue for anyone in the industry if they pay attention and do a crack by. So, I think the next thing is, just looking at the newspaper article. You know the Wall Street Journal, excuse me, the New York Times has got all much articles on all these customers out there bidding – bad loans.

And there is probably a bunch of points to make here; one, CPS or any sub-prime model lender, we are not making the loans. We are buying them from car dealers. So in fact, the car dealer is (inaudible) customer.

And you know, with as either good things or not so good things about car dealers, but in the end, it’s not unheard of that maybe car dealers are trying to take advantage of some customers. And you know, shockingly, they should, but nonetheless that doesn’t have anything to do with us buying the loan.

Now to extend the lenders did buy one, I think, you found that newspapers that are trying to find, one, two, three, four examples and making a huge deal of it.

I think if you look at some of the facts that if it would become much more relevant in terms of what’s really going on, one of the facts is that all the applications CPS received, we only fund 6%.

We are not going go out there buying every loan that comes our way regardless of which the customer is, we have a very sophisticated buying model and we have a very sophisticated set of parameters and systems to go through before we buy any customers. But the fact that the matter is, we buy 6% resilience we turn it out.

So we are not looking to buy those bad loans. I think another point within CPS, we’ve been doing this for 20 years. We call every single customer before we make a loan. We check and make sure that they can afford to pay the loan knowing that the customers can’t pay loans (Inaudible).

Customer if he can’t pay the loan, he gives back the car and walk away. That financially has a very large impact on CPS and all the other sub-prime lenders. So, certainly CPS and with most lenders, we have every reason to keep that borrow in the car and to do the proper verification to make sure they can afford the car and make the payment.

So everything the newspapers write about lenders really newly making loans and I’ve been in care about what the customer is doing is just crazy.

I think we started around, CPS is never used to start and never will and a lot of those things that the vast majority of our industry has to start with reps and so all the articles read about that are also at least somewhat misleading in that. The vast majority that just didn’t use those contractions.

And so again, they are saying something and making a lot out of it. And then maybe the last point is comparing us to the mortgage industry and the mortgage industry, the mortgage players could make loans and immediately sell them and they got to pay it upfront.

In the auto industry, we buy loans and that we service them ourselves and we only get paid if those loans perform.

There is a very large difference and if you sort of take that for a moment and think about it, there is a lot of reasons why the mortgage people don’t really care what the customer could afford the mortgage because they were selling it and they made the money immediately and walked away, that’s not true in the auto industry.

In the auto industry, if those loans do not perform, then the auto companies doesn’t, or the lending companies doesn’t make any money. There is a huge difference there.

The other thing that people write is how the sub-prime auto industry is going crazy and growing so fast become the next recession which again is partly just untrue and ironically, it’s untrue for two reasons, one, the sub-prime auto industry at the point has grown a lot has only gotten back to the 2006, 2007 pre-recession levels.

So it’s not like we are growing out of control. We are one of the leaders and getting the country’s economy back on its seat by getting back to those pre-recession levels. So, no, we are not growing out of control.

And it’s interesting how they say, we are growing out of control and yet they never mention that all the sub-prime auto bonds produced in Wall Street during the recession paid. I think I thought a number that, 99.6 or something, but all auto loans produced during the recession paid in full.

So, it’s nice when they say how terrible the auto industry when they get so larger sub-prime, as we nicely pointed out, that even in the worst recession in the 100 years, every one of those ABS bonds paid in full.

So it’s kind of crazy that what you read in the paper and I think it’s well worth spending a few minutes talking about the fact that CPS and virtually all the other auto lenders in our industry follow much better guidelines than the mortgage guys ever did. We’ve all done it for years that are lots more experience.

Like I said, if our loans don’t pay, then we are going to get hurt probably far more than the customer would. So, now harping on the legal world for the newspapers of that matter. Looking forward, I think, I think we look tremendously good (inaudible) in our industry.

I think the low rates sub-prime continue to lead well into next year every quarter on the call we say the rates are going to up than they never do while they go up a little bit, but I think our – the deal we just priced was a little more expensive than the prior quarter is still cheaper than the deal we priced last year.

So, I think the rates are just fine.

I think, because of the regulatory concerns for the big banks and the bigger players, they’ve slowed down and maybe they are looking for ways to sort of protect themselves a little bit and I think a lot of the formal players have slowed down just to take a breath from lot of growth in the last year or two when they’ve been trying to sort of make some numbers as they started out.

