Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Investor Presentation (August 2019)
23 slides from Consumer Portfolio Services's investor presentation, Aug 19, 2019
Slide 1: Investor Presentation As of June 30, 2019
Investor Presentation As of June 30, 2019
Slide 2: Company overview
2 » Consumer finance company focused on sub - prime auto market » Established in 1991. IPO in 1992 » Through June 30, 2019, approximately $15.7 billion in contracts originated » From 2002 – 2011, four mergers and acquisitions aggregating $822.3 million » Irvine, California operating headquarters; Br
Slide 3: Managed portfolio, pretax income, contract purchases and return on assets
3 $1,000 $1,500 $2,000 $2,500 Total Managed Portfolio ($ in mm) $0.00 $2.00 $4.00 $6.00 $8.00 Pretax Income ($ in mm ) $50 $100 $150 $200 $250 $300 New Contract Purchases ($ in mm) (1) Equal to annualized pretax income as a percentage of the average managed portfolio. 0.0% 1.0% Return on Managed Ass
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: Results influenced by transition to fair value accounting
5 » Recent results influenced by transition to fair value accounting effective January 2018 (1) As a percentage of the average managed portfolio. Percentages may not add due to rounding. June 30, 2019 June 30, 2018 December 31, 2018 December 31, 2017 Interest Income 14.1% 16.7% 16.2% 18.2% Servicing
Slide 6: U.S. Auto Finance Market
U.S. Auto Finance Market $1.2 trillion in auto loans outstanding as of Q1 2019 (1) Approximately 37% of Q1 2019 auto loans originated were below “prime” (credit score less than 660) (1) Approximately $604.4 billion in new auto loans in 2018 (2) Historically fragmented market Few dominant long - term
Slide 7: Dealer-sourced contract purchases
» Generally purchasing contracts from dealers in 48 states across the U.S. » As of June 30, 2019 had 76 employee marketing representatives 7 86% 14% Factory Franchised Independent Contracts Purchased Six Months Ended June 30, 2019 8 % 7 % 6 % 2 %
Slide 8: Contract originations
$493 $0 $200 $400 $600 $800 $1,000 $1,200 ($ in millions) 8 » Since inception through June 30, 2019 the Company has originated approximately $15.7 billion in contracts $902
Slide 9: Total managed portfolio
$2,399 $0 $500 $1,000 $1,500 $2,000 $2,500 ($ in millions) 9
Slide 10: Vehicle mix of contracts purchased
0% 4% 8% 12% 16% 20% 24% 28% Model Years of Current Year Production 10 • 23% New • 9% Certified Pre - Owned • 68% Pre - owned • 46% Domestic • 54% Imports Primarily late model, pre - owned vehicles (1) Under the CPS programs for contracts purchased during six months ended June 30, 2019
Slide 11: CPS program offerings across sub-prime credit spectrum
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 six months ended June 2019. (2) Contract APR as adjusted for fees charged (or paid) to deale
Slide 12: Borrower and contract characteristics
• Average age 43 years • Average time in job 5 years • Average time in residence 6 years • Average credit history 11 years • Average household income $56,880 per year • Percentage of homeowners 20% Borrower : • Average amount financed $17,500 • Weighted average monthly payment $464 • 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 2021, due in April 2023 » $100 million with Citibank; revolves to August 2020, due in August 2021 » $100 million with Ares / Credit - Suisse; revolves to November 2019, due in N
Slide 15: Vintage cumulative net losses
15 » Average of quarterly vintage cumulative net losses as of June 30, 2019 » Improved credit performance of more recent vintages 2017 2018 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 2006 2007
Slide 16: Vintage cumulative net losses
16 » Average of quarterly vintage cumulative net losses as of June 30, 2019 » Improved credit performance of more recent vintages 2017 2018 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 200
Slide 17: Pre-tax income and book value per share
- 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 - 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 Pre-
Slide 18: Balance sheet
($ in millions) June 30, 2019 December 31, 2018 December 31, 2017 December 31, 2016 Assets Cash 9.7$ 12.8$ 12.7$ 13.9$ Restricted cash 125.5 117.3 112.0 112.8 Finance receivables, net of allowance 1,147.6 1,454.7 2,195.8 2,172.4 Finance receivables, measured at fair value 1,158.4 821.1 - - Deferred
Slide 19: Income statement
19 ($ in millions) June 30, 2019 June 30, 2018 December 31, 2018 December 31, 2017 December 31, 2016 Revenues Interest income 84.4$ 97.0$ 380.3$ 424.2$ 409.0$ Other income 1.9 2.4 9.5 10.2 13.3 86.3 99.4 389.8 434.4 422.3 Expenses Employee costs 19.7 19.8 79.3 73.0 65.5 General and administrative 15
Slide 20: Key performance 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) June 30, 2019 June 30, 2018 December 31, 2018 Decem
Slide 21: Investment highlights
» CPS has weathered multiple industry cycles to remain one of the few independent public auto finance companies » Thirty consecutive quarters of pre - tax profits » Attractive industry fundamentals with fewer large competitors than last cycle » Consistent credit performance 21 » Growing portfolio en
Slide 22: Review of SEC filings
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
Consumer Portfolio Services — Investor Presentation (August 2019) on 6ix