What changed in this filing

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Item 1. Financial Statements

2024-05-10 compared with 2023-11-09 · 367 added, 335 removed, 587 unchanged (54% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30,

Cash and cash equivalents

23 unchanged sentences

authorized 75,000,000 shares;

21,113,152 and 20,131,323 shares issued and

outstanding at September 30, 2023 and December 31, 2022, respectively

21,147,743 and 21,174,856 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Retained earnings

1 unchanged sentence

Total stockholders' equity

Total liability and stockholder’ equity

Total liabilities and stockholders' equity

See accompanying Notes to Unaudited Condensed

6 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Interest income

18 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Other comprehensive income/(loss);

change in funded status of pension

change in funded status of pension plan

Comprehensive income

6 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

13 unchanged sentences

Purchases of finance receivables measured at fair value

( 1,311,735 )

Payments received on finance receivables at fair value

18 unchanged sentences

Cash paid during the period for:

Non-cash financing activities:

Right-of-use asset, net

Lease liability

Deferred office rent

See accompanying Notes to Unaudited Condensed

5 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Common Stock (Shares Outstanding)

18 unchanged sentences

Total Shareholders' Equity

See accompanying Notes

to Unaudited Condensed Consolidated Financial Statements.

See accompanying Notes to Unaudited Condensed

Consolidated Financial Statements.

CONSUMER PORTFOLIO SERVICES, INC.

23 unchanged sentences

in the opinion of management, of a normal recurring nature.

Results for the nine-month period ended September 30, 2023 are not necessarily

Results for the nine-month period ended March 31, 2024 are not necessarily

indicative of the operating results to be expected for the full year.

12 unchanged sentences

at Fair Value

Effective January 1,

2018, we adopted the fair value method of accounting for finance receivables acquired on or after that date.

For each finance

receivable acquired after 2017, we consider the price paid on the purchase date as the fair value for such receivable.

estimate the cash to be received in the future with respect to such receivables, based on our experience with similar receivables

acquired in the past.

We then compute the internal rate of return that results in the present value of those estimated cash receipts

being equal to the purchase date fair value.

Thereafter, we recognize interest income on such receivables on a level yield basis

using that internal rate of return as the applicable interest rate.

Cash received with respect to such receivables is applied first

against such interest income, and then to reduce the recorded value of the receivables.

Effective January 1, 2018, we adopted the fair

value method of accounting for finance receivables acquired on or after that date.

For each finance receivable acquired after 2017, we

consider the price paid on the purchase date as the fair value for such receivable.

We estimate the cash to be received in the future

with respect to such receivables, based on our experience with similar receivables acquired in the past.

We then compute the internal

rate of return that results in the present value of those estimated cash receipts being equal to the purchase date fair value.

we recognize interest income on such receivables on a level yield basis using that internal rate of return as the applicable interest

Cash received with respect to such receivables is applied first against such interest income, and then to reduce the recorded value

of the receivables.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

3 unchanged sentences

would be required.

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.

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.

The following table presents

the primary components of Other Income for the three-month and nine-month periods ending September 30, 2023 and 2022:

the primary components of Other Income for the three-month periods ending March 31, 2024 and 2023:

Schedule of other income

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Origination and servicing fees from third party receivables

Direct mail revenues

Sales tax refunds

10 unchanged sentences

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

1 unchanged sentence

the supplemental balance sheet information related to leases:

Schedule of supplemental balance sheet information related to

September 30,

Schedule of supplemental balance sheet information related to leases

(In thousands)

12 unchanged sentences

Finance lease

Maturities of lease liabilities were as

Schedule of maturities of lease liabilities

Maturities of lease liabilities were as follows:

(In thousands)

Year Ending September 30,

Year Ending December 31,

2024 (excluding the three months ended March 31, 2024)

Total undiscounted lease payments

2 unchanged sentences

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

1 unchanged sentence

the lease expense included in General and administrative and Occupancy expense on our Unaudited Condensed Consolidated Statement of Operations:

Schedule of lease information

Schedule of lease expense

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Operating lease cost

3 unchanged sentences

the supplemental cash flow information related to leases:

Schedule of supplemental cash flow information related to leases

Schedule of supplemental

cash flow information related to leases

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Cash paid for amounts included in the measurement of lease liabilities:

(In thousands)

Operating cash flows from operating leases

5 unchanged sentences

Compensation”.