And the result is, I think you are going to see, what we’ll call normal competition. There is always lots of room to grow our industry, I think the players there most of these companies being run by people with lots of experience.

And I think you are going to see, what we call normal competition, people buying what they are supposed to buy and I think that should last for a good long time.

I think maybe the regulatory environment is maybe a little hard for the small companies because they need the funding to grow and maybe a little harder to get it with some of Wall Street folks having a little more concerns with that.

So again, this is locking the small players from growing a lot, that’s probably a benefit to the players like CPS and alike. And so I think, lot of things are sort of going in the right way for us and I think as an industry, we’ll do very well as well.

Lastly, talking about some of that isn’t going very well, our stock price continues to languish and everyone asked like we have some huge control over. Shockingly, we have zero control over the stock market. We announced a really nice set of earnings for this and the market is down 300 points today and dragging everybody with it.

So, as I’ve said many times, we can’t control the stock market. What we can do is, grow our company in a very good way in an organized fashion and keep putting up big earnings and having them continue to grow. Those kinds of things later will be rewarded with higher stock price.

But there is nothing we can do to push the stock price is something we would want to do to push the stock price. All we can do is continue to succeed in an good organized way which is exactly what we are doing. With that, we’ll open up for questions..

The floor is now open for questions. (Operator Instructions) Our first question comes from the line of David Scharf of JMP Securities. Your line is now open..

Hi, good morning thanks for taking my questions. Brad, this is, I think it’s the second call in a row where you’ve made some comments about potential easing – a little bit of easing from some of the larger lenders.

I am wondering when we think about the big ramp in volumes sequentially [Inaudible] slower period, I mean, if you had to get how much of it would you characterize as maybe some catch-up the result of a full quarter of your APRs falling below 20% and how much of it is more industry-related – more related to the competitive comments you’ve made?.

No, I think, if I really guess, I’d say it’s 20% that our rates have come down just a little bit and 80% that there’s across the board easing.

I think, if you take some of the really large banks, they seem to be maybe – without knowing for real, I think it’s easy to imagine someone in a very large bank on Wall Street saying, hey, [Inaudible]this morning, that I think we should slow down and pull back and so [Inaudible] well, I may not agree with that but [Inaudible] so the bank pull back a little bit [Inaudible] and remember that banks in our world are probably competing with [Inaudible] business.

Then they sort of slow down a little later, that helps us at the top end. And then I think to the extent the little guys [Inaudible] trouble getting the funding or maybe they have made a few mistakes in how they’ve grown a little quickly, then all of a sudden, they ease off in the bottom-end.

And so a lender like CPS or some other players like CPS that sort of lend up and down the spectrum, we get some advantages across the board. So I think – I think there really is, if you look at a big place like Santander who probably has maybe slowed down a little bit or at least as we’re looking at what they do or some of the other guys.

And so, I think they are all good competitors and they all do really well, but again, when you are growing a lot it’s easy to say hey, let’s slow down a little and then all of a sudden, $100 million a month, $200 million a month slashes in an industry and they are just aren’t that many big players to soak it all up.

And so I think you are seeing a little bit of maybe regulatory concerns at the high end, you know, Wall Street concern at the low end and so it keeps the people in the middle in sort of a good spot..

Got it and I think historically you’ve been, maybe roughly two-thirds franchise, one-third independents in terms of your volume.

Has the easing of some of these larger players being felt more in one versus the other? I mean, you sense a little more retrenchment?.

Ironically, that’s a great question because our business on the franchise side, what we’ll call the high-end has improved greatly. So, that’s sort of lends into the same I made a minute ago, but if we certainly had to pick it would be the high end that’s really seems to ease back as opposed to the low end..

Got it. And let me touch on credit and then I’ll get back in queue.

In thinking about the sequential rise in the loss rate, once again, I guess some multiple choice, how much of that should we think about as normal seasonality? How much of it is the fact that Q2 was artificially low with a fair number of debt sales? And thirdly, how much of it is just plain increase in loss frequency or severity?.

I think, to start with the middle, I think we had a little bit of a low second quarter. So that’s the factor, I think seasonality is certainly a factor, I might give [Inaudible] maybe a third each of those. And then I think, a third is still us trying to get the right, what we call the [Inaudible].

I think we mentioned in the previous call that when the FTC came along, we would probably might have been little overly aggressive in some of the collection tactics and then we said okay, we are not going to do that anywhere, everybody backed off at time, and so we are trying to come up with a more normalized collection plan and I think I mentioned that in the very beginning of the call that that plan seems to be having some real success.

And so as much as the numbers don’t quite reflect that yet, the way we collect now is much more in line with the way we were supposed to, but we have had that almost two year interval in sort of retraining the collection force a little bit and that’s affected the numbers, plain and simple.

But in the end, I think we will get back to where we want to and so you might see what we call a couple of bumps in the road in terms of the collections results or the credit results, but I think in the long-term, it will put us one most importantly very much in compliance with the way people are supposed to collect, and two, it will put us very close back to the what we’ll call the baseline collections we’ve always done.

And so, unfortunately, you are going to see a little noise in the sort of the credit results sort of between when we started that 18 months ago or two years ago so when we had finished which we hope will be, maybe hopefully by the end of this year..

Okay, so it’s more of kind of the bumpiness as you are still undergoing with post-FTC transition and less related to kind of your repo realization rates?.

Yes, exactly, the repo as much as the realization rate is down a little bit, it’s almost getting back to what we’ll call them our normalized level for what we realized at the auction and a lot of people do focus on that number but given that it’s at 44 now, I think the high would be 50.

It still, seems like a number but, we are not repo-ing half the portfolio. So, its impact [Inaudible] people might believe by looking at just that number.

I think – and to sort of finish it off, I think, one of the things we always look at is are we originating the same credit quality paper today that we were doing two or three years ago and resoundingly everyone that’s concerned with that kind of area of our company says yes.

Our credit in terms of what we buy everyday hasn’t varied since 2009 if not a whole lot earlier. And so a lot is much more the noise in the collection than in terms of what we buy on a daily basis..

Got it. That’s helpful. Thank you..

Thank you..

Thank you. Our next question comes from the line of RJ Bizzell of Stephens. Your line is now open..

Hey guys, JR here. Thanks for taking my questions and congrats on the quarter..

Thank you. .

Going back, strong originations this quarter, just wondering if you could kind of talk, I know you said, just doing the math, $90 million per month average, just wondering if you could kind of talk about the cadence of that origination volume throughout the quarter?.

Sure. I think, Jeff might help me a little bit – I think it was 90 the first months and about 93 the second and 97 the last..

Last month was the best month, the 97, yes..

But I think we cleared it, might around the 90 the first month of the quarter, and we were sort of like wow, that was a good month, let’s see if it continues and in fact it has. And, as I mentioned, normally the summer hasn’t [Inaudible] at all, and the winter, the fourth quarter drops a little and as mentioned, we may yet see a little drop-off.

We are still running at the high end of the 90s and so we’ll see if that maintains the rest of the year..

Excellent, and given that strength in September, and kind of you talk about that maturation process of the marketing reps, it’s safe to assume here the $100 million a month of originations is still kind of the near-term goal for you all?.

It certainly is, and I think - what will be interesting is to see what happens in February and March, because, on the one hand we wanted the get to a 100, we’re at a 100, just about, and we want to get back to where we used to go at 125 or so a month.

So, it will be interesting to see how the growth materializes next year, but if it comes in what we’ll call the more natural time which is February, March and April, we may pop up to those kind of numbers which will be nice. But given that, that’s now what happened this year is a little bit hard for us to sit there and count on that happening..

Thanks..

But on the one hand, the 100’s a real nice number, we’ll see what happens next year, but it’s interesting that even this year as much as the growth came in different part, we still grew 35% to 40%..

Right, and kind of switching gears a little bit and talking about the headcount, I know you said, you went from 730 to roughly 804 in September of total headcount, and I am just wondering kind of where you added those heads and I know it kind of Nevada branch is the one that received most of the headcount there around collections.

And I am guessing further asking, are you comfortable with where you are out on the headcount from a collections standpoint to really service this volume of originations?.

The headcount again is sort of an interesting thing we are watching. But the answer to your question, a lot of the growth came in Vegas, like I said, we had the new branch and we were thinking about hiring 50 people and we are at 75.

And so it’s worked out far better than we expected and we’ll probably continue to fill our branch which might hold as much other in the quarter.

What’s little interesting is, it’s kind of like one of the things I’ve stated in many calls is our goal is to get back to $125 million a month on a $2.3 billion portfolio wherever we had the peak in 2007 and so now are at $100 million and I think our portfolio is $1.5 billion.

