Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Investor Presentation (November 2016)
23 slides from Consumer Portfolio Services's investor presentation, Nov 8, 2016
Slide 1: Investor Presentation As of September 30, 2016
Investor Presentation As of September 30, 2016
Slide 2: Company overview
2 » Consumer finance company focused on sub - prime auto market » Established in 1991. IPO in 1992 » Through September 30, 2016, over $13.2 billion in contracts purchased from automobile dealers » From 2002 – 2011, four mergers and acquisitions aggregating $822.3 million » Irvine, California operati
Slide 3: Managed portfolio, pretax income and contract purchases
3 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 $2,200 $2,400 Total Managed Portfolio ($ 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 $350 New Contract Purchases ($ in mm) (1) Equal to annualized pretax income as a percentage of the average m
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. September 30, 2016 September 30, 2015 December 31, 2015 December 31, 2014 Interest In
Slide 6: U.S. Auto Finance Market
U.S. Auto Finance Market $1.1 trillion in auto loans outstanding as of Q2 2016 (2) Approximately 44% of 2016 new auto loans are 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 4
Slide 7: Dealer network and marketing
» Purchasing contracts from dealers in 48 states across the U.S. » As of September 30, 2016 had 87 employee marketing representatives » Primarily factory franchised dealers 7 (1) Under the CPS programs for contracts purchased during first nine months of 2016. 76% 24% Contract Purchases (1) Factory F
Slide 8: New contract purchases
$284 $1,019 $1,283 $297 $9 $113 $552 $764 $945 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 ($ in millions) $874 First Nine Months of 2016 8 » Since inception through September 30, 2016 the Company has purchased over $13.3 billion in contracts » New contract purchases have ramped up significantly sin
Slide 9: Total managed portfolio
$0 $500 $1,000 $1,500 $2,000 $2,500 ($ in millions) $2,292 $2,156 $1,664 $1,195 $756 $795 $898 $1,231 $1,644 $2,031 9 » Decline through 2010 was the result of the financial crisis
Slide 10: Vehicle mix of contract purchases
0% 4% 8% 12% 16% 20% 24% Model Years of Current Year Production 10 • 25% New • 75% Pre - owned • 40% Domestic • 60% Imports Primarily late model, pre - owned vehicles (1) Under the CPS programs for contracts purchased during first nine months of 2016.
Slide 11: Credit programs and risk-adjusted pricing
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 the first nine months of 2016. (2) Contract APR as adjusted for fees charged (or paid) to dealer. Progra
Slide 12: Yields and credit metrics by quarter
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 loa
Slide 13: Borrower and contract profile
• Average age 42 years • Average time in job 6 years • Average time in residence 6 years • Average credit history 11 years • Average household income $51,300 per year • Percentage of homeowners 23% Borrower : • Average amount financed $16,406 • Weighted average monthly payment $456 • 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 and securitizations
» $300 million in interim funding capacity through three credit facilities » $100 million with Fortress; revolves to April 2017, due in April 2019 » $100 million with Citibank; revolves to August 2018, due in August 2019 » $100 million with Ares / Credit - Suisse; revolves to November 2017, due in N
Slide 16: Vintage cumulative net losses
16 » Average of quarterly vintage cumulative net losses as of September 30, 2016 » Recent pool performance in line with business model economics 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 5
Slide 17: Vintage cumulative net losses
17 » Average of quarterly vintage cumulative net losses as of September 30, 2016 » Recent pool performance in line with business model economics 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
Slide 18: Balance sheet
($ in millions) September 30, 2016 December 31, 2015 December 31, 2014 December 31, 2013 Assets Cash 11.5$ 19.3$ 17.9$ 22.1$ Restricted cash 116.4 106.1 175.4 132.3 Finance receivables, net of allowance 2,160.3 1,909.5 1,534.5 1,115.4 Finance receivables, measured at fair value - - 1.7 14.5 Residual
Slide 19: Income statement
19 ($ in millions) September 30, 2016 September 30, 2015 December 31, 2015 December 31, 2014 December 31, 2013 Revenues . . . Interest income 105.4$ 90.6$ 350.0$ 286.7$ 231.3$ Servicing fees - 0.1 0.3 1.4 3.1 Other income 3.1 3.3 13.4 12.1 10.4 Gain on cancellation of debt - - - 11.0 108.5 94.0 363.
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) September 30, 2016 September 30, 2015 December 31,
Slide 21: Investment highlights
» CPS has weathered two industry cycles to remain one of the few independent public auto finance companies » Twenty consecutive quarters of profitability » Attractive industry fundamentals with fewer large competitors than last cycle » Consistent credit performance 21 » Growing portfolio enhances op
Slide 22: Information included in the preceding slides is believed to be accurate, but is not
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
Slide 23: 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/searchedg
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