Wake up, Buy Here, Pay Here people. It's a beautiful day. Go grab yourself another cup of joe and say hello to Jim and Michelle Rhodes on the Buy Here, Pay Here morning show. Take it away, you two. Good morning. Hello, good morning from Utah. Welcome to the morning show on a Friday. It is Friday. More talk about data, about repo data today yeah and I had to postpone v-eight meeting last night because we had uh well yeah we had people you know football games for the kids and some of that stuff so we had to reschedule one for next week but um it worked out we got you know we got two groups of uh each size now so people can float and attend the other and that's part of why we had people attending the other group because of conflicts last night and so so anyway we just had to reschedule but I've got together some data today for this conversation and got updated repo data through August. And I just picked, you know, some key indicators. So poor Michelle is not well this morning. She's feeling a little sick to her stomach. So she's being a trooper and showing up for the morning show. She's being a champion. Yeah, poor her. Yeah. No, she's, she's not feeling well, but, but I could have tried to kick off the show on my own. It's just, I'm going to botch the buttons every time. I'm so clumsy with that. There's an old adage. I remember my dad saying is if you don't want to end up cleaning the toilets, don't do a good job. So it's like a military thing. If you peel potatoes really well, you're going to end up on potato duty. So, I, you know, and I'm cool with that. Yeah. I, I, I'm happy to help. And you're glad to be here, right? Yeah. Even with a sick stomach. So good morning. Yeah. Good morning. Uh, glad to have you here. Got, um, let's say just got that information to pull together and we're reaching out to a few guests for upcoming weeks. And, uh, so things will be a little fluid for us for the coming weeks, but, uh, we'll, we'll be, uh, and next week I will be out of town. So, um, Yeah, for a couple of weeks. I'll be in Guymon and Jim will be here in our home. People don't know where Guymon is. Guymon, Oklahoma. Yeah. Little town in West Oklahoma. It's where White Hat Way was. Inspired. Yeah. I would say that's the inspiration or the original kind of motivations, inspiration for me. The White Hat Cowboys of Western Oklahoma. Anyway, shall we get into our stuff? Absolutely. And we probably won't keep folks here along today. Just have a couple of data points to discuss and kind of a follow on to our conversation from Wednesday. For those who didn't participate on Wednesday, we introduced three. indicators that we would recommend from a white hat perspective to be able to track. And so I brought back two of those three today with specific results through the month of August, because what we're seeing, there's a lot of chatter out there about You know, heavy charge offs. Yeah. And so we just kind of wanted to cut through the chatter and the opinions and the kind of just broad conversation and bring something as precise as we possibly could to the conversation as is my approach. And so we. We just, I gathered up two. Let me share with you the first one. The first data point that I picked is an easy one to kind of understand. And that's this one about P&I collected per active account. Active account. So what you still got... um people making payments on the internet yeah yeah and this is the one that I said you know this is a simple napkin thing you don't need a sophisticated software you just need a piece of paper write down look it up on your software how much principal and interest did we collect and put in the bank last month in the month of august in this case and then divide that by the number of accounts that you had in the portfolio at the beginning of august okay And so when you have that on the board, because one of the things we talked about Wednesday is let's make this part of our culture, tracking this kind of stuff, showing those numbers, everybody make it visible for the team to see kind of how we're doing with those numbers. And the numbers were pretty sobering when I got in there and looked at that for this. So what I chose to look at, because any of these kind of numbers, when you look at them on a single month, it can be It can be up or down based on the number. That's why the more data we collect and we constrain together is it's better to like year over year. Right. And, you know, your average three, six, whatever. Sure. Yeah. Yeah. So the bottom line is we, when I look at that number, that's a simple number to be able to get to. I would look at it on a, look at your own trending, like look at the number each month. And then what I'm working from here is a, I think I ended up with a three month rolling average for P and I collected. So let me share with you what we had on that. When we look at principal and interest collected per active account, Of the twenty one dealers that I could get valid data across the full range and who had submitted, we just by the time I filtered out, you know, kind of in. Invaluable data or data that wasn't going to be useful in this case, I end up with twenty one dealers. So out of those twenty one, eighteen of them showed a decrease in their three month rolling average through August. That's substantial. It's just says to me in a pretty simple way that we're still, we're still hurting in terms of the, now the decrease across the average of all those was less than a percent, but it's still says that across the three month period, ending August are the amount of money that we banked per account was down versus the three month period ending July. So this is just my way of