Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Investor Presentation (July 2015)
22 slides from Consumer Portfolio Services's investor presentation, Jul 30, 2015
Slide 1: Investor Presentation As of June 30, 2015
Investor Presentation As of June 30, 2015
Slide 2: Company overview
2 » Consumer finance company focused on sub - prime auto market » Established in 1991. IPO in 1992 » Through June 30, 2015, over $11.8 billion in contracts purchased from automobile dealers » From 2002 – 2011, four mergers and acquisitions aggregating $822.3 million » Irvine, California operating he
Slide 3: Managed portfolio, pretax income, purchases and return on managed assets
3 $900 $1,100 $1,300 $1,500 $1,700 $1,900 Total Managed Portfolio ($ in mm) $5.00 $7.00 $9.00 $11.00 $13.00 $15.00 Pretax Income ($ 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
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: Returns on managed portfolio
5 » Lower funding costs and improvements in operating leverage offsetting lower contract APRs resulting in steady returns on managed portfolio. (1) As a percentage of the average managed portfolio. Percentages may not add due to rounding. June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 Inter
Slide 6: U.S. Auto Finance Market
U.S. Auto Finance Market $1 trillion in auto loans outstanding as of Q2 2015 (2) Approximately 39% is below “prime” (credit score less than 660) (1) Approximately $140 billion in new subprime auto loans in 2014 (2) Historically fragmented market – top 20 players represent 47% of outstandings (1) Few
Slide 7: Dealer relationships and marketing representatives
» Purchasing contracts from dealers in 48 states across the U.S. » As of June 30, 2015 had 121 employee marketing representatives » Primarily factory franchised dealers 7 (1) Under the CPS programs for contracts purchased during first six months of 2015. 69% 31% Contract Purchases (1) Factory Franch
Slide 8: New contract purchases
$284 $691 $1,019 $1,283 $297 $9 $113 $552 $764 $945 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 ($ in millions) $504 8 » Since inception through June 30, 2015 the Company has purchased over $11.8 billion in contracts » New contract purchases have ramped up significantly since financial crisis First
Slide 9: Total managed portfolio
$0 $500 $1,000 $1,500 $2,000 $2,500 ($ in millions) $1,822 $1,566 $2,156 $1,664 $1,195 $756 $795 $898 $1,231 $1,644 9 » Decline through 2010 was the result of the financial crisis
Slide 10: Contract purchases by vehicle type and model year
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Model Year 10 • 19% New • 81% Pre - owned • 42% Domestic • 58% Imports Primarily late model, pre - owned vehicles (1) Under the CPS programs for contracts purchased during the first six months of 2015.
Slide 11: Program offerings across the credit spectrum
11 » 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 six months of 2015. (2) Contract APR as adjusted for fees charged (or paid) to dealer. Program
Slide 12: Yields and credit metrics versus last cycle
12 » Yields and credit metrics are 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) Wholesale lo
Slide 13: Borrower and contract profile
• Average age 42 years • Average time in job 6 years • Average time in residence 7 years • Average credit history 12 years • Average household income $54,969 per year • Percentage of homeowners 26% Borrower : • Average amount financed $16,237 • Weighted average monthly payment $447 • Weighted averag
Slide 14: 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 15: Funding and securitizations
» $200 million in interim funding capacity through two credit facilities » $100 million with Fortress; revolves to April 2017, due in April 2019 » $100 million with Citibank; revolves to August 2016, due in August 2017 » Regular issuer of asset - backed securities, providing long - term matched fund
Slide 16: Vintage cumulative net losses
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 22.00% Months Seasoned 2002 2003 2004 2005 2006 2007 2008 2010 2011 2012 2013 2014 16 » Average of quarterly vintage cumulative net losses as of June 30, 2015 » 2010 and later vintages in line or better than 2003 - 2005 vintages
Slide 17: Balance sheet
($ in millions) June 30, 2015 December 31, 2014 December 31, 2013 December 31, 2012 Assets Cash 18.4$ 17.9$ 22.1$ 13.0$ Restricted cash 200.1 175.4 132.3 104.4 Finance receivables, net of allowance 1,710.3 1,534.5 1,115.4 744.8 Finance receivables, measured at fair value 0.3 1.7 14.5 59.7 Residual i
Slide 18: Income statement
18 ($ in millions) June 30, 2015 June 30, 2014 December 31, 2014 December 31, 2013 December 31, 2012 Revenues . . . Interest income 84.9$ 68.2$ 286.7$ 231.3$ 175.3$ Servicing fees - 0.4 1.4 3.1 2.3 Other income 3.5 3.0 12.1 10.4 9.6 Gain on cancellation of debt - - - 11.0 - 88.4 71.6 300.2 255.8 187
Slide 19: Key financial and credit metrics
19 (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) June 30, 2015 June 30, 2014 December 31, 2014 Decem
Slide 20: Investment highlights
» CPS has weathered two industry cycles to remain one of the few independent public auto finance companies » Fifteen consecutive quarters of improving profitability » Attractive industry fundamentals with fewer large competitors than last cycle » Credit performance of 2010 and later vintages in line
Slide 21: 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
Slide 22: financing, and exposure to litigation .
financing, and exposure to litigation . 22
Consumer Portfolio Services — Investor Presentation (July 2015) on 6ix