Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Investor Presentation (November 2006)
32 slides from Consumer Portfolio Services's investor presentation, Nov 9, 2006
Slide 1: Cautionary Statement
Cautionary 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 of
Slide 2: Reference to Public Reports
Reference to Public Reports 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.g
Slide 3: Consumer Portfolio Services, Inc.
Consumer Portfolio Services, Inc. Specialty finance company focused on sub-prime auto market Established in 1991; IPO in 1992 Irvine, California headquarters and three servicing branches in Virginia, Florida and Illinois
Slide 4: Consumer Portfolio Services, Inc.
Consumer Portfolio Services, Inc. Through September 30, 2006, approximately $6.8 billion in contract purchases from auto dealers As of September 30, 2006, managed portfolio of approximately $1.48 billion Approximately 740 employees
Slide 5: U.S. Auto Finance Market
U.S. Auto Finance Market 2005 U.S. auto financing = $407 billion (1) $211 billion new; $196 billion used Company estimates 20%, or $81 billion is “sub-prime” Historically fragmented market with few long-term dominant players Significant barriers to entry (1)According to CNW Marketing Research, Inc.
Slide 6: Major Market Participants
Major Market Participants AmeriCredit Capital One Triad HSBC/Household Wells Fargo CitiFinancial Chase Custom Manufacturers’ Captives
Slide 7: The CPS Landscape as of September 30, 2006
The CPS Landscape as of September 30, 2006 Contracts with over 7,300 dealers in 47 states 81 employee marketing reps in the field and 6 in-house West coast headquarters and three strategically located servicing branches
Slide 8: The CPS Landscape: Dealers
The CPS Landscape Primarily factory franchised dealers Contract Purchases for the nine months ended September 30, 2006 Factory Franchised 89%Rental Car Companies 1% Independents (1) 10% (1) Includes contract purchases of TFC, a subsidiary that targets enlisted members of U.S. Armed Forces
Slide 9: The CPS Landscape: Risk-adjusted pricing
The CPS Landscape CPS’s risk-adjusted pricing results in program offerings covering a wide band of the credit spectrum New contract acquisitions for the nine months ended September 30, 2006 Program Avg Yield % (1) Avg Amount Financed $ Avg FICO % of Purchases (2) Preferred 12.520,002604 518 523 512
Slide 10: The CPS Landscape: Late model pre-owned vehicles
The CPS Landscape Primarily late model pre-owned vehicles 17% New 83% Pre-owned 0% 5% 10% 15% 20% 25% 30% 2006 2005 2004 2003 2002 2001 Earlier Securitization 2006-C Principal Balances by Model Year The CPS Landscape Affordable, basic transportation vehicles Average vehicle sales price of $15,677 Av
Slide 11: The CPS Landscape: Affordable, basic transportation
The CPS Landscape Affordable, basic transportation vehicles Average vehicle sales price of $15,677⑀⏇Average monthly payment of $386 for 63 months PONT 7% KIA 5% SUZU 4% CHEV 20% DODG 12% FORD 18% MITS 3% CHRY 6% HYUN 3% TOYO 3% NISS 5% Others 14% New contract acquisitions under the CPS programs for
Slide 12: The CPS Landscape: Stable obligors
The CPS Landscape An emphasis on stable obligors with the ability to rehabilitate their credit profile New contract acquisitions under the CPS programs for the nine months ended September 30, 2006 Average age - 37 years Average time in job- 5 years Average time in residence- 5 years Average househol
Slide 13: Contract Originations
Contract Originations Centralized contract originations at Irvine HQ Maximizes control and efficiencies Proprietary auto-decisioning system Makes initial credit decision on approximately 90% of incoming applications Enhances dealer service by shortening response time Pre-funding verification of empl
Slide 14: Contract Originations: Infrastructure to Support Volumes
Contract Originations Infrastructure to Support Significant Originations Volumes02004006008001,0001,2001991199219931994199519961997199819992000200120022003200420052006 Annual Volumes ($ in millions) 2006 originations through September Since inception through September 30, 2006 the Company has origin
Slide 15: Contract Servicing
Contract Servicing 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 Early
Slide 16: Successful Acquisitions
