Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Investor Presentation (February 2007)
31 slides from Consumer Portfolio Services's investor presentation, Feb 20, 2007
Slide 1: Services, Inc. As of December 31, 2006
Services, Inc. As of December 31, 2006
Slide 2: Safe Harbor Statement
Safe Harbor Statement Information included in the following 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 o
Slide 3: Reference to Public Reports
Reference to Public Reports to review the materials filed by CPS with the U.S. Securities and Exchange Commission ("Commission"). Such materials may be found Ne inquiring of the Commission's ES ae page earchedgar/companyse I usin CPSs ticker Saal: which is "CPSS.” Risk facia that should be considere
Slide 4: Company Overview
Company Overview Y Specialty finance company focused on sub- prime auto market Y Established in 1991; IPO in 1992 v Irvine, California headquarters and three servicing branches in Virginia, Florida and Illinois a)
Slide 5: Company Overview
Company Overview ¥ Through December 31, 2006, approximately $7.1 billion in contract purchases from auto dealers Y As of December 31, 2006, managed portfolio of approximately $1.57 billion ¥ Approximately 780 employees Pa)
Slide 6: U.S. Auto Finance Market
U.S. Auto Finance Market ¥ 2005 USS. auto financing = $407 billion = $211 billion new; $196 billion used ¥ Company estimates 20%, or $81 billion is “sub- prime” Y Historically fragmented market with few long-term dominant players ¥ Significant barriers to entry - (S)) () According to CNW Marketing R
Slide 7: Major Market Participants
Major Market Participants v¥ AmeriCredit v Wells Fargo v Capital One Y CitiFinancial v Triad ¥ Chase Custom v¥ HSBC/Household Y Manufacturers’ Captives
Slide 8: Contract purchases including TFC
- (iS) (Q) Includes contract purchases of TFC, a subsidiary that targets enlisted members of U.S. Armed Forces.
Slide 9: Collateral Description
Collateral Description we veimanly late model pre- owned vel » & icles 15% New 85% Pre-owned 72% Domestic 28% Foreign 40% 35% 30% 25% 20% 15% 10% 5% 0%: Securitization 2006-D Principal Balances by | Model Year ase 2006 2005 2004 2003 2002 2001 Earlier
Slide 10: Program Overview
Program Overview CPS’s risk-adjusted pricing results in program offerings covering a wide band of the credit spectrum New contract acquisitions in 2006 Program | viet» | “Thane | AYEPICO | puch Preferred 12.4% $19,756 592 3% Super Alpha 15.2% $19,617 518 12% Alpha Plus 17.1% $17,670 523 18% Alpha 19
Slide 11: Borrower and Contract Profile
Borrower and Contract Profile An emphasis on stable borrowers with the ability to rehabilitate their credit profile Borrower: Average age 37 years Average time in job 5 years Average time in residence 5 years Average credit history 9 years Average household income $40,440 per year Percentage of home
Slide 12: Contract Originations
Contract Originations Y Centralized contract originations at Irvine HQ = Maximizes control and efficiencies Y Proprietary auto-decisioning system = Makes initial credit decision on approximately 90% of incoming applications = Enhances dealer service by shortening response time v Pre-funding verifica
Slide 13: Historical Origination Volume
Historical Origination Volume Since inception through December 31, 2006 the Company has originated over $7.0 billion 1,2005 1,000 i 800 ial Annual Volumes (Sin millions) 600 I 400 lat 200 | in aleeraiel il
Slide 14: Contract Servicing
Contract Servicing Y Geographically dispersed servicing centers enhance coverage and staffing flexibility and drive portfolio performance ¥ Offices are tied into the central database and paperless collection system ¥ Early contact on past due accounts; commencing as early as first day after due date
Slide 15: Successful Acquisitions
15 Successful Acquisitions Date and Entity Purchase Price Comments: . ¥ $380 million portfolio MEN Financial March 2002 aus x C eal Y $174 million negative ae ¥ me goodwill Y $150 million portfolio The Finance May 2003 Co 7 milli ¥ CPS maintains presence in mpany $23.7 million TFC military niche Sea
Slide 16: Strategies for Future Growth
Strategies for Future Growth v Increase dealer penetration and expand dealer network = Expansion of marketing rep network = Continue high level of dealer contact with improved service levels = Expansion of risk-based pricing model = Expansion of the independent dealer program = Retention of existing
