Good morning and welcome to the World Acceptance Corporation sponsored first quarter press release conference call. This call is being recorded. At this time, all participants are in a listen-only mode. Before we begin, the corporation has requested that I make the following announcement. The comments made during this conference call may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 that represent the Corporation's expectations and beliefs concerning future events. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties. Statements other than those of historical facts as well as those identified by the words anticipate, estimate, intend, plan, expect believe, may, will, and should or any variation of the forgoing and similar expressions are forward-looking statements. Additional information regarding forward-looking statements and any factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements are included in the paragraph discussing forward-looking statements in today's earnings press release and in the Risk Factors section of the Corporation's most recent Form 10-K for the fiscal year ended March 31, 2016 and subsequent reports filed with or furnished to the SEC from time to time. The Corporation does not undertake any obligation to update any forward-looking statements it makes. At this time, it is my pleasure to turn the floor over to your host, Janet Matricciani. Please go ahead.

Good morning and welcome to our first quarter fiscal year 2017 earnings call. This morning, I will not repeat the information in the press release, as I assume that everyone on this call has had a chance to read it. As usual, I will add to more detail to the information in that press release to further describe our results and strategy. Our results this quarter show a continued shrinkage in key metrics, that being gross loans outstanding, originations revenue and net income. Naturally, when ledger and originations reduce, earnings usually follow the same path as our interest payments and fees relate closely to the size of our ledger. The same is true for our insurance products and other income. What I would like to do today is add some color on our results and also to describe the actions that we've been taking and are continuing to take to reverse this decline and put us back on a path to growth. This quarter, and the start of this fiscal year, has had a strong focus on continuing to roll out specific strategies, where we have seen good results. We continue to be in a test-and-learn mode and so many of our successful pilots are being rolled out one state at a time and are not yet implemented Company-wide. We strive to ensure that we are fully compliant with all state regulations and requirements before we roll out, which slows down our rollout process but helps to ensure its success. And since many of our new pilots are not in full rollout Company-wide, we are not yet maximizing the full potential of their value. For example, we've rolled out live check successfully in Tennessee in the first campaign. We have seen that the payment pattern for the first two payments,…

[Operator Instructions] We'll first go to John Hecht from Jefferies.

First of all, you mentioned the refi percentage is slightly lower than the year ago and you mentioned the borrowers are waiting an additional month on average before they refi. So I'm wondering, number one, do you have the refi statistics, and number two, why do you think the customers are – what's changed in behavior that they want to wait a little longer?

We do have the refi statistics and we did do the analytics to work this out, but we don't show all of our metrics publicly, but we have looked at that and feel confident that it is our borrowers waiting another month or two. Why they are waiting another month or two can depend on multiple factors. You can have economic factors that help you to do it, the fact they feel a need to refinance less often, petrol prices are lower. But these are speculative comments. It's very hard to identify a particular reason that's causing customers to wait another month. I think the most important thing for us is they are choosing to wait another month and they are choosing to wait with us and they are happy with our customer service. They are not choosing to go elsewhere.

Okay. And then you mentioned you're migrating toward a higher credit score. Is this a FICO score or is this your own internal credit score? And a follow-up to that would be, you've experienced rising charge-offs and you talked about there's a few different factors including the lack of a sale of charged-off assets, but at what point do you think, based on your forecasting or just your expectations because you are migrating to higher credit score, when do you think those will stabilize going forward?

The first question was about the credit scores. This is not our internal credit score. We work with Equifax and they have Beacon scores and this is looking at those scores. Beacon score of course is not the only indicator of credit quality, this is why we all in this industry have models to help us understand, but the Beacon score being higher is a positive indication of course. In terms of the charge-offs, we'll have to see how this plays out and see – we believe our mitigating strategies of having pay-by-phone in the branches, which is a great choice for customers who don't want to come into the branch, and internalizing and centralizing collections pre-charge-offs will also have a very positive effect, but it is too early to speculate about the timing for this to have an impact on our business.

Okay. And then the last question, and you guys mentioned this both in your statements and in the press release, the marketing was down and it sort of seems like there was just sort of a timing difference in one year doing things because you're getting a different, as you mentioned, effectiveness rate, how should we think about – does that mean, because marketing is down this quarter, we should expect it to creep up next quarter from a timing perspective or are you just getting more efficient overall and we should expect marketing expenses to continue to be comp lower on a year-over-year basis?

