Consumer Portfolio Services, Inc. · NASDAQ:CPSS

Consumer Portfolio Services — Investor Presentation (June 2018)

23 slides from Consumer Portfolio Services's investor presentation, Jun 30, 2018

  1. Slide 1: Investor Presentation As of June 30, 2018

    Investor Presentation As of June 30, 2018

  2. Slide 2: Consumer finance company focused on sub-prime auto market

     Consumer finance company  Irvine, California operating focused on sub-prime auto headquarters; Branches in Nevada, Illinois, Virginia and market Florida  Established in 1991. IPO in  Approximately 1,013 1992 employees  $859.1 million contract  Through June 30, 2018, originations in 2017; $425

  3. Slide 3: Total Managed Portfolio, Pretax Income, New Contract Purchases

    Total Managed Portfolio Pretax Income ($ in mm) ($ in mm) $2,400 $12.00 $2,200 $10.00 $2,000 $8.00 $1,800 $6.00 $1,600 $4.00 $1,400 $2.00 $1,200 $0.00 $1,000 New Contract Purchases ($ in mm) Return on Managed Assets (1) $200 2.0% $150 1.0% $100 $50 0.0% (1) Equal to annualized pretax income as a per

  4. Slide 4: Origination and servicing systems flow

    CPS Systems Proprietary Applications Credit Bureaus Originations System Credit Automobile Application Dealership Credit Decisioning AOA / DOA Decline or Approval / Pricing Underwriting Underwriting Package Shop -- Negotiate -- Receivables Apply for Credit Accounting System Servicing and Collections

  5. Slide 5: Recent results reflect upward tick in cost of funds

     Recent results reflect upward tick in cost of funds due to rising interest rate environment. Quarter Ended Twelve Months Ended December 31, December 31, June 30, 2018 June 30, 2017 2017 2016 Interest Income 16.7% 18.4% 18.2% 18.4% Servicing and Other Income 0.4% 0.4% 0.4% 0.6% Interest Expense (4.

  6. Slide 6: U.S. Auto Finance Market and Other National Industry Players

    U.S. Auto Finance Other National Market Industry Players $1.1 trillion in auto loans outstanding as of Q2 2018 (1) Santander Consumer USA Approximately $151.7 billion in new GM Financial/AmeriCredit auto loans in Q2 2108 (2) Capital One Approximately 41% of Q2 2018 auto loans originated were below “

  7. Slide 7: Purchasing contracts from dealers in 48 states

     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 Contract Purchases (1) 21% Factory Franchised 79% Independents (1) Under the CPS programs for contracts purchased during first six m

  8. Slide 8: Contract purchases since inception ($ in millions)

     Since inception through June 30, 2018 the Company has originated approximately $14.8 billion in contracts $1,200 $1,061 $1,089 $1,000 $945 $859 $800 $764 ($ in millions) $600 $552 $425 $400 $297 $284 $200 $113 $9 $0 8

  9. Slide 9: Total managed portfolio ($ in millions)

     Decline through 2010 was the result of the financial crisis $2,500 $2,308 $2,334 $2,329 $2,031 $2,000 $1,644 $1,500 ($ in millions) $1,195 $1,231 $1,000 $898 $795 $756 $500 $0 9

  10. Slide 10: Primarily late model, pre-owned vehicles

    Model Years of Current Year Production 24% 20% Primarily late model, pre- 16% owned vehicles 12% • 24% New • 76% Pre-owned 8% • 45% Domestic • 55% Imports 4% 0% (1) Under the CPS programs for contracts purchased during first half of 2018 10

  11. Slide 11: Proprietary scoring models and risk-adjusted pricing across sub-prime spectrum

     CPS’s proprietary scoring models and risk-adjusted pricing result in program offerings covering a wide band of the sub-prime credit spectrum Avg. Annual Avg. Avg. Amount Household Avg. Time on Avg. % of Program (1) Yield (2) Financed Income Job (years) FICO Purchases Preferred 12.32% $20,281 $80,4

  12. Slide 12: Borrower and contract characteristics

    Borrower: • 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% Contract: • Average amount financed $16,101 • Weighted average monthly payment $437 • Weight

  13. Slide 13: Contract Originations and Servicing

    Contract Originations Servicing  Centralized contract originations at  Geographically dispersed servicing Irvine HQ centers enhance coverage and staffing  Maximizes control and efficiencies flexibility and drive portfolio  Certain functions performed at Florida performance and Nevada offices  E

  14. Slide 14: Funding: credit facilities and securitizations

     $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 Nov

  15. Slide 15: Vintage cumulative net losses by quarter

     Average of quarterly vintage cumulative net losses as of June 30, 2018  Recent pool performance in line with business model economics 20.00% 18.00% 2006 2007 16.00% 2013 14.00% 2014 12.00% 2015 2016 10.00% 2017 8.00% 6.00% 4.00% 2.00% 0.00% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 4

  16. Slide 16: Vintage cumulative net losses by month

     Average of quarterly vintage cumulative net losses as of June 30, 2018  Recent pool performance in line with business model economics 18.00% 2006 16.00% 2007 14.00% 2013 12.00% 2014 2015 10.00% 2016 8.00% 2017 6.00% 4.00% 2.00% 0.00% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

  17. Slide 17: Pre-tax Income and Book Value per Share

    18,000 10.00 Pre-tax Income $ in Millions - Left Axis 9.00 16,000 Book Value per Share in $ - Right Axis 8.00 14,000 7.00 12,000 6.00 10,000 5.00 8,000 4.00 6,000 3.00 4,000 2.00 2,000 1.00 - - 17

  18. Slide 18: Balance sheet

    December 31, December 31, December 31, ($ in millions) June 30, 2018 2017 2016 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 t

  19. Slide 19: Income statement

    Three Months Ended Years Ended December 31, December 31, December 31, ($ in millions) June 30, 2018 June 30, 2017 2017 2016 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.

  20. Slide 20: Key operating metrics

    Three Months Ended Years Ended December 31, December 31, December 31, ($ in millions) June 30, 2018 June 30, 2017 2017 2016 2015 Auto contract purchases $ 214.7 $ 233.9 $ 859.1 $ 1,088.8 $ 1,060.5 Total managed portfolio $ 2,329.2 $ 2,343.3 $ 2,333.5 $ 2,308.1 $ 2,031.1 Risk-adjusted margin (1) $ 38

  21. Slide 21: CPS has weathered two industry cycles

     CPS has weathered two  Growing portfolio enhances industry cycles to remain one operating leverage through of the few independent public economies of scale auto finance companies  Opportunistic, successful  Twenty-seven consecutive acquisitions quarters of profitability (measured on a pre-tax b

  22. Slide 22: Review of SEC filings 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 (http://www.sec.gov/edgar/searchedgar/compa

  23. Slide 23: Forward-looking statement disclaimer

     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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