Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Investor Presentation (May 2006)
35 slides from Consumer Portfolio Services's investor presentation, May 25, 2006
Slide 1: Consumer Portfolio Services, Inc.
Slide 2: Cautionary Statement
Cautionary Statement Information included in the following 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
Slide 3: Reference to Public Reports
Reference to Public Reports 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 adh Page (http:/Avww.sec. gov
Slide 4: Consumer Portfolio Services, Inc.
Consumer Portfolio Services, Inc. Y Specialty finance company focused on sub- prime auto market Y Established in 1991; IPO in 1992 Y Through March 31, 2006, approximately $6.3 billion in contract purchases from auto dealers ao)
Slide 5: Consumer Portfolio Services, Inc.
Consumer Portfolio Services, Inc. v As of March 31, 2006, managed portfolio of approximately $1.2 billion Y Irvine, California headquarters and servicing branches in Virginia, Florida and I1linois v Approximately 730 employees > @
Slide 6: U.S. Auto Finance Market
U.S. Auto Finance Market vy 2004 US. auto financing = $392 billion® = $207 billion new; $185 billion used v¥ Company estimates 20%, or $78 billion is “sub- prime” v Historically fragmented market with few long-term dominant players v Significant barriers to entry é iS) (1) According to CNW Marketing
Slide 7: Major Market Participants
Major Market Participants v AmeriCredit v Wells Fargo v Capital One v Manufacturers’ Captives v Triad v Regional Financial Inst. v¥ HSBC/Household VY Regional Independents v CitiFinancial
Slide 8: The CPS Landscape
Slide 9: The CPS Landscape
The CPS Landscape Contract Purchases in 2005 of WSs Primarily factory rental Car dsvedenis™ franchised dealers Gig Be j iS) (1) Includes contract purchases of TFC, a subsidiary that targets enlisted members of U.. Armed Forces
Slide 10: The CPS Landscape
The CPS Landscape CPS’s risk-adjusted pricing results in program offerings covering a wide band of the credit spectrum New contract acquisitions in 2005 roe [MELE] Guteaet | samo Preferred 12.4 20,228 604 Super Alpha 15.3 18,981 517 Alpha Plus 16.9 17,070 524 Alpha 19.1) 14,613 SLL Standard 23.0 12,
Slide 11: The CPS Landscape
The CPS Landscape Produas 49% A rf = : = = : Peed Sper ABI Phe Mecry Dena if iS) New contract acquisitions in 2005
Slide 12: The CPS Landscape
v Primarily late model pre-owned vehicles 12 © The CPS Landscape 16% New 84% Pre-owned 30% 25% 20% 15% 10% 5% 0% Securitization 2006-A Principal Balances by Model Year 2006 2005 2004 2003 2002 2001Earlier
Slide 13: The CPS Landscape
¥ Affordable, basic transportation vehicles ¥ Average vehicle sales price of $15,150 y Average monthly payment of $385 for 61 months 13 © The CPS Landscape HYUN 3% TOYO % MITS 4% SUZU 4% CHRY 5% NISs 5% PONT 6% New contract acquisitions in 2005
Slide 14: The CPS Landscape
The CPS Landscape An emphasis on stable obligors with the ability to rehabilitate their credit profile Average age 38 years Average time in job 5 years Average time in residence 5 years Average household income $39,596 per year Percentage of homeowners 17% e iS) New contract acquisitions in 2005
Slide 15: Contract Originations
Contract Originations yY Centralized contract originations at Irvine HQ = Maximizes control and efficiencies v Proprietary auto-decisioning system = Makes initial credit decision on approximately 90% of incoming applications = Enhances dealer service by shortening response time v Pre-funding verific
Slide 16: Contract Originations
Contract Originations Infrastructure to Support Significant Originations Volumes Since inception through March 2006 the Company has originated over $6.3 billion 1,200 1,000 2006 originations 800 through March Annual Volumes @ in millions) 400 | 600 , , | j ¥ 200 - i [ te LLL \ Sb > ok 6 SNMP IPS SI
Slide 17: Contract Servicing infrastructure
and staffii se and paperless collection system id balancing among
Slide 18: Contract Servicing
Contract Servicing v Early contact on past due accounts; commencing sixth day after due date Y Workloads allocated based on specialization Y Front end workload supplemented by automated intelligent predictive dialer 18 ©
Slide 19: Servicing supervision structure
Supervision |[ Supervision || Supervision || Supervision |[ Supervision || Supervision Predictive || Front Back |} Military |] Insurance || Skip Dialer End End Claims Tracing 0-29days || 30-59days || 60-119 days Supervision || Supervision || Supervision | Supervision |[ Supervision Legal Bankruptcy
Slide 20: Successful Acquisitions
