Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Investor Presentation (September 2018)
23 slides from Consumer Portfolio Services's investor presentation, Sep 7, 2018
Slide 1: Investor Presentation As of June 30, 2018
Investor Presentation As of June 30, 2018
Slide 2: Company overview
2 » Consumer finance company focused on sub - prime auto market » Established in 1991. IPO in 1992 » Through June 30, 2018, approximately $14.8 billion in contracts originated » From 2002 – 2011, four mergers and acquisitions aggregating $822.3 million » Irvine, California operating headquarters; Br
Slide 3: Managed portfolio, pretax income and return on managed assets
3 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 $2,200 $2,400 Total Managed Portfolio ($ in mm) $0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 Pretax Income ($ in mm ) $50 $100 $150 $200 New Contract Purchases ($ in mm) (1) Equal to annualized pretax income as a percentage of the average managed portfolio.
Slide 4: CPS Systems Proprietary 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: Portfolio yield and margin components
5 » Recent results reflect upward tick in cost of funds due to rising interest rate environment. (1) As a percentage of the average managed portfolio. Percentages may not add due to rounding. June 30, 2018 June 30, 2017 December 31, 2017 December 31, 2016 Interest Income 16.7% 18.4% 18.2% 18.4% Serv
Slide 6: U.S. Auto Finance Market
U.S. Auto Finance Market $1.1 trillion in auto loans outstanding as of Q2 2018 (1) Approximately 41% of Q2 2018 auto loans originated were below “prime” (credit score less than 660) (1) Approximately $151.7 billion in new auto loans in Q2 2108 (2) Historically fragmented market Few dominant long - t
Slide 7: Dealer network and contract purchases
» Purchasing contracts from dealers in 48 states across the U.S. » As of June 30, 2018 had 79 employee marketing representatives » Primarily factory franchised dealers 7 (1) Under the CPS programs for contracts purchased during first six months of 2018. 79% 21% Contract Purchases (1) Factory Franchi
Slide 8: Contract originations
$284 $297 $9 $113 $552 $764 $945 $425 $0 $200 $400 $600 $800 $1,000 $1,200 ($ in millions) $1,089 8 » Since inception through June 30, 2018 the Company has originated approximately $14.8 billion in contracts $1,061 $859
Slide 9: Total managed portfolio
$2,329 $0 $500 $1,000 $1,500 $2,000 $2,500 $898 ($ in millions) $2,308 $1,195 $756 $795 $1,231 $1,644 $2,031 9 » Decline through 2010 was the result of the financial crisis $ 2,334
Slide 10: Vehicle mix of contract purchases
0% 4% 8% 12% 16% 20% 24% Model Years of Current Year Production 10 • 24% New • 76% Pre - owned • 45% Domestic • 55% Imports Primarily late model, pre - owned vehicles (1) Under the CPS programs for contracts purchased during first half of 2018
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 first half of 2018. (2) Contract APR as adjusted for fees charged (or paid) to dealer. Progr
Slide 12: Borrower and contract characteristics
• Average age 43 years • Average time in job 5 years • Average time in residence 6 years • Average credit history 12 years • Average household income $56,632 per year • Percentage of homeowners 21% Borrower : • Average amount financed $16,101 • Weighted average monthly payment $437 • 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 » Uses both criteria an
Slide 14: Funding and securitization
» $300 million in interim funding capacity through three credit facilities » $100 million with Fortress; revolves to April 2019, due in April 2021 » $100 million with Citibank; revolves to August 2018, due in August 2019 » $100 million with Ares / Credit - Suisse; revolves to November 2019, due in N
Slide 15: Cumulative net losses by quarterly vintage
15 » Average of quarterly vintage cumulative net losses as of June 30, 2018 » Recent pool performance in line with business model economics 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
Slide 16: Cumulative net losses by quarterly vintage
16 » Average of quarterly vintage cumulative net losses as of June 30, 2018 » Recent pool performance in line with business model economics 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Slide 17: Pre-tax income and book value per share
- 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 - 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 Pre - tax Income $ in Millions - Left Axis Book Value per Share in $ - Right Axis 17
Slide 18: Balance sheet
($ in millions) June 30, 2018 December 31, 2017 December 31, 2016 December 31, 2015 Assets Cash 17.4$ 12.7$ 13.9$ 19.3$ Restricted cash 119.9 112.0 112.8 106.1 Finance receivables, net of allowance 1,793.2 2,195.8 2,172.4 1,909.5 Finance receivables, measured at fair value 412.9 - - - Deferred tax a
Slide 19: Income statement
19 ($ in millions) June 30, 2018 June 30, 2017 December 31, 2017 December 31, 2016 December 31, 2015 Revenues Interest income 97.0$ 107.5$ 424.2$ 409.0$ 350.0$ Other income 2.4 2.6 10.2 13.3 13.7 99.4 110.1 434.4 422.3 363.7 Expenses Employee costs 19.8 17.6 73.0 65.5 59.6 General and administrative
Slide 20: Key operating and credit metrics
20 (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) June 30, 2018 June 30, 2017 December 31, 2017 Decem
Slide 21: Investment highlights
» CPS has weathered two industry cycles to remain one of the few independent public auto finance companies » Twenty - seven consecutive quarters of profitability (measured on a pre - tax basis) » Attractive industry fundamentals with fewer large competitors than last cycle » Consistent credit perfor
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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