Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Investor Presentation (October 2012)
23 slides from Consumer Portfolio Services's investor presentation, Oct 17, 2012
Slide 1: Investor Presentation As of September 30, 2012
1 Investor Presentation As of September 30, 2012
Slide 2: Consumer finance company focused on the sub-prime auto market
; Consumer finance company focused on the sub - prime auto market Established in 1991; IPO in 1992 Through September 30, 2012, approximately $9.5 billion in contract purchases from auto dealers Irvine, California headquarters and three strategically located servicing branches in Virginia, Florida an
Slide 3: Delinquencies, net charge-offs, portfolio, net income and purchases
0.0% 2.0% 4.0% 6.0% 8.0% 31+ Delinquencies (1) 3 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% Net Charge - offs (1) $600 $650 $700 $750 $800 $850 $900 Total Managed Portfolio ($ in mm) $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 Net Income ($ in mm ) $25 $50 $75 $100 $125 $150 New Contract Purchases ($ in mm) (1) On
Slide 4: Growth in managed portfolio and declines in funding costs driving operating leverage
Growth in managed portfolio and declines in funding costs are driving enhanced operating leverage and profitability (1) As a percentage of the average managed portfolio. Quarter Ended Sept. 2012 (1) Quarter Ended June 2012 (1) Quarter Ended Sept. 2011 (1) Interest Income 21.7% 20.9% 17.5% Servicing
Slide 5: U.S. Auto Finance Market
U.S. Auto Finance Market 2006 U.S. auto financing = $405 billion (1) $216 billion new; $189 billion used Company estimates 20%, or $81 billion is “subprime” Historically fragmented market Few dominant long - term players Significant barriers to entry Other National Industry Players GM Financial/Amer
Slide 6: Purchase contracts from dealers across the U.S.
Purchase contracts from dealers in over 45 states across the U.S. As of September 30, 2012 had 29 employee marketing representatives in the field and 32 in - house Primarily factory franchised dealers (1) Under the CPS programs for contracts purchased in the first three quarters of 2012. 72% 28% Con
Slide 7: Over $9.5 billion in contracts purchased since inception
$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 ($ in millions) Since inception through September 2012 the Company has purchased over $9.5 billion in contracts New contract purchases have ramped up significantly since financial crisis 7
Slide 8: Primarily late model, pre-owned vehicles
0% 2% 4% 6% 8% 10% 12% 14% 16% Model Year • 9% New • 91% Pre - owned • 53% Domestic • 47% Foreign Primarily late model, pre - owned vehicles 8 (1) Under the CPS programs for contracts purchased in the first three quarters of 2012.
Slide 9: Proprietary scoring models and risk-adjusted pricing across the credit spectrum
CPS’s proprietary scoring models and risk - adjusted pricing result in program offerings covering a wide band of the credit spectrum (1) Under the CPS programs for contracts purchased in the first three quarters of 2012. (2) Contract APR as adjusted for fees charged (or paid) to dealer. (3) Wholesal
Slide 10: Yields and credit metrics stronger than at end of last cycle
Yields and credit metrics are significantly stronger today than at the end of the last cycle (1) For new contracts purchased during the calendar quarter. Averages are weighted by principal balance. (2) Contract APR as adjusted for fees charged (or paid) to dealer . (3) Wholesale loan - to - value ra
Slide 11: Borrower and contract profile
• Average age 41 years • Average time in job 6 years • Average time in residence 6 years • Average credit history 13 years • Average household income $55,848 per year • Percentage of homeowners 25% Borrower: • Average amount financed $15,314 • Average monthly payment $425 • Average term 61 months •
Slide 12: Contract Originations and Servicing
Contract Originations Centralized contract originations at Irvine HQ ▪ Maximizes control and efficiencies Proprietary auto - decisioning system ▪ Makes initial credit decision on over 99% of incoming applications ▪ Uses both criteria and proprietary scorecards in credit and pricing decisions Pre - f
Slide 13: Funding and liquidity
$200 million in interim funding capacity through two credit facilities › $100 million with Goldman Sachs/Fortress due in December 2012 › $100 million with Citibank due in May 2013 Regular issuer of asset - backed securities, which provides long - term matched funding › $8.3 billion in over 60 deals
Slide 14: Managed portfolio growing again
$595 $744 $907 $1,122 $1,566 $2,126 $1,664 $1,195 $ 756 $ 795 $845 $0 $500 $1,000 $1,500 $2,000 $2,500 ($ in Millions) 14 Decline through 2010 was the result of the financial crisis. Managed portfolio is growing again.
Slide 15: Consistent improvement in delinquencies and net charge-offs
15 2.00% 4.00% 6.00% 8.00% 10.00% 2.00% 4.00% 6.00% 8.00% 10.00% Delinquencies Net Charge - Offs Net Charge-Offs (1) 31+ Delinquencies (2) (1) Annualized for quarterly period. (2) Includes repossession inventory. . Consistent year - over - year improvement in CPS portfolio delinquencies and net char
Slide 16: Vintage cumulative net losses
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% Months Seasoned 2002 2003 2004 2005 2006 2007 2008 2010 2011 Average of quarterly vintage cum. net losses as of September 30, 2012 2010 and later vintages in line or better than 2003 and 2004 vintages 16
Slide 17: Recovery rates correlate to Manheim Index
17 30.00% 35.00% 40.00% 45.00% 50.00% 55.00% 100.00 105.00 110.00 115.00 120.00 125.00 130.00 Manheim Index Recovery Rate Manheim Used Vehicle Value Index (Quarterly Avg.) (1) CPS Recovery Rate Quarterly Avg. (2) (1) Wholesale used vehicle prices (on a mix, mileage, and seasonally adjusted basis). (
Slide 18: Balance sheet
18 ($ in millions) September 30, 2012 December 31, 2011 December 31, 2010 December 31, 2009 Assets Cash $ 10.5 $ 10.1 $ 16.3 $ 12.4 Restricted Cash 107.2 159.2 124.0 128.5 Finance receivables, net of allowance 670.2 506.3 552.5 840.1 Finance receivables measured at fair value 77.5 160.3 --- --- Resi
Slide 19: Income statement
19 Nine Months Ended Years Ended ($ in millions) September 30, 2012 September 30, 2011 December 31, 2011 December 31, 2010 December 31, 2009 Revenues Interest income $ 127.2 $ 86.6 $ 127.9 $ 137.1 $ 208.2 Servicing fees 1.9 3.5 4.3 7.7 4.6 Other i ncome 7.5 7.2 10.9 10.4 11.1 136.6 97.4 143.1 155.2
Slide 20: Selected financial and operating data
(1) Revenues less interest expense and provision for credit losses. (2) Total expenses less provision for credit losses and interest expense. ($ in millions) Nine Months Ended Years Ended September 30, 2012 September 30, 2011 December 31, 2011 December 31, 2010 December 31, 2009 Auto contract purcha
Slide 21: CPS has weathered two industry cycles
CPS has weathered two industry cycles to remain one of the few independent public auto finance companies Four quarters of improving profitability and operating performance Attractive industry fundamentals with fewer large competitors than last cycle Credit performance of 2008 and later vintages in l
Slide 22: Any person considering an investment in securities issued by CPS is urged to review
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 (http : //www . sec . gov/edgar/searchedg
Slide 23: Information included in the preceding slides is believed to be accurate, but is not
Information included in the preceding slides is believed to be accurate, but is not necessarily complete . Such information should be reviewed in its appropriate context . The implication that historical trends will continue in the future, or that past performance is indicative of future results, is
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