SOUTHFIELD, Mich. — As company executives highlighted how
much financing volume moved into its second quarter because of delayed federal income
tax refunds, Credit Acceptance Corp. also discussed the impact the Consumer
Financial Protection Bureau is having on its business.

During a conference call detailing its second-quarter
performance, chief executive officer Brett Roberts responded to how Credit
Acceptance reacted when the CFPB began issuing enforcement actions earlier this
year.

"We are used to regulation; we are regulated in all 50 states,
and so we are used to dealing with state regulators. This is obviously
something new," Roberts said. "We have had a good long look at it, and we are
comfortable where we are from a compliance perspective.

"We've always taken it very, very seriously. We are watching
what the agency does, and we are responding appropriately to it," he continued.
We are dialed into the industry associations, and we're certainly in the right
circles to be first in line to understand if there are any new expectations for
companies in our industry, and to make sure that we comply with those
expectations.

"It certainly adds some expense and some things that they
have come out with we have had to take a hard look at, but there is nothing
specific to worry about there at this point from our perspective," Roberts went
on to say. But certainly we will keep a close eye on it and do what we need to
do there."

Company's Q2 Performance

Credit Acceptance reported that its consolidated net income for
the second quarter came in at $61.5 million or $2.56 per diluted share, for the
three months that ended June 30. A year earlier, the company generated consolidated
net income of $56.6 million or $2.18 per diluted share.

For the first six months of this year, executive highlighted
their consolidated net income was $122.1 million or $5.04 per diluted share,
compared to consolidated net income of $106.9 million or $4.10 per diluted
share for the same period a year ago.

Turning to second-quarter adjusted net income, a non-GAAP
financial measure, Credit Acceptance reported that this mark settled $60.7
million or $2.53 per diluted share, up from $54.3 million or $2.09 per diluted
share in the year-ago quarter.

For the first half of this year, the company's adjusted net
income totaled $119.5 million or $4.93 per diluted share, marking a rise from $103.3
million or $3.96 per diluted share through the first six months of 2012.

Beyond the top-line figures, Credit Acceptance highlighted
that its unit and dollar volumes increased 8.4 percent and 10.5 percent,
respectively, during the second quarter. The company's number of active dealers
grew 21.6 percent while average volume per active dealer declined 10.7 percent.

"We believe the decline in volume per dealer is the result
of increased competition," the company said. "In addition, we believe a delay
in federal income tax refunds in the current year contributed to both the
decline in unit and dollar volumes during the first quarter of 2013 and the
increase in unit and dollar volumes during the second quarter of 2013."

Credit Acceptance reported that it originated 48,706 loans
through 4,484 active dealers during the second quarter.

For the six months that ended June 30, the company indicated
unit and dollar volumes increased 2.0 percent and 4.5 percent, respectively.

"Positive growth for the first six months in a difficult
environment and strong returns, we're OK with that given where we are in the
cycle," Roberts said during the company's conference call.

Looking ahead to what competition might be like for the
remainder of the year, Roberts acknowledged, "It is hard to say from
quarter-to-quarter whether it gets a little better, a little bit worse.

"There are hundreds of players in the subprime auto space
and no single group or single company is that important but there are lots of
people out there that are making auto loans, lots of people making auto loans in
our segment of the market that continues to be very competitive and that will
continue until there is some change in the capital inflows to this industry,"
he went on to say.

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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