For the three and nine months

ended September 30, 2023, we recorded stock-based compensation costs in the amount of $ 816,000

and $ 2.6 million, respectively.

These stock-based compensation costs were $ 1.4

million and $ 3 .0 million for

the three and nine months ended September 30, 2022.

As of September 30, 2023, unrecognized stock-based compensation costs to be recognized

over future periods equaled $ 6.8

This amount will be recognized as expense over a weighted-average period of 2.0

For the three months ended March 31, 2024 and

2023, we recorded stock-based compensation costs in the amount of $ 832,000 and $ 912,000 , respectively.

As of March 31, 2024, unrecognized

stock-based compensation costs to be recognized over future periods equaled $ 5.1 million.

This amount will be recognized as expense over

a weighted-average period of 1.5 years.

The following represents

stock option activity for the nine months ended September 30, 2023:

Schedule of option activity

stock option activity for the three months ended March 31, 2024:

Schedule of stock option activity

(in thousands)

5 unchanged sentences

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The following table presents

the price distribution of stock options outstanding and exercisable for the years ended September 30, 2023 and December 31, 2022:

Schedule of stock options outstanding and exercisable

the price distribution of stock options outstanding and exercisable for the years ended March 31, 2024 and December 31, 2023:

Schedule of price distribution

of stock options

Number of shares as of

September 30, 2023

March 31, 2024

December 31, 2023

Range of exercise prices:

(In thousands)

Range of exercise prices:

$2.00 - $2.99

4 unchanged sentences

$10.00 - $10.99

At September 30, 2023 the aggregate intrinsic

value of options outstanding and exercisable was $ 35.3 million and $ 30.5 million, respectively.

There were 2.8 million options exercised

for the nine months ended September 30, 2023 compared to 3 .0 million for the comparable period in 2022.

The total intrinsic value of options

exercised was $ 13.5 million and $ 23.1 million for the nine-month periods ended September 30, 2023 and 2022.

There were 2,661,000 shares

available for future stock option grants under existing plans as of September 30, 2023.

At March 31, 2024 the aggregate intrinsic value

of options outstanding and exercisable was $ 23.9 million and $ 20.6 million, respectively.

There were 180,000 options exercised for the

three months ended March 31, 2024 compared to 1,086,000 for the comparable period in 2023.

The total intrinsic value of options exercised

was $ 716,000 and $ 3.8 million for the three-month periods ended March 31, 2024 and 2023.

There were 2,684,000 shares available for future

stock option grants under existing plans as of March 31, 2024.

Purchases of Company Stock

The table below describes

the purchase of our common stock for the nine-month ended September 30, 2023 and 2022:

Schedule of purchases of company stock

Nine Months Ended

September 30, 2023

September 30, 2022

the purchase of our common stock for the three months ended March 31, 2024 and 2023:

Schedule of purchase of our

Three Months Ended

March 31, 2024

March 31, 2023

Open market purchases

5 unchanged sentences

Reclassifications had no effect on net income or shareholders’ equity.

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Financial Covenants

3 unchanged sentences

Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage

As of September 30, 2023, we were in compliance with all such covenants.

In addition, certain of our debt agreements other than

our term securitizations contain cross-default provisions.

Such cross-default provisions would allow the respective creditors to declare

a default if an event of default occurred with respect to other indebtedness of ours, but only if such other event of default were to

be accompanied by acceleration of such other indebtedness.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

As of March 31, 2024, we were in compliance with all such covenants.

In addition, certain of our debt agreements other than our

term securitizations contain cross-default provisions.

