Good day, everyone, and welcome to the Consumer Portfolio Services 2023 Fourth Quarter Operating Results Conference Call. Today's call is being recorded. Before we begin, management has 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 valuations 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 projected. I refer you to the company's annual report filed March 15th 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 here 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 fourth quarter and full year earnings call. Thinking about this call and what I should say, the real thing was '23 probably in retrospect, was what we'll loosely call a transitional year for us and in terms of where we want to go with the company, somewhat of a neutral year. And it harkens back to, I think, in late January of '23, when we were looking at our credit performance, we were somewhat surprised and/or dismayed, if not shocked that the '22 vintages weren't performing as well as we thought they would. And at that point, we decided we needed to do slow things down and figure out what was going on. And so we did. So really, unfortunately, at some level, we spend, I mean, there's good news, bad news. Bad news is we spent most of '23 evaluating the '22 performance and figuring out what went wrong and how to make it better so that we can then move forward and it took some time. One of the things we did immediately was we tightened the credit, we improved the model, beefed up the collection team and kind of went after making that '22 paper perform as best as we possibly could. And so unfortunately, at some level, we spent most of '23 waiting to see how '22 would do rather than try and grow real fast in '23 and not really know how we were going to improve. So what we did find out as the year went on and actually just the first or second quarter, as much as we were somewhat dismayed in our performance and how our credit was performing, we found out that almost everyone else in the industry was doing far, far worse. So…

Thanks, Brad. Just sort of follow-up on what Brad was talking about in terms of portfolio performance. since that is the number one priority of the company right now. I'll also add that there were some macroeconomic issues that were sort of weighing on the vintages, 2022 and early 2023. Obviously, inflation and rising interest rates were headwinds that we could not control, along with the guaranteed back-end problems that Brad talked about, it jacked up the amount finance and jacked up the car payments, putting stress on the consumer. But in fairness, that's been balanced out with a fantastic unemployment numbers that is probably the most critical metric to judging the viability of our business and that is near historical low. And also the other bullet that can really hurt the business is a recession. And I think that most economic pundits are opining that we are going to avoid a recession soft or hard, so low unemployment, no recession still means that our business is quite viable. As Brad alluded to, the 2022 vintages started off challenging, but seem to have leveled out at the end of 2023, our servicing practices definitely help that. I'll talk about that in a minute. Likewise, the first half of the 2023 vintages are equally challenging, but again, we've seen steady improvement on those vintages, and we expect them to be more in line with our historical CNLs. Anecdotally, we were recently at a major asset-backed security conference, and we routinely heard from investors and bankers that our 2022 vintages and 2023 vintages far outweighed our competitors' performance in the space. So even though we aren't quite thrilled with the challenges that 2022 and 2023 -- early 2023 had, we are very pleased with our performance in our space. For the fourth…

Thanks, Mike. I'll go over the financial results. For the revenues for the fourth quarter, $92 million. That's an 11% increase over the $83 million from the fourth quarter of 2022. For the full year, revenues were $352 million, is a 7% increase over the full year revenue of $329.7 million in 2022. Of course, our largest component of revenue is interest income. The fair value portfolio is now up to $2.7 billion. And that portfolio is yielding 11.3% remembering that, that yield is net of credit losses. Also included in revenues for the quarter and for the year are marks to our fair value portfolio. In the fourth quarter, we booked a markup of $6 million to that fair value portfolio. That's compared to -- for the full year, it was $12 million in markups for the fair value portfolio. That's compared to $15.3 million in fair value markups for the prior year 2022 period. The markup is a result of better-than-expected performance in that fair value portfolio. Looking at expenses, $82.1 million for the fourth quarter is 27% higher than the 64.7% in the fourth quarter '22. For the full year, $290.9 million in expenses is 36% higher than the $213.5 million in 2022. A couple of things of note under expenses. We continue to see reverse negative loss provisions from our CECL portfolio. That's the portfolio that we originated prior to 2018 that's not accounted for under fair value. We booked a lifetime loss reserve on that portfolio, and the results are coming in on that better than we expected, so we're able to reverse any loss reserves that are no longer required. That number was $1.6 million in the fourth quarter, $22.3 million for the full year and those numbers compared to $4.7 million in the…

Thank you, Danny. As you can hear from both the reports that as much as '22 wasn't the best of the years, we've done quite well through it in many different areas. Looking at the industry, it's kind of about that. Everyone is still struggling with the '22 paper. And even in some cases, some people's '23 paper has not started out particularly well either. But since ours is, we're kind of happy where we sit there. And I think it's going to create some opportunities for the company and that people are certainly going to be kind of conservative going forward, at least until they understand that their models are working again where they've corrected their model sufficiently to where people can grow again. So we might have a little bit of a head start in terms of getting back in the game than some of our friendly competitors. There's certainly will be some opportunities that probably one or two of the folks won't make it. That might be interesting opportunity wise, but also the fact that we can start growing again and sort of put '22 behind us and be proud of what we did in '22. But again, in terms of our -- what we want the company to do, we'd like to get back to that game much more than we have been. Also, you would think at some point down the road, they have some lower rates. And with a lower rate environment, obviously, our margins improve. Our performance will be great that way. So towards the end of this year, in '24, that might be a benefit as well. In terms of the overall economy, who knows whether we'll have a hypothetical soft landing, but it's certainly looking like we might get somewhere there.…

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