We are getting more efficient in marketing and you can measure that by of course your response rate for the cost of different campaigns depending on the materials that you use, but we have no intention to reduce our marketing budget for the year. As I said, we're just pushing it back to later in the year at a time when we think the customer quality is higher and the response rates are higher. So we expect to have the same marketing budget as we've had a year before, it's simply choosing a better more attractive universe and more responsive universe to which to mail.

Right. Thank you very much.

We'll now go to John Rowan from Janney.

Just wanted to go back to the later refinancing, what was it again, you said two to three months, typically later?

For our refinancings, it appears that [indiscernible] are waiting about a month longer for small loans and a couple of months longer to refi large loans compared to previous two or three years.

Is that changing the economics of the loan at all? I mean, obviously the refinance period obviously coincided historically with when the amortization and the Rule 78 would start to actually increase and move back toward a faster amortization. Is the later refinancing starting to change the economics or is it just kind of following that same point, just with a longer duration loan?

This is John. It does change the economics, right. It's amortizing loan, right. So the loan [indiscernible] but we don't think it's a significant change in the economics of the loan. So it's certainly something that we are comfortable with.

Okay. And then again, just why are you so confident that the charge-offs are going to move down? I mean not doing field calls is a permanent change. I know, obviously you mentioned to me about pay-by-phone in the branches. Is that really the only mitigating factor? So why you think – or just personnel adjustment in the field or what else gives us confidence that the charge-offs are going to go back down to a more historic level?

First of all, as I said or point to, we gave our customers kind of no warning to expect this change because we acted immediately and felt it was best in the regulatory environment. So there is naturally a period of adjustment afterwards. Secondly, as I mentioned, the credit scores of our customers are going up in higher quality, and therefore, we're getting a higher quality of customer in the door, and so we would naturally expect charge-offs to go down, as I talked about in detail in my script. Also, the pay-by-phone, as I said, give customers another option who don't wish to come in the branches and perhaps were expecting to be field-called and reminded and they don't have that now. And finally and very importantly, we believe that centralizing the collection center and running that away from the branches will help us manage a much better system and strategy of receiving payments and managing pre-charge-off collections.

Okay. Thank you very much. That's it for me.

[Operator Instructions] It looks like we do have another question from Clifford Sosin from CAS Investment Partners.

I apologize if this was mentioned at the very beginning of the call, because I unfortunately joined it [midway] [ph], but can you give an update as to the progress of your live check program which you tested early last quarter? And then also, maybe if you can just reiterate your stance on that thing, anything about the CFPB investigation, that would be helpful.

Sure. Okay, two completely different questions. In terms of live check, so let me start with that one, in terms of live check, the Company never before in its history had done live check. So we didn't have internal data and wanted to be very careful in our testing. So we started in Tennessee with a small pilot but large enough to give us significant data, and what came in was a very positive result. First, we saw our response rate soar up to five times as high as we got for pre-approvals, and secondly, the second question of course is, are those responding of the credit quality that you expect, and the answer is, yes absolutely, based on the first two payments. Of course more data gives us more information, but having those first two payments coming in line with our expectations is very significant. This allowed us to therefore better mail in Tennessee and do a larger campaign, and also prepare for and begin our campaigns in other states, and we intend to keep rolling this out to other states carefully and using all the data we get of course to improve our model. So we believe this will be an important distribution channel, if you like, for us. That answers your first question.

Yes. I guess, on that topic, have you done additional live check campaigns or did you do any in the quarter, have you done to-date this quarter?

They are literally happening in the next couple of months and we will talk about them as we do them, but we are literally in the prose of launching into other states right now.

Okay. So as we think about the year-over-year levelling off of new and former borrowers, it's right to think about only the impact of the one Tennessee pilot, the rest is other factors?

So far, up until now, only impact of live check is not really significant because it's a small Tennessee pilot, but we believe by growing this and other initiatives – first you test and learn, right, then you do it across several more states and then you do it Company-wide, so the impact continues to grow. You just want to do it safely and with knowledge behind you that gives you confidence.

Thank you. And then if there's any color you can provide on the CFPB investigation, it'll be great.

Sure. On the CFPB, the only thing I'm going to do is state what we've always said on the CFPB, which is that we don't expect to have anything substantial to say until the end of the process. We don't know the timing for that. And since we're not in the business of speculating, we just don't feel it's appropriate to say any more than that at this time.

Thank you.

It appears there are no further questions. Thank you for your participation. This concludes the World Acceptance Corporation quarterly teleconference.