Good day everyone and welcome to the Consumer Portfolio Services 2017 First 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 within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Such forward-looking statements are subject to certain risks that could cause actual results to differ materially from those projected. I refer you to the Company’s SEC filings for further clarification. The company assumes no obligation to update publicly any forward-looking statements whether as a result of new information, future events, or otherwise. With us here now is Mr. Charles Bradley, Chief Executive Officer, and Mr. Jeff Fritz, Chief Financial Officer. I will now turn the call over to Mr. Bradley.

Thank you. And welcome everyone to our first quarter conference call for CPS. I think overall we’re pleased, not excited about how the quarter went. I think generally speaking, for a long, long time everybody is very used to having the first quarter of the year be a very big quarter, tax returns and such and lately in the last few years that’s changed, maybe it's just the rolling release of tax returns are now later in the quarter and they’ve seen that they don’t come quite as suddenly and they certainly don’t last quite as long and sort of what we deem to the tax season. And so the quarter is not known, I just think the days of the first quarter being the hallmark for the year are probably over and that you’ll see more of an evening of the quarters over the year. But having said that, we had a very slow January and February and a very good March, and so March did wonders to sort of pull the quarters through. You know April appears to be a bit slow, but not as slow as January and February. So again like I said, I think it’s more of a you’re scattering that tax season over more months and more towards the end of the first quarter and into the second quarter, and so maybe that will benefit the second quarter some. Collections continue to improve slightly, they are not -- they're still not improving to the extent we want them to. I think there is a lot of sort of reasoning behind that which we’ll get to a little later in the call, but you know they're better, they are not great. So again, we keep waiting for some real move in the collection area, but we’ll have to see when and how that’s going to happen. Losses on the other hand, they are higher, but we think we're hopefully at a point where maybe they've peaked and we could hopefully, as collection does continue to improve that we have sort of reached the high end of that scale and we’ll start working our way back down. Interestingly enough there is lots of talk of pricing in the marketplace, as far as we can tell there is a little action along those lines. We haven’t seen much tightening from what we can see, so as much as that seems to be what everybody else is talking about we’ve tightened, we haven’t seen too much from anyone else. And then lastly, the capital markets, in the face of all these driven things still remain very strong and we’re having no problem with securitization and execution of that is actually starting to improve again. So real sort of good news there and it bodes well for the future as well. Again in all those areas a little bit more detail, but first I’ll turn it over to Jeff to go through the financials.

Thanks Brad, welcome everyone. We’ll begin with the revenues. Revenues for our first quarter $107.6 million, that’s down actually 1% from December quarter and up 7% from first quarter of 2016. So what we’re seeing now here from a revenue standpoint is that as the portfolio has sort of leveled out with the current volume of originations. You see virtually flat revenues in sequential quarters, but still that increase over a year ago. We did do $229 million in new originations in the first quarter, but as I indicated that really just keeps the portfolio kind of at the current level. Expenses for the quarter $99.8 million, a 5% increase over the fourth quarter of last year and a 13% increase over the $88.4 million for the first quarter a year ago. Actually on a sequential basis, most of our expenses, operating expenses were flat, but we did have a significant increase in the provision for credit losses. We can look at that, the credit loss provision for the quarter was $47.2 million, that’s an 8% increase from the fourth quarter and a 7% increase compared to $44.2 million a year ago. And so you know, what I think we’re seeing continuously is erosion in the recovery rates that we get at the auctions which has been a big industry topic and we’re certainly seeing the impact of that on or losses and flowing back through to the provision for credit losses on the P&L. And then you know similarly just as Brad indicated the servicing side of the business continues to be a challenge, although we do have some indications of improvements, some seasonal improvement in the first quarter on the delinquency side. Pre-tax earnings $7.8 million for the quarter, that’s down compared to $12.7 million in the fourth…

Thank you, Jeff. And looking at a few of the different areas, starting with marketing, our workforce is fairly stable at the moment. We’re not really trying to grow it particularly and we may be individually trying to improve in certain areas of the country. But overall just keeping it stable, as I mentioned the markets seem to be slowing down yet again and further more we’re not really looking to grow very aggressively in this market. So again it’s more of an internal improving the marketing situation, internally rather than growing in on a national level. New car sales are now starting to slow down, certainly it’s my belief that last year towards the end of the year in particular, the manufactures pushed real hard to get those sales number up for the rest of the year and now you’re seeing the result of that. I would fully expect new car sales to continue to trend down. You know you then move on to the used car sales and there is somewhat -- a lot of cars in the market which is impacting our resale prices. Overall, it certainly feels like there is too many cars out there and until that changes its going to be a bit of a burden on the industry. In terms of originations, as I mentioned, we haven't seen too much signs of tightening overall in the industry. I think some of the bigger folks, some of the larger banks have certainly talked about tightening, and you may be seeing a little bit of it there, down in our end of the neck of woods, you really haven't seen too much of it lately. We did tighten our LTV, we contracted on LTV sum to where it’s the lowest it's been since the second…

Thank you. The floor is now open for questions. [Operator Instruction] Our first question comes from David Scharf with JMP Securities.

Brad, as usual a very thorough presentation, so maybe just a few follow up questions. And one is, we discuss this every quarter, the competitive landscape out there and your observations that you really haven't seen much tightening by other. I am curious do you have any thoughts about when we may see the first signs of a shake out if you will of some of the smaller lenders, are you seeing anything either in some other marketed ABS transactions or just what you hear through the grapevine about the ability to secure funding or warehouse lines that gives you a sense of whether perhaps in the second half for the year. We may see things ease up? Just curious, what your broader observations are?

Yes, I think we are as curious as the next person on what's going to happen in the industry. In terms of signs, it almost sort of make sense, what we are beginning see is the smaller players. The guys that have come in a few years back and they haven't really gotten to some critical mass are beginning to show signs of trouble. We've certainly heard rumors of companies having trouble, some of the equity investor's sponsorships in those companies wanting to get liquid or get out. We its probably knowledge there has been some management changes in some of those companies. And so I guess that would be the beginning of what you might see, certainly you might also begin to see some companies having particularly the smaller ones having much tougher times, having access to the securitization market or having access to capital in general. And so, we are beginning to see that with some of the smaller players, sort of the down side is the smaller players don’t have that big effect on what we do. But it’s a good start in terms of trying to see what's going to happen next. I think the problem you have and I think sort of just to give context, you buy all this paper, let's just take a small company. Small company continue the business with equity, sponsorship and capital, they start buying a lot of paper and they think its working out fine, and let's just say that all happen in 2014 or so or '13, by '15, '16, you're starting to see that paper's performance and if it's not working and you're not a big enough company than you’ve got a problem. Because you still need more capital, you think about it, if that paper doesn’t perform that you originated in '14 and '15 and when you get the '16 and '17, the capital requirements to move forward with securitization will be more, the capital or equity requirements to draw more capital in will be more, and now you get all sorts of pressure on those companies in terms of staying alive. And then if you than take that sort of same analogy and role it to the bigger companies. If you don’t have critical mass, you don’t have enough capital and you're making money, all sorts of problems start to evolve in terms of how you can access capital you need to run your business and how you can access the capital you need to fund your securitizations. And so, we haven’t seen that with the big players yet, but certainly you might expect we might. So we’ll see, but the answer to your question, yes we are being [indiscernible] smaller players, that trend continues, this might be a very interesting year across the board.

Got it. And that’s helpful. And maybe similar topic, but switching to credit, you made the comment, I know it was written in stone, but you're hopeful that perhaps the net loss rate that you're experienced in the quarter was close to the peak. Is that based on your observations of how your most recent originations have been performing after tightening a bit and reducing LTVs, is it based on the believe that recovery rates have hit -- finally bottom out? Trying to get a sense for how we should be thinking about that in the [Multiple Speakers] rest of the industry.

It was a surprise a little to us, exactly not the way to think about it. Because -- but it's a very interesting question, because it sort of give me a chance to give you an interesting answer, in that. If your paper isn’t in performing and this goes back you previous question, and its true for us, but not to the extent maybe for lots of other folks. There are '13 and '14 paper at this point, we know how that paper is really going performed and it's not the performance as well as we wanted it to. And so we also might have known some of that a while back. And so what you do in that arena is you start tightening, and so we did. And so on the one hand we have a lot of more faith in our '15 and '16 paper performing much better. And so that's sort of the hedge, when you're sitting there in 2014 and '12 and '13 don’t look very good and '14 and '15 is defined by better paper, which we did. And so on the one hand we think the paper from '14, '15 and '16 will all improve, but that doesn’t help collections today. Collection today is collection all of it the same, and so our sort of originations and marketing hedge was to buy better paper, to tightened and we did. But that paper -- so therefore even if collections doesn’t improve, the paper performance down the road should improve because we bought better paper, but nothing to do with collections, which is why it's sort of funny. And then the second thing, we don’t really -- recoveries again, we don’t think recoveries are going to improve, so that’s not in the solution or the equation…

Right, got it. Thanks very much.

Thank you. Our next question comes from Kyle Joseph with Jefferies.

I wanted to talk a little bit about tax refunds during the quarter, I know you talked about sales in January and February being weak and recovering in March. Can you give us a little sense for the credit performance, did it sort of mirror those trends as well or delinquencies elevated earlier in the quarter and did they recover later in the quarter?

Probably that’s a fair statement that in January and February, they weren’t as good as in March, that trend is -- and that it was probably be somewhat typical to the quarter. Ironically, as I think I mentioned, it used to be the tax refunds started back in January 5th, now they don’t start till the end of February something along those lines. And so it would make sense that certainly March was another very strong month, both in terms of originations and in terms of performance. So yes, I would agree with you that it trended in a positive fashion over the quarter in probably both areas. April hasn’t fallen off a cliff by any means. It slowed a little bit, but we would still expect to have a pretty good, so far start to the second quarter. Again, we would kind of hope that the credit performance would also drift through the quarter as well.

