IRVINE, Calif. — After wrapping up another quarter of net
income growth, Consumer Portfolio Services again addressed competition in the
subprime auto financing market.

However, late last week, instead of touching on startups
that are entering the arena, CPS chairman and chief executive officer Charles
Bradley Jr. delved into how the company is navigating against commercial banks
and much larger operations such as Santander Consumer USA and Capital One.

"It's interesting. As much as there seems to be lots of
little guys running around, we really don't see a lot, just occasionally hear
about one or another in the regional kind of setting," said Bradley, who will
be one of the numerous top finance company executives driving the agenda at the
SubPrime Forum, which is sponsored by Dealertrack Technologies, Fiserv and
Black Book Lender Solutions and is set for Nov. 12 and Nov. 13 at the Manchester
Grand Hyatt in San Diego.

"But the big guys, most important part is all the banks
backed out considerably from our industry of that top end of our industry,"
Bradley continued. "So you're left with the Santanders, the Capital Ones of the
world who, when they want to, can be very aggressive.

"Very nice for us, and for whatever reason, they have not been
all that aggressive lately. And even when they are, it's only for a little
while," he went on to say.

When continuing his thought about the possible reason why,
Bradley mentioned how Santander Consumer USA is the engine driving Chrysler
Capital, the new financing company for Chrysler Group franchised dealers. He
also pointed out that AmeriCredit — the company that "used to be the big guy on
the street," according to Bradley — is more involved with General Motors
Financial and its potential foreign interests.

According to second-quarter data from Experian Automotive,
Capital One owned 3.77 percent of the entire used-vehicle financing market,
down 6 percent year-over-year. Experian also noted Santander's Q2 reading stood
at 2.91 percent, up 5.7 percent year-over-year, while AmeriCredit's share stood
at 0.81 percent, softening by 21.8 percent year-over-year.

"We're all there and they all have their moments when they
come in and take some of the business," Bradley said. "But the market is very
large, and without all those banks, there's plenty of room for them to get
bigger without really putting a lot of pressure on us, because we're all trying
to fill in the hole.

"If you take out an HSBC and a Citibank and a bunch of those
lenders that don't exist in our market today that were there five years ago, you
can have a Capital One and a Santander grow quite a bit and it doesn't faze any
of us littler guys. And it certainly shouldn't faze even the littlest guys," he
continued.

"I think that's probably the fairest estimation I can give
you on the large players," Bradley went on to say.

Third-Quarter Performance

Consumer Portfolio Services tabulated earnings of $5.9
million or $0.19 per diluted share for its third quarter that ended Sept. 30.
Those figures are higher compared to net income of $2.7 million or $0.11 per
diluted share, in the third quarter of last year.

The company determined earnings for the first nine months of
this year came in at $14.5 million or $0.46 per diluted share, up from $4.6
million or $0.19 per diluted share for the same period a year ago.

CPS' third-quarter revenues totaled $64.1 million, an
increase of $16.1 million or 34 percent year-over-year. The company's Q3 total
operating expenses also rose, too, climbing 18 percent or $8.3 million to $53.5
million.

Looking at revenue and expenses for the first nine months of
the year, executives spotted total revenue coming in at $189.1 million, an
increase of approximately $52.6 million or 39 percent, while expenses settled
at $163.5 million, an increase of $31.5 million or 24 percent.

During the third quarter of this year, CPS purchased $206.8
million of new contracts compared to $203.8 million during the second quarter
and $143.1 million during the third quarter of last year.

The company's managed receivables totaled $1.167 billion as
of Sept. 30, an increase from $1.067 billion as of June 30 and $844.9 million
as of Sept. 30 of last year.

"We're pleased to report another strong quarter of financial
results," Bradley said. "With continued improvements in funding costs and
operating expenses, our return on managed assets is expanding. This combination
of higher returns on an increasing asset base positions us well for future
earnings growth."

Nick Zulovich can be reached at nzulovich@subprimenews.com. Continue the conversation with SubPrime Auto Finance News on LinkedIn and Twitter.


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