OppFi Inc.

Good afternoon and welcome to OPFI's third quarter 2023 earnings conference call. All participants are in listen-only mode. As a reminder, this conference call is being recorded. After management's presentation, there will be a question and answer session. Participants can submit questions at any time, either by emailing investors at opfi.com, or for those listening by dial-in, you will be prompted to enter the queue after the prepared remarks. It is now my pleasure to introduce your host, Sean Smolarz, Head of Investor Relations. You may now begin.

Thank you, Operator. Good afternoon. On today's call are Todd Schwartz, Chief Executive Officer and Executive Chairman, and Pam Johnson, Chief Financial Officer. Our third quarter 2023 earnings press release and supplemental presentation can be found at investors.opfi.com. During this call, OPFI will discuss certain forward-looking information. These forward-looking statements are based on assumptions and assessments made by OPFI's management in light of their experience and assessment of historical trends, current conditions, expected future developments, and other factors they believe to be appropriate. Any forward-looking statements made during this call are made as of today, and OPFI undertakes no duty to update or revise any such statement, whether as a result of new information, future events, or otherwise. Important factors that could cause actual results, developments, and business decisions to differ materially from forward-looking statements are described in the company's filings with the United States Securities and Exchange Commission, including the sections entitled Risk Factors. In today's remarks by management, the company will discuss certain non-GAAP financial metrics. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in the earnings press release issued earlier this afternoon. This call is being webcast live and will be available for replay on our website. I would now like to turn the call over to Todd.

Thanks, Sean, and good afternoon, everyone. I'm very excited to discuss our third quarter results, which demonstrate that we are achieving the goals that we set out to accomplish. For the second consecutive quarter, our earnings significantly rebounded year over year, while we generated solid revenue growth. Throughout this year, we have continued to make impactful adjustments to credit models with our bank partners that have resulted in improved credit performance and accelerated earnings growth. We believe the portfolio is as strong as it has ever been from a credit profile perspective, which gives me confidence in continued credit performance and earnings growth prospectively. I strongly believe our results indicate, yet again, our ability to balance growth and risk while maintaining expense discipline. Pam will review our third quarter results in detail, as well as discuss our full-year guidance updates. which includes raising our earnings outlook for the third time this year. Before she does, I will cover two topics. The key highlights from our third quarter financial performance and our progress on strategic business priorities for 2023. The third quarter was highlighted by substantial improvement in credit performance year over year, including net charge off rate as a percentage of revenue, yield and recoveries. The key highlights for the third quarter this year compared to last year are a strong 7.2% total revenue growth to $133.2 million, solid 7.6% growth in originations to $195.7 million, and significant rebounds in net income to $15.5 million from an approximate $1 million loss and adjusted net income to $13.8 million from an approximate $1 million profit. We achieved these results while maintaining discipline in the approach to underwriting, considering the macro environment and our continued emphasis on profitability over portfolio growth. Now, I'd like to provide updates on our core strategic initiatives. For the third quarter, credit performance continued to improve as expected. The annualized net charge-off rate as a percentage of total revenue decreased 23%, or 12 percentage points, falling to 42.4 percent from 54.8 percent in Q3 last year. In addition, the annualized net charge-off rate as a percentage of average receivables decreased 17 percent, or 11 percentage points, falling to 54.5 percent from 65.9 percent in the year-ago period. Credit modeling enhancements and adjustments have created dynamic credit models that continue to improve early-stage delinquency metrics as the portfolio shifts to the lowest risk segments. At the end of the third quarter year over year, the total first payment default decreased 9% and total delinquency rate declined 14%. As has been the trend this year, our recovery strategy performed well with a 58% increase compared to the third quarter last year. We also realized solid growth in yield, expanding to 129% compared to 120% in the year-ago period, and thereby strengthening our unit-level economics. This was achieved with a decrease in delinquent loans in the portfolio, lower enrollment in hardship and assistance programs, and a relative shift away from states with lower interest rates. Our product and marketing team are focused on cost-effective initiatives to attract greater lower-risk origination volume, including SEO and direct mail, while also strengthening our relationships and fine-tuning our competitive strategy in the partner channel. For the third quarter, this resulted in our marketing cost per funded loan being steady year over year. We also continued to be vigilant on expenses, total expenses excluding interest expense as a percentage of total revenue increased less than 1% to 36.1% from 35.8% in Q3 last year. We have previously discussed our corporate development initiatives. While we are evaluating acquisition opportunities in adjacent customer or product categories, we will be patient to find the right fit. Concurrently, we are exploring other initiatives to create shareholder value, given our strong balance sheet and the inherent options that it provides us. At its core, OpFi is a tech-enabled, mission-driven specialty finance platform that broadens the reach of community banks to extend credit access to everyday Americans. Through transparency, responsible lending, financial inclusion, and an excellent customer service experience, The company supports consumers who are turned away by mainstream options to build better financial health. In summary, we expect to continue to grow profitably with Originations growth, improved credit performance, and prudent expense management. These dynamics combined with our strong balance sheet and excess funding capacity provide us with options next year to create additional shareholder value. We will remain disciplined with underwriting and expenses. we plan to share our detailed view of 2024 when we report Q4 results. Now, I'll turn the call over to Pam to review our Q3 financial performance and updated full-year outlook.