Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Investor Presentation (May 2020)
23 slides from Consumer Portfolio Services's investor presentation, May 5, 2020
Slide 1: Investor Presentation As of March 31, 2020
Investor Presentation As of March 31, 2020
Slide 2: Company overview
2 » Consumer finance company focused on sub - prime auto market » Established in 1991. IPO in 1992 » Through March 31, 2020, approximately $16.5 billion in contracts originated » From 2002 – 2011, four mergers and acquisitions aggregating $822.3 million » Irvine, California operating headquarters; B
Slide 3: Managed portfolio, pretax income and contract purchases
3 $1,000 $1,500 $2,000 $2,500 Total Managed Portfolio ($ in mm) $0.00 $2.00 $4.00 $6.00 $8.00 Pretax Income ($ in mm ) $50 $100 $150 $200 $250 $300 New Contract Purchases ($ in mm) (1) Equal to annualized pretax income as a percentage of the average managed portfolio. 0.0% 1.0% Return on Managed Ass
Slide 4: CPS proprietary systems and applications
4 CPS Systems Proprietary Applications Credit Decisioning AOA / DOA Underwriting Servicing and Collections System Auto Dialer –Workflow Management Receivables Accounting System Credit Application Servicing Activities –Five Branch Locations Decline or Approval / Pricing Credit Bureaus Underwriting Pa
Slide 5: Results as percentage of average managed portfolio
5 » Results influenced by transition to fair value accounting, early adoption of CECL and the pandemic (1) As a percentage of the average managed portfolio. Percentages may not add due to rounding. March 31, 2020 March 31, 2019 December 31, 2019 December 31, 2018 Interest Income 13.0% 14.4% 14.0% 16
Slide 6: U.S. Auto Finance Market
U.S. Auto Finance Market $1.2 trillion in auto loans outstanding as of Q4 2019 (1) Approximately 39% of autos financed in Q4 2019 were below “prime” (credit score less than 660) (1) Historically fragmented market Few dominant long - term players Significant barriers to entry Other National Industry
Slide 7: Contracts purchased from dealers across the U.S.
» Contracts purchased from dealers in 46 states across the U.S. » As of March 31, 2020 had 69 employee marketing representatives 7 87% 13% Factory Franchised Independent Contracts Purchased Three Months Ended March 31, 2020
Slide 8: Contract originations
$266 $0 $200 $400 $600 $800 $1,000 $1,200 ($ in millions) 8 » Since inception through March 31, 2020 the Company has originated approximately $16.5 billion in contracts $1,003
Slide 9: Managed portfolio
$2,435 $0 $500 $1,000 $1,500 $2,000 $2,500 ($ in millions) 9
Slide 10: Contract purchases by vehicle type
0% 4% 8% 12% 16% 20% 24% 28% Model Years of Current Year Production 10 • 23% New • 8% Certified Pre - Owned • 69% Pre - owned • 46% Domestic • 54% Imports Primarily late model, pre - owned vehicles (1) Under the CPS programs for contracts purchased during three months ended March 31, 2020
Slide 11: Program offerings across the sub-prime credit spectrum
11 » CPS’s proprietary scoring models and risk - adjusted pricing result in program offerings covering a wide band of the sub - prime credit spectrum (1) Under the CPS programs for contracts purchased during three months ended March 31, 2020. (2) Contract APR as adjusted for fees charged (or paid) t
Slide 12: Borrower and contract characteristics
• Average age 42 years • Average time in job 5 years • Average time in residence 5 years • Average credit history 11 years • Average household income $55,887 per year • Percentage of homeowners 19% Borrower : • Average amount financed $18,038 • Weighted average monthly payment $486 • Weighted averag
Slide 13: Contract Originations and Servicing
Contract Originations » Centralized contract originations at Irvine HQ » Maximizes control and efficiencies » Certain functions performed at Florida and Nevada offices » Proprietary auto - decisioning system » Makes initial credit decision on over 99% of incoming applications » Decision inputs inclu
Slide 14: Funding: credit facilities and securitizations
» $300 million in interim funding capacity through three credit facilities » $100 million with Fortress; revolves to April 2021, due in April 2023 » $100 million with Citibank; revolves to September 2020, due in September 2021 » $100 million with Ares / Credit - Suisse; revolves to November 2021, du
Slide 15: Vintage cumulative net losses
15 » Average of quarterly vintage cumulative net losses as of March 31, 2020 2017 2018 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 2006 2007 2013 2014 2015 2016 2017 2018 2019
Slide 16: Vintage cumulative net losses (first 24 months)
16 » Average of quarterly vintage cumulative net losses as of March 31, 2020 2017 2018 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2006 2007 2013 2014 2015 2016 2017 2018 2019
Slide 17: Balance sheet
($ in millions) March 31, 2020 December 31, 2019 December 31, 2018 December 31, 2017 Assets Cash 4.5$ 5.3$ 12.8$ 12.7$ Restricted cash 137.5 135.5 117.3 112.0 Finance receivables, net of allowance 660.4 885.9 1,454.7 2,195.8 Finance receivables, measured at fair value 1,559.7 1,444.0 821.1 - Deferre
Slide 18: Income statement
18 ($ in millions) March 31, 2020 March 31, 2019 December 31, 2019 December 31, 2018 December 31, 2017 Revenues Interest income 79.2$ 85.8$ 337.1$ 380.3$ 424.2$ Mark to finance receivables measured at fair value (10.4) - - - - Other income 2.0 2.4 8.7 9.5 10.2 70.8 88.2 345.8 389.8 434.4 Expenses Em
Slide 19: Key performance metrics
19 (1) Revenues less interest expense and provision for credit losses. (2) Total expenses less provision for credit losses and interest expense. (3) Equal to annualized pretax income as a percentage of the average managed portfolio. ($ in millions) March 31, 2020 March 31, 2019 December 31, 2019 Dec
Slide 20: Investment highlights
» CPS has weathered multiple industry cycles to remain one of the few independent public auto finance companies » Thirty consecutive quarters of pre - tax profits » Attractive industry fundamentals with fewer large competitors than last cycle » Consistent credit performance 20 » Growing portfolio en
Slide 21: COVID-19 pandemic impact
21 » No material effect observed in first quarter of 2020 » First quarter 2020 results include estimates of future effect » Originations volume down significantly in April 2020 » April 2020 furlough / layoff of 11% » Approximately 35% of workforce transitioned to work from home » Increased extension
Slide 22: Investor notice and risk factors
Any person considering an investment in securities issued by CPS is urged to review the materials filed by CPS with the U.S. Securities and Exchange Commission ("Commission"). Such materials may be found by inquiring of the Commission’s EDGAR search page www.sec.gov/edgar/searchedgar/companysearch.h
Slide 23: Forward-looking statements
Forward - looking statements in this presentation include the Company's recorded figures representing allowances for remaining expected lifetime credit losses, its markdown of carrying value for the portion of its portfolio accounted for at fair value, its charge to the provision for credit losses f
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