saying, are we coming out of it? Is it stabilized? Are we still experiencing charge-offs? This one isn't exactly charge-offs, but I think we can conclude that when we're collecting less money per the account in the portfolio, that's going to show up in delinquency. That's probably going to show, you know, we're basically getting a snapshot at why would we be short? Well, we either left customers unpaid or or we had customers unpaid and they charged off. I mean, it could be any combination, but we're simply looking at how much did we bank in P&I compared to the number of accounts in the portfolio. So it's just one indicator. And then the other one, I went back to this collateral recovery rate. We are starting to look at collateral recovery rate in our group. Some of our groups are going to be shocked next week when they see the numbers you know, now that we're measuring cloud recovery rate, it's really it's a strong indicator of disparity between our members, and I think it's going to be a good conversation point. We have other metrics that we track that would give, you know, an insight into the same kind of calculations. But, you know, one of our members, Jeff Owings, people have seen Jeff speak on the success group. He kind of gets out and... I'm sorry? So he gets out and has made some, and he's a guy who's been in business for years. And so when Jeff was speaking about that, he made the case that, you know, we should all be tracking collateral recovery rate. And so I went back and just fished out the formula that we had. And I didn't use it at the beginning because we just couldn't ever seem to get everybody on the same page about the formula. But we've used the formula that seems to be valid. And the bottom line is I put it on the screen here. The CRR calculation, collateral recovery rate, is in my definition. This is my own kind of, you know, simplifying the language for the typical dealer saying principal banked, including repos. Like I treat repos as though it's principal. And why? Well, because it's money that the portfolio is yielding in cash. at least as a cash credit to inventory, right? So we take the principal that we collect and that includes repos and we divide that by the total decrease in the portfolio in that period. Okay. So that's basically that measurement. And I put a star in there, a couple of stars, because there are a couple of things you have to allow for. You have to take out your amount of finance because the dealer might look at that and say, well, my portfolio was actually up. There wasn't a decrease. Well, that's because you haven't taken out your new contracts that you added to the portfolio. If you take out the contracts that you added, and then you would need to make any adjustments for contracts that you acquired or sold, you know, small percentage of our dealers do that. But just remember in order, you're looking at just decrease of principle in the portfolio after you make those adjustments and you compare that. And so when I looked at that number, I looked again at a three month rolling average on that one. And through August, thirteen of the twenty one dealers had decreased. Right. So, again, it's kind of a broad indicator of portfolio performance, portfolio yield. But it's just it's it's. It's valid data. It's information that we confirm and do a soft reconciliation. We try to get plus or minus one percent on the portfolio movement. And so it's a small pool, but it's a real pool. And it's, you know, when I say there are twenty one dealers in this pool, that's twenty one more dealers to compare to than, you know, somebody who's not involved. And this is also twenty one dealers that have had. They're data verified and validated. And so we watch the chatter on social. There's none of that. This is just a lot of times dealers looking at from their perspective. Like you said, you've had some challenges with, all right, dealers, CRR, what is that? I mean, how do you arrive at that? And so this is using the same metrics across the board. Which is helpful because, you know, yeah, that's that's twenty groups, VA, whatever dealer peer groups. It's it's good to really valuable to have everyone on the same formula. Yeah, for sure. You know, and then it's validated. Yeah. And then you start to stack that up as a trend over many months. You know, we and some of our members have data back to January twenty twenty four. And so we're able to sweep that kind of information. One thing I didn't say. About the P&I per active account is, you know, when you when you look at that number and you think about, you know, what does it represent in terms of our. So I try not to look at a single month. We have the August number, but rather than come in and say August was up or down versus July, any given month, we can expect in the numbers we're talking about here, you can see some swings. That's why I try to look at at least a three-month rolling average. When it's available, we'll go back and look at a six-month rolling average instead because I don't like to be too reactive. I think any one month can be, but a number like this, the P&I collected per active account, you might want to, you know, if you're putting on your whiteboard, I would typically put, for example, number of Fridays that occur in a month, in a calendar month, we'll move that number because if you have more Fridays, you're probably going to collect more in that month. So, but again, when you kind of, yeah, when you take that out of there, when you move to a three month rolling average, you're going to have pretty good, you know, trending to work from and not, you get so worked up if you came up a little bit short on it. Exactly. And