Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Q4 2022 Earnings Presentation
21 slides from Consumer Portfolio Services's earnings presentation, Mar 15, 2023
Slide 1: Consumer Portfolio Services, Inc. Investor Presentation
Consumer Portfolio Services, Inc. Nasdaq: CPSS Investor Presentation As of December 31, 2022
Slide 2: Consumer finance company focused on sub-prime auto market
➢ Consumer finance company ➢ Approximately 784 focused on sub-prime auto employees as of market December 31, 2022 ➢ $1.9 billion contract ➢ Established in 1991. IPO in originations in 2022; 1992 $1.1 billion contract originations in 2021; ➢ Through December 31, 2022, approximately $20.0 billion in ➢
Slide 3: Pretax Income, Managed Portfolio, Contract Purchases, Pre-Tax Return
Pretax Income ($ in mm) Total Managed Portfolio ($ in mm) $35.0 $3,000 $30.0 $25.0 $2,500 $20.0 $15.0 $2,000 $10.0 $5.0 $1,500 $0.0 $1,000 New Contract Purchases ($ in mm) Pre-Tax Return on Managed Assets (1) 6.0% $550 $500 5.0% $450 $400 4.0% $350 $300 3.0% $250 2.0% $200 $150 1.0% $100 $50 0.0% (1
Slide 4: CPS Systems and Process Flow
CPS Systems Proprietary Applications Credit Bureaus Originations System Credit Automobile Application Dealership Credit Scoring and Decisioning Decline or Approval / Pricing Verifications Funding and Funding Package Shop -- Negotiate -- Receivables Apply for Credit Accounting System Servicing and Co
Slide 5: Managed Portfolio Return Components
Quarter Ended Twelve Months Ended December 31, December 31, December 31, December 31, 2022 2021 2022 2021 Interest Income 11.5% 12.4% 12.0% 12.4% Mark to Fin. Recs. at FV 0.0% -- 0.6% (0.2%) Servicing and Other Income 0.5% 0.3% 0.4% 0.3% Interest Expense (4.2%) (3.1%) (3.4%) (3.5%) Net Interest Marg
Slide 6: U.S. Market for Auto Finance and Industry Players
U.S Market for Auto Finance Other National Industry Players ➢ $1.5 trillion auto loans outstanding at ➢ Santander Consumer USA Q4 2022 (1) ➢ Exeter Finance Corp ➢ Approximately 34% of auto financings in Q4 2022 were below ➢ Global Lending Services prime (FICO < 661) (1) ➢ Westlake Financial ➢ Histor
Slide 7: Contracts purchased in 2022 by geography and dealer type
➢ Contracts purchased in the year ended December 31, 2022 - $1,854.4 million ➢ Contracts purchased from dealers in 47 states ➢ Diverse geographic market penetration Originating Dealer Type 3% Independent, 25% 9%9%5% 2% 5% 9% Factory Franchised, 75% 2% 9% 4% 8% 5%
Slide 8: Contract Purchases Volume
➢ Since inception through December 31, 2022, the Company has originated approximately $20.0 billion in contracts ➢ 2022 Q4 volume was 30.5% greater than the volume from the fourth quarter of 2021 $2,000 $1,854 $1,800 $1,600 $1,400 ($ in millions) $1,200 $1,000 $800 $600 $400 $200 $0
Slide 9: Total Managed Portfolio
$2,500 $2,000 $1,500 ($ in millions) $1,000 $500 $0
Slide 10: Vehicle Characteristics of Purchased Contracts
20% Model Years of Current Year Production 16% Primarily late model, pre- owned vehicles ➢ 9% New 12% ➢ 13% Certified Pre-Owned ➢ 78% Pre-owned 8% ➢ 48% Domestic ➢ 52% Imports 4% 0% (1) Under the CPS programs for contracts purchased for the year ended December 31, 2022
Slide 11: CPS Credit Programs and Scoring Models
➢ 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 Meta 9.83% $26,046 $98,405 9.3
Slide 12: Borrower and Contract Characteristics
Borrower: • Average age 42 years • Average time in job 5 years • Average time in residence 6 years • Average credit history 10 years • Average household income $70,812 per year • Percentage of homeowners 22% Contract: • Average amount financed $22,782 • Weighted average monthly payment $572 • Weight
Slide 13: Contract Originations and Servicing
Contract Originations Servicing ➢ Centralized contract originations at ➢ Geographically dispersed servicing Irvine HQ centers enhance coverage and staffing flexibility and drive portfolio ➢ Maximizes control and efficiencies performance ➢ Certain functions performed at Florida and Nevada offices ➢ E
Slide 14: Funding and Securitization Activity
➢ $400 million in interim funding capacity through two credit facilities ➢ $200 million with Citibank; revolves to July 2024, due in July 2025 ➢ $200 million with Ares; revolves to January 2024, due in January 2028 ➢ Regular issuer of asset-backed securities, providing long-term matched funding ➢ $1
Slide 15: Cumulative Net Losses by Vintage
➢ Average of quarterly vintage cumulative net losses as of December 31, 2022 ➢ Improved credit performance of more recent vintages 2016 20.00% 2015 18.00% 2016 2017 2015 16.00% 2018 2017 2019 14.00% 2020 2021 12.00% 2018 10.00% 8.00% 6.00% 2019 4.00% 2.00% 2020 2021 0.00% 1 4 7 10 13 16 19 22 25 28
Slide 16: Balance Sheet
December December December December ($ in millions) 31, 2022 31, 2021 31, 2020 31, 2019 Assets Cash $ 13.5 $ 29.9 $ 13.5 $ 5.3 Restricted cash 149.3 146.6 130.7 135.5 Finance receivables, net of allowance 70.6 176.2 411.3 885.9 Finance receivables, measured at fair value 2,476.6 1,749.1 1,523.7 1,44
Slide 17: Income Statement
Three Months Ended Years Ended December December December 31, December 31, December ($ in millions) 31, 2022 31, 2021 2022 2021 31, 2020 Revenues Interest income $ 79.7 $ 67.7 $ 305.2 $ 266.3 $ 295.0 Mark to finance receivables at fair value - - 15.3 (4.4) (29.5) Other income 3.3 1.7 9.2 6.0 5.7 83.
Slide 18: Key Operating Metrics
Three Months Ended Years Ended December December December December December ($ in millions) 31, 2022 31, 2021 31, 2022 31, 2021 31, 2020 Auto contract purchases $ 428.0 $ 328.0 $ 1,854.4 $ 1,146.3 $ 742.6 Total managed portfolio $ 2,795.4 $ 2,209.4 $ 2,795.4 $ 2,209.4 $ 2,175.0 Risk-adjusted margin
Slide 19: Investment Highlights
➢ CPS has weathered multiple industry cycles to remain one ➢ Consistent credit of the few independent performance public auto finance companies ➢ Opportunistic, successful acquisitions ➢ Forty-five consecutive quarters of pre-tax profits ➢ Stable senior management team averaging 20 years of ➢ Attrac
Slide 20: Risk Factors and SEC Filings
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 www.sec.gov/edgar/searchedgar/companysearch
Slide 21: Forward-Looking Statements
Forward-looking statements in this presentation include the Company's recorded figures representing allowances for remaining expected lifetime credit losses, its markdown of carrying value for the portion of its portfolio accounted for at fair value, its charge to the provision for credit losses f
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