Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Q2 2023 Earnings Presentation
21 slides from Consumer Portfolio Services's earnings presentation, Aug 3, 2023
Slide 1: Consumer Portfolio Services, Inc. Investor Presentation
Consumer Portfolio Services, Inc. Nasdaq: CPSS Investor Presentation As of June 30, 2023
Slide 2: Consumer finance company focused on sub-prime auto market
Consumer finance company Approximately 803 focused on sub-prime auto employees as of June 30, market 2023 $733.5 million contract Established in 1991. IPO in originations in six months 1992 ended June 2023; $1.9 billion contract Through June 30, 2023, originations in 2022 approximately $20
Slide 3: Pretax Income, Managed Portfolio, Contract Purchases, Return on Assets
Pretax Income ($ 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: Originations and Servicing Process
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, June 30, 2023 June 30, 2022 2022 2021 Interest Income 11.4% 12.3% 12.0% 12.4% Mark to Fin. Recs. at FV - 0.8% 0.6% (0.2%) Servicing and Other Income 0.3% 0.3% 0.4% 0.3% Interest Expense (4.9%) (3.0%) (3.4%) (3.5%) Net Interest Margin 6.8% 1
Slide 6: U.S. Market for Auto Finance and Industry Players
U.S Market for Auto Finance Other National Industry Players $1.4 trillion auto loans outstanding at Santander Consumer USA Q1 2023 (1) Exeter Finance Corp Approximately 34% of auto financings in Q1 2023 were below Global Lending Services prime (FICO < 661) (1) Westlake Financial Histor
Slide 7: Diverse geographic market penetration
Diverse geographic market penetration Contracts purchased from dealers in 47 states Contracts purchased in six months ended June 30, 2023 - $733.5 million Originating Dealer Type 3% Independent, 32% 9%9% 6% 7% 8% Factory Franchised, 68% 6% 5% 6% 6% 3% 4% 7% 5%
Slide 8: Contract originations ($ in millions)
Since inception through June 30, 2023, the Company has originated approximately $20.7 billion in contracts $2,000 $1,800 $1,600 $1,400 ($ in millions) $1,200 $1,000 $800 $734 $600 $400 $200 $0 Six Months Ended June 30, 2023
Slide 9: Total managed portfolio ($ in millions)
$2,910 $3,000 $2,500 $2,000 $1,500 ($ in millions) $1,000 $500 $0
Slide 10: Vehicle mix: late model, pre-owned vehicles
20% Model Years of Current Year Production 16% Primarily late model, pre- owned vehicles 5% New 12% 12% Certified Pre-Owned 83% Pre-owned 8% 47% Domestic 53% Imports 4% 0% (1) Under the CPS programs for contracts purchased for the six months ended June 30, 2023
Slide 11: Proprietary scoring models and risk-adjusted pricing programs
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 14.27% $22,917 $103,107 9
Slide 12: Borrower and contract characteristics
Borrower: • Average age 41 years • Average time in job 5 years • Average time in residence 6 years • Average credit history 9 years • Average household income $71,307 per year • Percentage of homeowners 21% Contract: • Average amount financed $20,638 • Weighted average monthly payment $572 • Weighte
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: credit facilities and securitizations
$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 $1
Slide 15: Average quarterly vintage cumulative net losses
Average of quarterly vintage cumulative net losses as of June 30, 2023 20.00% 2016 18.00% 2017 2018 16.00% 2019 2016 2020 14.00% 2021 2022 12.00% 2017 10.00% 2018 8.00% 6.00% 4.00% 2019 2020 2.00% 2022 2021 0.00% 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61
Slide 16: Balance sheet summary
June 30, December December December ($ in millions) 2023 31, 2022 31, 2021 31, 2020 Assets Cash $ 7.1 $ 13.5 $ 29.9 $ 13.5 Restricted cash 148.1 149.3 146.6 130.7 Finance receivables, net of allowance 46.3 70.6 176.2 411.3 Finance receivables, measured at fair value 2,618.4 2,476.6 1,749.1 1,523.7 D
Slide 17: Income statement summary
Three Months Ended Years Ended June 30, June 30, December 31, December 31, December 31, ($ in millions) 2023 2022 2022 2021 2020 Revenues Interest income $ 82.6 $ 75.7 $ 305.2 $ 266.3 $ 295.0 Mark to finance receivables at fair value - 4.7 15.3 (4.4) (29.5) Other income 2.2 1.6 9.2 6.0 5.7 84.9 82.0
Slide 18: Key performance metrics
Three Months Ended Years Ended June 30, June 30, December December December ($ in millions) 2023 2022 31, 2022 31, 2021 31, 2020 Auto contract purchases $ 318.4 $ 548.1 $ 1,854.4 $ 1,146.3 $ 742.6 Total managed portfolio $ 2,910.3 $ 2,554.9 $ 2,795.4 $ 2,209.4 $ 2,175.0 Risk-adjusted margin (1) $ 58
Slide 19: CPS has weathered multiple industry cycles
CPS has weathered multiple industry cycles to remain one Consistent credit of the few independent performance public auto finance companies Opportunistic, successful acquisitions Forty-seven consecutive quarters of pre-tax profits Stable senior management team averaging 20 years of Attra
Slide 20: Review of SEC materials 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 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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