Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Investor Presentation (August 2020)
23 slides from Consumer Portfolio Services's investor presentation, Aug 4, 2020
Slide 1: Consumer Portfolio Services, Inc. Investor Presentation As of June 30, 2020
Consumer Portfolio Services, Inc. Nasdaq: CPSS Investor Presentation As of June 30, 2020
Slide 2: Company overview
» Consumer finance company focused on sub - prime auto market » Established in 1991. IPO in 1992 » Through June 30, 2020, approximately $16.6 billion in contracts originated » From 2002 – 2011, four mergers and acquisitions aggregating $822.3 million » Irvine, California operating headquarters; Bran
Slide 3: Pretax income, purchases, managed portfolio and 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 proprietary systems and applications
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 Pack
Slide 5: Results as a percentage of average managed portfolio
» 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. June 30, 2020 June 30, 2019 December 31, 2019 December 31, 2018 Interest Income 12.8% 14.1% 14.0% 16.2%
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
» Contracts purchased from dealers in 46 states across the U.S. » As of June 30, 2020 had 58 employee marketing representatives Contracts Purchased Six Months Ended June 30, 2020 Factory Franchised , 88% Independent , 12% 13.4% 1.9% 2.9% 5.3% 11.6% 5.9%
Slide 8: Contract originations since inception
» Since inception through June 30, 2020 the Company has originated approximately $16.6 billion in contracts $402 $0 $200 $400 $600 $800 $1,000 $1,200 ($ in millions)
Slide 9: Total managed portfolio
$2,326 $0 $500 $1,000 $1,500 $2,000 $2,500 ($ in millions)
Slide 10: Portfolio composition by vehicle type
(1) Under the CPS programs for contracts purchased during six months ended June 30, 2020 » 21% New » 8% Certified Pre - Owned » 71% Pre - owned » 46% Domestic » 54% Imports Primarily late model, pre - owned vehicles 0% 4% 8% 12% 16% 20% 24% 28% Model Years of Current Year Production
Slide 11: CPS programs 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 (1) Under the CPS programs for contracts purchased during six months ended June 30, 2020. (2) Contract APR as adjusted for fees charged (or paid) to deal
Slide 12: Borrower and contract profile
(1) Under the CPS programs for contracts purchased during three months ended June 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 $57,355 per year • Percentage of homeowners 19% Borrower :
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 and securitization
» $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 September 2020, due in September 2021 » $100 million with Ares / Credit - Suisse; revolves to November 2021, du
Slide 15: Vintage cumulative net losses
» Average of quarterly vintage cumulative net losses as of June 30, 2020 2017 2018 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 2006 2007 2013 2014 2015 2016 2017 2018 2019
Slide 16: Vintage cumulative net losses (early months)
» Average of quarterly vintage cumulative net losses as of June 30, 2020 2017 2018 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2006 2007 2013 2014 2015 2016 2017 2018 2019
Slide 17: Balance sheet
(1) Numbers may not add due to rounding. ($ in millions) June 30, 2020 December 31, 2019 December 31, 2018 December 31, 2017 Assets Cash 7.5$ 5.3$ 12.8$ 12.7$ Restricted cash 139.2 135.5 117.3 112.0 Finance receivables, net of allowance 571.2 885.9 1,454.7 2,195.8 Finance receivables, measured at fa
Slide 18: Income statement
(1) Numbers may not add due to rounding. (2) Includes $8.8 million tax benefit in 2020. ($ in millions) June 30, 2020 June 30, 2019 December 31, 2019 December 31, 2018 December 31, 2017 Revenues Interest income 75.6$ 84.4$ 337.1$ 380.3$ 424.2$ Mark to finance receivables at fair value (9.5) - - - -
Slide 19: Key performance 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) June 30, 2020 June 30, 2019 December 31, 2019 December
Slide 20: Investment highlights
» CPS has weathered multiple industry cycles to remain one of the few independent public auto finance companies » Twenty - eight consecutive quarters of pre - tax profits » Attractive industry fundamentals with fewer large competitors than last cycle » Consistent credit performance » Growing portfol
Slide 21: COVID-19 impact and recent developments
» Originations volumes down significantly in Q2 2020 compared to prior year period and Q1 2020. » First and second quarter results include provisions for credit losses and mark down to fair value receivables due to pandemic. » April 2020 furlough / layoff of 11% of workforce. » Approximately 35% of
Slide 22: Risk factors notice
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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