when you do the three month, it does it, you, sometimes we, we like to really celebrate the, this was the best month. Great. And then the next month is low. And so it's like, is it, is it the worst month ever? But when you average it out, it's like, how are we doing overall? Because we, you know, our contracts are, they're, three-year contracts. So yeah, not a single month. And I can say, I don't have much else here. We can wind down a little early. I think what I'd like to do in our coming weeks here, and we're kind of saving Fridays back for continue this conversation and kind of keeping an update on what we're seeing in our own data. And then I would say that I'd like to bring back around the conversation about collection efficiency. We discussed that in one of our group meetings earlier in the month. And there's, There's an appetite for that. There's a need currently for us to start looking at collection efficiency and just- You've been doing that for clients for how long? Ten plus years. I started really tracking that in a different way, twenty years ago. So it's a number that just quick information and I would invite people to come back and be part of that conversation because I think in times like this, it's even more important because what that number does is that it sort of moves past any delinquency and recency numbers. Not that those won't still mean something, but when you can move past that and look at collection efficiency, then you start to really look at how much are we cooperating with customers? That's a pretty good measurement of how much are we cooperating with customers and getting the money in the bank, even if the delinquencies up and down, even if the month had, you know, short, you know, fewer Fridays and any of those kinds of, it takes out some of those homes and just looks at how well are we cooperating with customers? And is that trending up or down? Yeah. And I do appreciate the way that you look at data is is not reactionary. It's it's, you know, taking all the emotion out and let's level it out and let's look at because we're always talking long game. And, you know, three months is not necessarily a long game, but it is when you're looking at data. You know, you're leveling it out. So I really appreciate that. And being reactive in terms of management has its own set of problems. Like, let me be that manager. Let's say I'm a general manager of a store. I look up and my collected per account is down, you know, in the month of August. Well, if I didn't look at a three month rolling average, I might say, well, we're way down. Well, maybe I didn't consider those Fridays. And so now what I do, I go meet with the team and say, well, these numbers are terrible. We got to get to work and get these accounts up. So and maybe I'm feeling pressure. Maybe I'm a dealer. I'm feeling pressure on my borrowing base. And so I'm going to go to the team. We got to get these numbers up. Well, if you look at it in a more longer range trending, maybe the numbers are just fine. They're just right where they're typically are. So we gotta be careful about not being too reactive because when we react, we put pressure on the team, the team puts pressure on the customers. And what these numbers are suggesting to me is our customers are already feeling a certain amount of pressure. And if we if we push too hard, they're going to fold. And so I think this is what we we got to be careful not to overreact. And so, you know, that's my nature anyway. But I think, you know, when you're playing a long game and you're working with customers and you're you're kind of helping them through whatever's going on, I'm not going to be surprised to see that. delinquency run a little high at times. I'm not gonna be surprised to see our P&I collected on a given month be a little bit short. So I just think we gotta watch these things in a more long range trending. And then I hope that the data that we shared here today gives folks an indication like, is it just me? Is it just my market? And so that's one of the fun things about VA is being able to sit in a room with dealers from different pockets of the country and they can describe what it is that they're experiencing. in their market conversations with customers situation their local economy and I think that gives people some perspective and it helps them from being too reactive thinking it's just me right or it's just something of that nature so this is why we want to continue to bring this kind of information and you know we want to we realize it's it's money and it's your business and you want to make sure that you're profitable I mean of course um we are in a really uh, interesting economy. And, and I just, I, I would encourage everyone out there listening. And I brought this up Wednesday, I think, um, uh, something that Russell Moore talked to us about and his wife mentioned, you know, he was struck, he was stressing about his borrowing or his, uh, his, uh, uh capital provider and and you know just feeling some pinch there and she's like that's that that a dealer is going to ask for grace um from their from their capital providers and and you know that it can make or break because it's it's rough well our our customers um have an even harder their experience compared to ours is very different. And the numbers, they back that up. I mean, it backs that up. Their experience is harder than ours. They have less money a month and more bills than they did during COVID. Way, way more. Yeah, way less. And You know, a lot of things have jumped, jumped, jumped, and yet we are experiencing something that we helped contribute to because we were like, well, we're going to charge or, you