Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Investor Presentation (November 2014)
21 slides from Consumer Portfolio Services's investor presentation, Nov 10, 2014
Slide 1: Investor Presentation As of September 30, 2014
1 Investor Presentation As of September 30, 2014
Slide 2: Consumer finance company focused on the sub-prime auto market
Consumer finance company focused on the sub - prime auto market Established in 1991; IPO in 1992 Through September 30, 2014, over $11.1 billion in contract purchases from auto dealers Irvine, California operating headquarters and branches in Nevada, Virginia, Florida and Illinois Approximately 800 e
Slide 3: Managed portfolio, pretax income, contract purchases and return on managed assets
3 $850 $1,050 $1,250 $1,450 Total Managed Portfolio ($ in mm) $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 Pretax Income ($ in mm ) $30 $80 $130 $180 $230 $280 New Contract Purchases ($ in mm) (1) Equal to annualized pretax income as a percentage of the average managed portfolio. 0.0% 1.0% 2.0% 3.0% 4.0%
Slide 4: Growth in managed portfolio and lower funding costs driving operating leverage
Growth in managed portfolio and declines in funding costs are driving enhanced operating leverage and profitability (1) As a percentage of the average managed portfolio. Percentages may not add due to rounding. 4 Quarter Ended September 30, 2014 June 30, 2014 September 30, 2013 Interest Income 20.1%
Slide 5: U.S. Auto Finance Market
U.S. Auto Finance Market Over $800 billion in auto loans outstanding as of Q1 2014 (1) Approximately 35% is “subprime” (credit score less than 620) (1) 2014 pacing for approximately $150 billion in new subprime auto loans (2) Historically fragmented market Few dominant long - term players Significan
Slide 6: Purchase contracts from dealers across the U.S.
Purchase contracts from dealers in over 48 states across the U.S. As of September 30, 2014 had 127 employee marketing representatives, 54 in the field and 73 in - house Primarily factory franchised dealers (1) Under the CPS programs for contracts purchased during the first nine months of 2014. 66% 3
Slide 7: New contract purchases ramped up since financial crisis
$284 $691 $1,019 $1,283 $297 $9 $113 $552 $764 $681 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 ($ in millions) Since inception through September 2014 the Company has purchased over $11.1 billion in contracts New contract purchases have ramped up significantly since financial crisis 7
Slide 8: Managed portfolio is growing
$1,231 $1,122 $1,519 $1,566 $2,126 $1,664 $1,195 $756 $795 $898 $0 $500 $1,000 $1,500 $2,000 $2,500 ($ in Millions) 8 Decline through 2010 was the result of the financial crisis Managed portfolio is growing
Slide 9: Primarily late model, pre-owned vehicles
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Model Year • 15% New • 85% Pre - owned • 46% Domestic • 54% Imports Primarily late model, pre - owned vehicles 9 (1) Under the CPS programs for contracts purchased during the first nine months of 2014.
Slide 10: Proprietary scoring models and risk-adjusted pricing across the credit spectrum
CPS’s proprietary scoring models and risk - adjusted pricing result in program offerings covering a wide band of the credit spectrum (1) Under the CPS programs for contracts purchased during the first nine months of 2014. (2) Contract APR as adjusted for fees charged (or paid) to dealer. 10 Program
Slide 11: Yields and credit metrics stronger than at end of last cycle
Yields and credit metrics are significantly stronger today than at the end of the last cycle (1) (1) For new contracts purchased during the calendar quarter under the CPS programs. Averages are weighted by principal balance. (2) Contract APR as adjusted for fees charged (or paid) to dealer . (3) Who
Slide 12: Borrower and contract characteristics
12 (1) Under the CPS programs for contracts purchased during first nine months of 2014. • Average age 42 years • Average time in job 6 years • Average time in residence 7 years • Average credit history 13 years • Average household income $54,540 per year • Percentage of homeowners 26% Borrower: • Av
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 and pr
Slide 14: Funding capacity, securitizations and corporate debt
$200 million in interim funding capacity through two credit facilities › $100 million with Goldman Sachs/Fortress due in March 2017 › $100 million with Citibank due in June 2017 Regular issuer of asset - backed securities, providing long - term matched funding › $9.1 billion in over 64 deals from 19
Slide 15: Cumulative net losses by vintage
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 22.00% Months Seasoned 2002 2003 2004 2005 2006 2007 2008 2010 2011 2012 2013 Average of quarterly vintage cum. net losses as of September 30, 2014 2010 and later vintages in line or better than 2003 - 2005 vintages 15
Slide 16: Balance sheet
16 (1) Numbers may not add due to rounding. ($ in millions) September 30, 2014 December 31, 2013 December 31, 2012 December 31, 2011 Assets Cash 13.1$ 22.1$ 13.0$ 10.1$ Restricted cash 174.6 132.3 104.4 159.2 Finance receivables, net of allowance 1,407.8 1,115.4 744.8 506.3 Finance receivables, meas
Slide 17: Income statement
17 ($ in millions) September 30, 2014 September 30, 2013 December 31, 2013 December 31, 2012 December 31, 2011 Revenues Interest income 207.1$ 167.4$ 231.3$ 175.3$ 127.9$ Servicing fees 1.2 2.5 3.1 2.3 4.3 Other income 8.5 8.3 10.4 9.6 10.9 Gain on cancellation of debt - 10.9 11.0 - - 216.8 189.1 25
Slide 18: Key performance metrics
(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. 18 ($ in millions) September 30, 2014 September 30, 2013 December 31,
Slide 19: CPS has weathered two industry cycles
CPS has weathered two industry cycles to remain one of the few independent public auto finance companies Eleven quarters of improving profitability and operating performance Attractive industry fundamentals with fewer large competitors than last cycle Credit performance of 2010 and later vintages in
Slide 20: 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/searchedg
Slide 21: 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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