Question-and-Answer Session
Operator
(Operator Instructions). Your first question comes from David Burtzlaff – Stephens Inc.
David Burtzlaff – Stephens Inc.
I have a few questions here. Kind of start on the auto business, what kind of lot expansion do you guys foresee this year?
Darrin J. Anderson
Well we actually acquired two lots in early January so we’ll have those two for the whole year. We will – we’ve got to get those under our belt, get the other three lots kind of going and mid-year we’ll look at whether or now we’ll add potentially one or two. We might add a service center as well, but I wouldn’t anticipate real rapid growth this year.
David Burtzlaff – Stephens Inc.
Okay. And Doug do you have the loss rate, what the auto loss rate is?
Douglas E. Nickerson
I can get that for you, David. Right now we are reserving at a pretty high level there for two reasons. One is we’re new to the business so we’re learning it and we want to make sure that we’re conservative with respect to that.
And the second thing is also as we all know the macroeconomic factors and you read a lot about that with respect to the automobile industry, so for those two reason we’re reserving at a much higher rate than we would for example in our payday. Where typically our payday is going to be – our loss ratio would be around 23 or 24%; with our car lots we’re going to be in the mid-30s as a percentage of revenue.
David Burtzlaff – Stephens Inc.
And then where do you kind of see the loss rate on for payday coming out this year? A little higher than where we were for 2008?
Douglas E. Nickerson
Yes. It’s funny. We mentioned something in the earnings release, David, about that and Darrin and I spent some time talking about that yesterday. Clearly given the environment we’re in and the nature of the difficulty with respect to collections, I mentioned early in my comments our returns are actually a little lower but our collections are worse and I don’t think we’re unique there.
I would be surprised if we could improve our loss ratio year-over-year. So I think it’s safe to assume that we will at best be about same and most likely be a little worse than what we were this year.
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