So, again, we are doing a nice job I think of getting along the track to where we want to go. But a lot of those lines, the other nice number to look at, the headcount 1100 when we got there the last time, and so one of the things we are focusing on and we’d like to do is to keep that headcount lower if not substantially lower when we get there.

And so the extent we can get to $125 million a month, and we are sitting in the 800 it will be nice to able to say, over time when we get back that we won’t need 1100 people because of the efficiencies in automation we now employed. So it’s certainly one of our goals is to keep that headcount not probably used to where it was last time.

If it has to have to, but certainly one of our goals is to keep it lower. But the answer to your question, yes, I think we are fully staffed in terms of what we need for collections. We are fully staffed for originations. One maybe interesting though is part of the hiring we are doing today is staffing up originations for the next year.

As I mentioned, as you mentioned, the marketing folks take six months to a year much more closer to a year to get their feet under them in terms of being able to be a real productive marketing person if the CPS originations people pick about six months to get trained up to where they are ready to go.

And so the extent we want to grow in March, April, whenever it is, February, March, April and May, then hiring originations people today is sort of the smart thing to do and so we are doing some of that as well..

Thanks for the detail..

Yes, no problem. Thank you..

Thank you. Our next question comes from the line of Kyle Joseph of Jefferies. Your line is now open..

Morning guys. Thanks for taking my questions. Sorry to go back to when you saw or the diminished competition.

When did that trend really start? Was it all in the third quarter or did you see that start to happen in the second quarter?.

Ironically, it really was mostly just the third quarter, really it jumped somewhat suddenly than that and I don’t remember what the June number was. But I think it was in the 70s. Almost that was over 90 going from the 70s up to 90.

So I think – and I still sort of believe that everybody pushed real hard by playback my first quarter conference call I think that’s probably what I said. I thought about it this morning and I think every call saying, we’d tell everybody there is not a lot of competition in this industry and now we’ve seen it.

And that competition showed up in that first beginning of second quarter and because all of a sudden we weren’t growing and that’s normally the time you grow and so we attributed that to some competition in the market.

So it was very interesting to see that that increased pressure which kept us from growing too much in the early part of the year sort of really weighing a lot and rather suddenly come June July. And so as much, it’s almost nothing differently we picked the whole bunch of business..

Got it and then can you guys touch on the new loan terms in the quarter? I know you said pricing has come down a bit, but can you comment on LTVs, duration of the loans and what not?.

The LTVs are pretty steady, just between 113% and 114%. And the terms, weighted average term is still around 63 months and we do about 65 or so percent of our business is in the extended term paper, the 72 month paper. But we got still a pretty broad mix in the terms and the weighted average coupon is about 19.6% I think for the quarter.

So it’s first time I think in a while we are below the 20%, but it’s still pretty close to those levels..

Okay, and did you guys see any relief with competition decreasing or is that relatively stable?.

Any what?.

Any relief in terms of….

You know, what’s interesting is I think that the drop in APR was so subtle. We might almost attribute the mix. Remember that I mentioned earlier that, we sort of picked up a bunch of business at the high end. But our average contract uses a 15.5 and today it’s about 16.3.

The only real way you can get to a higher average contract is to buy more the new car new franchise kind of cars loans. And so, by doing that, you are actually – but those cars, those types of loans generally have a lower APR.

And so as much as we didn’t really changed our pricing a lot, the fact that we bought a little more at the higher end, like our new car volume, truly new car volume went from about 7% to almost 20%. And so the extent we are getting that many more new cars financed, the APR is going to go down naturally as opposed to those new car prices you can see..

Got it, thanks.

And then can you guys give us your outlook in terms of what you think used car prices are going to do, I know, we seem they may not come down and a lot of people think used car prices are going to continue falling, but what do you guys think?.

Primarily, they’ll come down, I don’t know that they are going to come rocketing down like some people might say. The easy answer is they’ve been up for a long time and people been saying, at some point they are going to come down and now of course they are starting to come down, so people are thinking they are going to come down a lot.

I think they’ll come down, I don’t know that they’ll do anything more than normalized.

Ironically, in looking at how that would affect, one of the things that’s sort of interesting is, used car buyers or used car dealers, buy all their inventory at auction and the extent they are having trouble buying cars at auction which they are when they are really high priced, it certainly makes followers that they are trying to get a deal of the auction so they can then mark their car up a little bit to make some profit.

That’s been very difficult for the used car dealers over the last year or so. And so, as much as the used car prices are going to come down some, what that’s really going to do is help the used car market.

It may not help the new car guys quite as much then they won’t sell as many new cars, but in the end, they will cut their incentives is what they do and they’ll probably still sell plenty of cars. So, if anything in some ways it’s going to help the industry more than it’s going to really have an effect in terms of how we look at things like that..

Got it, thanks. And then just one last one.

You talked about how the securitization yields or price of the securitization increased a bit quarter-on-quarter, in terms of the overall cost of funds, is there a more room to run in terms of declining there, because I imagine the new ABS transaction is rather higher quarter-on-quarter is still lower than the ABS transactions that are paying off?.

Actually, what we have found now is we’ve had such amazing execution over the last two ABS deals which have been high volumes, they were almost kind of getting to the point where the fact, I looked at it, I found that the weighted average blended cost of the existing securitizations was about 2.69% and then the new we put out was 2.71%.

And so I think that we are pretty much at an even keel so to speak and the blended deal of the ABS deals, where we are going to see a little improvement in the overall interest expense would be in the continued decline of some of that other corporate debt like the renewable notes which are more expensive debt and that they run down, we’ll save the few bucks there..

Great, thanks very much for answering my questions and congratulations on a good quarter..

Thank you and thanks for the questions..

Thank you. Our next question comes from the line of Kirk Ludtke of CRT Capital Group. Your line is now open..

Good morning everyone..

Good morning..

I just – on previous calls I think you mentioned, but you thought that some of your competitors might be overreaching and that they would ultimately have to pull back. So I guess, I guess things are to that extent – to that extent it sounds like things are playing out as you had expected.

I am just wondering if – do you see any interjection to the point where some of the smaller players might become available?.

Excellent question. I think, yes, I think a whole lot of folks are waiting to see that happen and it’s going to happen, I don’t know when. We haven’t quite seen it yet. But it’s certainly rumbling about some of the companies that, maybe some regulatory issues and things like that.

So I think, between some of the small or smaller guys maybe selling them a little bit and maybe Wall Street be able to more – having in the back them by taking those opportunities. I know there is always Wall Street might be waiting for those opportunities. So it will be somewhat interesting and or exciting to see how that plays out.

But the answer to your question, as of right now we’ve really haven’t seen anything. But, I think, I would fully expect to see some real opportunities, maybe next year, end of next year..

And is that’s something you are open to?.

Oh, yes, we’ve done five or six acquisitions today. It all have been very successful and I think the fact that we’ve done them and they’ve been very successful. We are pretty high up and Wall Street folks see down in terms of doing these kind of acquisitions..

Great, thank you very much..

Thank you..

And then, one bigger picture question and I – as time passes, since the financial crisis, do you see the pool of sub-prime borrower shrinking?.

No, I think, it’s sort of a segue would be to say that crisis is going to adjust their spike out, so that people who I came to know it was – it might have been school loans and something else and so they are not count those negatively against their FICO score in terms of theory, everyone’s FICO score will go up.

But as an economist told me when the United States go Triple A to Double A, I think whatever the new FICO number will be, it will be the new standard as opposed to changing the world.

The economist said, when it became double A that will be the new standard and he was right, nobody cared that United States is in Triple A anymore then I think when the FICO has changed no one will care, I don’t think all of a sudden banks are going to say, oh gee, the FICO is higher we are going to buy them all.

So, I think the FICO is not going to be particularly relevant in changing that world. I think, something else I’ve mentioned in the past is that, that’s just a better reporting of the credit is probably create more sub-prime. The fact that they are much more accurate, they do a far better job these days.

They are just keeping better track to people’s credit. And so to the extent you have any kind of that credit is going to show up more and more.

I think the recession certainly created a lot of folks maybe mortgage-related has fell into our world, but I think, generally speaking, it’s almost between just better reporting than it creates more people in our environment.

Let me say that the market is still so large for sub-prime that sort of big players pushing others around you don’t see the kind of pressure you might expect..

Interesting. Thank you very much..

Thank you..

Thank you. Our next question comes from the line of Jason Stewart of Compass Point. Your line is now open..

Thanks, one quick question on in terms of P&L – how should we be thinking of fee and others and line items in this higher origination environment? I sort of would have expected it to trend a little higher with the higher volume, but any color on that would be helpful?.

Yes, it’s not going to be significant – you mean the other income line on the P&L?.

Yes..

Yes, I mean, that’s not going to be a significant factor, but once again, that includes our base servicing fees which we earn on the third-party servicing portfolios and those are virtually gone on advertising offers rapidly. The other component of that is, products and services, direct mail products and services that we offer to our dealers.

It’s an interesting and profitable component of our business. It’s not going to grow at the same rate that the overall business that seems to be growing. So, from a modeling standpoint, you could maybe consider to be to stay at kind of level or increasing slightly but not increasing at the same rate as the rest of the business..

Okay, there is no product offerings that you’ve proactively cut out because of the potential for regulatory change?.

Well, we don’t sell anything to consumers directly. So the only sort of other income that’s is other products and services are marketing-related services that we sell directly to the dealers..

Right, okay..

If we do an acquisition, you do that line half of the service and fee income..

Right, okay.

That’s perfect, and then on the – side, we haven’t heard anything from the NADA in a while on their proposal to move to the pricing deal that you are participating – have you heard of anything, is there any movement or is that been through of the table for the time being?.

We haven’t as of yet. I think, it’s a very interesting topic I can imagine, because I am sure that the NADA doesn’t want to do it at all, we’ll see, but the answer is now we haven’t heard anything yet.

I think one of the sort of things between the CFPB or even that topic, all of the stuff is probably going to move relatively slowly which probably didn’t shocked too much of anybody..

But they don’t – it’s been slow so far anything to do a whole lot very quickly, but, okay..

Maybe one thing to watch for is, the NADA conventions in January since I do sense there is something that’s what we probably hear about it..

Got it, well, we’ll look for that. Thank you..

Thank you. Our next question comes from the line of David Scharf of JMP Securities. Your line is now open..

Right, thank you. Just one follow-up. Brad, I know you’ve talked quite a bit about returning to kind of those 2006, 2007 levels ultimately about $100 million a month.

Without pinning you down too much, on fourth quarter guidance, just trying to get a sense for how much of the typical seasonality the fall off from Q3 to Q4 we should probably expect this year? I realize things are pretty unique and you are ramping up and grabbing more share than you usually do this time of the year.

But, would we typically see the same kind of seasonal sequential fall off in originations?.

Yes, interesting question, I think about that almost every day. But generally, historically that number is about 10%. It generally drop almost where we are today, let’s call it 100 that’s an easy number. And so, it wouldn’t surprise if we got the 90, maybe it’s had less or something, let’s say if we are going to get 97, so pick a number.

But, now having said that, you could roll some dice, no idea what that’s really going to happen this year. But it’s yes, seasonally, it’s roughly 10% to 12% is the fourth quarter drop from the third quarter..

Okay, so, which is another way of saying, just so, I paraphrase correctly, you are not viewing the kind of third quarter pace as anything that’s unusually elevated is the correct way to think about kind of your current run rate?.

Yes, I would think so. I am not expecting to go backwards off of the third quarter other than the normal seasonality..

Right, perfect. Okay, thank you..

Yes, thanks..

Thank you. (Operator Instructions) I am showing no further questions at this time. I'd like to hand the call back over to Mr. Charles Bradley for any additional comments..

Well, I want to again thank you, all, for attending the call. We had a really nice quarter. I think both from a micro side the company is doing everything we want to do. I think a lot of the planning we put in place over the last year or two and we are doing FTC and everybody else is really paid off.

I think sort of our planning for the future has paid off. I think after twenty years we hope we could do it right and it certainly seems like we are. I think the industry looks good. I think as I mentioned, some of the folks are slowing down here and there and I think that’s all good for the industry.

I think the regulatory environment is in anything that’s there for the industry, I think, in the end, we can work the regulatory folks and make real progress in terms of whatever they are trying to accomplish and hopefully for those, keep those customers in getting loans and as opposed to be in.

And I hope that some points in these favors are paying attention to what’s really going on and give us credit for what we are doing right as opposed to speaking to few errant instances or problems that car dealers are making and blaming on the lending industry.

But either way, we’ll keep them what we are doing and hopefully the results will continue to follow and be rewarded in the marketplace for it. So thank you all for attending and we look forward to talking to you early next year..

Thank you. This does conclude today's teleconference. A replay will be available beginning two hours from now until October 22, 2014, 11:59 PM by dialing (855) 859-2056 or (404) 537-3406 with a conference identification number, 19927879.

A broadcast of the conference call will be also 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..