Consumer Portfolio Services, Inc. · NASDAQ:CPSS
Consumer Portfolio Services — Investor Presentation (March 2017)
23 slides from Consumer Portfolio Services's investor presentation, Mar 16, 2017
Slide 1: Investor Presentation As of December 31, 2016
Investor Presentation As of December 31, 2016
Slide 2: Company overview
2 » Consumer finance company focused on sub - prime auto market » Established in 1991. IPO in 1992 » Through December 31, 2016, approximately $13.5 billion in contracts originated » From 2002 – 2011, four mergers and acquisitions aggregating $822.3 million » Irvine, California operating headquarters
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 proprietary systems and 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: Operating leverage offsetting lower contract APRs
5 » Improvements in operating leverage offsetting lower contract APRs. (1) As a percentage of the average managed portfolio. Percentages may not add due to rounding. December 31, 2016 December 31, 2015 December 31, 2016 December 31, 2015 Interest Income 18.2% 18.4% 18.4% 18.9% Servicing and Other In
Slide 6: U.S. Auto Finance Market
U.S. Auto Finance Market $1.1 trillion in auto loans outstanding as of Q4 2016 (1) Approximately 44% of Q4 2016 auto loans originated were below “prime” (credit score less than 660) (1) Approximately $140 billion in new subprime auto loans in 2016 (2) Historically fragmented market – top 20 players
Slide 7: Dealer relationships and contract purchases
» Purchasing contracts from dealers in 48 states across the U.S. » As of December 31, 2016 had 77 employee marketing representatives » Primarily factory franchised dealers 7 (1) Under the CPS programs for contracts purchased during 2016. 76% 24% Contract Purchases (1) Factory Franchised Independents
Slide 8: New contract purchases ramped up since financial crisis
$284 $1,019 $1,283 $297 $9 $113 $552 $764 $945 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 ($ in millions) $1,089 8 » Since inception through December 21, 2016 the Company has originated approximately $13.5 billion in contracts » New contract purchases have ramped up significantly since financial cr
Slide 9: Total managed portfolio
$0 $500 $1,000 $1,500 $2,000 $2,500 ($ in millions) $2,308 $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 contracts purchased
0% 4% 8% 12% 16% 20% 24% Model Years of Current Year Production 10 • 24% New • 76% Pre - owned • 40% Domestic • 60% Imports Primarily late model, pre - owned vehicles (1) Under the CPS programs for contracts purchased during 2016.
Slide 11: Program offerings across the credit spectrum
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 2016. (2) Contract APR as adjusted for fees charged (or paid) to dealer. Program (1) Avg. Yield (2) Avg.
Slide 12: Yields and credit metrics stronger than last cycle
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 7 years • Average credit history 11 years • Average household income $51,324 per year • Percentage of homeowners 23% Borrower : • Average amount financed $16,366 • Weighted average monthly payment $472 • 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: credit facilities 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 » $100 million with Ares / Credit - Suisse; revolves to November 2017, due in N
Slide 16: Quarterly vintage cumulative net losses
16 » Average of quarterly vintage cumulative net losses as of December 31, 2016 » Recent pool performance in line with business model economics 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59
Slide 17: Quarterly vintage cumulative net losses
17 » Average of quarterly vintage cumulative net losses as of December 31, 2016 » Recent pool performance in line with business model economics 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 3
Slide 18: Balance sheet
($ in millions) December 31, 2016 December 31, 2015 December 31, 2014 December 31, 2013 Assets Cash 13.9$ 19.3$ 17.9$ 22.1$ Restricted cash 112.8 106.1 175.4 132.3 Finance receivables, net of allowance 2,172.4 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) December 31, 2016 December 31, 2015 December 31, 2016 December 31, 2015 December 31, 2014 Revenues . . . . Interest income 105.2$ 92.1$ 409.0$ 350.0$ 286.7$ Other income 2.9 3.2 13.3 13.7 13.5 108.1 95.3 422.3 363.7 300.2 Expenses Employee costs 18.0 16.7 65.5 59.6 50.1 General an
Slide 20: Selected operating and credit 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) December 31, 2016 December 31, 2015 December 31, 20
Slide 21: Investment highlights
» CPS has weathered two industry cycles to remain one of the few independent public auto finance companies » Twenty - one consecutive quarters of profitability » Attractive industry fundamentals with fewer large competitors than last cycle » Consistent credit performance 21 » Growing portfolio enhan
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 (http : //www . sec . gov/edgar/searche
Slide 23: Forward-looking statements disclaimer
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,
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