know, expand the amount. And, you know, we're seeing buyer pay here. I would say ten years ago, no one would have ever dreamed of having a six hundred dollar a month payment. Yeah. Um, and their experience, ten years ago is not that different. So how, I mean, how are we, how are we, um, showing grace? This is a long game. Brent Carmichael teaches collect the, the, the cash, not the car, even if it comes over a longer period of time, or we figure out some way of being able to help, um, you know, however we can help our, our customers be able to be successful in their loan, even if they're a little bit late. Yeah. Help them be successful. Yeah. You raised something that you're thinking back to that Russell Moore. And I don't remember Russell's particular, I remember that conversation, but I don't remember the particulars about what was happening with Russell or if it was even him or another dealer. But the bottom line is I got a call from a dealer. It's clear from a lot of the conversations I'm having with dealers is that Lenders are either pulling back if they're maybe not stepping in to provide new financing with certain dealers, not increasing their lines, whatever. And then they're also applying some pressure. I'm hearing from some dealers who are feeling some pressure from their lenders. As a result, some of them are exploring alternative financing. The truth is there's not a lot there right now. We're in a contraction period with capital. Now, there are exceptions. I will say that We're familiar with lenders who are stepping in. I think they're still going to be conservative and rightfully so at a period like this. But there are some exceptions and it kind of goes back to what you've heard us talk about recently. We're going to continue to talk about dealers who. dealers who have the best chance of getting additional funding at some sort of favorable terms are gonna be the ones who have their ducks in a row in terms of their data. They know their own data. They know their own metrics, their financials, all this stuff. And so this kind of stuff that we're tracking is gonna be, beneficial to those dealers. They can certainly leverage their VA data alone in conversations with lenders because we've got a ton of stuff in there. And most of your banks or lenders that are just kind of dipping their toe and trying to step in are not as familiar with how the pieces move. That's right. And so if you can show that and trend that, and it's like, this is during, during the hardest times you saw, if you could sit down with a capital provider, Bank, whatever, and say, you know, when the economy was experiencing this, this is what we did. And and that's that is really that's really, really helpful. And the more data you have. where you can see that where a financial institution can see the trends and how you weathered the trends. And what strategies. Yeah, exactly. That's something else we're doing with VA to starting to build in a layer of strategy and accountability sessions so that, you know, that's something in a ninety minute, you know, virtually with eight dealers, you can't get too far. That's why they do the plus. Yeah. You do the kind of the premium stuff. So it just a quick mention for those dealers are out there who haven't reached out to us about V eight, we'd love to have you in a V eight dealer group. They're under two hundred dollars a month and it's it's just a really great solution for. Yeah. Meeting monthly, having conversations, the V eight plus, which there's extra meetings where it's like diving into a conversation, not just around the number. That's one ninety nine right now. Yeah. just a home group is one. Yeah. We did one earlier in the week on increasing cashflow. And then next week we do kind of wealth management and wealth building. And I'm like, you can drop a hundred and ninety nine dollars on a good dinner. Yeah, you can. I probably wouldn't. But yeah, but I mean, if you're getting a bottle of wine, you probably are. So it's yeah, it's it's really it's interesting when you when you can like start to compare things like that. It's a hundred and ninety nine. but that, Oh, I just, yeah. Look at your cable bill. Yeah. No, we do. We, we, we want to see dealers get part of our V eight groups. This is good value. You can talk to some of our members and hear kind of what they're getting from it. And we're, we're finding irrespective of portfolio size, that it's a good. And then you do at the end of every month, the last Tuesday, the last Monday, Monday, the last Monday of every month, um, is just, it's anyone can come. I think that's a week from Monday. So yeah, we're doing the discovery, just an open discovery meeting where we kind of walk through the data points and kind of give people a feel for what the format is and what, what, how we turned their simple data into something more, you know, valuable. And so, so yeah, we, we do that on the last Monday. So if you want an invitation to that, we we're happy to extend an invitation. Yeah. that, uh, anything we've talked about, um, please feel free to reach out. It's nine Oh three eight one six zero two one six nine Oh three eight one six zero two one six. Um, we, it is, uh, if you need to get an RFC created too, before the end of the year, it's yesterday. Um, so, If that's something that you need some assistance in doing, please reach out to the phone number I just provided or Jim at White Hat Way. And let's get that started. Whitehatway.com. Whitehatway.com. Thank you. All right, everybody. Thanks so much for joining. Have a happy and fun and whatever weekend. And, you know, lots of college and high school football. See you all later. Thanks, guys.