Such cross-default provisions would allow the respective creditors to declare a

default if an event of default occurred with respect to other indebtedness of ours, but only if such other event of default were to be

accompanied by acceleration of such other indebtedness.

Provision for Contingent

1 unchanged sentence

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

counsel has advised us on such matters where, based on information available at the time of this report, there is an indication that

it is both probable that a liability has been incurred and the amount of the loss can be reasonably determined.

Adoption of New Accounting Standards

In March 2022, the Financial Accounting Standards

Board (“FASB”) issued Accounting Standards Update ("ASU") 2022-02, known as the Financial Instruments – Credit

Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures.

ASU 2022-02 eliminates the accounting guidance for TDRs in ASC

310-40 on troubled debt restructurings for entities that have adopted the CECL model introduced by ASU 2016-13, Current Expected Credit

ASU 2022-02 also requires that public business entities disclose current-period gross charge 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.

This guidance is effective for fiscal years beginning after December 15, 2022, and the adoption of this guidance did

not have a material impact on the condensed consolidated financial statements.

(2) Finance Receivables

counsel has advised us on such matters where, based on information available at the time of this report, there is an indication that it

is both probable that a liability has been incurred and the amount of the loss can be reasonably determined.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU No.

"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.

Our portfolio of finance receivables

12 unchanged sentences

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

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

We consider an automobile

3 unchanged sentences

are contractually past due, as extended where applicable.

Automobile contracts less than 31 days delinquent are not included.

circumstances we will grant obligors one-month payment extensions to assist them with temporary cash flow problems.

The only modification

of terms is to advance the obligor’s next due date by one month and extend the maturity date of the receivable by one month.

certain limited cases, a two-month extension may be granted.

There are no other concessions such as a reduction in interest rate, forgiveness

of principal or of accrued interest.

Automobile finance receivables, net of unearned interest was $ 38.5

million and $ 92.3 million as of September

30, 2023 and December 31, 2022, respectively.

The following table summarizes the delinquency status of finance receivables as of September

30, 2023 and December 31, 2022:

Schedule of delinquency status of finance receivables

September 30,

(In thousands)

Automobile contracts less than 31 days delinquent are not reported as delinquent.

In certain circumstances we will grant obligors one-month payment extensions.

The only modification of terms is to advance the obligor’s

next due date by one month and extend the maturity date of the receivable by one month.

In certain limited cases, a two-month extension

may be granted.

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.

The following table summarizes the delinquency status

of finance receivables as of March 31, 2024 and December 31, 2023:

Schedule of delinquency status

of finance receivables

Delinquency Status

Balance at end of period

(In thousands)

Finance receivables totaling

$ 1.4 million

and $ 2.0 million

at September 30, 2023 and December 31, 2022, respectively, including all receivables greater than 90 days delinquent, have been placed

on non-accrual status as a result of their delinquency status.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

$ 469,000 and $ 1.1 million at March 31, 2024 and December 31, 2023, respectively, have been placed on non-accrual status as a result of

their delinquency status.

Allowance for Credit Losses

26 unchanged sentences

between various segments of our portfolio.

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Our methodology incorporates

6 unchanged sentences

conditions such as changes in unemployment rates, collateral values or other factors.

However, we have considered how certain qualitative

factors may affect future credit losses and have incorporated our judgement of the effect of such factors into our estimates.

Throughout our history we have observed how events

such as extreme weather, political unrest, and other qualitative factors have influenced the performance of our portfolio.

Consequently,

we have considered how such qualitative factors may affect future credit losses and have incorporated our judgement of the effect of those

factors into our estimates.

The following table presents

the amortized cost basis of our finance receivables by annual vintage as of September 30, 2023 and December 31, 2022.

Schedule of amortized cost basis of finance receivables

September 30,

the amortized cost basis of our finance receivables by annual vintage as of March 31, 2024 and December 31, 2023:

Schedule of annual vintage

(In thousands)

1 unchanged sentence

2014 and prior.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The following table presents

a summary of the activity for the allowance for finance credit losses for the three-month and nine-month periods ended September 30,

2023 and 2022:

a summary of the activity for the allowance for finance credit losses for the three-month periods ended March 31, 2024 and 2023:

Schedule of allowance for finance credit losses

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Balance at beginning of period

1 unchanged sentence

Balance at end of period

The following table presents the gross charge-offs

by year of origination of our finance receivables for the three-month and nine-month ended September 30, 2023 and 2022:

Schedule of charge-offs for financed receivables

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The following table presents

the gross charge-offs by year of origination of our finance receivables for the three-month periods ended March 31, 2024 and 2023:

Schedule of gross charge-off

Three Months Ended

Nine Months Ended

September 30,

Annual Vintage Pool

(In thousands)

2014 and prior

5 unchanged sentences

losses in repossessed inventory that is not included in the allowance for finance credit losses:

Schedule of allowance for losses on repossessed inventory

September 30,

Schedule of allowance for

losses in repossessed inventory

(In thousands)

3 unchanged sentences

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

8 unchanged sentences

Interest Rate at

September 30,

(Dollars in thousands)

December 2024

September 2026

December 2026

9 unchanged sentences

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

are $ 201 .0 million in 2023, $ 844.3 million in 2024, $ 529.7 million in 2025, $ 317.1 million in 2026, $ 206.2 million in 2027, $ 119 .0 million

in 2028, and $ 26 .0 million in 2029.

are $ 644.3 million in 2024, $ 691.9 million in 2025, $ 435.8 million in 2026, $ 284.8 million in 2027, $ 169.4 million in 2028, and $ 51.5

million in 2029.

(2) Includes repossessed assets that are included in Other assets on our Unaudited Condensed Consolidated

Balance Sheet.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Debt issuance costs of $ 14.6

million and $ 14.2 million as of September 30, 2023 and December 31, 2022, respectively, have been excluded from the table above.

debt issuance costs are presented as a direct deduction to the carrying amount of the Securitization trust debt on our Consolidated Balance

million as of March 31, 2024 and December 31, 2023 have been excluded from the table above.

These debt issuance costs are presented as

a direct deduction to the carrying amount of the Securitization trust debt on our Consolidated Balance Sheets.

All of the securitization trust

2 unchanged sentences

remote subsidiaries and is secured by the assets of such subsidiaries, but not by our other assets.

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The terms of the securitization

2 unchanged sentences

of liquidity and not exceed maximum leverage levels.

As of September 30, 2023, we were in compliance with all such covenants.

As of March 31, 2024, we were in compliance with all such covenants.

We are responsible for the administration

3 unchanged sentences

proceeds from a term securitization prior to the purchase of additional collateral.

As of September 30, 2023, restricted cash under the

various agreements totaled approximately $ 142.1 million.

Interest expense on the securitization trust debt consists of the stated rate

of interest plus amortization of additional costs of borrowing.

Additional costs of borrowing include facility fees, amortization of deferred

financing costs and discounts on notes sold.

Deferred financing costs and discounts on notes sold related to the securitization trust

debt are amortized using a level yield method.

Accordingly, the effective cost of the securitization trust debt is greater than the contractual

rate of interest disclosed above.

As of March 31, 2024, restricted cash under the various

agreements totaled approximately $ 137.7 million.

Interest expense on the securitization trust debt consists of the stated rate of interest

plus amortization of additional costs of borrowing.

Additional costs of borrowing include facility fees, amortization of deferred financing

costs and discounts on notes sold.

Deferred financing costs and discounts on notes sold related to the securitization trust debt are amortized

using a level yield method.

Accordingly, the effective cost of the securitization trust debt is greater than the contractual rate of interest

disclosed above.

Our wholly-owned bankruptcy remote subsidiaries

10 unchanged sentences

The terms and amounts of

our other debt outstanding at September 30, 2023 and December 31, 2022 are summarized below:

our other debt outstanding at March 31, 2024 and December 31, 2023 are summarized below:

Schedule of debt outstanding

3 unchanged sentences

Warehouse lines of credit

3.00% over one month Libor (Minimum 3.75%) 8.59% and 7.48%

at September 30, 2023 and December 31, 2022, respectively

4.15% over a commercial paper rate (Minimum 5.15%) 9.60% and 8.60% at

September 30, 2023, and December 31, 2022, respectively

3.00% over CP yield rate (Minimum 3.75%) 8.42% and 8.58% at March 31, 2024 and December 31 2023, respectively

4.50% over a commercial paper rate (Minimum 7.50%) 9.94% and 9.63% at March 31 2024, and December 31 2023, respectively

Residual interest financing

Subordinated renewable notes

Weighted average rate of 8.16% and 7.82% at September

30, 2023 and December 31, 2022, respectively

average maturity of July 2025 and October 2024 at September 30, 2023 and December 31, 2022,

Weighted average rate of 9.01 % and 8.45 % at March 31, 2024 and December 31, 2023, respectively

Weighted average maturity of May 2026 and February 2026 at March 31, 2024 and December 31, 2023, respectively

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

On February 2, 2022, we renewed our two-year revolving

credit agreement with Ares Agent Services, L.P.

There was $ 163.5 million outstanding under this facility at September 30, 2023.

28, 2022, we increased the capacity of its credit agreement with Ares Agent Services, L.P.

from $ 100 million to $ 200 million.

The revolving

period for this facility was extended to January 2024 followed by an amortization period through January 2028 for any receivables pledged

at the end of the revolving period.

On March 29, 2024, we renewed our two-year $ 200

million revolving credit agreement with Ares Agent Services, L.P.

The revolving period for this facility was extended to March 2026 followed

by an amortization period through March 2028 for any receivables pledged at the end of the revolving period.

There was $ 67.7 million outstanding

under this facility at March 31, 2024.

On March 22, 2024, we completed a $ 50 million

securitization of residual interests from previously issued securitizations.

In the transaction, a qualified institutional buyer purchased

$ 50 .0 million of asset-backed notes secured by an 80% interest in a CPS affiliate that owns the residual interests in five CPS securitizations

issued from January 2022 through January 2023.

The sold notes (“2024-1 Notes”), issued by CPS Auto Securitization Trust 2024-1,

consist of a single class with a coupon of 11.50%.

At March 31, 2024 there was $ 50 .0 million outstanding under this facility.

On July 15, 2022, we renewed our two-year revolving

credit agreement with Citibank, N.A., and doubled the capacity from $ 100 million to $ 200 million.

There was $ 78.0 million outstanding

under this facility at September 30, 2023.

The revolving period for this facility was extended to July 2024 followed by an amortization

period through July 2025 for any receivables pledged at the end of the revolving period.

Unamortized debt issuance costs of $ 188,000 and

$ 377,000 as of September 30, 2023 and December 31, 2022, respectively, have been excluded from the amount reported above for residual

The revolving period for this facility

was extended to July 2024 followed by an amortization period through July 2025 for any receivables pledged at the end of the revolving

There was $ 184.1 million outstanding under this facility at March 31, 2024.

Unamortized debt issuance costs of $ 1 .0 million

and $ 125,000 as of March 31, 2024 and December 31, 2023, respectively, have been excluded from the amount reported above for residual

interest financing.

Similarly, unamortized debt issuance costs of $ 1.1 million and $ 2.6 million as of September 30, 2023 and December

Similarly, unamortized debt issuance costs of $ 2.3 million and $ 599,000 as of March 31, 2024 and December 31, 2023,

respectively, have been excluded from the Warehouse lines of credit amounts in the table above.

These debt issuance costs are

presented as a direct deduction to the carrying amount of the debt on our Unaudited Condensed Consolidated Balance Sheets.

These debt issuance costs are presented

as a direct deduction to the carrying amount of the debt on our Unaudited Condensed Consolidated Balance Sheets.

