Good day, everyone, and welcome to the Consumer Portfolio Services 2022 Third 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 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 projected. I refer you to the company's annual report filed 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 here is Mr. Charles Bradley, Chief Executive Officer; Mr. Mike Lavin, Chief Operating Officer; and Mr. Danny Bharwani, Chief Financial Officer of Consumer Portfolio Services. I will now turn the call over to Mr. Bradley.

Thank you, and welcome to our third quarter conference call. It's nice to be able to say we had another extremely strong quarter. It's what we expected, and certainly what we want to continue to do. I'll give you a few highlights, and I'll turn it over to the guys. But one of the things we did -- a lot of things we did, timing is everything, and we renewed -- I think we'd mentioned in our last conference call that we renewed one of our lines, our Ares facility in June. And we renewed that line and increased it from $100 million to $200 million. And we did the same thing in July with Citibank. We renewed and increased that line from $100 million to $200 million. So now we have $400 million in warehousing, and it's very nice to not be in the market right now looking for warehousing or trying to increase warehousing. So we're quite happy we accomplished that and got it done before the market started to change. Another interesting thing is that portfolio has been growing enough this year so that our core operating expenses had dropped below 6%. That's always been a target for us. We think we can do even better than that. I think our target now is to get them below 5%, but given the increasing size of the portfolio and the size of the company, a strong focus on those core operating expenses is very important. And it's nice to be able to say we're doing quite well at achieving those goals. Also another highlight would be we did the July securitization, or securitization during July. As everyone should know, the cost of funds in the market have been going up. So we're pretty happy with that deal at…

Thank you, Brad. Going over the financial results for the third quarter. Our revenues for the third quarter were $90.3 million. That's up 10% over the $82 million we posted last June in our second quarter, and it's up 32% from the $68.6 million in our third quarter of last year. The main driver for the increase in revenue is the increase in our servicing portfolio, which is really now driven by the fair value portfolio. If you've been listening to these calls in the past, you'll remember that we switched over to fair value accounting five years ago beginning in 2018, and that fair value component is now 96% of our total portfolio. That has grown -- we'll talk about that more when we cover the balance sheet, but that has grown 8% quarter-over-quarter and 41% year-over-year. So -- and that is yielding 11.4%. You might recall, too, if you've been on these calls in the past that the yield on our fair value portfolio is net of losses. So the 11.4% is after our expected loss assumptions. The legacy portfolio is now down to only 4% of our total. That's yielding 24%. Included in these numbers for the third quarter is a fair value mark of $8.2 million. That represents some losses -- COVID reserves we posted back in the last year or 2, where we are now realizing that these losses are not materializing. So we have $8.2 million of these reversals in our fair value portfolio that we didn't have last year in the third quarter. Going over expenses, it's $56 million expenses in the third quarter compared to $47.8 million in the June quarter and $49 million in the third quarter last year. That is up 17% over the sequential quarter and 14% year-over-year. Those…

Thanks, Danny. In personnel and facilities, we're currently at 794 employees. We've fluctuated between 750 and 800 employees since we reduced our Forrester in COVID in 2019 by 22%. 407 of those employees are in servicing, 247 are in sales and origination, the rest are in the support departments. I think it's important to note and very interesting to note that we originated $1.1 billion in originations in 2021 with roughly 750 employees, and we've blown by that volume in 2022 so far with the same amount of employees. We think that's a testament to our investment in new technologies, leading to more personnel efficiencies. And I think it's safe to say, right now and going forward, we're at scale. In terms of our office leases, we've been quite fortunate to have four of our five leases come up for renewal post-COVID. So we've been able to leverage the sort of the commercial real estate crash to renew or relocate four of our offices. And we believe that will save us between $6 million to $7 million a year to the bottom line. In sales, our record setting year continues, albeit with a slight slowdown in Q3. In Q3, we originated $468 million, which compares to $548 million in Q2 of 2021. That's a 14% drop. But I think, as Brad noted earlier, the more interesting thing and the good news is that demand is still strong for our product. We had 653,000 applications in Q3, that compares to 615,000 applications in Q2. So it's a sequential increase of 6.2%. So the demand is still strong. So despite that dip, I think when you look at the year-over-year analysis, you'll see that we're in the middle of a record-setting year. In Q2 2022, we did $468 million, like I said,…

Thanks, Mike. So obviously, we're doing a lot of things well. We've taken a lot of time. We've been doing this a long time, so one might expect we should be doing things well, and we are. Looking at the industry, certainly with the -- I guess, the things going on in the industry are the -- everyone is doing what they can to madly keep up with the federal government raising the interest rates, and we are, of course, doing the same. And I think we've done a pretty good job of moving along. I think given how our credit performance has done very well, that we're in a pretty good position. All of our pools are doing great, but nonetheless, you just don't know what the next six months or nine months or a year is going to evolve. So it's much safer to scale back, tighten credit and raise rates, and we're doing all those things very efficiently and pretty quickly. And what's interesting is we're continuing to get a fair amount of volume. So if you get all those kind of rates, that's real good. With the CPI coming on today and being very positive, and the market is kind of picking up on that, one might hope that, sometime soon, we get to the peak of this and maybe rates start to level off and so on and so forth. But nonetheless, we can't predict anything about that. We can just do what we can to stay in front of that curve. A couple of things to think about, though, a lot of folks in our industry used forward flow agreements where they sold their loans to other folks who were just looking for more yield. So back when the basic yield was a couple…

Thank you. This concludes today's conference. 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.