Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Investor Presentation (March 2016)
22 slides from Consumer Portfolio Services's investor presentation, Mar 18, 2016
Slide 1: Investor Presentation As of December 31, 2015
Investor Presentation As of December 31, 2015
Slide 2: Consumer finance company focused on sub-prime auto market
2 » Consumer finance company focused on sub - prime auto market » Established in 1991. IPO in 1992 » Through December 31, 2015, over $12.4 billion in contracts purchased from automobile dealers » From 2002 – 2011, four mergers and acquisitions aggregating $822.3 million » Irvine, California operatin
Slide 3: Managed portfolio, pretax income and contract purchases
3 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 Total Managed Portfolio ($ in mm) $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 Pretax Income ($ 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
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 » 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. December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014 Interest Inco
Slide 6: U.S. Auto Finance Market
U.S. Auto Finance Market $1 trillion in auto loans outstanding as of Q4 2015 (2) Approximately 39% is below “prime” (credit score less than 660) (1) Approximately $140 billion in new subprime auto loans in 2015 (2) Historically fragmented market – top 20 players represent 49% of outstandings (1) Few
Slide 7: Dealer relationships and marketing representatives
» Purchasing contracts from dealers in 48 states across the U.S. » As of December 31, 2015 had 109 employee marketing representatives » Primarily factory franchised dealers 7 (1) Under the CPS programs for contracts purchased during 2015. 72% 28% Contract Purchases (1) Factory Franchised Independent
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) $1,061 8 » Since inception through December 31, 2015 the Company has purchased over $12.4 billion in contracts » New contract purchases have ramped up significantly since financial crisis
Slide 9: Total managed portfolio
$0 $500 $1,000 $1,500 $2,000 $2,500 ($ in millions) $2,031 $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 model year and vehicle type
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Model Year 10 • 28% New • 72% Pre - owned • 40% Domestic • 60% Imports Primarily late model, pre - owned vehicles (1) Under the CPS programs for contracts purchased during 2015.
Slide 11: CPS 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 2015. (2) Contract APR as adjusted for fees charged (or paid) to dealer. Program (1) Avg. Yield (2) Avg.
Slide 12: Yields and credit metrics stronger than 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 $54,340 per year • Percentage of homeowners 25% Borrower : • Average amount financed $16,537 • Weighted average monthly payment $476 • 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: credit facilities and securitizations
» $300 million in interim funding capacity through three c redit 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 » $100 million with Ares / Credit - Suisse; revolves to November 2017, due in
Slide 16: Cumulative net losses by vintage
16 » Average of quarterly vintage cumulative net losses as of December 31, 2015 » Recent pool performance in line with business model economics 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59
Slide 17: Balance sheet
($ in millions) December 31, 2015 December 31, 2014 December 31, 2013 December 31, 2012 Assets Cash 19.3$ 17.9$ 22.1$ 13.0$ Restricted cash 106.0 175.4 132.3 104.4 Finance receivables, net of allowance 1,909.5 1,534.5 1,115.4 744.8 Finance receivables, measured at fair value - 1.7 14.5 59.7 Residual
Slide 18: Income statement
18 ($ in millions) December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014 December 31, 2013 Revenues . . . Interest income 92.1$ 79.6$ 350.0$ 286.7$ 231.3$ Servicing fees - 0.2 0.3 1.4 3.1 Other income 3.2 3.6 13.4 12.1 10.4 Gain on cancellation of debt - - - 11.0 95.3 83.4 363.7 30
Slide 19: Key operating 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) December 31, 2015 December 31, 2014 December 31, 20
Slide 20: Investment highlights
» CPS has weathered two industry cycles to remain one of the few independent public auto finance companies » Sixteen consecutive quarters of improving profitability » Attractive industry fundamentals with fewer large competitors than last cycle » Consistent credit performance 20 » Growing portfolio
Slide 21: -Any person considering an investment in securities issued by CPS is urged to review
-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/searched
Slide 22: - Information included in the preceding slides is believed to be accurate, but is
- 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,
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