Successful Acquisitions Entity-Date and Purchase Price-Comments MFN Financial Corp.-March 2002 $123.2 million- $380 million portfolio $17.4 million negative goodwill The Finance Company-May 2003 $23.7 million- $150 million portfolio CPS maintains presence in TFC military niche SeaWest Financial Corp
Slide 17: Portfolio Financing
Portfolio Financing Two short-term warehouse facilities aggregating $350 million Quarterly “AAA” rated asset-backed securities provide long-term matched funding Use of multiple bond insurers enhances liquidity and structural flexibility Sale of subordinated tranches increases liquidity
Slide 18: Portfolio Financing: Regular ABS Issuer
Portfolio Financing The Company has been a regular issuer of rated ABS since 1994 Through Q3 2006: 42 deals aggregating over $4.9 billion 0501001502002503003501994-11994-21994-31994-41995-11995-21995-31995-41996-11996-11996-21996-31997-11997-21997-31997-41997-51998-11998-21998-31998-42001-A2002-A200
Slide 19: Other Financing
Other Financing ($ in thousands) Outstanding at September 30, 2006 Source Terms Comments $24,243, Residual Interest Financing, 8.36% Amortizing with related ABS, 2ndrated “NIM” transaction by CPS $40,000, Senior Debt -Affiliate of Levine Leichtman, 11.75% 2006 and 2007 maturities, A lender to CPS si
Slide 20: Total Managed Portfolio Composition by Source
Total Managed Portfolio Composition by Source ($ in millions)$0$200$400$600$800$1,000$1,200$1,400$1,600Dec-02Dec-03Dec-04Dec-05Sep-06SeaWest 3rd PartySeaWest TFCMFN CPS Primary Driver of Growth is CPS “Organic” Contract Purchases with over 95% now On Balance Sheet$1,481 mm$595 mm
Slide 21: Asset Performance: Average Annual Net Credit Losses
Asset Performance Average Annual Net Credit Losses Consistent Performance and Positive Trends MFN recoveries now exceed incremental losses Through Q3 2006 CPS MFN TFC
Slide 22: TFC Asset Performance
TFC Asset Performance Receivables and Repo Inventory 30 Plus Days Past Due Three quarter rolling averages Consistent Performance and Positive Trends* MFN transactions called in August 2005. 06CPS MFN*
Slide 23: Asset Performance: Cumulative Net Credit Losses
Asset Performance Average ABS Pool Cumulative Net Credit Losses as of September 30, 2006Consistent Performance and Positive Trends ABS pools from 2003 onward exhibit substantially better performance Months seasoned
Slide 24: Asset Performance: Auction Values
Asset Performance Auction Values for Repossession Sales Have Steadily Improved (1) 50% Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 CPS Portfolio
Slide 25: Asset Performance: Repossession Sales
Asset Performance Repossession Sales for CPS Portfolio in Q3 2006⑀⏇Least fuel efficient vehicles comprised less than 10% of all vehicles sold Full-size SUV’s and trucks sold for 48% of contract balance vs. 45% for other vehicles25%5%3%6%34%14%11%2%Compact Ca Full-size Car Full-size SUV Full-size Tru
Slide 26: Summary Balance Sheets
Summary Balance Sheets ($ in thousands) September 30, 2006 December 31, 2005 December 31, 2004 Assets $ 17,789 157,662 913,576 25,220 40,897 $ 1,155,144 $ 19,779 35,350 43,745 924,026 58,655 1,081,555 73,589 $ 1,155,144 Cash $ 15,302 $ 14,366 Restricted Cash 197,074 125,113 Finance receivables, net
Slide 27: Summary Statements of Operations
Summary Statements of Operations ($ in thousands) Nine Months Ended Year Ended September 30, 2006 $ 188,189 2,436 8,344 198,969 28,349 31,204 65,412 Impairment on residual 0 0 0 11,750 65,322 190,287 8,6820 $ 8,682 $0.36 September 30, 2005 December 31, 2005 December 31, 2004 Revenues $ 171,834 6,647
Slide 28: Selected Financial Data
Selected Financial Data ($ in millions) Nine Months Ended Years Ended December 31, Auto contract purchases Total managed portfolio Risk-adjusted margin (1) Core operating expenses (2) $ amount % of average managed portfolio Total delinquencies and repossessions (% of total managed portfolio) Annuali
Slide 29: Investment Merits
Investment Merits CPS has weathered industry turbulence to remain one of the few independent public auto finance companies Attractive industry fundamentals 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 Operating leverage through economies of scale Opportunistic, successful acquisitions Stable senior management team with significant equity ownership -senior management, including vice presidents, average 12 years of service with
Slide 31: Consumer Portfolio Services, Inc.
Consumer Portfolio Services, Inc. Nasdaq: CPSS
Slide 32: Slide 32
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