Got it. And then shifting over to used car prices, was there any impact in the quarter from tax refunds being delayed and the industries that we look at, there is two in particular and they are kind of showing diverging trends, what would you say used car prices have done year-over-year for you in terms of auction values you are receiving?

Jeff has the direct numbers.

Yes, I mean it's interesting Kyle because that our recoveries at the auction was 35.2% for the first quarter and that compares to almost 40% in the first quarter, 39.9% in the first quarter of 2016. So, we really lost a lot of ground over the course of 2016, two years ago in the first quarter of 2015 our returns at the auction were 43.8%. So there is no deigning what the change in that market has done to our recoveries and it's had a significant and material impact on our loss rates and we’ve had to increase our provisioning as a result of all those factors. So -- and from what you read and hear about in the industry about this never-ending pipeline of vehicles heading towards the auctions at some point, I mean I think we have to be realistic about the prospects for that market in the near-term not really changing very much, certainly not improving.

Got it. But, so given those trends your net charge-offs only increased marginally year-over-year. Is that fair to say that your growth charge-offs are either stable or down a bit year-over-year. I know we don’t have that until the Q comes out.

Yeah. I mean that particularly in the first quarter we typically see a little bit of the rebound in the credit performance mostly in the delinquency side, not so much on the losses. But, I think you're probably right there is probably some stability in the gross loss numbers.

All right. And then moving over to competition, I think -- sorry I think I miss some of your remarks. But, we have seen two of the larger public players sort of pull back and we’ve seen volumes trend down year-over-year. So, who is really, who are the companies that are still continuing to make these loans and whether it's an industry in particular or you can name names that you want.

I'm not going to name names. I think our feel would be generally speaking we haven't seen that much tightening into anyone. And part of the problem is, it goes back to your prior question, is if you bought not so great paper for a while one of the hard things to do is slowdown. Because if you slowdown that exposes that performance even more. It's kind of like, and this is why it's so hard once you've gone down the wrong path to get out of it, because what you really need to do is you got to sit down and say okay, we’ve fixed all our credit and then you got to go twice as fast and hope that the new credit outruns the old credit. As I sort of mentioned when I said, we look at our '12 and '13 paper and didn’t like how it's performing during 2014 and so then we started tightening credit in '14, '15 and '16 knowing that that paper down the road would be better. But the problem is, we were also able to -- since we didn’t really miss by that much in sort of '12 and '13, we didn’t have to do some huge restart in '14 and '15 and '16, but what we did do, which I think is important is we sort of the leveled off, we didn’t need to grow real fact because we were doing pretty well. And so other folks, if you're not making money or you're having the issues unfortunately the real way out of it is to figure out what you did wrong, fix it and then go fast because the new production covers up the old mistakes and you make more money, to the extend you are suffering from any of…

Got it. And then one last one from me. On expenses, as you guys were growing we saw expenses as a percentage of FX [ph] decline towards the 5%, we have seen that number sort of increase a little bit. So as your volume started to trend down, do you have any sense for where that navigates towards?

Well, I think that’s Kyle at this level of the portfolio $2.3 billion, if our originations stay at these levels and our portfolios stay at these levels, I think that just kind of even small fluctuations in the operating expenses from quarter-to-quarter will probably result in that numbers staying right around that 5% plus or minus, a few basis points. If we could get on track and buy the kind of paper we are comfortable buying in greater volumes and start growing the portfolio again, then I think we would see some -- have the prospect for some improvement in that metric.

That’s helpful. Great, thanks for answering my questions.

Thank you. I am showing no further questions at this time. I’ll turn the call back over to you Mr. Bradley for any additional or closing remarks.

Thank you. In closing, I get accused of being very pessimistic, I am very often, I just wanted to say, we are not only pessimistic, we're just experienced in what's going on. And I think 2017 is going to be an interesting year for our industry and we have sat in almost this exact position in the other cycle where we got kind of wacked in the head a little bit along with likes of other folks and this time it's not going to happen. So we want to be the one that get the benefit from everything that comes out of what's going on in our industry and I think we are doing a pretty good job of positioning ourselves to do just that. And so as much as you know, I mean if we can't grow as quite as fast and we have to keep working on credit and collections, we are making money and we have great access to markets, our credit even though we missed a little, we didn’t miss nearly as much as a whole a lot of folks did. And so we have to wait for those varying things sort of play out in our industry before we can expect to really take advantage, but having said that opportunities pop up all the time and we will be there to do that. So thank you all for attending the call and we look forward to seeing you next quarter.

This does conclude today's teleconference. A replay will be available beginning two hours from now until April 27, 2017 at 11:59 by dialing 855-859-2056 or 404-537-3406 with conference identification number 8553937. A broadcast of the conference call will also be available live for 90 days after the call via the company's website at www.consumerportfolio.com. Please disconnect your lines at this time and have a wonderful day.