(5) Interest Income and Interest Expense

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Interest on finance receivables

6 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Securitization trust debt

4 unchanged sentences

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

1 unchanged sentence

Earnings per share for the

three-month and nine-month periods ended September 30, 2023 and 2022 were calculated using the weighted average number of shares outstanding

for the related period.

The following table reconciles the number of shares used in the computations of basic and diluted earnings per

share for the three-month and nine-month periods ended September 30, 2023 and 2022:

three-month periods ended March 31, 2024 and 2023 were calculated using the weighted average number of shares outstanding for the related

The following table reconciles the number of shares used in the computations of basic and diluted earnings per share for the

three-month periods ended March 31, 2024 and 2023:

Schedule of earnings per share

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Weighted average number of common shares outstanding during the period used to compute basic earnings per share

2 unchanged sentences

If the anti-dilutive effects

of common stock equivalents were considered, shares included in the diluted earnings per share calculation for the three-month and nine-month

periods ended September 30, 2023 would have included an additional 1.5 million and 1.5 million shares, respectively, attributable to the

exercise of outstanding options and warrants.

For the three-month and nine-month periods ended September 30, 2022, 1.7 million and 1 .0

million shares, respectively, would be included in the diluted earnings per share calculation.

of common stock equivalents were considered, shares included in the diluted earnings per share calculation for the three-months ended

March 31, 2024 and 2023 would have included an additional 1.7 million shares attributable to the exercise of outstanding options and warrants.

(7) Income Taxes

3 unchanged sentences

state, or local examinations by tax authorities for years before 2015.

As of September 30, 2023,

and December 31, 2022, we had no unrecognized tax benefits for uncertain tax positions.

We do not anticipate that total unrecognized tax

benefits will significantly change due to any settlements of audits or expirations of statutes of limitations over the next 12 months.

As of March 31,2024 and December

31, 2023, we had no unrecognized tax benefits for uncertain tax positions.

We do not anticipate that total unrecognized tax benefits will

significantly change due to any settlements of audits or expirations of statutes of limitations over the next 12 months.

The Company and its subsidiaries

7 unchanged sentences

income in the period that includes the enactment date.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Deferred tax assets are recognized

4 unchanged sentences

Although realization

is not assured, we believe that the realization of the recognized net deferred tax asset of $ 5.8 million as of September 30, 2023 is more

is not assured, we believe that the realization of the recognized net deferred tax asset of $ 3.5 million as of March 31, 2024 is more

likely than not based on forecasted future net earnings.

1 unchanged sentence

federal deferred tax assets and $ 1.3 million of net state deferred tax assets.

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Income tax expense was $ 2 .0

million and $ 13.1 million for the three months and nine months ended September 30, 2023, representing effective income tax rates of 27 %

and 26 % respectively, compared to income tax expense of $ 8.9 million and $ 26.0 million for the three months and nine months ended September

30, 2022, and represents an effective income tax rates of 26 % and 27 % respectively.

million for the three months ended March 31, 2024, representing effective income tax rates of 30 %.

For the prior year period, income tax

expense was $ 4.6 million for the three months ended March 31, 2023 representing an effective tax rate of 25 %.

(8) Legal Proceedings

Consumer Litigation.

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.

Wage and Hour Claim.

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.

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 and the settlement remains subject to final

court approval.

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.

We are cooperating

with the inquiry.

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.

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.

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 2024, 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.

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.

The plaintiff purports to act on behalf of a class

of similarly situated employees and ex-employees.

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.

The settlement was preliminarily approved by the court on March 1, 2024 and remains subject to final court approval.

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.

On December 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.

Under the settlement the Company paid, after March 31,

2024, $ 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.

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

at each measurement date, most recently as of March 31, 2024, 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 March 31,

2024 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 March 31, 2024 does not exceed $ 5.6 million.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

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

We record at each measurement date, most recently as

of September 30, 2023, 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 September 30, 2023 is $ 3.8 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 September 30, 2023 does not exceed $ 7.3 million.