20 Successful Acquisitions Date and Entity Purchase Price Comments ¥ $380 million portfolio MEN Financial March 2002 ee : oe Sinan ¥ $174 million negative rp. .2 million goodwill ; ¥ $150 million portfolio ‘The Finance May 2003 oe : paces Osean CPS maintains presence in BEY etait TEC military niche
Slide 21: Portfolio Financing
Portfolio Financing ¥ Two short-term warehouse facilities aggregating $350 million ¥ Quarterly “AAA” rated asset-backed securities provide long- term matched funding ¥ Use of multiple bond insurers enhances liquidity and structural flexibility ¥ Sale of subordinated tranches increases liquidity or ©
Slide 22: Portfolio Financing
Inancing Portfolio F The Company has been a regular issuer af rated ABS since 1994 Through Q1 2006: 40 deals aggregating over $4.3 billion m Outstanding Balance $ in millions = Original Balance 350 300 250 200 150 100 n ©
Slide 23: Other Financing
Other Financing (8 in thousands) Outstanding at March 31, 2006 Source Terms Comments : 8.36% ee, B related ABS u Senior Debt — 11.75% $40,000 Affiliate of O | Reo aaa 2006 maturities since 1998 Levine Leichtman aah Sub, Debt — Wid ne 8.75% es ' effective Renewable Notes | Wd orig term 31 ay months 2
Slide 24: Total Managed Portfolio
Total Managed Portfolio Steady Growth over Last Five Years ($ in millions) $1,240 mm. Deo ism. slam. sipm. $595 mm ema ; | : ‘ r a | a Dee Dect Deets 06 Over 90% is Now On Balance Sheet 4 ©
Slide 25: Total Managed Portfolio
Total Managed Portfolio Composition by Source ($ in millions) $1,240 mm six a0 : Y) —_/, ‘sip i i < “satay ie en om Br tes son 0 0 | yi iy <¢ 06 Primary Driver of Growth is CPS “Organic” Contract Purchases 25 ©
Slide 26: Asset Performance
Asset Performance Receivables and Repo Inventory 30 Plus Days Past Due Three quarter rolling averages 10.00% 9.00% 8.00% EN 7.00% [ ee [Xa 6.00% / a 5.00% 4.00% +—— 3.00% +—— 2.00%+—— __tTFC 1.00% 0.00% HPI SS HS GY GOSS CS S oe UT SEO LO TOE sy Consistent Performance and Positive Trends GS) “MEN tr
Slide 27: Asset Performance
14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% i iS) s Asset Performance Average Annual Net Credit Losses Consistent Performance and Positive Trends ce rg MEN THC Za t MEN recoveries now exceed incremental losse: a “ Through sss ss FS F F © Q1 2006
Slide 28: Asset Performance
Asset Performance Average ABS Pool Cumulative Net Credit Losses as of March 31, 2006 Consistent Performance and Positive Trends 14.00% —1997 12.00% — 1998 — —2001 10.00% —2002 —2003 8.00% 2004 2005 6.00% 4.00% h ne __ABS pools from 2003 onward i exhibit substantially better performance. 0.00% +. eS
Slide 29: Asset Performance
Asset Performance Auction Values for Repossession Sales Have Steadily Improved (1) ———— 30% 50% $$ —* CPS Portfolio 10% |——— 0% SSS SSS SPS F F H q@ °* LP SILL EPO L 8 29 (1) Net liquidation proceeds a percentage of the net balance at the time of sale of the vehicle
Slide 30: Asset Performance
Asset Performance Repossession Sales for CPS Portfolio in Q1 2006 Yeas fel efficient vehicles comprised less than 10% of all vehicles sold ¥ Full-size SUV's and trucks sold for 54% of contract balance ws. 47% for other vehicles 30 © B% 2% 2% 5% 36% = Compact Car = Full-size Car = Full-size SUV. Full
Slide 31: Summary Balance Sheets
Summary Balance Sheets (8 in thousands) March 31, December 31, December 31 2006 2005 2004 Assets Cash $ 25,504 $$ (17,789 $14,366 Restricted Cash 212,428 157,662 125,113 Finance receivables, net of allowance 1,050,825 913,576 550,191 Residual interest in securitizations 22,608 25,220 50,430 Other As
Slide 32: Summary Statements of Operations
Summary Statements of Operations (8 in thousands) ‘Three Months Ended Year Ended March 31, March31, December 31, December 31, 2006 2005 2005 2004 Reveres Interest income $ 54597 $ 36,172 $171,834 $105,818 Servicing fees 1,005 2,264 6,647 12,480 Other income 2,492 3,397 15,216 14,304 53,024 41,833 19
Slide 33: Investment Merits
Investment Merits ¥ Market participant since 1991; CPS has weathered industry turbulence to remain one of the few independent public auto finance companies ¥ Attractive industry fundamentals ¥ Disciplined approach to credit quality and servicing ¥ Demonstrated growth in new contract acquisitions and
Slide 34: Investment Merits
Investment Merits ¥ Improving asset performance ¥ Recurring revenue model and sound quality of earnings ¥ Opportunistic, successful acquisitions ¥ Stable senior management — President, Senior Vice Presidents and Vice Presidents average 11 years of service with the Company 34 ©
Slide 35: Consumer Portfolio Services, Inc.
Consumer Portfolio Services — Investor Presentation (May 2006) on 6ix