Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Investor Presentation (March 2014)
22 slides from Consumer Portfolio Services's investor presentation, Mar 3, 2014
Slide 1: Investor Presentation As of December 31, 2013
1 Investor Presentation As of December 31, 2013
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 December 31, 2013, over $10.4 billion in contract purchases from auto dealers Irvine, California headquarters and three strategically located servicing branches in Virginia, Florida and Illinois
Slide 3: Managed portfolio, pretax income, purchases and return on managed assets
3 $850 $950 $1,050 $1,150 $1,250 Total Managed Portfolio ($ in mm) $4.00 $6.00 $8.00 $10.00 $12.00 Pretax Income ($ in mm ) $30 $60 $90 $120 $150 $180 $210 New Contract Purchases ($ in mm) (1) Equal to annualized pretax income as a percentage of the average managed portfolio. 0.0% 1.0% 2.0% 3.0% 4.0
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. Percentages may not add due to rounding. Quarter Ended Dec. 2013 (1) Quarter Ended Sept. 2013 (1) Quarter Ended Dec. 2012 (1) Inte
Slide 5: U.S. Auto Finance Market
U.S. Auto Finance Market Over $700 billion in auto loans outstanding as of Q4 2012 (1) Approximately 20% is “subprime” (credit score less than 620) (1) Over $300 billion in auto loans written in 2012, with appx . 25% subprime (2) Historically fragmented market Few dominant long - term players Signif
Slide 6: Purchase contracts from dealers across the U.S.
Purchase contracts from dealers in over 48 states across the U.S. As of December 31, 2013 had 95 employee marketing representatives, 45 in the field and 50 in - house Primarily factory franchised dealers (1) Under the CPS programs for contracts purchased during 2013 . 66% 34% Contract Purchases (1)
Slide 7: New contract purchases since inception
$447 $691 $1,019 $1,283 $297 $9 $113 $284 $552 $764 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 ($ in millions) Since inception through December 2013 the Company has purchased over $ 10.4 billion in contracts New contract purchases have ramped up significantly since financial crisis 7
Slide 8: Managed portfolio is growing again
$1,231 $907 $1,122 $1,566 $2,126 $1,664 $1,195 $756 $795 $898 $0 $500 $1,000 $1,500 $2,000 $2,500 ($ in Millions) 8 Decline through 2010 was the result of the financial crisis Managed portfolio is growing again
Slide 9: Primarily late model, pre-owned vehicles
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Model Year • 9% New • 91% Pre - owned • 48% Domestic • 52% Imports Primarily late model, pre - owned vehicles 9 (1) Under the CPS programs for contracts purchased during 2013.
Slide 10: Proprietary scoring models and risk-adjusted pricing across 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 during 2013. (2) Contract APR as adjusted for fees charged (or paid) to dealer. Program (1) Avg. Yield (2) Avg. Amou
Slide 11: 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) (1) For new contracts purchased during the calendar quarter under the CPS programs. Averages are weighted by principal balance. (2) Contract APR as adjusted for fees charged (or paid) to dealer . (3) Who
Slide 12: Borrower and contract profile
• Average age 42 years • Average time in job 7 years • Average time in residence 6 years • Average credit history 13 years • Average household income $56,796 per year • Percentage of homeowners 27% Borrower: • Average amount financed $15,595 • Weighted average monthly payment $445 • Average term 61
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 ▪ Uses both criteria and pr
Slide 14: Funding: credit facilities and securitizations
$200 million in interim funding capacity through two credit facilities › $100 million with Goldman Sachs/Fortress due in March 2017 › $100 million with Citibank due in June 2016 Regular issuer of asset - backed securities, which provides long - term matched funding › $8.5 billion in over 60 deals fr
Slide 15: Cumulative net losses by vintage
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 22.00% Months Seasoned 2002 2003 2004 2005 2006 2007 2008 2010 2011 2012 Average of quarterly vintage cum. net losses as of December 31, 2013 2010 and later vintages in line or better than 2003 - 2005 vintages 15
Slide 16: Recovery rates correlate to Manheim Index
16 30.00% 35.00% 40.00% 45.00% 50.00% 55.00% 100.00 105.00 110.00 115.00 120.00 125.00 130.00 Manheim Index Recovery Rate Manheim Used Vehicle Value Index (Quarterly Avg.) (1) CPS Recovery Rate Quarterly Avg. (2) (1) Wholesale used vehicle prices (on a mix, mileage, and seasonally adjusted basis). (
Slide 17: Balance sheet
17 ($ in millions) December 31, 2013 December 31, 2012 December 31, 2011 December 31, 2010 Assets Cash $ 22.1 $ 13.0 $ 10.1 $ 16.3 Restricted Cash 132.3 104.4 159.2 124.0 Finance receivables, net of allowance 1,115.4 744.7 506.3 552.5 Finance receivables measured at fair value 14.5 59.7 160.3 --- Re
Slide 18: Income statement
Three Months Ended Years Ended ($ in millions) Dec. 31 , 2013 Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2012 Dec. 31, 2011 Revenues Interest income $ 63.9 $ 48.1 $ 231.3 $ 175.3 $ 127.9 Servicing fees 0.6 0.4 3.1 2.3 4.3 Other i ncome 2.1 2.1 10.4 9.6 10.9 Gain on cancellation of debt --- --- 10.9 --- --
Slide 19: Key performance metrics
(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. Three Months Ended Years Ended ($ in millions) December 31, 2013 Decem
Slide 20: CPS has weathered two industry cycles
CPS has weathered two industry cycles to remain one of the few independent public auto finance companies Nine quarters of improving profitability and operating performance Attractive industry fundamentals with fewer large competitors than last cycle Credit performance of 2010 and later vintages in l
Slide 21: Risk factors and SEC filings notice
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 22: Forward-looking statements
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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