Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Q4 2021 Earnings Presentation
22 slides from Consumer Portfolio Services's earnings presentation, Feb 15, 2022
Slide 1: Consumer Portfolio Services, Inc. Investor Presentation
Consumer Portfolio Services, Inc. Nasdaq: CPSS Investor Presentation As of December 31, 2021
Slide 2: Consumer finance company focused on sub-prime auto market
Consumer finance company focused on sub-prime auto Approximately 740 market employees as of December 31, 2021 Established in 1991. IPO in $1.1 billion contract 1992 originations in 2021; $742.6 million contract Through December 31, 2021, originations in 2020; approximately $18.1 billion in
Slide 3: Pretax Income, Managed Portfolio, New Contract Purchases, Return on Assets
Pretax Income ($ in mm) Total Managed Portfolio ($ in mm) $25.0 $20.0 $2,500 $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) 5.0% $350 $300 4.0% $250 3.0% $200 2.0% $150 1.0% $100 $50 0.0% (1) Pre-tax income as a percentage of average
Slide 4: CPS Systems: Originations, Servicing and Collections Workflow
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 and twelve months
Quarter Ended Twelve Months Ended December 31, December 31, December 31, December 31, 2021 2020 2020 2020 Interest Income 12.4% 12.3% 12.4% 12.7% Mark to Fin. Recs. at FV -- (1.2%) (0.2%) (1.3%) Servicing and Other Income 0.3% 0.2% 0.3% 0.2% Interest Expense (3.1%) (4.2%) (3.5%) (4.4%) Net Interest
Slide 6: U.S. Market for Auto Finance and Other National Industry Players
U.S Market for Auto Finance Other National Industry Players $1.3 trillion auto loans outstanding at Santander Consumer USA Q3 2021 (1) Exeter Finance Corp Approximately 27% of auto financings in Q3 2021 were below Global Lending Services prime (FICO < 661) (1) Westlake Financial Histor
Slide 7: Contracts purchased in 2021 - $1.15 billion
Contracts purchased in the year ended December 31, 2021 - $1.15 billion Contracts purchased from dealers in 47 states Diverse geographic market penetration Originating Dealer Type 3% 2% Independent, 14% 10% 12% Factory Franchised, 86% 3% 6% 5%
Slide 8: Contract originations since inception ($ in millions)
Since inception through December 31, 2021, the Company has originated approximately $18.1 billion in contracts 2021 volumes exceed pre-pandemic year of 2019 $1,400 $1,146 $1,200 $1,000 ($ in millions) $800 $600 $400 $200 $0
Slide 9: Total managed portfolio ($ in millions)
$2,500 $2,209 $2,000 $1,500 ($ in millions) $1,000 $500 $0
Slide 10: Primarily late model, pre-owned vehicles
28% Model Years of Current Year Production 24% Primarily late model, pre- owned vehicles 20% 18% New 16% 10% Certified Pre-Owned 72% Pre-owned 12% 44% Domestic 8% 56% Imports 4% 0% (1) Under the CPS programs for contracts purchased for the year ended December 31, 2021
Slide 11: Proprietary scoring models and risk-adjusted pricing across sub-prime 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 11.11% $26,380 $84,2
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 10 years • Average household income $61,959 per year • Percentage of homeowners 19% Contract: • Average amount financed $21,194 • Weighted average monthly payment $547 • Weight
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
$200 million in interim funding capacity through two credit facilities $100 million with Citibank; revolves to December 2022, due in December 2023 $100 million with Ares; revolves to January 24, due in January 2028 Regular issuer of asset-backed securities, providing long-term matched fundin
Slide 15: Average quarterly vintage cumulative net losses
Average of quarterly vintage cumulative net losses as of December 31, 2021 Improved credit performance of more recent vintages 2016 20.00% 2015 18.00% 2016 2015 16.00% 2017 2017 2018 14.00% 2019 2020 12.00% 2018 10.00% 8.00% Since 2016, each succussive annual vintage is trending 6.00% to lower c
Slide 16: Balance sheet ($ in millions)
December December December December ($ in millions) 31, 2021 31, 2020 31, 2019 31, 2018 Assets Cash $ 29.9 $ 13.5 $ 5.3 $ 12.8 Restricted cash 146.6 130.7 135.5 117.3 Finance receivables, net of allowance 176.2 411.3 885.9 1,454.7 Finance receivables, measured at fair value 1,749.1 1,523.7 1,444.0 8
Slide 17: Income statement ($ in millions)
Three Months Ended Years Ended December December December 31, December 31, December ($ in millions) 31, 2021 31, 2020 2021 2020 31, 2019 Revenues Interest income $ 67.7 $ 67.7 $ 266.3 $ 295.0 $ 337.1 Mark to finance receivables at fair value - (6.5) (4.4) (29.5) - Other income 1.7 1.2 6.0 5.7 8.7 69
Slide 18: Auto contract purchases, managed portfolio and key metrics
Three Months Ended Years Ended December December December December December ($ in millions) 31, 2021 31, 2020 31, 2021 31, 2020 31, 2019 Auto contract purchases $ 328.0 $ 166.7 $ 1,146.3 $ 742.6 $ 1,002.8 Total managed portfolio $ 2,209.4 $ 2,175.0 $ 2,209.4 $ 2,175.0 $ 2,416.0 Risk-adjusted margin
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-one consecutive quarters of pre-tax profits Stable senior management team averaging 20 years of Attract
Slide 20: 2020 pandemic impacts and 2021 recovery
Originations volumes recovering in 2021 after being down significantly in 2020. Each quarter of 2020 results include provisions for credit losses and mark downs to fair value receivables due to pandemic. April 2020 furlough / layoff of 11% of workforce. Approximately 35% of workforce transit
Slide 21: 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 www.sec.gov/edgar/searchedgar/companysearch
Slide 22: 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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