Slide 17: Portfolio Financing
v v Portfolio Financing Two senior warehouse facilities aggregating $400 million $25 million subordinated warehouse facility allows advance rates up to 93% across both senior lines Quarterly “AAA” rated asset-backed securities provide long-term matched funding Use of multiple bond insurers enhances
Slide 18: Portfolio Financing
Portfolio Financing The Company has been a regular issuer of rated ABS since 1994 Through Q4 2006: 43 deals aggregating over $5.1 billion $ in millions = Outstanding Balance = Original Balance | | all FES PIES SEES IE ES. 18 (S)
Slide 19: Other Financing
Other Financing (3 in thousands) Source Terms Comments eee Residual Interest | 8.36% Amortizing | 2"! rated “NIM” ¢ Term Financing | with related ABS | transaction by CPS $12,200 Residual Interest LIBOR plus $35 mm two-year ss Warehouse Facility 6.125% revolver Senior Debt — 11.75% $25,000 Affiliate
Slide 20: Total Managed Portfolio
Total Managed Portfolio Composition by Source (8 in millions) $1,566 mm $907 mm 4 $744 mm y. $595 mm j aah | Sait 3a Paty = Sei TF nt 075 Dee Primary Driver of Growth is CPS “Organic” Contract Purchases PK) with over 95% now On Balance Sheet
Slide 21: Average Annual Net Credit Losses
Average Annual Net Credit Losses Consistent Performance and Positive Trends 14.00% 12.00% — CPs — MEN 10.00% — TEC. c t 8.00% iy \ 6.00% om WA MEN recoveries now Sone exceed incremental losses 0.00% cs ® ss Fe FS FF FS FL s
Slide 22: Delinquencies and Repo Inventory
Delinquencies and Repo Inventory Three quarter rolling averages D A ] \ = i per = }__, = P§, —MEN (2) —TFC PID DS. FHM MHI ID LG GI SOO OMI HS SP sh sh VERNON UE AL Ol Consistent Performance and Positive Trends
Slide 23: Static Pool Performance
14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% » © Static Pool Performance Average ABS Pool Cumulative Net Losses as of December 31, 2006 Consistent Performance and Positive Trends 1997 ome 1 SE: ~~ 2001 2002 — 2003 — 2004 — 2005 — 2006 | i \ ABS pools from 2003 onward \__ exhibit substantially
Slide 24: Auction Values
Auction Values Liquidation Values for Repo Sales Have Increased from 2003 ( 50% 40% 30% 20% + 10% + <i © CPS Portfolio SX Kg oh oF gg oF of oF WF Ww oS PEEPS P SM LESS SES (1) Net liquidation proceeds as a percentage ofthe net balance at the time of sale of the vehicle,
Slide 25: Repossession Sales in Q4 2006
Repossession Sales in Q4 2006 Y Least fuel efficient vehicles comprised less than 10% of all vehicles sold 14% ¥ Full-size SUV’s and trucks sold for 50% of contract balance ws, 43% for other vehicles 25 Qo racesput 11% \ 34% = Compact Car ‘© Fullsize SUV = Mid-size Car Mid-size Truck | Fulksize Car
Slide 26: Summary Balance Sheets
Summary Balance Sheets Ginmillions) Decubesh 2004 Assets Cash 14.2 $s 178 $ 144 Restricted Cash 193.0 157.7 125.1 Finance receivables, net of allowance 1401.4 913.6 550.2 Residual interest in securitizations 138 25.2 504 Other Assets 94.6 40.9 26.5 $1,717.0 $11551 $766.6 Li lities Accounts payable a
Slide 27: Summary Statements of Operations
Summary Statements of Operations ‘Years Ended (8 in millions) December'31, December 31 December 31 2006 2005 2004 Revenues Interest income S 263.6 $1718 3 105.8 Servicing fees 29 66 2s ‘Other income 24 15.2 144 278.9 193.7 132.7 Expenses Employee costs 38.5 404 38.2 General and administrative 420 39
Slide 28: Selected Financial Data
2» G 2 Selected Financial Data (8 in millions) Auto contract purchases Total managed portfolio Risk-adjusted margin (1) Core operating expenses (2) $ amount % of average managed portfolio Retum on managed assets (3) Total delinquencies and repo inventory (30+ days) (%6 of total owned portfolio) Annu
Slide 29: Investment Merits
Investment Merits ¥ CPS has weathered industry turbulence to remain one of the few independent public auto finance companies Y Attractive industry fundamentals Y Disciplined approach to credit quality and servicing ¥ Demonstrated growth in new contract acquisitions and total managed portfolio » &
Slide 30: Investment Merits
Investment Merits ¥ Recurring revenue model and sound quality of earnings Y Operating leverage through economies of scale ¥ Opportunistic, successful acquisitions Y Stable senior management team with significant equity ownership — senior management, including vice presidents, average 12 years of ser
Slide 31: Services, Inc.
io Services, Inc.
Consumer Portfolio Services — Investor Presentation (February 2007) on 6ix