Good day, everyone, and welcome to the Consumer Portfolio Services 2023 First Quarter Operating Results Conference Call. Today's call is being recorded. Before we begin, management had asked me to inform you that this conference call may contain forward-looking statements. Any statements made during this call that are not statements of historical facts may be deemed forward-looking statements. Statements regarding current or historical valuation of receivables, because dependent on estimates of future events, also are forward-looking statements. All such forward-looking statements are subject to risks that could cause actual results to differ materially from those I projected. I refer you to the company's annual report filed on March 15 for further clarification. The company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, further events or otherwise. With us is Mr. Charles Bradley, Chief Executive Officer; Mr. Danny Bharwani, Chief Financial Officer; and Mr. Mike Lavin, President and Chief Operating Officer of Consumer Portfolio Services. I will now turn the call over to Mr. Bradley.

Thank you, and welcome, everyone, to our first quarter conference call. We definitely spoke a little while ago, but not too long ago. So not that much has changed. But in terms of the first quarter, it's off to a very strong start. We're very happy with the results. I mean, I think the thing to sort of focus on in looking at the first quarter is that we've made a lot of changes in the last 2 quarters of 2022, mostly as a result of the Fed raising rates and the 2022 vintage has not really coming out of the gates as strongly as we might have hoped. As a result of that, though, we spent those 2 quarters and a good part of this quarter tightening our credit, raising our rates and fees and really sort of realigning everything we needed. One might have thought that would have had a negative effect on both growth and our attraction to dealers in the industry. That's not the case at all. We had a very strong quarter. Even with the tightening and the price increases, we've had strong growth in the first quarter, stronger than we would have expected. So all those things are very positive in terms of our first quarter of the year getting off to a good start. I think we also saw sort of a good thing is our DQ and losses have gone up a little bit, but we still are significantly below pre-pandemic levels, many of our friendly competitors probably couldn't say that. So again, we both are beginning to see we made the changes necessary as we start 2023, but we're also still beginning to see the real results of what we've done in terms of having a strong credit model, strong collection model and having an all kind of work to actually give us a great start to the year, but also to sort of to help take care of any inefficiencies or things that didn't work as well in 2022. So with that, I'm going to turn it over to Danny to the financial stuff and then Mike, and then I'll get back on a few comments on the industry and the macro.

Thank you, Brad. We'll go over the numbers. Revenues for the quarter, $83.1 million, which is slightly higher than the $83 million we posted in the December quarter, but it's up 12% over the $74.4 million in Q1 of last year. So what's -- drilling down on some of the details here. The fair value portfolio is now $2.8 billion, and that's yielding about 11.2%, remembering that, that yield is net of losses. Last year's number included a larger portion or larger benefit from the legacy portfolio, which was $190 million last year versus $71 million in this year. And that legacy portfolio last year was yielding 17%. So without that comparison, the revenue increase would have been even greater. Also included in revenues for last year was a fair value markup of $2.4 million. That was in Q1 of '22. We had no markup in Q1 of 2023. Moving down to expenses. The expenses for the quarter, $64.7 million, which is flat from the same $64.7 million number from Q4, but it's up 44% from the $45 million in Q1 of last year. These expenses include a negative provision from our legacy portfolio using CECL accounting, where we had originally estimated lifetime losses on the legacy portfolio that -- where those losses didn't materialize. So over time, we've been gradually reducing the amount of the excess reserves. And in the current quarter, that amount happened to be $9 million of negative provision. In the December quarter, it was $4.7 million and in the first quarter of last year, it was $9.4 million. Pretax earnings. I'll cover -- I guess, interest expense I can cover right now because that's a big component of the change in expenses. That interest expense component was -- has increased from $16.4 million last year…

Thanks, Danny. From an operations standpoint, as we reported in our last call, 2022 was a record-setting year for us originating $1.85 billion, which was our best year in our 31-year history, and we were able to grow our originations 67% year-over-year. So far, 2023 is off to a great start as we originated $415 million in originations in the first quarter, that is down 4% quarter-over-quarter, but up 2% over the first quarter in 2022. So we are tracking nicely so far in 2023. The key to that metric is demand for our financial products remain strong. We had over 30,000 apps in Q1, which is a 20% increase quarter-over-quarter and a 41% increase year-over-year. Now we expect greater demand for our financial products in February and March due to tax refund season, but we saw a greater influx of apps despite that seasonality. Yet, with all that said, we also reported on our last call that we aggressively tightened credit the second half of 2022. We continue to do that in Q1 in the areas that we consider most important. As a result, our approval rate dropped from 72% in the first half of 2022 to 65% in the second half of 2022 and in quarter 1, it dropped down to 59%. That drop is by design and as a result of our credit tightening. So in the first quarter, we continue to further narrow the consumers that we lend to in order to focus on originating only the upper tranche of the subprime market. Demand was so high that we feel like we're continuing and improving to buy the best subprime paper available in the market. We've been able to hold down to strong APR with the quarter average -- with Q1 quarter average at 21.5%. That's…

Thank you, Mike. Silicon industry, we think we sit in a very good spot in the industry. And of course, one of the questions is why? I think coming out of 2022, where we've seen some of the problems in terms of the rapid growth across industry in '22 and we'll probably give a lot of credit to our model. But Mike mentioned one of the indicators in the payment. With the inflation problems out there and the customers having more things to try and worry about, one of the things we managed to do is keep our payment for our customers down. A lot of the other folks -- and you can tell by the numbers, a lot of the other folks, the payment -- the customer payments all went up a lot. And I think over time, that's going to cause problems in terms of the performance. So us being able to manage that issue among others, has really helped keep us in line with what we're doing. So I think 2023 is going to be an interesting year for our industry, but I think where CPS sits today is one of the most advantageous positions we could be in. So we're good with that. This deal of famous NFL owners phrase and in terms of the economy and all, we care about the unemployment rate, we care about the securitization market, and nothing else. I mean the rest doesn't matter. Those are the ones we really care about. And so unemployments remain really low. No one really is forecasting unemployment to go up very much. We did another securitization just the other day. That market remains strong, particularly at the bottom end of the stack. In other words, the sort of lower grade bonds, BB, BBB, those…

Thank you. This concludes today's teleconference. A replay will be available beginning 2 hours from now for 12 months via the computers -- the company's website at www.consumerportfolio.com. Please disconnect your lines at this time, and have a wonderful day. End of Q&A: