What changed in this filing

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Item 9A. Controls and Procedures

2024-03-15 compared with 2023-03-15 · 1061 added, 274 removed, 1428 unchanged (48% of the section changed)

42 unchanged sentences

Other Information

Not Applicable.

During the quarter ended December 31, 2023, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule

10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions That Prevent

Not Applicable.

Directors and Executive Officers and Corporate Governance

Information regarding directors of the registrant

is incorporated by reference to the registrant’s definitive proxy statement for its annual meeting of shareholders to be held in

2023 (the " 2023 Proxy Statement " ).

The 2023 Proxy Statement will be filed not later than May 1, 2023.

Information regarding executive officers of the registrant appears

in Part I of this report, and is incorporated herein by reference.

Directors, Executive Officers and Corporate Governance

The names of the Company’s directors, their principal occupations,

and certain other information regarding them are set forth below.

Bradley, Jr ., 64, has been the

Company’s Chief Executive Officer since January 1992, a director since the Company’s formation in March 1991, and was elected

Chairman of the Board of Directors in July 2001.

Prior to that he was President of the Company from March 1991 to December 2022.

April 1989 to November 1990, he served as Chief Operating Officer of Barnard and Company, a private investment firm.

From September 1987

to March 1989, Mr.

was an associate of The Harding Group, a private investment banking firm.

Having been with the Company

since its inception, Mr.

Bradley brings comprehensive knowledge of the Company’s business, structure, history and culture to the

Board and the Chairman position.

Deckoff , 58, has been a director

of the Company since August 2022.

Deckoff has been the Managing Principal of Black Diamond, Capital Management, L.L.C., (“Black

Diamond”), a privately held alternative asset management firm, since its founding in 1995.

Prior to 1995, Mr.

Deckoff was a Senior

Vice President of Kidder, Peabody & Co.

(“Kidder”) and head of its Structured Finance Group.

Prior to joining Kidder,

Deckoff was a Managing Director in the Structured Finance Group at Bear Stearns & Co., Inc.

(“Bear Stearns”) Before

joining Bear Stearns, Mr.

Deckoff worked in the Structured Finance Department of Chemical Securities, Inc.

and the Fixed Income Research

Department at Drexel Burnham Lambert.

In June 2023, Mr.

Deckoff joined the Board of KVH Industries, Inc., a publicly traded company providing

connectivity solutions to primarily maritime customers globally.

Deckoff brings to the Board his extensive financial experience and

Grasso , 77, has been a director

of the Company since October 2019.

Grasso was the founder and majority owner of PFC Corporation (“PFC”) until his retirement

in November 2011, upon sale of PFC’s portfolio of assets to Capstone Realty Advisors.

Over a period of 35 years, PFC Corporation

originated over $1.8 billion of mortgage loans, and issued $1.8 billion of mortgage-backed securities.

He brings to the Board knowledge

and experience bearing in particular on the Company’s strategies for meeting its capital requirements, and broad organizational

and management skills.

Grounds , 68, has been a director

of the Company since December 2021.

From 2008 to 2021, he was the President and COO of Infinity World Development Corp, the principal

business of which was a was a $5 billion investment in the CityCenter mixed use integrated resort property located in Las Vegas, Nevada.

Grounds served on the board of MGM Resorts International, a hospitality and entertainment company, from 2013 to 2021 and of Remark

Holdings Inc., a technology company, from 2013 to 2019.

Grounds joined the Board of PointsBet Holdings Limited, an Australian sports

wagering operator and iGaming provider, in December 2022.

During his career he has held senior executive positions in major real estate

private equity investment, development and construction entities.

Grounds brings to the Board experience as a director of publicly-traded

companies, and skills in investment and general management.

Rayhill , 61, has been a director

of the Company since August 2006.

Rayhill has been a practicing attorney in New York State since 1988 and the managing attorney of

the Law Office of Bian Rayhill for the past five years.

As an experienced advocate, counselor and litigator, Mr.

Rayhill brings legal

knowledge and perspective to the Company’s Board.

Roberts , 86, has been a director

of the Company since its formation in March 1991.

From 1981 until his retirement at the end of 2020, he was the President of Monmouth

Capital Corp., an investment firm that specializes in management buyouts.

Having spent decades in the business of finance, Mr.

brings to the Company’s Board his perspective and judgment regarding means of financing its business.

Walker III , 61, has been a director

of the Company since August 2022.

Walker is Managing Partner and Founder of Vinson Ventures, LLC, (“Vinson Ventures”),

a boutique investment firm focused on building and growing early-stage companies, and the Executive Chairman of IntellPro, a SaaS based

investment management software product for the asset management industry.

Prior to starting Vinson Ventures, from June 2020 to August

Walker served as CEO and Partner at Palm Ventures, LLC, a private investment firm in Greenwich, CT.

From November 2017 to present,

Walker has been a member of the board of directors of Starwood Real Estate Trust, a private real estate investment firm, and has served

as the lead independent director.

From 2018 to present, Mr.

Walker has also served as a senior partner at Jadian Capital, an alternative

investment firm.

From 2008 through 2017, Mr.

Walker was a Managing Partner of Fir Tree Partners (“Fir Tree”), a global alternative

asset management firm.

Prior to joining Fir Tree, Mr.

Walker was a co-founder and Managing Partner of Black Diamond, a privately held

alternative asset management firm.

Walker began his career in investment banking at Kidder and Bear Stearns.

In June 2023, Mr.

joined the board of Emeco, an Australian mining equipment rental business.

Walker has served as a director of Clarus Corporation,

a publicly traded company focused on the outdoor and consumer enthusiast markets, since February 2022.

Walker also became a member

of the advisory board for certain funds managed by Black Diamond in January 2022.

Walker brings to the Board his extensive investment

management experience.

Washer , 62, has been a director

of the Company since June 2007.

He was the President and owner of Clean Fun Promotional Marketing (“Clean Fun”), a promotional

marketing company, from its founding in 1986 through its sale in September 2014.

He continued to act as a consultant to Clean Fun through

August 2017, and is now retired.

Washer contributes to the Board significant organizational and operational management skills, combined

with a wealth of experience in promotion and marketing of services.

Wood , 65, has been a director

of the Company since July 2001.

Wood was President of Carclo Technical Plastics (“Carclo”), a manufacturer of custom injection

moldings, from September 2000 until his retirement in April 2007.

Previously, from 1988 to September 2000, he was the Chief Operating

Officer and co-owner of Carrera Corporation, the predecessor to the business of Carclo Technical Plastics.

As President of Carclo, Mr.

Wood was responsible for the overall operation of that company and for the quality and integrity of its financial statements.

to the Board the knowledge and perspective useful in evaluating the Company’s financial statements, and broad organizational and

management skills.

Executive Officers

The information regarding the Company’s

executive officers set forth in Part I of this report under the caption “Information about Our Executive Officers” is incorporated

herein by reference.

Code of Ethics

The Company has adopted a Code of Ethics for Senior

Financial Officers, which applies to the Company’s chief executive officer, chief financial officer, controller and others.

the Code of Ethics may be obtained at no charge by written request to the Corporate Secretary at the Company’s principal executive offices.

Audit and Other Committees

The Board of Directors (the “Board”)

has established an Audit Committee, a Compensation Committee, and a Nominating Committee.

Each of these three committees operates under

a written charter, adopted by the Board of Directors.

The charters are available on the Company’s website, https://ir.consumerportfolio.com/corporate-governance.

The Board of Directors has concluded that each member of these three committees (every director other than Mr.

Bradley, the Company’s

chief executive officer), is independent in accordance with the director independence standards prescribed by Nasdaq, and has determined

that none of them have a material relationship with the Company that would impair their independence from management or otherwise compromise

the ability to act as an independent director.

The members of the Audit Committee are Mr.

(chairman), Mr.

Washer, and Mr.

The Board has determined that each Audit Committee member is independent as defined

under Nasdaq Listing Rules and Rule 10A-3(b)(1) of the Exchange Act.

The Audit Committee is empowered by the Board

of Directors to review the financial books and records of the Company in consultation with the Company’s accounting and auditing staff

and its independent auditors and to review with the accounting staff and independent auditors any questions that may arise with respect

to accounting and auditing policy and procedure.

The Board of Directors has further determined

Wood has the qualifications and experience necessary to serve as an “audit committee financial expert” as such term

is defined in Item 407 of Regulation S-K promulgated by the SEC.

Wood, as president of Carclo, was responsible for the preparation

and evaluation of the audited financial statements of that company.

Executive Compensation

Incorporated by reference to the 2023 Proxy Statement.

Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Incorporated by reference to the 2023 Proxy Statement.

Certain Relationships and Related Transactions, and Director

Incorporated by reference to the 2023 Proxy Statement.

Principal Accountant Fees and Services

Incorporated by reference to the 2023 Proxy Statement.

Compensation Committee

Interlocks and Insider Participation

The members of the Compensation Committee are

Wood (chairman), Mr.

Grounds, and Mr.

Compensation Committee Report

The Compensation Committee has reviewed and discussed

with the Company’s management the Compensation Discussion and Analysis contained in this report.

Based on such review and discussions

and relying thereon, the Compensation Committee has recommended to the Company’s Board of Directors that the Compensation Discussion and

Analysis set forth below be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

THE COMPENSATION COMMITTEE

Wood (chairman) William

Grounds William B.

Compensation Discussion

2023 Say-on-Pay Advisory Vote Outcome

The Compensation Committee annually considers

the results of the most recent advisory vote by shareholders to approve executive officer compensation.

In the 2023 advisory vote, a majority

of the voted shares (71%) approved of the compensation of our named executive officers.

The Compensation Committee interprets

that vote as a reason to retain the existing design, purposes and structure of our executive compensation programs.

The Compensation

Committee will continue to consider the results from future shareholder advisory votes regarding executive officer compensation in its

future administration of executive compensation.

Compensation Objectives

The Company’s objectives with respect

to compensation are several.

The significant objectives are to cause compensation (i) to be sufficient in total amount to

provide reasonable assurance of retaining key executives, (ii) to include a significant contingent component, so as to provide

strong incentives to meet designated Company objectives, and (iii) to include a significant component tied to the price of the

Common Stock, so as to align management’s incentives with shareholder interests.

The Compensation Committee

(“Committee”) of the Company’s Board of Directors is charged with administering the Company’s compensation

plans to meet those objectives.

To the extent that elements of compensation would not advance such objectives, or would do so less

effectively than would other elements, the Committee seeks to avoid paying compensation in those forms.

Role of the Compensation

Committee and the chief executive officer

Our Board of Directors has authorized the Compensation

Committee, which is composed solely of independent directors, to make all decisions regarding executive compensation, including administration

of our compensation plans.

In that regard, the Compensation Committee:

Reviews and discusses with management the factors underlying our compensation policies and decisions, including overall compensation objectives;

Reviews and approves all company goals and objectives (both financial and non-financial) relevant to the compensation of the chief executive officer;

Evaluates, together with the other independent directors, the performance of the chief executive officer in light of these goals and objectives and that individual’s overall effectiveness;

Fixes and approves each element of the compensation of the chief executive officer;

Reviews the performance evaluations of all other members of executive management (the chief executive officer prepares and presents to the Compensation Committee the performance evaluations of the other executive officers);

Reviews and approves each element of compensation, as well as the terms and conditions of employment, of those other executive officers;

Grants awards under our equity compensation plans and oversees the administration of those plans;

Reviews the costs and structure of our key employee benefit and fringe-benefit plans and programs.

The Compensation Committee is authorized to form subcommittee(s) and to retain experts and consultants to assist in the discharge of its

responsibilities.

To date it has not done so.

The chief executive officer, who attends meetings

of the Compensation Committee by invitation of the Committee’s chairman, assists the Committee in determining the compensation of

our other executive officers by, among other things:

Proposing annual merit increases to the base salaries of the other executive officers;

Establishing annual individual performance objectives for the other executive officers and evaluating their performance against such objectives (the Committee reviews these performance evaluations);

Making recommendations, from time to time, for special stock option and restricted stock grants ( e.g ., for motivational or retention purposes) to other executive officers.

The other executive officers do not have a role

in determining their own compensation, other than to discuss their annual individual performance objectives and results achieved with

the chief executive officer.

Our Overall Approach

The Committee has put into place a compensation

system consisting of three key components:

base salary, an annual cash bonus pursuant to an incentive plan, and long-term equity incentives

in the form of stock options.

The table below provides comparative information

regarding the components of our year 2023 executive compensation program.

We are applying the same elements in our executive compensation

program for the year 2024.

Objectives and Basis

Attract and retain high quality personnel

Targeted to be superior to compensation offered by our competitors

Annual Incentive Bonus

Achieve objectives set annually

Annual bonus amount is set and computed as a percentage of base salary

Actual payout determined by Company and individual performance

Target total cash (base salary + target bonus) designed to be superior to compensation offered by our competitors

Long-Term Incentive

Stock options

Align interests of executives with those of shareholders;

Target long-term incentive award size designed to retain executives through long-term vesting and the potential for wealth accumulation, contingent on benefit to the shareholders

The Committee has from time to time considered

providing additional elements of executive compensation.

It has considered elements such as restricted stock awards, restricted stock

units, compensation contingent on a change in control, defined benefit pension plans, deferred cash compensation, and supplemental retirement

plans (supplemental in the sense that they exceed the limits for tax advantaged treatment).

To date, the Committee has elected not to

pay compensation in such forms, having determined that the Company’s objectives are better met by one or more of the elements of compensation

that it does pay.

Regarding restricted stock and restricted stock

units, the Committee has noted that any form of equity equivalent to or closely tied to common stock does serve to meet the objective

of aligning officers’ personal interest with that of the shareholders generally.

The Committee believes, however, that the objective is

better met by grants of stock options than by grants of share equivalents, because recipients of the grants will face the same degree

of variance in results at a lesser cost to the Company, when option grants are compared to grants of restricted stock units.

unlike restricted stock, option grants will not provide a reward to the holder absent an improvement over time in the Company’s

The Committee has elected not to provide material perquisites as compensation, having determined that cash is a better medium

Regarding compensation that would be payable contingent

on a change in control of the Company, the Committee believes that there are certain legitimate objectives to be met by such contingent

compensation.

As of the date of this report, however, no such contingent compensation plans are in place.

Regarding defined benefit pension

plans, deferred cash compensation and supplemental retirement plans, the Committee believes that the Company’s retention objective is

better met by straight cash payments, whether in the form of base salary or in the form of bonus compensation.

In particular with respect

to plans for deferred compensation, the Committee believes those make sense for the Company and for the recipient only on the basis of

assumptions regarding future tax rates payable by each.

Having no assurance that such assumptions would be correct, the Committee has

chosen not to put into place any special deferred compensation programs for the company’s executive officers.

Those officers do

participate in a company-sponsored tax-deferred savings plan, commonly known as a 401(k) plan, on the same terms available to company

employees generally.

The Committee may in the future revisit its conclusions

as to any of the components discussed above, or may consider other forms of compensation.

The Base Salary Element

With respect to the retention objective, the Committee

considers an executive’s base salary to be the most critical component.

Acting primarily on the basis of recommendations of the chief

executive officer, the Committee adjusts other officers’ base salaries annually, with the adjustment generally consisting of a 2% to 10%

increase from the prior year’s rate.

Where exceptional circumstances apply, such as recruitment of a new executive officer, a promotion

to executive officer status or a special need to retain an individual officer, the chief executive officer may recommend, and the Committee

may approve, a larger increase.

The Company’s general approach in setting the

annual compensation of its named executive officers is to set those officers’ base compensation by reference to their base rates

for the preceding year.

During the year ended December 2023 the Company’s chief executive officer, Charles E.

Bradley, Jr., received $995,000

in base salary.

In setting that rate in the first quarter of 2023, the Committee considered the base salary rate that the Company had

paid in the prior year ($995,000), the desirability of providing an annual increase, the desirability of ensuring retention of the services

of the Company’s incumbent chief executive officer, the Company’s financial performance, and the levels of chief executive officer

compensation prevailing among other financial services companies.

The Committee considered whether to adjust officers’ base compensation

for 2023, and determined not to increase the base rate for the chief executive officer.

The Committee increased the base rate for each

of the other named executive officers in conjunction with each of their respective promotions in late 2022.

The Annual Incentive

Bonus (Executive Management Bonus Plan) Element

To encourage executive officers and key management

personnel to exercise their best efforts and management skills toward causing the Company to meet its overall objective, and toward achieving

designated specific individual objectives, the Company has implemented an Executive Management Bonus Plan, with annual payouts.

the Company’s bonus plan as applied to the year ended December 2023 the Company’s president is eligible to receive a cash bonus

of up to 160% of his base salary and the executive vice presidents are eligible to receive a cash bonus of up to 140% of their base salaries.

The chief executive officer is eligible to receive a cash bonus of up to 600% of his base salary.

The Committee is expected to evaluate

each named executive officer’s performance and determine the amount of the Executive Management Bonus Plan award earned by the end

of June 2024.

The Long-Term Incentive

Compensation Element

The Committee also awards incentive and non-qualified

stock options under the Company’s stock option plans.

Such awards are designed to assist in the retention of key executives and management

personnel and to create an incentive to create shareholder value over a sustained period of time.

The Company believes that stock options

are a valuable tool in compensating and retaining employees.

Because the exercise price of all options granted is equal to or above the

fair market value of the Company’s common stock on the date of grant, the option holders may realize value only if the stock price

appreciates from the price on the date the options were granted.

This design is intended to focus executives on the enhancement of shareholder

value over the long term.

During the year ended December 31, 2023, the Committee

did not grant stock options to the Company’s executive officers.

Other Elements

The Company also maintains certain broad-based

employee benefit plans, such as medical and dental insurance, and a qualified defined contribution retirement savings plan (401(k) plan),

in which executive officers are permitted to participate.

Such officers participate on the same terms as non-executive personnel who meet

applicable eligibility criteria, and are subject to any legal limitations on the amounts that may be contributed or the benefits that

may be payable under the plans.

The Company does not maintain any form of defined benefit pension or retirement plan in which

executive officers may participate, nor does it maintain any form of supplemental retirement savings or supplemental deferred compensation

Exercise of Discretion

In exercising its discretion as to the level of

executive compensation and its components, the Committee considers a number of factors.

Members of the Committee conduct informal surveys

of compensation paid to comparable executives within and without the consumer finance industry.

The Committee finds these data useful

primarily in evaluating the overall level of compensation paid or to be paid to the Company’s executive officers.

Financial factors

considered include earnings, revenue, originations, and budget attainment.

Operational factors considered include individual and group

management goals;

indicators of the performance and credit quality of the Company’s servicing portfolio, including levels of delinquencies

and charge-offs;

and indicators of successful management of personnel, including employee stability.

All of such factors are assessed

with reference to the judgment of the Committee as to the degree of difficulty of achieving desired outcomes.

With respect to payment

of annual bonuses and grants of stock options, the Committee also takes note of factors relating to the degree of the Company’s success

over the most recent year.

Specific Objectives

and Evaluation

In the first quarter

of 2023 the Compensation Committee designated specific objectives with respect to the chief executive officer to be accomplished within

the year 2023, and fixed weights to be associated with each such objective.

The chief executive officer proposed to the Compensation Committee

specific annual objectives with respect to each other executive officer of the company, which the Committee approved.

The Compensation

Committee anticipates evaluating the named executive officers’ performance in comparison to the goals, determining whether each

of these objectives were met, and determining the amount of the Executive Management Bonus Plan award earned by each named executive officer

by the end of June 2024.

Grants of Options

The Committee did not award of stock options to

the Company’s officers in 2023.

In determining not to make such grant, the Committee considered the various factors noted above with

respect to option grants generally.

Stock Ownership, Hedging and Pledging

Our board of directors and Compensation Committee

have considered whether to establish a minimum stock ownership goal for members of our senior management.

We have elected not to do so,

considering that such a policy would either be strict and mandatory, in which case it would undermine the compensatory objectives of our

equity compensation plans, or would be merely hortatory, in which case it could be expected to have little effect.

We’ve also noted

that the multiyear vesting terms of the equity incentives granted under our plans have the effect of aligning our executives’ individual

personal financial incentives with the future price performance of the Company’s stock.

As part of our comprehensive compliance policy,

we remind all company executive officers of the mandatory legal prohibition on selling short company shares.

We also prohibit company

executive officers from entering into transactions that would have the effect of causing those individuals to benefit from a decline in

the price of the company stock, such as the purchase of “put” options.

We prohibit such “hedging” transactions

but we do not find it appropriate to prohibit our executive officers from pledging their shares of company stock as security for a loan.

We believe that the beneficial incentives of owning company stock remain substantially the same with or without such a pledge.

Summary of Compensation

The following table summarizes all compensation

earned during the three fiscal years ended December 31, 2023 by the Company’s chief executive officer, its chief financial officer, and

the other three most highly compensated individuals (such five individuals, the “named executive officers”) who were serving

in such position or as executive officers at any time in 2023.

It lists their names, their principal positions in which they served in

those years, and each component of compensation paid with respect to those years.

Summary Compensation Table

Name and Principal Position (1)

Incentive Plan Compensation (2)

All Other Compensation (4)

Chief Executive Officer

& Chief Operating Officer

Danny Bharwani

Executive Vice President

& Chief Financial Officer

Executive Vice President

- Sales & Originations

Executive Vice President

Bharwani was appointed chief financial officer of the Company

in September 2022.

The amount of the Non-Equity Incentive Plan Compensation award for

2023 is not calculable through the latest practicable date and this amount is expected to be determined by the end of June 2024.

Such amount, when finally determined, will be disclosed in a filing under Item 5.02(f) of Form 8-K.

Represents the dollar value accrued for financial accounting purposes

in connection with the grant of such options, computed in accordance with Financial Accounting Standards Board Accounting Standards

Codification Topic 718 and SFAS 123R.

Value was estimated using a Black-Scholes model for 2021 and 2022.

For the options granted

on January 24, 2022, the weighted average fair value per option was $5.8558, based on assumptions of 4.11 years expected life, expected

volatility of 75.26%, and a risk-free rate of 1.43%.

For the options granted on June 24, 2022, the weighted average fair value per

option was $4.98, based on assumptions of 4.11 years expected life, expected volatility of 75.15%, and a risk-free rate of 3.13%.

For the year 2021 the weighted average fair value per option was $2.6510, based on assumptions of 4.11 years expected life, expected

volatility of 71.38%, and a risk-free rate of 0.51%.

No option awards were granted in 2023.

Amounts in this column represent premiums paid by the Company for

group life insurance.

Grants of Plan-Based Awards in Last Fiscal

In the year ended December 31, 2023, we did not

grant any options, stock awards, or stock appreciation rights to any of our named executive officers.

Our named executive officers are eligible for

awards under our Executive Management Bonus Plan, which are expected to be determined by the end of June 2024.

The table below provides

information regarding the awards for which the named executive officers are eligible for the year 2023.

Grants of Plan-Based Awards

Estimated future payouts under non-equity incentive plan awards

The “target” and “maximum”

figures appearing in the table above represent the maximum cash payout under the individual executives’ Executive Management

Bonus Plan awards as of the date the incentive was fixed.

The chief executive officer, Mr.

Bradley, is eligible to receive a cash bonus

of up to 600% of his base salary.

The Company’s president, Mr.

Lavin, is eligible to receive a cash bonus of up to 160% of his base

The other named executive officers, as executive vice presidents, are eligible to receive a cash bonus of up to 140% of their

base salaries.

The actual payout to each individual named in the table above has not been determined as of the date of this report.

Outstanding Equity Awards at Fiscal Year-end

The following table sets forth as of December

31, 2023 the number of unexercised options held by each of the named executive officers, the number of shares subject to then exercisable

and unexercisable options held by such persons and the exercise price and expiration date of each such option.

referred to in the table was granted at an option price per share no less than the fair market value per share on the date of grant.

of such individuals holds a stock award;

accordingly, only information concerning option awards is presented.

Number of securities underlying unexercised options (exercisable)

Number of securities underlying unexercised options (unexercisable)

Option exercise price

Option expiration date

Danny Bharwani

exercisable as to the unexercisable portion on June 01, 2024.

exercisable as to cumulative increments of one-half of the unexercisable portion on August 3, 2024 and 2025.

exercisable as to cumulative increments of one-half of the unexercisable portion on January 24, 2025 and 2026.

exercisable as to cumulative increments of one-third of the unexercisable portion on June 24, 2024, 2025 and 2026.

Option Exercises in Last Fiscal Year

All of the five named executive officers exercised

stock options during 2023.

The table below shows the realized value and the number of options exercised for those individuals.

our officers hold stock awards;

accordingly, no stock awards vested during 2023.

Option Exercises and Stock Vested

Value realized on exercise (1)

Number of shares acquired on exercise

The value realized is the difference between the fair market value

of the Company’s common stock on the date of exercise (the closing price reported by Nasdaq) and the exercise price of the

Executive Management Bonus Plan (Non-equity

Incentive Plan)

The salary and cash bonus of the named executive

officers are determined by the Compensation Committee.

The compensation appearing in the Summary Compensation Table above under the caption

“Non-Equity Incentive Plan Compensation” is paid pursuant to an Executive Management Bonus Plan (the “EMB Plan”).

The EMB Plan is administered by the Compensation Committee.

Among other things, the Compensation Committee selects participants in the

EMB Plan from among the Company’s executive officers and determines the performance goals, target amounts and other terms and conditions

of awards under the EMB Plan.

With respect to officers other than the chief executive officer, determinations of base salary and of criteria

relating to the EMB Plan are based in part on evaluations of such officers prepared by the chief executive officer, which are furnished

to and discussed with the Compensation Committee.

Director Compensation

Throughout 2023, we paid our non-employee directors

a retainer of $6,000 per month, with an additional fee of $700 per month for service on a board committee ($1,200 for a committee chairman).

Non-employee directors also received per diem fees of $1,000 for attendance in person at meetings of the board of directors, or

$500 for attendance by telephone.

No per diem fees are paid for attendance at committee meetings.

Name of Director

Earned or Paid in Cash (1)

This column reports cash compensation earned in 2023 for Board and

committee service.

Bradley’s compensation as chief executive officer of the

Company is described elsewhere in this report.

He received no additional compensation for service on the Company’s Board of

Pension Plans

The Company’s officers do not participate in any

pension or retirement plan, other than a tax-qualified defined contribution plan (commonly known as a 401(k) plan).

Potential Payments Upon Termination or Change

This section provides information regarding payments

and benefits to the named executive officers that would be triggered by termination of the officer’s employment (including resignation,

or voluntary termination;

severance, or involuntary termination;

and retirement) or a change of control of the Company.

Each of the named executive officers is an at-will

employee and, as such, does not have an employment contract.

In addition, if the officer’s employment terminates for any reason

other than a change of control of the Company, any unvested stock options are terminated, and vested options become subject to accelerated

ordinarily three months following separation from service, or twelve months in the case of disability, retirement or death.

Accordingly, there are no payments or benefits that are triggered by any termination event (including resignation and severance) other

than in connection with a change of control of the Company.

Benefits Triggered by Change of Control or

Termination after Change of Control

Our stock option plans provide that each employee

of ours who holds outstanding unexpired options under our stock option may have the right to exercise such options following a change

of control of the Company, without regard to the date such option would first be exercisable.

Each of the named executive officers holds

such options.

The “acceleration” of options is mandatory following certain changes of control, and subject to the discretion

of the Compensation Committee following certain others.

Acceleration is mandatory in the event of (i) the sale, or other disposition

of substantially all of the Company’s assets, or (ii) a merger or similar transaction in which shareholders of the Company hold

less than 50% of the shares of the surviving entity;

provided, however, that acceleration following a merger or similar transaction is

mandatory only if the holder suffers a Qualifying Termination (defined below) within one year following the transaction, or if the surviving

entity does not provide the holder with an equivalent award.

Acceleration is also mandatory if a holder suffers a Qualifying Termination

within one year following (iii) a change within a three-year period in the membership of a majority of the board of directors (excluding

changes recommended by the board), or (iv) a person’s acquisition of outstanding voting securities of the Company, other than directly

from the Company and without approval of the board, resulting in that person’s having beneficial ownership of greater than 25% of

Under our stock option plans, the Compensation

Committee may exercise its discretion to provide for acceleration under other circumstances than those described above with respect to

any particular stock option or class of stock options.

The committee would expect to exercise its discretion with the intention of preserving

the value of the stock option award.

To date, such discretion has not been exercised.

A “Qualifying Termination” is a termination

of the holder’s employment by the Company other than for cause, disability or death, or by the holder for “good reason”

(principally relating to a material diminution in the holder’s authority, compensation or responsibilities, or a relocation of greater

than 50 miles).

The preceding description applies to options held by officers and employees.

Options issued to non-employee directors

accelerate without the exercise of discretion upon any of the four categories of change of control described above.

As of December 31, 2023, each of the named executive

officers would realize a benefit if unvested stock options were to become immediately exercisable upon a change in control, based on the

value of the shares underlying such options at the closing market price on December 30, 2023, which was $9.37 per share.

The respective

amounts of such possible benefit are set forth in the following table:

Potential Value Upon Acceleration

Management Structure

The board of directors is responsible for overseeing

the management of the Company.

Its oversight is aimed at seeing to it that the Company’s business is managed to meet our goals,

and that the interests of the shareholders are served.

currently serves as both

the chairman of the board and our chief executive officer, and is the only member of our board who is not independent of the Company.

The Nominating Committee has determined that the remaining directors and director nominees are “independent” under applicable

independence standards of the Nasdaq Stock Market.

Our board has chosen not to designate any individual formally as the lead independent

Each director retains his full oversight responsibility.

Our board structure supports the independence

of our non-management directors.

Our Audit Committee, Compensation Committee and Nominating Committee are each composed solely of independent

Our bylaws provide that any two directors have the authority to call meetings of the board of directors, as do specified officers,

including the president and the secretary.

To enhance the possible use of that authority by independent directors, the corporate secretary

is under standing instructions to call a meeting at the instance of any one director.

The board believes that combining the chairman

and chief executive officer positions is currently the most effective leadership structure given Mr.

Bradley’s in-depth knowledge

of our business and industry and his demonstrated ability to formulate and implement strategic initiatives.

Bradley is continuously

involved in developing and implementing our strategies, working closely with the company’s other senior executives to seek continued

disciplined growth and excellence in operations.

His close involvement in management places Mr.

Bradley in the best position to decide

which business issues require consideration by the independent directors of the board.

In addition, having a combined chairman and chief

executive officer enables us to speak with a unified voice to shareholders, customers and others concerned with our company.

believes that combining the chief executive and chairman roles, as part of a governance structure that includes oversight of management

responsibilities by independent directors, provides the preferred system for meeting the requirement that the Company be managed in the

best interest of our shareholders.

Risk Oversight

The board’s overall responsibility for directing

the management of the Company includes risk oversight.

The risk oversight function is performed at the board level, and by the Audit and

Compensation Committees.

The board of directors as a whole in its regular

meetings discusses and considers the risk inherent in the existing business of the Company and in proposed initiatives.

Because the Company’s

business consists of extending consumer credit to individuals believed to be of higher risk than others (sub-prime credit), the assessment

of the risk assumed in such extensions of credit is a primary consideration on the part of the board.

Risk oversight is also a key function

of the Audit Committee and Compensation Committee.

The principal risk management function performed

by the Audit Committee is the ongoing assessment of the credit estimates and allowances periodically recorded in the Company’s books.

The committee reviews that assessment regularly.

Other risk assessments performed by the Audit Committee include assessments of contingent

liabilities, and of other reserves and allowances.

The principal risk management functions performed

by the Compensation Committee are its setting and evaluation of objectives for the chief executive officer, in connection with its administration

of the Executive Management Bonus Plan.

The committee recognizes that the company’s business of extending subprime credit inherently

includes a conflict between growing the business and managing the risk of credit losses:

one means to increase the company’s business

is to offer credit on terms that are priced too low for the risk assumed.

The Compensation Committee manages that risk by insisting that

objectives to grow the business are qualified by a mandate that credit quality be maintained at appropriate levels.

To some extent, such

risk management is shared with the Audit Committee, which performs the primary oversight of whether credit risk assumed is reflected with

adequate allowances in the Company’s financial statements.

Chief Executive Officer Pay Ratio

The Dodd-Frank Reform and Consumer Protection

Act includes a mandate that public companies disclose the ratio of the compensation of their chief executive office to their median employee

(“CEO Pay Ratio”).

The CEO Pay Ratio for 2023 is not calculable at this time because Mr.

Bradley’s 2023 Non-Equity Incentive

Plan Compensation award has not yet been determined.

The 2023 Non-Equity Incentive Plan Compensation award is expected to be determined

by the end of June 2024.

Such amount, when finally determined, and the CEO Pay Ratio for 2023, will be disclosed in a filing under Item

5.02(f) of Form 8-K.

Security Ownership of Certain Beneficial

Owners and Management and Related Stockholder Matters

The table below sets forth the number and percentage

of shares of our Common Stock (our only class of voting securities) owned beneficially as of March 1, 2024 (the latest practicable date)

by (i) each person known to us to own beneficially more than 5% of the outstanding Common Stock, (ii) each director and each named executive

officer, and (iii) all of our directors and executive officers, as a group.

Except as otherwise indicated, and subject to applicable community

property and similar laws, each of the persons named has sole voting and investment power with respect to the shares shown as beneficially

owned by such persons.

Percent of class is calculated by reference to 21,129,918 shares outstanding on March 1, 2024.

Except as otherwise

noted, each person named in the table has a mailing address at 3800 Howard Hughes Parkway, Suite 1400, Las Vegas, Nevada 89169.

Name and Address of Beneficial Owner

Amount and Nature of Beneficial Ownership (1)

Percent of Class

5,127,165 (2)

Danny Bharwani

All directors and executive officers combined (22 persons)

17,701,448 (3)

Black Diamond Capital Management, L.L.C.

2187 Atlantic Street, 9 th Floor, Stamford, CT 06902

5,127,165 (2)

Dimensional Fund Advisors LP, Building One, 6300 Bee Cave Road, Austin, Texas, 78746

1,623,488 (4)

*Less than 1%

Includes certain shares that may be acquired within 60 days after

March 1, 2024 from the Company upon exercise of options, as follows:

Bradley, 1,680,000 shares;

Grasso, 90,000 shares;

Grounds, 30,000 shares;

Rayhill, 195,000 shares;

Roberts, 60,000 shares;

Washer, 180,000 shares;

Wood, 195,000 shares;

Bharwani, 270,000 shares;

Lavin, 450,000 shares;

Robinson, 285,000 shares;

Straten, 285,000 shares.

Bradley’s shares, 1,685,878 are pledged to secure loan(s) to him.

The calculation of beneficial ownership also includes,

in the case of the executive officers, an approximate number of shares each executive officer could be deemed to hold through contributions

made to the Company’s Employee 401(k) Plan (the “401(k) Plan”).

The 401(k) Plan provides an option for all participating

employees to purchase stock in the Company indirectly by buying units in a mutual fund.

Each “unit” in the mutual fund

represents an interest in Company stock, cash and cash equivalents.

These shares are held directly by certain Black Diamond investment

vehicles (“Black Diamond vehicles”).

Black Diamond Capital Management, L.L.C.

(“Black Diamond”) exercises

investment discretion on behalf of investment advisory affiliates that serve as investment advisers to the Black Diamond vehicles.

Deckoff is the Managing Principal of Black Diamond.

Deckoff disclaims beneficial ownership over the shares, except to the

extent of his pecuniary interest therein.

Includes 4,982,440 shares that are not outstanding as of the date

of this report, but which may be acquired within 60 days after March 1, 2024 upon exercise of options.

Based on a report on Schedule 13G/A filed by the named person on

February 9, 2024.

Equity Compensation Plan Information

The table below presents inform a tion regarding

securities authorized for issuance under equity compensation plans, including the CPS 2006 Long-Term Equity Incentive Plan, as of December

Plan Category

Outstanding Options

Weighted average exercise price of Outstanding Options

Number of securities remaining available for future issuance under equity compensation plans

Plans approved by shareholders

Plans not approved by shareholders

Certain Relationships and Related

Transactions, and Director Independence

Subordinated Notes.

The Company has offered

and sold its subordinated notes in a continuous public offering.

Executive officer Teri L.

Robinson has purchased such notes directly

from the Company in the offering, in each case on the same terms then offered to the public generally.

The largest aggregate amount of

principal outstanding on Ms.

Robinson’s notes in 2023 was $540,578.

The amount of principal outstanding as of March 1, 2024 was

In 2023, the Company paid $950,548 of principal on such notes, which includes principal paid more than once due to the renewal

of matured notes during the year.

That same year, the Company paid $25,293 of interest at rates fixed at the time of purchase of each

The interest rate on such notes ranges from 4.9% to 7.15%.

Executive officer Steve Schween purchased such

subordinated notes from the Company before he became an executive officer.

The largest aggregate amount of principal outstanding on Mr.

Schween’s note in 2023 was $665,460.

The amount of principal outstanding as of March 1, 2024 was $665,460.

In 2023, the Company

paid $130,570 in interest at a rate fixed at the time of purchase of the note.

The interest rate on the note is 12.25%.

Noel Jackson, the Company’s

Vice President of Servicing, is the sister of Mr.

Bradley, the Company’s chief executive officer and chairman of the board.

fiscal year 2023, Ms.

Jackson received annual compensation of a base salary of $181,000 and is also eligible for an award of up to 78%

of her base salary under the Executive Management Bonus Plan described above.

Jackson’s employment with the Company was authorized

by the Board of Directors and her base salary and Executive Management Bonus Plan award is reviewed and approved by the Compensation Committee

on an annual basis.

Other Transactions .

In October 2022, before

Schween became an executive officer, the Limited Liability Company of which Mr.

Schween is a member entered into a one-year contract

with the Company to provide vehicle data services to the Company.

The initial approximate dollar amount involved in the transaction and

Schween’s interest in the transaction was $130,000.

The contract was terminated in May 2023 and the actual dollar amount involved

in the transaction and Mr.

Schween’ s interest in the transaction was $80,000.

Policy on Related Party Transactions and Director

Independence.

It is the Company’s policy that transactions with related parties having a control or fiduciary relationship with the

Company who personally benefit from such transactions may take place only if approved by the Audit Committee or by the members of the

Company’s Board of Directors who are disinterested with respect to the transaction, and independent in accordance with the standards for

director independence prescribed by Nasdaq.

Such policy is maintained in writing in the charter of the Audit Committee.

The Audit Committee

has given general approval to executive officer purchases of subordinated notes that are on terms and rates then available to the public,

including the purchases by Ms.

Robinson The transactions with Mr.

Schween described above were not subject to approval because they were

entered into before Mr.

Schween was an executive officer.

The nine directors of the Company are Charles

Bradley, Jr., Stephen H.

Deckoff, Louis M.

Grasso, William W.

Grounds, Brian J.

Rayhill, William B.

Roberts, James E.

Walker III, Gregory

Washer, and Daniel S.

Wood, of whom Messrs.

Rayhill, Grasso, Washer, and Wood compose the Audit Committee.

The Board of Directors has

concluded that other than Mr.

Bradley (who is the Company’s chief executive officer), each of the other eight directors is independent

in accordance with the director independence standards prescribed by Nasdaq, and has determined that none of them has a material relationship

with the Company that would impair his independence from management or otherwise compromise his ability to act as an independent director.

Principal Accounting Fees and Services

Fees Paid to Auditors

The following table sets forth the fees accrued

or paid to the Company’s independent registered public accounting firms for the years ended December 31, 2023 and 2022.

has served as the Company’s independent registered public accounting firm since February 2009, and has reported on the Company’s

financial statements for the years ended December 31, 2008 through 2023.

Audit and Non-Audit Fees

Audit Fees (1)

Audit-Related Fees (2)

All Other Fees

Audit fees relate to professional services rendered in connection with the audit of

the Company’s annual financial statements and internal control over financial reporting, quarterly review of financial statements

included in the Company’s Quarterly Reports on Form 10-Q, and audit services provided in connection with other statutory and

regulatory filings.

Audit-related fees comprise fees for professional services that are reasonably related to the performance

of the audit or review of the Company’s financial statements.

The 2022 and 2023 tax fees represent services rendered in connection with preparation of state and

federal tax returns for the Company and its subsidiaries.

Audit Committee Supervision of Principal Accountant

The Audit Committee acts pursuant to a written

charter adopted by the Board of Directors.

Pursuant to the charter, the Audit Committee pre-approves the audit and permitted non-audit

fees to be paid to the independent auditor, and authorizes on behalf of the Company the payment of such fees, or refuses such authorization.

The Audit Committee is also empowered to delegate such authority to one or more of its members.

The Audit Committee has delegated to its

chairman the authority to approve performance of services on an interim basis.

In the fiscal years ended December 31, 2023 and December

31, 2022, all services for which audit fees or audit related fees were paid were preapproved by the Audit Committee as a whole, or pursuant

to such delegated authority.

In the course of its meetings, the Audit Committee

has considered whether the provision of the non-audit fees outlined above is compatible with maintaining the independence of the audit

firm, and has concluded that such independence is not and was not impaired.

Exhibits, Financial Statement Schedules

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Exhibit Number

Description (“**” indicates compensatory plan or

Description (“**”

indicates compensatory plan or agreement.)

Restated Articles of Incorporation (Exhibit 3.1 to Form 10-K filed

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Supplement No.

1 dated December 7, 2010 to Indenture re RUS Notes (Exhibit 4.3 to Form S-1/A, no.

1 dated December 7, 2010 to Indenture re RUS Notes (Exhibit 4.3 to Form S-1, no.

Supplement No.

2 dated January 22, 2014 to Indenture re RUS Notes (Exhibit 4.4 to Form S-1, no.

Supplement No.

3 dated June 14, 2023 to Indenture re RUS Notes (Exhibit 4.5 to Form S-3, no.

1997 Long-Term Incentive Stock Plan (“1997 Plan”) (Exhibit 10.20 to Form S-2, no.

333-121913) **

Form of Option Agreement under 1997 Plan (Exhibit 10.2.1 to Form 10-K filed March 13, 2006) **

Form of Option Agreement under 1997 Plan (Exhibit 10.2.1 to Form 10-K

filed March 13, 2006) **

2006 Long-Term Equity Incentive Plan as amended May 18, 2015 (Incorporated by reference to pages A-1 through A-10 of the definitive proxy statement filed by the registrant on April 27, 2015)**

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Registrant’s Code of Ethics for Senior Financial Officers (Exhibit 14 to Form 10-K filed March 13, 2006)

List of subsidiaries of the registrant (filed herewith)

List of subsidiaries of the registrant (Exhibit 21 to Form 10-K filed March 15, 2023)

Consent of Crowe LLP (filed herewith)

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Section 1350 certification (filed herewith)

Policy Relating to Recovery of Erroneously Awarded Compensation (filed herewith)

Inline XBRL Instance Document

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March 15, 2024

Grasso, Director

Lou Grasso, Director

March 15, 2024

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Wood, Director

March 15, 2023

/s/ DENESH BHARWANI

Denesh Bharwani, Executive Vice President and Chief Financial Officer

(Principal Accounting Officer)

INDEX TO FINANCIAL STATEMENTS

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period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established

in Internal Control – Integrated Framework:

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission

audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal

Control – Integrated Framework:

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred

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· Testing the completeness and accuracy of the underlying data used in the fair value of finance receivables

Allowance for Finance Credit Losses –

Qualitative Factors Related to the CECL Reasonable and Supportable Forecasts

As described in Notes 1 and 3 to the financial

statements, the Company has a gross receivables portfolio of $92.3 million and a related allowance for finance credit losses (ACL) on

loans of $21.7 million for the year ended December 31, 2022.

Management estimates the allowance using relevant information from internal

and external sources, relating to past events, current conditions and reasonable and supportable forecasts.

Historical loss experience

for older receivables, aggregated into vintage pools based on the calendar quarter of origination is used to estimate expected losses

for less seasoned quarterly vintage pools.

This estimate is adjusted by certain qualitative factors that may impact future credit losses.

The qualitative factors represent management’s estimate of the impact of future losses.

The use of qualitative factors to adjust historical

losses for management’s forecast requires significant judgment.

Management applies qualitative factors to adjust its estimation

of the timing and amount losses to represent its future economic forecast.

We identified auditing the reasonableness of qualitative factors

used to create forecasts in its credit loss model as a critical audit matter as it involves especially subjective auditor judgment.

Testing the design and operating effectiveness of controls over the

application of the assumptions used to support the estimate of the allowance for credit losses included addressing:

· The completeness and accuracy of internal data

· Review of management’s judgments and significant assumptions over inputs

Substantively testing management's process, including

evaluating management’s judgments and assumptions, for developing the estimate of the allowance for credit losses included:

· Evaluating the appropriateness of the methodology for developing the forecast and qualitative factors.

