Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Investor Presentation (November 2020)
23 slides from Consumer Portfolio Services's investor presentation, Nov 5, 2020
Slide 1: Consumer Portfolio Services, Inc. Investor Presentation
Consumer Portfolio Services, Inc. Nasdaq: CPSS Investor Presentation As of September 30, 2020
Slide 2: Company overview
» Consumer finance company focused on sub - prime auto market » Established in 1991. IPO in 1992 » Through September 30, 2020, approximately $16.8 billion in contracts originated » From 2002 – 2011, four mergers and acquisitions aggregating $822.3 million » Headquarters in Las Vegas, Nevada. Branche
Slide 3: Pretax income, purchases, managed portfolio, return on assets
$0.00 $2.00 $4.00 $6.00 Pretax Income ($ in mm ) $50 $100 $150 $200 $250 $300 New Contract Purchases ($ in mm) $1,000 $1,500 $2,000 $2,500 Total Managed Portfolio ($ in mm) 0.0% 1.0% Return on Managed Assets (1)
Slide 4: CPS Systems proprietary applications
CPS Systems Proprietary Applications Credit Decisioning AOA / DOA Underwriting Servicing and Collections System Customer Contact Workflow Management Receivables Accounting System Credit Application Servicing Activities Five Branch Locations Decline or Approval / Pricing Credit Bureaus Underwriting P
Slide 5: Results influenced by fair value accounting, CECL and the pandemic
» Results influenced by transition to fair value accounting, early adoption of CECL and the pandemic (1) As a percentage of the average managed portfolio. Percentages may not add due to rounding. September 30, 2020 September 30, 2019 December 31, 2019 December 31, 2018 Interest Income 12.8% 13.9% 14
Slide 6: U.S. market for auto finance
(1) According to Experian Automotive Other National Industry Players » Santander Consumer USA » Exeter Finance Corp » Global Lending Services » Westlake Financial » Credit Acceptance Corp. » GM Financial – Americredit » Capital One » Wells Fargo U.S Market for Auto Finance » $1.2 trillion auto loans
Slide 7: Contracts purchased from dealers across the U.S.
» Contracts purchased from dealers in 46 states across the U.S. » As of September 30, 2020 had 58 employee marketing representatives Contracts Purchased Nine Months Ended September 30, 2020 $575.9 million Factory Franchised , 89% Independent , 11% 13.9% 2.1% 2.8% 5.4% 11.8% 5.8%
Slide 8: Contracts originated since inception
» Since inception through September 30, 2020 the Company has originated approximately $16.8 billion in contracts $576 $0 $200 $400 $600 $800 $1,000 $1,200 ($ in millions) Through Q3 2020
Slide 9: Total managed portfolio
$2,250 $0 $500 $1,000 $1,500 $2,000 $2,500 ($ in millions)
Slide 10: Vehicle mix of contracts purchased
(1) Under the CPS programs for contracts purchased during nine months ended September 30, 2020 » 23% New » 8% Certified Pre - Owned » 69% Pre - owned » 45% Domestic » 55% Imports Primarily late model, pre - owned vehicles 0% 4% 8% 12% 16% 20% 24% 28% Model Years of Current Year Production
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 (1) Under the CPS programs for contracts purchased during nine months ended September 30, 2020. (2) Contract APR as adjusted for fees charged (or paid) t
Slide 12: Borrower and contract characteristics
(1) Under the CPS programs for contracts purchased during nine months ended September 30, 2020. • Average age 42 years • Average time in job 5 years • Average time in residence 6 years • Average credit history 11 years • Average household income $58,290 per year • Percentage of homeowners 19% Borrow
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 » Decision inputs inclu
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 November 2020, due in September 2021 » $100 million with Ares / Credit - Suisse; revolves to November 2021, due
Slide 15: Quarterly vintage cumulative net losses
» Average of quarterly vintage cumulative net losses as of September 30, 2020 » Improved credit performance of more recent vintages 2017 2018 2019 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57
Slide 16: Quarterly vintage cumulative net losses, first 24 months
» Average of quarterly vintage cumulative net losses as of September 30, 2020 » Improved credit performance in recent vintages 2017 2018 2019 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2006 2007 2013 2014 2015 2016 2017 2018 2019
Slide 17: Balance sheet
(1) Numbers may not add due to rounding. ($ in millions) September 30, 2020 December 31, 2019 December 31, 2018 December 31, 2017 Assets Cash 11.3$ 5.3$ 12.8$ 12.7$ Restricted cash 200.9 135.5 117.3 112.0 Finance receivables, net of allowance 483.1 885.9 1,454.7 2,195.8 Finance receivables, measured
Slide 18: Income statement
(1) Numbers may not add due to rounding. (2) Includes $8.8 million tax benefit in 2020. ($ in millions) September 30, 2020 September 30, 2019 December 31, 2019 December 31, 2018 December 31, 2017 Revenues Interest income 72.6$ 82.9$ 337.1$ 380.3$ 424.2$ Mark to finance receivables at fair value (3.2
Slide 19: Operating and credit metrics
(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) September 30, 2020 September 30, 2019 December 31, 201
Slide 20: Investment highlights
» CPS has weathered multiple industry cycles to remain one of the few independent public auto finance companies » Twenty - nine consecutive quarters of pre - tax profits » Attractive industry fundamentals with fewer large competitors than last cycle » Consistent credit performance » Growing portfoli
Slide 21: Pandemic impact on 2020 results
» Originations volumes down significantly in Q3 and Q2 2020 compared to prior year periods and Q1 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
Slide 22: Notice to investors
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.h
Slide 23: 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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