Consumer Portfolio Services, Inc. · NASDAQ:CPSS

Consumer Portfolio Services — Investor Presentation (September 2019)

23 slides from Consumer Portfolio Services's investor presentation, Sep 30, 2019

  1. Slide 1: Investor Presentation As of September 30, 2019

    Investor Presentation As of September 30, 2019

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

     Irvine, California operating  Consumer finance company headquarters; Branches in focused on sub-prime auto Nevada, Illinois, Virginia and market Florida  Approximately 1,018  Established in 1991. IPO in employees at September 30, 1992 2019  Through September 30, 2019,  $902.4 million contract

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

    Total Managed Portfolio Pretax Income ($ in mm) ($ in mm) $2,500 $8.00 $6.00 $2,000 $4.00 $1,500 $2.00 $0.00 $1,000 New Contract Purchases ($ in mm) Return on Managed Assets (1) $300 $250 $200 1.0% $150 $100 $50 0.0% (1) Equal to annualized pretax income as a percentage of the average managed portfo

  4. Slide 4: Automobile Dealership, Auto Consumers, CPS Systems

    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 influenced by transition to fair value accounting effective January 2018

     Recent results influenced by transition to fair value accounting effective January 2018 Quarter Ended Twelve Months Ended September 30, September 30, December 31, December 31, 2019 2018 2018 2017 Interest Income 13.9% 16.0% 16.2% 18.2% Servicing and Other Income 0.3% 0.3% 0.4% 0.4% Interest Expens

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

    U.S. Auto Finance Other National Market Industry Players $1.2 trillion in auto loans outstanding as of Q1 2019 (1) Santander Consumer USA Approximately $604.4 billion in new GM Financial/AmeriCredit auto loans in 2018 (2) Capital One Approximately 37% of Q1 2019 auto loans originated were below “pri

  7. Slide 7: Generally purchasing contracts from dealers in 48 states across the U.S.

     Generally purchasing contracts from dealers in 48 states across the U.S.  As of September 30, 2019 had 72 employee marketing representatives Contracts Purchased Nine Months Ended September 30, 2019 3%2 % Factory Franchised Independent 11% 8% 14% 13% 7% 86% 4% 6% 5% 7

  8. Slide 8: Contract originations since inception

     Since inception through September 30, 2019 the Company has originated approximately $16.0 billion in contracts $1,200 $1,000 $902 $755 $800 ($ in millions) $600 $400 $200 $0 8

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

    $2,500 $2,413 $2,000 $1,500 ($ in millions) $1,000 $500 $0 9

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

    28% Model Years of Current Year Production 24% Primarily late model, pre- 20% owned vehicles 16% • 24% New • 9% Certified Pre-Owned 12% • 67% Pre-owned • 46% Domestic 8% • 54% Imports 4% 0% (1) Under the CPS programs for contracts purchased during nine months ended September 30, 2019 10

  11. Slide 11: CPS's proprietary scoring models and risk-adjusted pricing across the sub-prime credit 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 13.62% $20,937 $82,3

  12. 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 11 years • Average household income $57,564 per year • Percentage of homeowners 20% Contract: • Average amount financed $17,757 • Weighted average monthly payment $478 • 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: Credit facilities and securitization funding

     $300 million in interim funding capacity through three credit facilities  $100 million with Fortress; revolves to April 2021, due in April 2023  $100 million with Citibank; revolves to August 2020, due in August 2021  $100 million with Ares / Credit-Suisse; revolves to November 2019, due in Nov

  15. Slide 15: Average of quarterly vintage cumulative net losses

     Average of quarterly vintage cumulative net losses as of September 30, 2019  Improved credit performance of more recent vintages 20.00% 2006 18.00% 2007 16.00% 2013 14.00% 2014 12.00% 2015 10.00% 2016 8.00% 2017 6.00% 2018 2017 4.00% 2.00% 2018 0.00% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33

  16. Slide 16: Average of quarterly vintage cumulative net losses

     Average of quarterly vintage cumulative net losses as of September 30, 2019  Improved credit performance of more recent vintages 16.00% 2006 14.00% 2007 2013 12.00% 2014 2015 10.00% 2016 8.00% 2017 2018 6.00% 2017 4.00% 2.00% 2018 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

  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 - - Jun-13 Sep-13 Dec-13 Jun-14 Sep-14 Dec-14 Jun-15 Sep-15 Dec-15 Jun-16 Sep-16 Dec-16 Jun-17 Sep-17 Dec-17 J

  18. Slide 18: Balance sheet

    September 30, December 31, December 31, December 31, ($ in millions) 2019 2018 2017 2016 Assets Cash $ 8.8 $ 12.8 $ 12.7 $ 13.9 Restricted cash 128.6 117.3 112.0 112.8 Finance receivables, net of allowance 1,009.7 1,454.7 2,195.8 2,172.4 Finance receivables, measured at fair value 1,313.2 821.1 - -

  19. Slide 19: Income statement

    Three Months Ended Years Ended September 30, September 30, December 31, December 31, December 31, ($ in millions) 2019 2018 2018 2017 2016 Revenues Interest income $ 83.5 $ 93.6 $ 380.3 $ 424.2 $ 409.0 Other income 2.0 2.0 9.5 10.2 13.3 85.5 95.6 389.8 434.4 422.3 Expenses Employee costs 20.3 18.8 7

  20. Slide 20: Key performance metrics

    Three Months Ended Years Ended September 30, September 30, December 31, December 31, December 31, ($ in millions) 2019 2018 2018 2017 2016 Auto contract purchases $ 262.1 $ 225.2 $ 902.4 $ 859.1 $ 1,088.8 Total managed portfolio $ 2,412.6 $ 2,342.9 $ 2,380.9 $ 2,333.5 $ 2,308.1 Risk-adjusted margin

  21. Slide 21: CPS has weathered multiple industry cycles

     CPS has weathered multiple  Growing portfolio enhances industry cycles to remain one operating leverage through of the few independent public economies of scale auto finance companies  Opportunistic, successful  Thirty consecutive quarters of acquisitions pre-tax profits  Stable senior managem

  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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