Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Q3 2022 Earnings Presentation
21 slides from Consumer Portfolio Services's earnings presentation, Nov 10, 2022
Slide 1: Consumer Portfolio Services, Inc. Investor Presentation
Consumer Portfolio Services, Inc. Nasdaq: CPSS Investor Presentation As of September 30, 2022
Slide 2: Consumer finance company focused on sub-prime auto market
➢ Consumer finance company ➢ Approximately 792 focused on sub-prime auto employees as of market September 30, 2022 ➢ $1.4 billion million ➢ Established in 1991. IPO in contract originations in 1992 nine months ended September 2022; $818.3 ➢ Through September 30, 2022, million contract approximately
Slide 3: Pretax Income, Managed Portfolio, New Contract Purchases, Pre-Tax Return
Pretax Income ($ in mm) Total Managed Portfolio ($ in mm) $35.0 $3,000 $30.0 $25.0 $2,500 $20.0 $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) 6.0% $550 $500 5.0% $450 $400 4.0% $350 $300 3.0% $250 2.0% $200 $150 1.0% $100 $50 0.0% (1
Slide 4: CPS Systems: Originations and Servicing Process
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 (percent of average managed portfolio)
Quarter Ended Twelve Months Ended September 30, September 30, December 31, December 31, 2022 2021 2021 2020 Interest Income 12.1% 12.5% 12.4% 12.7% Mark to Fin. Recs. at FV 1.2% -- (0.2%) (1.3%) Servicing and Other Income 0.3% 0.3% 0.3% 0.2% Interest Expense (3.5%) (3.4%) (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 ➢ $1.4 trillion auto loans outstanding at ➢ Santander Consumer USA Q2 2022 (1) ➢ Exeter Finance Corp ➢ Approximately 37% of auto financings in Q2 2022 were below ➢ Global Lending Services prime (FICO < 661) (1) ➢ Westlake Financial ➢ Histor
Slide 7: Contracts purchased in nine months ended September 30, 2022
➢ Contracts purchased in nine months ended September 30, 2022 - $1,426.3 million ➢ Contracts purchased from dealers in 47 states ➢ Diverse geographic market penetration Originating Dealer Type 3% Independent, 23% 9%9% 4% 5% 2% Factory Franchised, 77% 9% 4% 8% 5%
Slide 8: Contract Originations ($ in millions)
➢ Since inception through September 30, 2022, the Company has originated approximately $19.5 billion in contracts ➢ 2022 Q3 volume was 43.3% greater than the volume from the third quarter of 2021 $1,600 $1,426 $1,400 $1,200 ($ in millions) $1,000 $800 $600 $400 $200 $0 Nine Months Ended September 30
Slide 9: Total Managed Portfolio ($ in millions)
$2,687 $2,500 $2,000 $1,500 ($ in millions) $1,000 $500 $0
Slide 10: Primarily late model, pre-owned vehicles
24% Model Years of Current Year Production 20% Primarily late model, pre- owned vehicles 16% ➢ 9% New ➢ 12% Certified Pre-Owned 12% ➢ 79% Pre-owned 8% ➢ 47% Domestic ➢ 53% Imports 4% 0% (1) Under the CPS programs for contracts purchased for the nine months ended September 30, 2022
Slide 11: CPS credit programs: proprietary scoring models and risk-adjusted pricing
➢ 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 Meta 9.17% $26,634 $96,181 9.5
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 $70,550 per year • Percentage of homeowners 23% Contract: • Average amount financed $23,156 • Weighted average monthly payment $572 • 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
➢ $400 million in interim funding capacity through two credit facilities ➢ $200 million with Citibank; revolves to July 2024, due in July 2025 ➢ $200 million with Ares; revolves to January 24, due in January 2028 ➢ Regular issuer of asset-backed securities, providing long-term matched funding ➢ $17.
Slide 15: Quarterly vintage cumulative net losses
➢ Average of quarterly vintage cumulative net losses as of September 30, 2022 ➢ Improved credit performance of more recent vintages 2016 20.00% 2015 18.00% 2016 2017 2015 16.00% 2018 2017 2019 14.00% 2020 2021 12.00% 2018 10.00% 8.00% 6.00% 2019 4.00% 2.00% 2020 2021 0.00% 1 4 7 10 13 16 19 22 25 28
Slide 16: Balance Sheet ($ in millions)
September December December December ($ in millions) 30, 2022 31, 2021 31, 2020 31, 2019 Assets Cash $ 12.9 $ 29.9 $ 13.5 $ 5.3 Restricted cash 159.8 146.6 130.7 135.5 Finance receivables, net of allowance 89.7 176.2 411.3 885.9 Finance receivables, measured at fair value 2,343.3 1,749.1 1,523.7 1,4
Slide 17: Income Statement ($ in millions)
Three Months Ended Years Ended September September December 31, December 31, December ($ in millions) 30, 2022 30, 2021 2021 2020 31, 2019 Revenues Interest income $ 79.8 $ 67.0 $ 266.3 $ 295.0 $ 337.1 Mark to finance receivables at fair value 8.2 - (4.4) (29.5) - Other income 2.3 1.5 6.0 5.7 8.7 90
Slide 18: Key performance metrics
Three Months Ended Years Ended September September December December December ($ in millions) 30, 2022 30, 2021 31, 2021 31, 2020 31, 2019 Auto contract purchases $ 468.2 $ 326.9 $ 1,146.3 $ 742.6 $ 1,002.8 Total managed portfolio $ 2,687.3 $ 2,161.5 $ 2,209.4 $ 2,175.0 $ 2,416.0 Risk-adjusted margi
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-four consecutive quarters of pre-tax profits ➢ Stable senior management team averaging 20 years of ➢ Attrac
Slide 20: Risk factors and SEC filings reference
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 21: 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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