· Testing the completeness and accuracy of data used in the calculation of qualitative factors.

· Evaluating the reasonableness of the forecasts.

· Inspecting and evaluating key assumptions and judgments used in developing the qualitative factors.

/s/ Crowe LLP

We have served as the Company’s auditor since 2008.

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Deferred tax assets, net

Accrued interest receivable

LIABILITIES AND SHAREHOLDERS' EQUITY

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Series B preferred stock, $ 1 par value;

authorized 1,870

authorized 1,870 shares;

Common stock, no par value;

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

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Changes in assets and liabilities:

Accrued interest receivable

Deferred tax assets, net

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( 1,673,166 )

( 1,107,537 )

Payments on receivables portfolio at fair value

1 unchanged sentence

Purchase of furniture and equipment

Net cash provided by (used in) investing activities

Net cash (used in) investing activities

Cash flows from financing activities:

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Supplemental disclosure of cash flow information:

Cash paid (received) during the period for:

See accompanying Notes to Consolidated Financial Statements.

Cash paid during the period for:

See accompanying Notes

to Consolidated Financial Statements.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Summary of Significant Accounting Policies

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vehicle dealers (“Dealers”) located throughout the United States.

Customers located in California, Texas, Ohio, Illinois, Florida,

Pennsylvania, and Indiana represented 8.2 %, 7.8 %, 7.6 %, 5.7 %, 5.1 %, 4.6 %, and 4.6 % respectively, of contracts purchased during 2022 compared

with 10.9 %, 6.1 %, 9.3 %, 3.6 %, 5.0 %, 4.6 %, and 5.0 % respectively in 2021.

Customers located in Texas, Illinois, Ohio, California, Florida,

and Pennsylvania represented 7.1 %, 6.9 %, 6.2 %, 6.0 %, 5.4 %, and 5.0 %.

respectively, of contracts purchased during 2023 compared with 7.8 %,

5.7 %, 7.6 %, 8.2 %, 5.1 %, and 4.6 % respectively in 2022.

No other state had a concentration in excess of 5.0% in 2023.

We specialize in contracts with vehicle purchasers who generally would not be expected to qualify for traditional financing provided by

commercial banks or automobile manufacturers’ captive finance companies.

We specialize in

contracts with vehicle purchasers who generally would not be expected to qualify for traditional financing provided by commercial banks

or automobile manufacturers’ captive finance companies.

We are subject to various

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Management may authorize an extension of payment terms if collection appears likely during the next calendar month.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our portfolio of finance receivables

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that is greater than 90 days delinquent are first applied to accrued interest and then to principal reduction.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Finance Receivables Measured at Fair Value

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carrying value of the portion of the receivables portfolio accounted for at fair value.

The Company considered the effect of the pandemic

on the portfolio of finance receivables carried at fair value and recorded a mark down to that portfolio of $ 4.4 million for the twelve-month

period ended December 31, 2021.

Anticipated credit losses

are included in our estimation of cash to be received with respect to receivables.

Because such credit losses are included in our computation

of the appropriate level yield, we do not thereafter make periodic provision for credit losses, as our best estimate of the lifetime aggregate

of credit losses is included in that initial computation.

Also because we include anticipated credit losses in our computation of the

level yield, the computed level yield is materially lower than the average contractual rate applicable to the receivables.

initial recorded value is fixed as the price we pay for the receivable, rather than as the contractual principal balance, we do not record

acquisition fees as an amortizing asset related to the receivables, nor do we capitalize costs of acquiring the receivables.

recognize the costs of acquisition as expenses in the period incurred.

The Company recorded a $ 15.3 positive mark to

for the twelve-month period ended December 31, 2022.

Anticipated credit

losses are included in our estimation of cash to be received with respect to receivables.

In accordance with the fair value

accounting standards, credit losses are included in our computation of the appropriate level yield, therefore we do not thereafter

make periodic provision for credit losses, as our best estimate of the lifetime aggregate of credit losses is included in that

initial computation.

Also because we include anticipated credit losses in our computation of the level yield, the computed level

yield is materially lower than the average contractual rate applicable to the receivables.

Because our initial recorded value is

fixed as the price we pay for the receivable, rather than as the contractual principal balance, we do not record acquisition fees as

an amortizing asset related to the receivables, nor do we capitalize costs of acquiring the receivables.

Rather we recognize the

costs of acquisition as expenses in the period incurred.

Allowance for Finance Credit Losses

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As conditions change, our level of provisioning and/or allowance may change.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Charge Off Policy

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charged off no later than the end of the month that the Contract becomes five scheduled payments past due.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Contract Acquisition Fees and Origination Costs

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Included in other assets in the accompanying Consolidated Balance Sheets are repossessed vehicles pending sale of $ 125,000 and $ 571,000

million at December 31, 2022 and 2021, respectively.

T reatment of Securitizations

December 31, 2023 and 2022, respectively.

Treatment of Securitizations

Our term securitization structure has generally

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and decreased from time to time based on performance of the various portfolios, and have also varied from one Trust to another.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our warehouse securitization

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and record as indebtedness the Notes issued in the transaction.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

We have the power to direct

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL

Impairment of Long-Lived Assets and Long-Lived Assets to Be

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disposed of are reported at the lower of carrying amount or fair value less costs to sell.

The following table presents the primary components

of Other Income:

The following table presents

the primary components of Other Income:

Schedule of other income

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Direct mail revenues

Convenience fee revenue

Recoveries on previously charged-off contracts

Sales tax refunds

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Numerator for basic and diluted earnings per share

Denominator for basic earnings per share - weighted average number of common shares outstanding during

Incremental common shares attributable to exercise of outstanding options and

Denominator for basic earnings per share - weighted average number of common shares outstanding during the year

Incremental common shares attributable to exercise of outstanding options and warrants

Denominator for diluted earnings per share

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL

Incremental shares of 1.7

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in the near term and, accordingly, actual results could differ from those estimates.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reclassification

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year have been reclassified to conform to the current year’s presentation with no effect on previously reported earnings or shareholders’

Financial Covenant s

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Financial Covenants

Certain of our securitization

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amount of losses that may ultimately be incurred, over and above such losses as are probable, cannot be estimated with certainty.

Recent Accounting Pronouncements

In March 2022,

FASB issued ASU No.

2022-02, Financial Instruments – Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures.

The amendments in this ASU eliminate the long-standing accounting guidance for Troubled Debt Restructurings (“TDRs”) by creditors

in Subtopic 310-40, Receivables – Troubled Debt Restructurings by Creditors, as it is no longer meaningful due to the introduction

of Topic 326, which requires an entity to consider lifetime expected credit losses on loans when establishing an allowance for credit

Thus, most losses that would have been realized for a TDR under Subtopic 310-40 are now captured by the accounting required under

The amendments in this ASU also require that an entity disclose current-period gross write offs by year of origination for

financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments – Credit Losses Measured

at Amortized Cost.

The Company adopted ASU No.

2022-02 effective January 1, 2023.

Aside from the changes to the disclosures required by

2022-02, the ASU did not have a material impact on our consolidated financial statements.

In November 2023, the FASB issued ASU No.

2023-07, “Segment Reporting (Topic 280),” which is intended to enhance the disclosures on reportable segments.

This new standard

will be effective for annual reporting periods beginning after December 15, 2023, with early adoption permitted.

The Company is currently

evaluating the impact of ASU 2023-07;

however, at the current time, the Company does not believe this ASU will have a material impact

on its consolidated financial statements.

In December 2023, the FASB issued ASU No.

“Income Taxes (Topic 740),” which is intended to provide greater transparency in various income tax components that affect the

rate reconciliation based on the applicable taxing jurisdictions, as well as the qualitative and quantitative aspects of those components.

This new standard will be effective for annual reporting periods beginning on or after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of ASU 2023-09;

however, at the current time, the Company does not believe this ASU will

have a material impact on its consolidated financial statements.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

(2) Restricted Cash

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Any payments received on a contract that is greater than 90 days delinquent are first applied to accrued interest and then to principal

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In January 2018 the Company

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recorded separately on the Company’s Balance Sheet and are excluded from all tables in this footnote.

The following table presents the components of

finance receivables, net of unearned interest:

The following table presents

the components of finance receivables, net of unearned interest:

Schedule of finance receivables

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There are no other concessions, such as a reduction in interest rate, forgiveness of principal or of accrued interest.

Accordingly, we consider such extensions to be insignificant delays in payments rather than troubled debt restructurings.

The following

table summarizes the delinquency status of finance receivables as of December 31, 2022 and 2021:

Schedule of amortized cost basis of finance receivables

Accordingly, we consider such extensions to be insignificant delays in payments.

The following table summarizes the delinquency status

of finance receivables as of December 31, 2023 and 2022:

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Schedule of delinquency status

of finance receivables

Delinquency Status

8 unchanged sentences

Charge offs are deducted from the allowance when management believes that collectability is unlikely.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Management estimates the allowance

25 unchanged sentences

the Company’s rates of growth, size of our managed portfolio and fluctuations in economic growth and unemployment.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

In consideration of the depth

10 unchanged sentences

Schedule of amortized cost basis of finance receivables

(In thousands)

Annual Vintage Pool

(In thousands)

2014 and prior

Total amortized cost basis

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At the adoption of CECL, the Company recorded

At the adoption of CECL in 2020, the Company recorded

an addition to its allowance for finance credit losses of $ 127 .0 million.

2 unchanged sentences

The Company recorded a reduction to provision

for credit losses on finance receivables in the amount of $ 28.1 million and $ 14.6 million for the years ended December 31, 2022, and 2021,

respectively.

The reserve decrease was primarily due to a decrease in lifetime expected credit losses resulting from improved credit performance,

an improved macroeconomic outlook and higher used car prices.

The Company made additional provisions for credit losses of $ 14.1 million

for the year ended December 30, 2020.

Those reserve increases were made in consideration for the uncertainty associated with the pandemic.

for credit losses on finance receivables in the amount of $ 22.3 million , $ 28.1 million , and $ 14.6 million for the years ended December

31, 2023, 2022, and 2021, respectively.

The reserve decrease was primarily due to a decrease in lifetime expected credit losses resulting

from better than expected credit performance for these receivables.

The following table presents

2 unchanged sentences

(In thousands)

Balance at beginning of year

Impact of adoption ASC 326

Balance at beginning of period

Provision for credit losses on finance receivables

Balance at end of year

Balance at end of period

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

The following table presents

the gross charge-offs by year of origination of our finance receivables for the year ended December 31, 2023, 2022, and 2021:

Schedule of charge-offs for financed receivables

Annual Vintage Pool

(In thousands)

2014 and prior

Applied against repos in inventory (net)

Excluded from finance receivables

8 unchanged sentences

Net repossessed inventory included in other assets

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(4) Furniture and Equipment

7 unchanged sentences

accumulated depreciation and amortization

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Depreciation expense totaled $ 847,000 , $ 1,618,000 ,

4 unchanged sentences

The debt issued in these

transactions is shown on our Consolidated Balance Sheets as “Securitization trust debt,” and the components of such debt are

summarized in the following table:

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

transactions is shown on our Consolidated Balance Sheets as “Securitization trust debt,” and the components of such debt

are summarized in the following table:

Schedule of securitization trust debt

4 unchanged sentences

September 2025

December 2024

September 2026

December 2026

2 unchanged sentences

December 2028

November 2030

February 2031

_________________________

(1) The Final Scheduled Payment Date represents final legal maturity of the securitization trust debt.

Securitization trust debt is expected to become due and to be paid prior to those dates, based on amortization of the finance receivables

pledged to the Trusts.

Expected payments, which will depend on the performance of such receivables, as to which there can be no assurance,

are $ 804.4 million in 2023, $ 578.9 million in 2024, $ 339.1 million in 2025, $ 202.3 million in 2026, $ 128.1 million in 2027, $ 55.3 million

in 2028, and $ 0.6 million in 2029.

(2) Includes repossessed assets that are included in Other Assets on our Consolidated Balance Sheets.

Final Scheduled Payment Date represents final legal maturity of the securitization trust

Securitization trust debt is expected to become due and to be paid prior to those dates,

based on amortization of the finance receivables pledged to the Trusts.

Expected payments,

which will depend on the performance of such receivables, as to which there can be no assurance,

are $ 826.3 million in 2024, $ 618.4 million in 2025, $ 386.5 million in 2026, $ 242.8 million

in 2027, $ 152.6 million in 2028, and $ 38.8 million in 2029.

(2) Includes repossessed assets

that are included in Other Assets on our Consolidated Balance Sheets.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL

Debt issuance costs of $ 14.6

34 unchanged sentences

to pay any of our other creditors.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The terms of our debt outstanding at December

5 unchanged sentences

Warehouse lines of credit

3.00% over CP yield rate (Minimum 3.75%) 7.48% and 3.75% at December 31, 2022 and December 31 2021, respectively

4.15% over a commercial paper rate (Minimum 5.15%) 8.60% and 5.15% at December 31 2022, and December 31 2021, respectively

Residual interest financing

3.00% over CP yield rate (Minimum 3.75%) 8.58% and 7.48%

at December 31, 2023 and December 31 2022, respectively

4.15% over a commercial paper rate (Minimum 5.15%) 9.63% and 8.60% at

December 31 2023, and December 31 2022, respectively

Residual interest financing

Subordinated renewable notes

Weighted average rate of 7.82 % and 8.93 % at December 31, 2022 and December 31, 2021, respectively

Weighted average maturity of October 2024 and January 2024 at December 31, 2022 and December 31, 2021, respectively

Weighted average rate of 8.45 % and 7.82 % at December

31, 2023 and December 31, 2022, respectively

Weighted average maturity of February 2026 and October

2024 at December 31, 2023 and December 31, 2022, respectively

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL

Debt issuance costs of $ 599,000

million and $ 400,000 as of December 31, 2022 and December 31, 2021, respectively, have been excluded from the table above.

issuance costs are presented as a direct deduction to the carrying amount of the Warehouse lines of credit and residual interest financing

on our Consolidated Balance Sheets.

and $ 2.6 million as of December 31, 2023 and December 31, 2022, respectively, have been excluded from the table above.

These debt issuance

costs are presented as a direct deduction to the carrying amount of the Warehouse lines of credit and residual interest financing on our

Consolidated Balance Sheets.

On May 11, 2012, we entered

26 unchanged sentences

January 2024 followed by an amortization period through January 2028 for any receivables pledged to the facility at the end of the revolving

At December 31, 2022 there was $ 137.6 million outstanding under this facility.

At December 31, 2023 there was $ 69 .0 million outstanding under this facility.Prior to the expiration of the revolving period in

January 2024, the revolving period was extended to March 31, 2024.

The total outstanding debt

9 unchanged sentences

The agreed valuation of the

collateral for the 2018-1 and 2021-1 Notes is the sum of the amounts on deposit in the underlying spread accounts for each related securitization

collateral for the 2021-1 Notes is the sum of the amounts on deposit in the underlying spread accounts for each related securitization

and the over-collateralization of each related securitization, which is the difference between the outstanding principal balances of the

1 unchanged sentence

On each monthly payment

date, the 2018-1 and 2021-1 Notes are entitled to interest at the coupon rate and, if necessary, a principal payment necessary to maintain

a specified minimum collateral ratio.

date, the 2021-1 Notes are entitled to interest at the coupon rate and, if necessary, a principal payment necessary to maintain a specified

minimum collateral ratio.

Unamortized debt issuance

5 unchanged sentences

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL

We must comply with certain

4 unchanged sentences

See the discussion of financial covenants in Note 1.

The following table summarizes

the contractual and expected maturity amounts of our outstanding subordinated renewable notes as of December 31, 2022:

Schedule of expected maturity amounts for long-term debt

The following table summarizes the contractual

and expected maturity amounts of our outstanding subordinated renewable notes as of December 31, 2023:

Schedule of contractual

and expected maturity amounts of our outstanding subordinated renewable

Contractual maturity

28 unchanged sentences

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL

Options and Warrants

11 unchanged sentences

vesting generally over 4-5 years.

The per share weighted-average

fair value of stock options granted during the years ended December 31, 2022, 2021 and 2020 was $ 5.42 ,

There were no stock

options granted during the year ended December 31, 2023.

The per share weighted-average fair value of stock options granted during

the years ended December 31 2022 and 2021 was $ 5.42 ,

respectively.

That fair value was estimated using a binomial option pricing model using the weighted average assumptions noted in the

following table.

That fair value was estimated using a binomial option pricing model using the weighted average assumptions noted in

the following table.

We use historical data to estimate the expected term of each option.

The volatility estimate is based on the historical

and implied volatility of our stock over the period that equals the expected life of the option.

Volatility assumptions ranged from 75 %

for 2022, 79 %

The volatility estimate is based on the

historical and implied volatility of our stock over the period that equals the expected life of the option.

Volatility assumptions

ranged from 75 %

for 2022, and 79 %

The risk-free interest rate is based on the yield on a U.S.

Treasury bond with a maturity comparable to the expected life of

The dividend yield is estimated to be zero based on our intention not to issue dividends for the foreseeable future.

Treasury bond with a maturity comparable to the expected life

of the option.

The dividend yield is estimated to be zero based on our intention not to issue dividends for the foreseeable

Schedule of assumptions for stock options

19 unchanged sentences

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL

Stock option activity for

15 unchanged sentences

December 31, 2022

Range of exercise prices:

(In thousands)

Range of exercise prices:

$2.00 - $2.99

4 unchanged sentences

$10.00 - $10.99

$7.00 - $7.99

$10.00 - $10.99

We did not issue any stock options with an exercise

price above or below the market price of the stock on the grant date for the years ended December 31, 2023, 2022 and 2021.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8) Interest Income and Interest Expense

6 unchanged sentences

Interest on finance receivables at fair value

Mark to finance receivables measured at fair value

Other interest income

Interest income

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

The following table presents the components of

10 unchanged sentences

Income taxes consist of the following:

Schedule of income tax expense

Schedule of income taxes expenses

Year Ended December 31,

5 unchanged sentences

Income tax expense

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income tax expense for the

12 unchanged sentences

Income tax expense

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

The tax effected cumulative

19 unchanged sentences

Net deferred tax asset

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We acquired certain net operating

12 unchanged sentences

in which net operating losses might otherwise expire.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Deferred tax assets are recognized

10 unchanged sentences

had net operating loss carryforwards for state income tax purposes of $ 6.6 million .

