‘Unseasonal’ 4Q Origination Boost Puts CPS on Track for Growth in 2019
Consumer Portfolio Services is counting on marketing and technology enhancements implemented last year to spur origination volume, despite potential complications with changes in the tax code coupled with the government shutdown.
CPS originations shot up 32% year over year, to $251 million in the fourth quarter of 2018. In fact, fourth-quarter volume was the highest of any quarter last year, an outlier in terms of seasonality, Chief Executive Charles Bradley Jr. said during an earnings call last week.
Chief Financial Officer Jeffrey Fritz explained the anomaly by pointing out that the company had laid the groundwork for growth in the first three quarters of 2018. “We’ve been adding new marketing reps throughout 2018,” Fritz told Auto Finance News. “We’ve added some technologies in that area so folks in the field have more tools at their disposal to provide high-level service to the dealers. We upgraded and enhanced our credit decision model. So, the growth in the fourth quarter is really a combination of all those things.”
Also read: CPS Bolsters Originations Despite Shrinking Revenue
Looking ahead, the subprime lender hopes that the fourth-quarter volume will serve as a springboard for first-half 2019 originations. However, the government shutdown and estimated smaller-than-average tax refund checks could push the seasonal spike in originations further into the year.
“I think that will come into focus here in the next few weeks,” Fritz said. “In the last couple of years, we could almost circle the last week in February as the week where it seemed like a lot of tax refund checks showed up in folks’ mailboxes. We see that in two ways. We see an increase in application flow at the dealers, and we also see it on the servicing side where customers who may be a payment or two past due [are able to catch up].”
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