Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Investor Presentation (March 2018)
23 slides from Consumer Portfolio Services's investor presentation, Mar 13, 2018
Slide 1: Investor Presentation As of December 31, 2017
Investor Presentation As of December 31, 2017
Slide 2: Consumer finance company focused on sub-prime auto market
2 » Consumer finance company focused on sub - prime auto market » Established in 1991. IPO in 1992 » Through December 31, 2017, approximately $14.3 billion in contracts originated » From 2002 – 2011, four mergers and acquisitions aggregating $822.3 million » Irvine, California operating headquarters
Slide 3: Managed portfolio, pretax income, purchases 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) $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 Pretax Income ($ in mm ) $50 $100 $150 $200 $250 $300 $350 New Contract Purchases ($ in mm) (1) Equal to annualized pretax income as a percentage of the average m
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: Recent results reflect upward tick in cost of funds
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. December 31, 2017 December 31, 2016 December 31, 2017 December 31, 2016 Interest Income 18.0% 18.2% 18.2% 18
Slide 6: U.S. Auto Finance Market
U.S. Auto Finance Market $1.1 trillion in auto loans outstanding as of Q4 2017 (1) Approximately 39% of Q4 2017 auto loans originated were below “prime” (credit score less than 660) (1) Approximately $225 billion in new subprime auto loans in 2016 (2) Historically fragmented market Few dominant long
Slide 7: Dealer contract purchases
» Purchasing contracts from dealers in 48 states across the U.S. » As of December 31, 2017 had 76 employee marketing representatives » Primarily factory franchised dealers 7 (1) Under the CPS programs for contracts purchased during 2017. 78% 22% Contract Purchases (1) Factory Franchised Independents
Slide 8: Contract originations since inception
$284 $1,283 $297 $9 $113 $552 $764 $945 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 ($ in millions) $1,089 8 » Since inception through December 31, 2017 the Company has originated approximately $14.3 billion in contracts $1,061 $859
Slide 9: Total managed portfolio
$0 $500 $1,000 $1,500 $2,000 $2,500 $898 ($ in millions) $2,308 $1,664 $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 contracts purchased
0% 4% 8% 12% 16% 20% 24% Model Years of Current Year Production 10 • 25% New • 75% Pre - owned • 44% Domestic • 56% Imports Primarily late model, pre - owned vehicles (1) Under the CPS programs for contracts purchased during 2017
Slide 11: Proprietary scoring models and risk-adjusted pricing programs
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 2017. (2) Contract APR as adjusted for fees charged (or paid) to dealer. Program (1) Avg. Yi
Slide 12: Borrower and contract profile
• Average age 43 years • Average time in job 6 years • Average time in residence 7 years • Average credit history 11 years • Average household income $51,000 per year • Percentage of homeowners 22% Borrower : • Average amount financed $16,319 • Weighted average monthly payment $433 • 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: 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 N
Slide 15: Quarterly vintage cumulative net losses
15 » Average of quarterly vintage cumulative net losses as of December 31, 2017 » 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
Slide 16: Quarterly vintage cumulative net losses (36 months)
16 » Average of quarterly vintage cumulative net losses as of December 31, 2017 » 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 3
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) December 31, 2017 December 31, 2016 December 31, 2015 December 31, 2014 Assets Cash 12.7$ 13.9$ 19.3$ 17.9$ Restricted cash 112.0 112.8 106.1 175.4 Finance receivables, net of allowance 2,195.8 2,172.4 1,909.5 1,534.5 Finance receivables, measured at fair value - - - 1.7 Deferred tax
Slide 19: Income statement
19 ($ in millions) December 31, 2017 December 31, 2016 December 31, 2017 December 31, 2016 December 31, 2015 Revenues Interest income 105.1$ 105.2$ 424.2$ 409.0$ 350.0$ Other income 2.1 2.9 10.2 13.3 13.7 107.2 108.1 434.4 422.3 363.7 Expenses Employee costs 19.2 18.0 73.0 65.5 59.6 General and admi
Slide 20: Key operating 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) December 31, 2017 December 31, 2016 December 31, 20
Slide 21: CPS has weathered two industry cycles
» CPS has weathered two industry cycles to remain one of the few independent public auto finance companies » Twenty - three consecutive quarters of profitability » Attractive industry fundamentals with fewer large competitors than last cycle » Consistent credit performance 21 » Growing portfolio enh
Slide 22: 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 23: Forward-looking statements 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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