These state net operating losses begin to expire

These state net operating losses begin to expire in

We recognize a tax position

30 unchanged sentences

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL

The following table presents

15 unchanged sentences

Finance lease

Maturities of leases

Maturities of lease liabilities were as follows:

schedule of maturities of leases

(In thousands)

5 unchanged sentences

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL

The following table presents

6 unchanged sentences

Total lease cost

The following table presents the supplemental cash

flow information related to leases:

Supplemental cash flow information related to leases

The following table presents

the supplemental cash flow information related to leases:

Schedule of supplemental cash flow information

related to leases

Year Ended December 31,

6 unchanged sentences

Consumer Litigation.

We are routinely involved

in various legal proceedings resulting from our consumer finance activities and practices, both continuing and discontinued.

can and do initiate lawsuits against us alleging violations of law applicable to collection of receivables, and such lawsuits sometimes

allege that resolution as a class action is appropriate.

For the most part, we have legal and factual defenses to consumer claims, which

we routinely contest or settle (for immaterial amounts) depending on the particular circumstances of each case.

Following our filing of a complaint for a deficiency

judgment in the Superior Court at Waterbury, Connecticut, the defendant filed a cross-claim alleging that our deficiency notices were

not compliant with Connecticut law, and seeking relief on behalf of a class of Connecticut obligors whose vehicles we had repossessed.

The defendant’s contract provided for resolution of disputes exclusively by arbitration, and exclusively on an individual basis,

not a class basis.

We are routinely involved in various legal proceedings resulting from our consumer finance activities and practices, both continuing and

discontinued.

Consumers can and do initiate lawsuits against us alleging violations of law applicable to collection of receivables, and

such lawsuits sometimes allege that resolution as a class action is appropriate.

For the most part, we have legal and factual defenses

to consumer claims, which we routinely contest or settle (for immaterial amounts) depending on the particular circumstances of each case.

Following our filing of a

complaint for a deficiency judgment in the Superior Court at Waterbury, Connecticut, the defendant filed a cross-claim on October 16,

2019 alleging that our deficiency notices were not compliant with Connecticut law, and seeking relief on behalf of a class of Connecticut

obligors whose vehicles we had repossessed.

The complaint seeks primarily damages, injunctive relief, waiver of contract deficiencies,

and attorney fees and interest.

The defendant’s contract provided for resolution of disputes exclusively by arbitration, and exclusively

on an individual basis, not a class basis.

Nevertheless, in August 2021, the court denied our motion to compel arbitration, without opinion.

In April 2022, a

motion for certification of a class was filed but has not been ruled upon.

It is reasonable to expect that resolution of these claims

will be on a class basis.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In April 2022, a motion for certification of a class was filed but has not been ruled upon.

It is reasonable to expect that resolution

of these claims will be on a class basis.

Wage and Hour Claim.

On September 24, 2018,

a former employee filed a lawsuit against us in the Superior Court of Orange County, California, alleging that we incorrectly classified

our sales representatives as outside salespersons exempt from overtime wages, mandatory break periods and certain other employee protective

provisions of California and federal law.

The complaint seeks injunctive relief, an award of unpaid wages, liquidated damages, and attorney

fees and interest.

On September 24, 2018, a former employee filed a lawsuit against us in the Superior Court of Orange County, California, alleging that

we incorrectly classified our sales representatives as outside salespersons exempt from overtime wages, mandatory break periods and certain

other employee protective provisions of California and federal law.

The complaint seeks injunctive relief, an award of unpaid wages, liquidated

damages, and attorney fees and interest.

The plaintiff purports to act on behalf of a class of similarly situated employees and ex-employees.

As of the date

of this report, no motion for class certification has been filed or granted.

We believe that our compensation practices with respect to

our sales representatives are compliant with applicable law.

Accordingly, we have defended and intend to continue to defend this lawsuit.

Massachusetts Civil Investigative Demand .

In September 2021, we received a civil investigative demand from the Office of the Attorney General of the Commonwealth of Massachusetts

relating to the Company’s communications with and repossession notices sent to Massachusetts customers.

We are cooperating with

can be no assurance as to the outcomes of the matters described or referenced above.

We record at each measurement date, most

recently as of December 31, 2022, our best estimate of probable incurred losses for legal contingencies, including the matters

identified above.

The amount of losses that may ultimately be incurred cannot be estimated with certainty.

However, based on such

information as is available to us, we believe that the total of probable incurred losses for legal contingencies as of December 31,

2022 is $ 4.9

million , and that the range of reasonably possible losses for the legal proceedings and contingencies we face, including

those described or identified above, as of December 31, 2022 does not exceed $ 11.2

We believe that our compensation practices with respect to our sales representatives are compliant with applicable law.

In August 2023,

the parties settled by agreement the claims of the plaintiff and a California settlement class for $ 1.1 million and the settlement remains

subject to final court approval.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Massachusetts Civil Investigative

In September 2021, we received a civil investigative demand from the Office of the Attorney General of the Commonwealth of

Massachusetts relating to the Company’s communications with and repossession notices sent to Massachusetts customers.

28, 2023 and without admitting any wrongdoing, the Company entered into an assurance of discontinuance with the Office of the Attorney

General of the Commonwealth of Massachusetts, reflecting the parties’ agreements to settle and fully resolve allegations of the Company’s

noncompliance with Massachusetts law.

The Company agreed to make a payment in the total amount of $ 1.24 million to an independent trust

for the purposes of making payments to eligible consumers, paying costs of implementation, and paying the Attorney General’s costs

of investigation.

In addition, the Company agreed to pay $ 75,000 for the fees and costs of a trustee to oversee the trust.

be no assurance as to the outcomes of the matters described or referenced above.

We record at each measurement date, most recently as

of December 31, 2023, our best estimate of probable incurred losses for legal contingencies, including the matters identified above.

amount of losses that may ultimately be incurred cannot be estimated with certainty.

However, based on such information as is available

to us, we believe that the total of probable incurred losses for legal contingencies as of December 31, 2023 is $ 3.6 million , and that

the range of reasonably possible losses for the legal proceedings and contingencies we face, including those described or identified above,

as of December 31, 2023 does not exceed $ 5.6 million .

Accordingly, we believe that

17 unchanged sentences

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL

The following tables represents

17 unchanged sentences

Funded Status at end of year

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Additional Information

7 unchanged sentences

Expected return on plan assets

Our overall expected long-term

rate of return on assets is 7.25 %

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Our overall expected long-term rate of return

on assets is 7.00 %

per annum as of December 31, 2023.

21 unchanged sentences

Net amount recognized in other comprehensive loss (income)

The estimated net gain that

will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2024 is $ 400,000 .

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The estimated net gain

that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2023 is $ 169,000 .

The weighted average asset

allocation of our pension benefits at December 31, 2022 and 2021 were as follows:

NOTES TO CONSOLIDATED FINANCIAL

The weighted average asset allocation of our pension

benefits at December 31, 2023 and 2022 were as follows:

Schedule of weighted average asset allocation of our pension benefits

25 unchanged sentences

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL

fair value of plan assets at December 31, 2023 and 2022, by asset category, is as follows:

28 unchanged sentences

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL

(12) Fair Value Measurements

45 unchanged sentences

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL

The table below compares the fair values of these

14 unchanged sentences

Discount rate

10.6% - 11.3%

Cumulative net losses

10.0% - 18.4%

The following table summarizes the delinquency

5 unchanged sentences

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL

Repossessed vehicle inventory,

2 unchanged sentences

At December 31, 2023, the finance receivables related to the repossessed vehicles

in inventory totaled $ 1.9 million .

We have applied a valuation adjustment, or loss allowance, of $ 1.3 million , which is based on a recovery

rate of approximately 30 %, resulting in an estimated fair value and carrying amount of $ 571,000 .

The fair value and carrying amount of

the repossessed inventory at December 31, 2021 was $ 2.5 million after applying a valuation adjustment of $ 1.9 million .

in inventory totaled $ 597,000 .

We have applied a valuation adjustment, or loss allowance, of $ 472,000 , which is based on a recovery rate

of approximately 20 %, resulting in an estimated fair value and carrying amount of $ 125,000 .

The fair value and carrying amount of the

repossessed inventory at December 31, 2022 was $ 1.9 million after applying a valuation adjustment of $ 1.3 million .

There were no transfers in

2 unchanged sentences

value on a non-recurring basis.

The estimated fair values of financial assets and

liabilities at December 31, 2022 and 2021, were as follows:

The estimated fair values of financial assets

and liabilities at December 31, 2023 and 2022, were as follows:

Schedule of fair values of financial assets and liabilities

11 unchanged sentences

Subordinated renewable notes

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

As of December 31, 2022

10 unchanged sentences

Subordinated renewable notes

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13) Subsequent Events

16 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures