Charles E. Bradley - President and Chief Executive Officer Jeffrey P. Fritz - Executive Vice President and Chief Financial Officer.

J.R Bizzell - Stephens Inc David M. Scharf - JMP Securities LLC John Heck - Jefferies Charles Fisher - LF Partners. Lucy C. Webster - Compass Point Research & Trading, LLC Erik Volfing - Grand Slam Asset Management LLC..

Good day everyone and welcome to the Consumer Portfolio Services 2015 Second 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 facts 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 will 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 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 you Mr. Bradley..

Thank you and thank you everyone for attending our call today. You know I think [indiscernible] is the summer and second quarter is over, there is not a lot of particularly exciting news other than its about what we expected. The quarter was consistent with our projections, I think the big thing about the summer is generally nothing happens.

After last year we had hoped to have some growth and we have had some. So that's’ sort of inline with what we expect and what I mentioned in last call. So overall, we would say that we are very pleased with the quarter, 15th quarter in a row with increased earnings, almost across the board all the numbers of what we expect.

I think the [indiscernible] is up a little bit, its partially because it’s the summer months, also now the portfolio is getting close to two billion in size, the growth dilution from growing doesn’t affect the numbers much, and so its a little bit higher and again well within line of what we would expect.

In marketing we are still, we are not hiring quite as much, but we are as mentioned in past calls our emphasis now is on training.

Very recently we've seen a real uptick in the deals purchase per dealer and I think as I mentioned in our previous call that was one of our goals, because in the beginning in marketing I don’t know how many steps it is, but step one was to get a bunch of marketing people in-house, train them, get them up to speed.

Next was to grow the dealer footprint and get access to as many dealers we can across the country and then the third step was to increase the penetration of that dealer network and in fact that is beginning to show some results.

So we are very please in terms of what is happening in marketing and I think down the road that will show a better return as that projects comes sort of full circle.

Originations, as we continue to grow our originations it works very smoothly, I don’t know maybe eight, nine years ago what we used to grow in [sudden spurts] (ph) originations had a tough time keeping up that's no longer the case in these days. Whenever we grow they had no problem keeping [indiscernible] probably some of the best in our industry.

So we are very pleased with that.

Collections is our continuing work in progress, we have seen small movements of progress, I still think there is a lot more to be had out of our collection production, but again, we think they are pretty good, we strive to have some of the best in the industry and so we think there is room to improve and grow there, but overall both in terms of management structure within the branches and the overall functioning of collections and the training involved in getting - not getting, proving our compliance while the statutory things going on and the regulatory issues going, I think we are doing really well in terms of what collections is doing today versus what it was doing five years ago, but even so I think we will see continued improvements in the collection area as well.

Copper markets, I mean copper market are generally what we call not boring but consistent, the interest rate appear to be about the same, there is always a shock whether interest rates are going up, but if they wait long enough to raise interest rate we’ll probably get some of the cost reductions in terms of how we do business in the WallStreet market, so that could be a nice timing for both of them and us.

With that I’ll turn it over to Jeff to go over the financial results..

Thanks, Brad. Welcome everybody. We’ll begin with the revenues. Revenues for the quarter were $88.4 million thats a 3% increase over our first quarter revenues this year of $86 million, and a 23% increase over the second quarter of 2014. For the six month period, revenues were $174.4 million and that’s a 25% increase over the six month period of 2014.

Basically its business as usual, revenue driving, coming from the growth in the portfolio, we bought $270 million of contracts in the second quarter that's $504 million for the six month period that's allowed our portfolio to grow 6% for the quarter and 36% compared to a year ago.

So obviously we’re pleased with the continued gradual ramp up of the portfolio. On the expense side, expenses for the quarter is $73.2 million that’s a 3% increase over the previous quarter, the March quarter, and a 23% increase over $59.3 million in the second quarter of 2014.

For the six month period, the expenses were $144.4 million and that also is a 25% increase over the expenses for the first six months of 2014.

In the sequential quarters, most of our expense categories were flat, at least the core operating expenses were mostly flat obviously we had and we’ll talk a little bit more about provisions for credit loss is increasing, interest expense certainly increased as the debt from securitization has increased in the sequential quarters.

Year-over-year the core operating expenses increased obviously and generally now consistent with the increase in originations and the size of portfolio.

Big expense category of course is provisions for credit losses that were $35.7 million for the quarter that's 7% increase over the March quarter this year, and a 39% increase over the second quarter of 2014. For the six months, provisions for credit loss is $69.1 million, a 40% increase over the first six months of 2014.

Our provisioning schedule, our actual credit losses, the growth in our allowance have pretty much in track with our projections or schedules and consistent that growth is consistent with our prior expectations.

Pre-tax earnings for the quarter was $15.2 million that’s a 3% increase over the March quarter and a 24% increase over the pre-tax earnings in the second quarter of 2014. Year to date pre-tax earnings $29.9 million, a 24% increase over the first six months of last year.

Net income was $8.4 million for the quarter, a 2% increase over the March quarter this year, and a 21% increase over the $7 million that we earned in the second quarter of last year and year to date, net income $16.9 million, a 23% increase over the net income of $13.7 million for the first six months 2014.

Diluted earnings per share $0.27, that’s a penny better than last quarter and a $0.05 better than the $0.22 we earned in the second quarter of last year that’s a 23% year-over-year increase in diluted earnings per share. And for the six months $0.53 that’s also a 23% increase over the $0.43 we earned in the first six months of last year.

Moving on to the balance sheet, free cash on the balance sheet was $18.4 million compared to $20 million last quarter and $14 a year ago. The restricted cash of $200 million includes $95 million in pre-fund proceeds from the 2015-B securitization, which was settled and released after we closed books for the quarter.

I might mention that in addition our liquidity position is very strong, in addition to the cash that you see on the balance sheet the $18.4 million, we also carried on the balance sheet $34 million at the end of the quarter of unpledged receivables and those would have been new receivables that we had recently acquired in the last couple of weeks of June that we did not pledge to one of the warehouse lines and if had pledged them we would have received significant additional cash proceeds.

The finance - receivables portfolio, net of the allowance for losses is now $1.7 billion that’s up about 6%, I think as I said compared to the previous quarter and 36% compared to a year ago, managed portfolio now is $1.822 billion so we’re rapidly approaching this at a milestone of $2 billion and hopefully we’ll get there soon with continued originations growth.

On the liability side of the balance sheet, no new debt, the residual interest financing continues to wind down, the long term debt, the notes, the little notes program at $15 million is kind of stayed the same, the only significant change is we did that $250 million 2015-B securitization and so our securitization trust debt now is up to $1.8 billion.

Looking at some of the performance metrics, the net interest margin for the quarter was $74.7 million that’s a 3% increase over the March quarter and a 25% increase over the second quarter of last year. On a year-to-date basis, the NIM was $147.5 million that’s a 29% increase over the first six months of last year.

So this of course is driven by our interest income offset by our cost of funds, the blended cost of funds under 2015-B securitization that we just did this quarter was 3.17%, that’s up a little bit from the first quarter deal where it was about 3.0% and the blended cost of all the ABS debt on the balance sheet now for the quarter is about 2.8%.

The risk-adjusted NIM, which takes into account the provisions for credit losses for the quarter was $39 million that’s about flat with the first quarter and a 15% increase over the second quarter of last year. On a year-to-date basis, the risk adjusted NIM $78.4 million a 21% increase over last year’s six months period.

Our core operating expenses which exclude the interest in provisions credit losses were $23.8 million roughly flat as I think as I said earlier with the first quarter this year and a 10% increase over last year and more importantly I think this metric that we’ve been referring to recently improving metric, our core operating expenses as a percentage of our average managed portfolio down to 5.3% for this quarter that’s a continued reduction compared to 5.8% in the first quarter this year and that metric was 6.5% in the second quarter of last year.

And so what we are seeing is what we predicted I think continued improvement in operating leverage, core operating expenses decreasing at a lower rate than the portfolio itself and the topline revenue.

So our return on managed assets for the quarter was 3.4% that’s down a basis point from 3.5% for the first quarter and it was also 3.4% for the six months period which is down a little bit from the 3.7% for the six months period last year.

Looking a little bit at the more detailed credit metrics, the delinquency at the end of June was 7.49% that’s up a little bit from 6.86% at the end of March and compares to 6.21% for June 30 of 2014.

So we’re seeing a little bit of seasonal calendar seasonal increase in the delinquency numbers as well as I think Brad alluded to the age of portfolio, size of the portfolio providing less sort of growth dilution with the new business that comes on.

Net losses for the quarter is 6.59% that’s down a little bit from 6.64% in the first quarter of this year and up compared to 4.98% a year ago.

Just a quick note, the return on the auctions, vehicles were liquidated at the auctions for the quarter 44.8% which is up a little bit slightly improved compared to 43.8% in the first quarter, but down compared to 49.2% and those numbers have been trending down as no really everybody in the industry has observed.

We’ll just make a quick comment on the asset backed market, we completed our 2015-B deal in the quarter, the blended cost of funds as I said was 3.17%, we benefited a little bit from slightly tighter spreads and execution in the deal in a couple of the classes but the benchmarks had widened a little bit compared to the first quarter which led to somewhat wider overall pricing.

But overall that market continues to be very dynamic, the structure of our deal is really remained unchanged now for almost two years, eight consecutive deals have been the same five class structure going from a AAA to top of the stack down to a B, we had I think a dozen unique investors in the deal and almost all the tranches were oversubscribed 1.5 to I think one tranche was 3.5 times oversubscribed.

So that market as I said continues to be very receptive to our class. And with that I will turn it over to Brad..

Thank you, Jeff.

Looking at the industry, not a lot of movement going on out there, I think because of the regulatory environment potentially and maybe right of other things there aren’t a lot of new entrance in the industry or haven’t been in well over a year, so again nothing particularly newly reported there, but obviously having new entrance is certainly a good that keeps people from jumping in and trying to grow real fast in new crazy things.

So I think on that end of the market is quite good.

Yet again, it looks like the large players, banks and otherwise are beginning to pull back or slowdown and so I think I’ve mentioned in previous calls, it would appear sort of the new trend is for people to get very aggressive in the first quarter so on the belief, I think they need to put some earnings or they are getting better paper, we don’t believe that the paper you buy in the first quarter or early second quarter then you better than the paper you buy the whole year, so its little odd that that would be a reason but it’s possible, but what the result of that is this year like last.

We’re seeing a little bit of an uptick in our originations volumes during the summer and as I have said before, normally that doesn’t happen, but I’m beginning to buy end of the fact that in the future now, I can have nearly that big tax return, refunds spike in the early months of the year and maybe a little more consistent production throughout the summer.

And so we’re doing that we still need right around $100 million or a little more, last year we were sort of in the 80s kind of range and I think we had a $100 million once last year for a month, in this year we may go $100 million month for rest of the year.

So I think there is improvement not quite going 125 we're looking for, but still, we’re not pushing to get to that 125 either, and I think as much that’s a subtle difference it’s a very important one and that we’re not pushing very hard to grow the portfolio by either credit which seems to be a way a lot of people do it and we haven’t really cut price much either.

So we’re getting some growth, we're not getting huge growth, but we’re getting consistent growth and we’re not sacrificing hadrly anything in credit hardly anything in pricing to get there, which I think is overall probably as good as we could hope for.

I think so moving on to the corporate side of things, [indiscernible] let’s talk about the shelf, we’ve lot of comments about the shelf and lot of people saying “oh my god you put the self out there, you’re going to go sell all kind of stock and everything else” Well we talked to some investment folks and some of our financial advisory folks and they all said, if you are ever going to think about raising some capital or selling some stock and you should have a shelf in place and under that advice we put the shelf out.

I think I’ve mentioned many times, sometimes down the road we may raise some debt certainly not we’re not doing it today, at this very moment we have no intention of either raising lot of debt tomorrow or selling lot of stock tomorrow, which was a lot of the questions we got, ‘boy you have put this shelf out there, you must be something immenantly” and that just isn’t.

I think having a shelf in place, there was a chance we would have been reviewed and so just for lot of sort of housekeeping reasons it was the good move to put this shelf out there, so you have it [indiscernible].

And down the road we may raise some capital, if we think the market is right, if the stock ever goes up to some level we like maybe we would sell some stock, neither of those things are true today, so that sort of takes go to shelf, [indiscernible] some of the rate or upset that we put it out that without any notice we apologize for that but again it was much more of a housekeeping thing without any imminent things happening.

Lets see, in terms of the stock, we could talk for about two to three hours about how great the company is doing and how we are doing everything like we've said we would, and we have been doing that for quarter after , quarter after quarter but in the end nobody cares anything about the stock price, and what people should realize as much as we also get lots of comment on, [indiscernible] stock price, the one thing we cannot control is the stock price, we can run the company, we can grow it, we can buy good paper, we could do all the things we’ve said we were going to do and in fact have done, the one thing we cannot do is anything with stock price.

We can put these results out there but the stock price is only take care of itself at some point. We’re trading at a very low multiple, we produced lots of consecutive quarters of earnings, we have real growth in the revenue and the earnings, trying to get the stock to follow it is difficult.

I mentioned we might buying some stock and we have we bought in 285,000 shares and average price is 621 in last few months and I think as the opportunities present themselves we’ll continued to buy some stock. We thought we’re buying it really low at 621 most of the stock we bought was more than its trading for today.

So it’s little bit problematic and that we would like to go out and we think the stock is significantly undervalued so we’re trying to buy some back but and then again when we buy it again at 621 of share and sitting at $0.06 of share that’s a little disappointing even to us, but as the opportunities come along, we’ll continue to buy some in or if we have the opportunity to do so but we have in fact bought some in today.

Another thing we noticed was that in April, the short interest in our stock in the end of April is only about half million shares, today it’s almost 1.3 million. So for whatever reason, there are folks out there, that don’t have a lot of faith in the company and our stock and that’s what are they.

So an easy thing to do is, if you really want the stock to go up, go buy some and put the guys with the shorts in a tough spot.

It’s I can’t quite understand why the short interest increased maybe it’s just a strategy for some hedge funds whatever and nonetheless there is a little bit noteworthy that the short interest in our stock has doubled over the last couple of months.

I also want to mention that we didn’t in fact renew, one of our credit facilities I think we did it with Fortress, one of our long term partners and so that’s a good thing, we’re probably always in the market, we keep looking at those facilities, currently we have two facilities they are $100 million each.

We may yet add another one in the future as we continue to grow and need a little more capacity.

Let’s see, I think Jeff motioned about better operating leverage, one of things we did say we would do and we have in fact done is that operating leverage continues to improve as you taken the fact that interest rates haven’t moved that much and the operating leverage continues to get better, those are all very positive things for the future of this company.

I think the economy is just kind of slugging along, it’s as I have said everybody wants some real fast growing or improving economy, we particularly probably don’t care having it move slowly, it’s good for us to keep those rates down and generally it’s a very good lending atmosphere, unemployment isn’t really a factor today.

So as I’ve mentioned that would be the most important factor to our performance so to the extent you have a moderating economy and you have low rates and lower employments, it’s a very good recipe for subprime auto. So we are taking advantage of that.

In terms of opportunities, the extent we get buy a company that maybe a big move, there aren’t any companies out there today, we continue to look, I think some day whenever there is a recession there will be some opportunities and we’ll be in a good spot to take advantage of them but for now, all we can really do is run the company the way we’re supposed to and the way we have been and hopefully eventually the stock price will catch up.

With that I’ll open up for questions..

The floor is now opened for questions. [Operator Instructions] Our first question comes from J.R Bizzell with Stephens Inc..

Yes, good afternoon, guys. Congrats again on another earnings growth quarter.

Brad kind of building on that share buyback, I knew you talked about it last quarter and just wondered if you could provide some more details maybe about that share buyback plan what you are capable of going out and buying and how you are thinking about, I know you said recently you had bought some and it’s traded off, I was just wondering how you all are thinking about that for the rest of the year?.

I think we are going to continue to buy opportunistically, we don’t really putting on a plan per se. I think the stocks are worth sitting, well, the easy way to look at it is, we think the stocks remind under value, the extent we can find opportunities to buy, then we will probably continue to buy some here and there.

We’re not really - there is no real set number in what we’re going to buy, there is no set time line what we are going to buy, does not particularly, hopefully a question but it’s where we sit. We’re going to buy it opportunistically as we go..

Great. And then switching back, you talked about competition and what you are seeing there and I’m just wondering kind of what your yield and thinking about them moving forward and then are you seeing any pricing pressure.

I know you said you are not seeing a lot but just kind of the cadence for the pricing throughout the quarter and was it more aggressive obviously in the 1Q and the beginning of the second quarter and how you are thinking about competition for the reminder of the year?.

That’s a good question. I think it needs us the most is easy now from stay your point of view or many other points of view that you look at the APR comes down a little bit and as pricing pressure, when it’s really that’s small of a change, our goal the APR is somewhere above 19, maybe 19.5.

So our target range is 19 to 19.5, and we’ve been in that for a long time.

To the extent that moves around within that range that’s almost more from a mix perspective from what we do, we’re always trying to find areas that are little more productive, we can find a spot in what we buy where the performance is better than we expected, we might buy a little more lower the price there and conversely to the extent we find some paper that's not performing quite as well we must tighten it there.

So occasionally our mix changes, we buy a little bit more sort of new car paper or new dealer paper versus independent paper and that has a tendency - we are buying more paper from the new car franchises, the APR is going to come down with lower price.

To the extent we are buying a little more from the lower tier program then the APR is going to go up. So I think we are seeing more today this is just a small fluctuations within our range based on the product mix we’re buying as apposed to real competition.

I think the competition certainly since I don’t know April has very much moderated to where no one is out there buying aggressively, no one is particularly trying to grow very much, that is hard to say that there is no competition, everybody is buying and so on and so forth and so I think the competition is steady.

There is no real change, there is no real pressure when news company came in and said I want to buy half a billion quickly and pick [Excitor] (ph) just for an example, there is no new Excitor today’s, Excitor has been around for a long time now, but when they started they bought very aggressively and wanted to grow a lot and there is no new entrant like that today and so you’re having much more normalized buying trends from all those folks..

Great and last one from me a promise cadence is the key word I’m using today but just originations obviously easy when we talk in I guess it was April and things hasn’t really accelerated yet as you thought they would and just thinking about June did you see a pretty substantial ramp up in June and I know you said you are over 100 in a month, I am just wondering if May was very similar to June and would you expect to kind of that rate to continue in July and August?.

We did see the bump up in May and June and we would expect that to continue probably for the rest for the year, originations appears strong, you can sort of tell a few weeks ahead what is going on and so July sort of looks lot like June and June and May were better than April.

So we did in fact see that uptick in the middle month that we normally didn’t expect but it is two years running and I’m close enough to saying this is the new metric in terms of how the growth mode works in subprime is certainly for us.

So we probably - I’m guessing next year if that happens again next year we will certainly say this is the way it is going to be but my guess is you have a much softer growth in the first four or five months of the year and then instead of having it dip to the summer you will see a much more normal growth throughout the year and then maybe a dip towards the end of the year.

The only thing that seems consistent right now is originations drop off still in November and December. So we would expect maybe a gradual increase over the summer, but certainly we did see a little pop in May and June and that's continued to nudge forward through the summer..

Guys. I appreciate it. Thanks for taking my questions..

Thank you..

Our next question comes from David Scharf with JMP securities..

Hi good morning. Thanks for taking questions. Maybe switching gears a little on recoveries in collections.

Brad, you had kind of mentioned that there is always kind of room for improvement just from a process standpoint we’re kind of in this post [FCC] (ph) settlement for you all I mean have you largely implemented kind of all of what was acquired in terms of collection practices or from a standpoint of just new processes or having to add headcounts or, is there still more to go?.

I think it was second parts, look at the second part first in terms of the headcount nothing really changed that way in terms of implementing the collection practices and so headcount hasn’t particularly changed maybe it is up a little bit but that is more I think we have the ability when we want to sort of - if want to change things just as a safety name I increased the headcount a little bit but I think in the long run the headcount is not going to be changed as a result of implementing better collection practices.

So to that part of the question we started implementing better collection practices in the middle of 2011 and so that is now four years old and it took some time.

I think it [indiscernible] so much, the headcount it was more teaching folks the better way to collect and so I think we've got into the point where most everyone all of the collection folks know what to do and are doing it.

Maybe the interesting sideline would be we found it was much easier to train the new people because they never collected the other way.

And so all the new hirers all do it very well and we still we have had some time to train the old folks to sort of - vetran collectors to do it the right way and I think at this point that’s just about complete and so we’ve implemented all the collection practice over the last few years and I think at this point, it’s a process, I think we’re way ahead of lot of folks in it but, first you have to retrain them and how to do it and then you got to get them used to it and then they got to do it.

And so we’re doing that now, all those folks click the way they’re suppose to and I think the results we’re going to see will continue to improve because its only about now that I would said that the entire force is doing walking in the same line as it suppose to be and having said that I think, there is lots to do even so there is I think the last step and probably I guess what we’re doing today is we still working on all the monitoring and all the things necessary to make sure it all stays the way we have now built it and I think that’s also very important in terms to very good to our environment, is not only you want to be able to do it at the right way, you want to build monitor towards, its stays the right way and on the top of that you want to be able to approved anyone that is the exactly the way supposed to be and that’s about where we are today.

Its made a sound little easier in its, but it takes the significant amount of time, significant amount of training and planning to implement all those steps. And as of today we can pretty much say we’ve done that having said that I still think that, that the results from the collection force could be better and then probably will be overtime..

Got it, that’s helpful and in terms of kind of recoveries the, is the current level of provisioning, I mean the, ending allowance in June was slide uptick from market 4.2% obviously the average age of the portfolio is going up a bit, does that level of provisioning reflect kind of recovery staying in this kind of 43%, 44% range or you forecasting over the next 12 months, further degradation in collateral values..

I would think I mean I would better under historic trend, I’m going to say as up Tom I had is always been the low 40s and so sort of the economic change like another session or ever we would expect that we coverage is to say right about where they are so and even having said that recoveries probably don’t have an up of a big factor or big piece of the factories in terms of the provisioning.

I think provisioning more of, we said we’re trying to get to the range of, losses in the paper performance that were about had now and so, I guess then on top of that extent, little extra provisioning for a little bit of cushion in that’s helpful too but I think in one hand I think the recoveries will stay in the low 40s without a recession changing that and significantly and then also don’t think the recoveries play that bigger role in the overall provisioning process and I think the provisioning process itself is, settling in other than to extent you can build a little cushion that’s always helpful..

Got it and then just lastly on the origination front, just trying to get a better feel for sort of the comfort level and kind of may be what programs what type of product or even geographies give you the confidence of getting to that 100 million - sustaining really the $100 million a month level for the rest of the year, it seems like based on what was purchased this quarter relative to the securitization size in June that the month of June came in stronger than maybe you anticipated.

I mean is there any particular type of programs where you’re seeing more opportunity or less competition and what the pricing looks like in those programs as well as deeper down the [indiscernible] subprime..

I think June was, early June is better than we expect, we had hope for little boost in June and we got it so that sort of, what we expected in terms of how we buy interestingly Minnesota sort of makes sense the knowing that all of our six to seven programs we run a profitable across the board, the deeper programs, were maybe we have slightly more expertise, it’s easy enough to say banks and big players can beat us at the higher end because they are little bit cheaper but little bit cost funds might be slightly less but we still play in that market but our margins are thinner as you get down the curve towards the lower end programs our margins grow.

So in some ways, buying deeper is more profitable over time lot of times is goes up little bit but, making more money that’s just fine and so but the answer to your question I think and I sort of alluded to this earlier for us is all about the mix and like I said last year, we lowered the pricing at the top end and got ton of new cars that we didn’t expect so we thought their market would be less elastic.

We thought you wouldn’t get a lot of push by lowering our price towards the top end and we are going to lock which was very interesting last year. This year we’re seeing that, there might be more room a little further down the curve, with less competitions that we’re looking at that.

But for us it’s always trying to balance it out where we stay right in that target range losses and we haven’t - we are certainly not in the position to say we’re going to make the move down or up, we’re still trying to have it all balance out.

So when we look at the programs a lot of it is, how do we mix them together to find the most profitable mix over all while trying to maintain the losses. The easy answer is the lower programs are profitable than the higher ones because of the less competition and maybe we’re a little better what we buy at that end.

Down the road, we maybe visit that but not right now..

Got it.

I guess lastly, along those lines, I mean in terms of the product mix or the program mix, is the weighted average FICO within the portfolio pretty consistent with where we were a year ago?.

It is. I think remembering on the one hand, we don’t use FICO in terms of how we buy paper at all but because we like you and everyone else happens that, with that regard we keep track of them and so first time buyer is generally regarded as the riskiest paper and its FICO is higher than the next four programs above it.

So I think the FICOs are remaining very consistent and are generally very close together..

Got it. Thank you very much..

Thank you..

Your next question comes from John Heck with Jefferies..

Good morning. Thanks very much. First, forgive me if you had mention this.

You talked about a little bit of pricing compression, do you guys have handy the average rate in this quarter versus last quarter and then moving beyond that a little better more into the weeds on that were you seeing, you talked about different programs, were you seeing more, I guess, sort of against in this last question but where are you seeing more or less competition or spreads wide and more given you some arbitrage opportunities..

Yes. I can tell you John, that the weighted average coupon on the second quarter production was like 19.3% and that’s just down 10 basis points from 19.4% in the first quarter and then the acquisition fees also trended downward about 40 basis points for this second quarter compared to 70 basis points for the first quarter..

Okay. That’s great..

So I would almost think that’s more again, that’s more of a mix thing I think we might have grown a little bit on the high end and that sort of push those numbers down at times. I think what we were going to say, we would say as I just said a minute ago, we think lower programs offer less competition in today’s market..

Yes. That sounds like coupon relatively flat, but little bit down fees, may be more mix shift but in the coming months you guys make a little deeper just because that's where you see the near-term opportunity..

Yes, we wouldn’t mind picking up the APR a little bit and they just kind of little bit so but again we have to do is sort of judiciously to make sure [indiscernible] kind of a we’re are not really worried, what we buying all those lower programs performs great and certainly very profitably as I mentioned earlier.

And so a lot of it just we don’t want to have a loss, what our target loss has dropped down too much or go up too much for our targeted pricing go down too much..

Okay. And then, turning to credit I mean, you had delinquencies in charge asset are up from prior recent periods but we attribute that a lot and I think you guys do to kind of a normalizing environment, where are we in that curve and when do you think things start to kind of flatten out or stabilize on a comparative period basis..

I would like to say any minute, though I don’t know because I think in the last quarter I said sort of the same thing, which is we would hope for improved results in that area soon so this is my guess, it’s safe to say we hope to target the end of the year for that we start to improve.

But again, it’s still a little bit of working progress and we’re still waiting for some better results and sort of a large big scale thing we’ve done over the last couple of years.

And so but we have lots of new folks that are all sort of rowing the right way and we would expect to have some better results over time, picking in time is little tough to do but hopefully much for the year..

That stabilizing or do you thinking that’s more on the collection side or it’s more on the front end where you did the terms just tighting up a little bit in new loans that it will have credit to stabilize?.

No I think it is just on the collection side, if you look at what we buy I mean I just had a glance few minutes ago and we bought it real consistently in terms of what we’ve been buying, just to pick one, like LTVis a good indicators and how the LTV is very stable over the last year and over the last several years and so to the extent we’re really buying very differently, you would see some of those metrics change and ours really don’t.

And so we think the front end is just fine and we would expect the improvement in the back end of the collections..

Okay.

And then last question just interested your thoughts we have seen some of the [indiscernible] concede with the regulators in terms of going to a single dealer mark up, where are we in that discussion at the more kind of model or independent vendors and where do you see that going into next few months?.

That’s a very good question, I think obviously the news came out few days ago with Honda and I think everybody is watching that very carefully, the good news is we don’t have a lot of dealer mark up anyway and we are sort of within the industry standards, so it is not going to change what we did dramatically one way or another but I think we will wait and see what we will call the big boys do and we will follow along.

But I think - I guess the easy answer is probably coming one way or another and remembering that the mark up doesn’t really affect us at all, it affects the dealers and so it’s kind of hard the regulator folks are sort of using the lenders regulate the dealers, I mean bottom line is they don’t want the dealers, the mark up loans to customers beyond a certain level and the way they’re going to enforce that is by not letting lenders buy those loans above those levels.

So if you think about it doesn’t like change what we do is we’ll have effect on the dealership market or the auto industry that way and that’s why there is probably such a lot of noise about it but it doesn’t affect what we make in any of those loans one bit and in some way to the extent they actually do cap it arguably we will be buying better credits.

So on the one hand it looks somewhat alarming when we write on paper, but it’s really all about the dealers not the lenders and so in some ways if anything the lender is going to benefit from it I’m sure nobody likes to talk about it that way, but that's just the way it is from our point of view anyway..

Yes, that’s great, I appreciate the color and thanks very much..

Our next question comes from Charles Fisher with LF Partners..

Good afternoon gentlemen, hey thanks for taking the phone call. Brad you guys had a terrific quarter at least I think it was and your origination has picked up, your metrics first of all I just want to say you guys are doing everything right, I couldn’t run the operation - I don’t think anybody could do better job than what you guys are doing.

It is very impressive to watch you guys from 2009 to where you have gotten..

Thank you..

And the my I guess my questions really about the share buyback program and I really applaud you can’t say how happy I’m that you - the company has bought just under 300,000 shares in the last few months I guess this is more of a comment than a question is my side is don’t worry too much about the price whether you pay 620 or 630 or $6 I don’t think it matters very much because we are buying at a such terrific value that it really doesn’t make a difference.

So don’t worry about the less $0.10 or $0.20, I am not a seller here, I am not saying that you can buy my shares, you’re going to be a share buyer, I’m never going to sell my shares..

By just pointing out even though we are buying it in above six, we are probably sort of where the bottom has come down a little bit and I agree this 100% there is no real difference between buying at six or whatever..

Yes and I would argue that look if you sit there and you’re a buyer of your shares and the market sees it, one of few things will happens, your stock will go higher which that is what leads to, that is great, where the stock won’t go higher and you will get the chance to buyback half the stock at five , 5.5, six times earnings whatever number ends up being which are value we could buy company at six times earnings you would be the first one to buy it and we would buy ourselves in a market, I guess..

That is true..

To keep up the great work you guys have been get there, lay on the accelerate a little more in the buyback and you will be surprised where you end up in the year or two..

Thank you for the encouragement and the comments..

Okay, thanks. Bye-bye..

Our next question comes with [indiscernible] Company..

Yes I’ve been a shareholder for about two years and just bought some more shares today good report.

On that short selling imagine - as going to selling shareholders and it’s on the [indiscernible] stock, its feel like be ban on the offering and I maybe little bit done somewhere between and under $7 of share but my question was I have been an investor in the investment business for 47 years and I’ll informing about what people should get paid and normally the top three should make more than 10% of what the net income is they should go down as a smaller, I think smaller in the larger companies and also the top guy should make more than next two bad guys combined.

We are making 15% approximately they had the net income and you’re making about 2.33 times the next two guys combine and that just seem like it of our - is very excessive on and I’ve owned, owned 1,500 companies in my life time process so like for comment on that please..

Sure and I think there is a couple earnings to consider when looking at those numbers, I think on the one hand one of the easy answer is and again it’s little difficult for to me do and try to depend myself publically but take a shot and easy answer is companies that are around for on are 23, 24 years and its owned about five they can say that and one of the reasons one might think because I’m hearing some other folks are here and so the extends, there wasn’t the money there to stay then lot of people to left from the company might gone under like many others.

And so some levels, people sort of, I have too much suffer people saying I have actually get lot of common thing that I don’t exactly what I get because of things we done, the company of all this time but also I think in terms of looking at I just think it’s not a big enough company for you to compare my salary versus other salaries below me, I think I note, our COO has left the company this year and we didn’t replace them so we actually cut and trying to compare me the next two the person in the number two spot left so it’s hard to sort of use that as a number one in that, number is no longer there.

So but easy answer is, I think as a shareholder, I think some of you remember is as much money as I may make or whatever, the reason I’m in this business, I’m in this company is because of this share, I own, I guess I’m the largest shareholder in the company and so I care about it that share value, changing my thought particularly using in the effective share price.

So the easy answer is, I’m line with every single person out there more than anyone could be being I’m a largest shareholder, I have a every interest in the world begin the stock price up but in the same token and I think as a shareholder you want a management team it is dedicated around this company and isn’t interested when the share prices goes down were looking for [indiscernible] somewhere else.

And so I think that’s part and - of what you get here, we are management team as one of the strongest, one of the ones with the most experience in this industry and growing the company from the 90s through today takes a lot of experience, lot of staying with it through the downturns, and a lot of expertise to make it through those downturn.

And so I think I understand your comments and I think if the stock price was $27 and prior wouldn’t be any comments but nonetheless comments and comments and that’s why it is but I - what would help but that we would get the stock price up and make everyone happy, I’m not all are worried about the management.

Our management is one of the best in the industry is not the best, we’ve been with our company longer than almost anyone say they been with their company and so I’m somewhat, okay with the whole thing, but thank you for your comments..

My last question is there, I think projected $3.5 million shares so I guess about shift selling shareholders I mean of that $3.5 million would be selling shareholders..

What our selling shareholders?.

I thought, I though, I read it..

You referring self offering I mean again As Brad said that’s just an offer, the shelf is put in place is housekeeping measure there is no imminent plans to selling of those shares..

But there will be selling shareholders in that..

No, the shelf give us the opportunity if we wanted to as I mentioned earlier we found the shelf and I believe the shelf had a $100 million of debt and $3.5 million of shares and only understand that we’re saying - to extend the company wanted to issue $3.5 million shares someday we could under that shelf as I mentioned earlier there is no plans today for us doing any of that..

Okay, thank you very much..

Thank you..

Our next question comes from [indiscernible]..

Hey guys. Excellent quarter and thanks very much for taking my questions. This is the first call that I have participated in and I just had a couple follow-up questions.

Could you please explain what the terms of your buyback or how many shares that you announced?.

We didn’t actually announce the buyback, we’re just buying back opportunistically as sort of things go along..

The board has to authorize how many shares?.

Yes. I’m sorry..

So what is the authorized buyback?.

Five million.

Five million shares. What did you expect would happen to the stock price that you announced the shelf you seeing discouraged, [indiscernible] and it traded lower but recognized that any time you offer itself, it’s very common to see the stock decline.

So I’m a bit confused with respect to the last questions on compensation, you are always titled to be paid and you guys do a great job as you suggest amongst the best in the industries.

But you have to recognize that if share holders are the ones who essentially own the business and I recognize you are the largest share holders, but share holders buy stock for only one reason and that’s to see an increase in the valuation of the business. And your business really hasn’t improved in terms of its valuation for a couple of years.

I mean, before I started to buy the stock I went back and looked at the chart and I was a bit puzzled as to why the marketplace hasn’t rewarded you for the improvement of the last couple of years and your business appears to be very consistent, very well managed.

I do note that the management did have a significant number of option grants in the last calendar year and as the last caller said your salaries are quite high.

Have you ever explored taking a company private I think a five times earnings and significant publically traded company gross and I’m looking at your audit cost, they look like there are 1.5 a year, and you have probably have other significant public company costs, have you considered taking the company private?.

Certainly we’ve considered it. I think on the way in, I am a believer of the stock price is going to go up, and so our goal everyday is run the company in such a way to improve shareholder value and get that value recognized in the stock.

Obviously in the last years, as you point out, that hasn’t happened and so but we’ve been here for 24 years, I’ve never sold any share just for the record and also just to point out in the option grants all those shares that are granted in options are granted at market price and that’s a real incentive for the management, it says most of the share is actually over the last couple of years have been granted something near $7..

I believe $6.59 was the price in the last year, I did look at..

That’s right. Two or three years before that was all around $7but nonetheless all that stock is now under water. So it’s basically worthless the only way for anyone to earn anything on those shares and the management is to improve the stock value of the company. So we are all very motivated to do just that.

So our remarks will show that’s a very good incentive the way I look at it because to the extent we want the stock $57 or $8 or $9, that’s what it needs to get to before anyone here makes any money on that those actions.

In terms of going forward, we’re always looking at different things I think taking the company private is, obviously it’s an option out there always. Again, I’m little bit more of a believer that at some point the industry will recognize the value and the stock prize will go up. I do believe.

If I can interrupt you, what is the event or what are the results that in your opinion what you have to do to make the market recognize you training five times with an exemplary five year growth record and one of the stronger management teams in space and are really good business.

What are you going to do to get the market place to give a multiple, and why don’t pay..

Okay. Well, the easy answer is, we going to stay over couple of hours and trying to guess what that would be. Let’s just throwing out there, that possible and we’ve thought about lately.

I think the regulatory environment today and sort of the view that some folks have of our industry certainly is in overly positive given sort of things we read about in the press.

And so there is probably a bit of a negative of hedge funds and other folks taking huge positions in companies like our’s, because they’re worried, there’s something go wrong and have some headline risk and that would be enough of a negative to get lot of folks out of this industry and out of our company along with everyone else has or at least ours in particular and so to the extent the regulatory environment changes at some point that could be somewhat watershed event where let’s say the harder thing and all these other things settle to where there is no regulatory problems.

That would be enough to where people could go flooding back in our industry and float all companies including ours and maybe recognize that point when they go looking for companies in this industry because they think the water safe again that we will get a real value because people will recognize that was the only thing that was keeping us from being recognize the better ones from the rest.

Again I only guess these events might be but that is certainly one we thought of [indiscernible]..

I appreciate your comments and if I were running your company and I’m not, following money to buy back the stock at five times earnings and I would buy everything that I could buy at $6. So my sense is I’m the new shareholder, I’m going to buy more stock it’s a very attractive business valuations. Thank you so much for taking my questions..

Thank you very much..

Our next question comes from Lucy Webster with Compass Point..

Hey good afternoon.

Thanks for taking my questions, my question on the wholesale channel side, I was just wondering if you had any color on sort of what vehicles are performing better at auction is there certain type that has stronger pricing than others, or are you sort of seeing strength increasing across the board?.

Well go ahead Jeff..

Lucy I don’t think there is any necessarily any pattern, I mean we’re buying of course we are originating generally a basic transportation vehicle, lot of light trucks and historically we find that light trucks as an example hold it very well to auction and we have a broad mix of manufacturers, there is couple of some of the Asian manufacturers Hyundai and Honda generally hold up pretty well and do well at the auctions and none of those patterns have really changed really even as the overall levels have come down, none of those patterns within sort of those broad grouping have changed really at all..

All right, thanks for the color. Thanks for taking my questions..

You’re welcome..

[Operator Instructions] Our next question comes from Mitch Sacks with Grand Slam..

Hi guys. You have actually got Erik Volfing in for Mitch. Congrats on a good quarter.

I was wondering if you could give a little bit more color about as you’re scaling the business and you’re growing what do you see in the operating efficiencies not so much maybe on the origination side but more on the back office side, have you gotten your people more trained and what can we look for there in terms of efficiency?.

Hi that is a very good question, over the last few years we’ve lot of focus on the front end and lot of automation and what is interesting is today the automation is now in the back end on the collection side and so we would expect every time to actually have our collection performance efficiency improve and so the focus for us is on the metrics and the efficiency things you could do upfront, in other words putting a scorecard having the computer decisions things rather people and as you may know we now get decisions in two seconds instead of two hours.

But now that kind of focus is on the collection side, in other words which customers need to be called how often, what type of customers are more likely to need more collection efforts than others we have done a lot in terms of the way we auction function to make those efficient, so I think the easy way to answer the question is generally speaking there has always been lots of efficiencies and it is improving but we think there could be some more in collections as we go forward not to the great extent we’ve had over the last 10 years in the front end there is still more on the table there and I think we will get some more out of it as time goes by..

Great, thank you..

Thank you..

And I’m not showing any further questions at this time. I would like to turn the conference back over to Mr. Bradley for closing remarks..

Well again I think the quarter went like we expected, the results were very good, I think the trends were all very good, we’re doing what we are supposed to be doing and we are seeing the results.

I would like to come up with that watershed event that stock and the recognition it deserves and we are [indiscernible] trying to do all those things, I think we will continue to opportunistically buyback stock when we can.

I agree there is no difference between the $6 price and $6.21 price anything at this pricing level is a bargain and we will look to continue trending those ways.

I think we’re also on the road constantly, trying to get our name out there more, trying to get in front of the hedge funds and folks who buy these stocks and just get CPS more in the marketplace and see if we can get some more recognition of our performance in the stock.

So knowing that’s our goal, along with running the company efficiently which we been able to do for long time now. We will continue to do that and we will talk to you on next quarter. Thank you..

This does conclude today’s teleconference. A replay will be available beginning two hours from now until July 23, 2015 at 11:59 by dialing 855-859-2056 or 404-537-3406 with conference identification number 83557731.

A broadcast of the conference call will also be available live 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..