Accordingly, we believe that

the ultimate resolution of such legal proceedings and contingencies should not have a material adverse effect on our consolidated financial

We note, however, that in light of the uncertainties inherent in contested proceedings there can be no assurance that the ultimate

resolution of these matters will not be material to our operating results for a particular period, depending on, among other factors,

the size of the loss or liability imposed and the level of our income for that period.

we believe that the ultimate resolution of such legal proceedings and contingencies should not have a material adverse effect on our consolidated

financial condition.

We note, however, that in light of the uncertainties inherent in contested proceedings there can be no assurance

that the ultimate resolution of these matters will not be material to our operating results for a particular period, depending on, among

other factors, the size of the loss or liability imposed and the level of our income for that period.

(9) Fair Value Measurements

30 unchanged sentences

and the rate of amortization of the portfolio of finance receivable.

Significant changes in any of those inputs in isolation would have

a significant effect on our fair value measurement.

For the quarter ended September

Significant changes in any of those

inputs in isolation would have a significant effect on our fair value measurement.

For the quarter ended March

31, 2024, the Company evaluated the appropriate fair value and future earnings rate of existing receivables compared to recently acquired

1 unchanged sentence

and did not record a mark down to that portfolio.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The table below presents

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Balance at beginning of period

4 unchanged sentences

Balance at end of period

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The table below compares

the fair values of these finance receivables to their contractual balances for the periods shown:

Schedule of finance receivables fair and contractual balances

September 30, 2023

Schedule of finance receivables to their contractual balances

March 31, 2024

December 31, 2023

6 unchanged sentences

Fair Values as of

September 30,

Unobservable Inputs

8 unchanged sentences

The following table summarizes

the delinquency status of these finance receivables measured at fair value as of September 30, 2023 and December 31, 2022:

the delinquency status of these finance receivables measured at fair value as of March 31, 2024 and December 31, 2023:

Schedule of delinquency status of finance receivables measured at fair value

September 30,

(In thousands)

Delinquency Status

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Repossessed vehicle inventory,

which is included in Other Assets on our unaudited condensed consolidated balance sheet, is measured at fair value using level 2 assumptions

based on our actual loss experience on sale of repossessed vehicles.

At September 30, 2023 the finance receivables related to the repossessed

vehicles in inventory totaled $ 604,000 .

We have applied a valuation adjustment, or loss allowance, of $ 444,000 , which is based on a recovery

rate of approximately 26%, resulting in an estimated fair value and carrying amount of $ 160,000 .

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.

which is included in Other assets on our consolidated balance sheet, is measured at fair value using level 2 assumptions based on our

actual loss experience on sale of repossessed vehicles.

At March 31, 2024, the finance receivables related to the repossessed vehicles

in inventory totaled $ 546,000 .

We have applied a valuation adjustment, or loss allowance, of $ 429,000 , which is based on a recovery rate

of approximately 21 %, resulting in an estimated fair value and carrying amount of $ 117,000 .

The fair value and carrying amount of the

repossessed inventory at December 31, 2023 was $ 597,000 after applying a valuation adjustment of $ 472,000 .

There were no transfers in

or out of level 1, level 2 or level 3 assets and liabilities for the three months ended September 30, 2023 and 2022.

or out of level 1, level 2 or level 3 assets and liabilities for the three months ended March 31, 2024 and 2023.

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The estimated fair values

of financial assets and liabilities at September 30, 2023 and December 31, 2022, were as follows:

Schedule of estimated fair values of financial assets and liabilities

As of September 30, 2023

of financial assets and liabilities at March 31, 2024 and December 31, 2023, were as follows:

Schedule of fair values of financial assets and liabilities

As of March 31, 2024

Financial Instrument

22 unchanged sentences

Subordinated renewable notes

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

(10) Subsequent Events

On October 24, 2023 we executed our fourth securitization

On April 23, 2024 we executed our second securitization

In the transaction, qualified institutional buyers purchased $319.9 million of asset-backed notes secured by $337.2 million in

automobile receivables originated by CPS.

The sold notes, issued by CPS Auto Receivables Trust 2023-D, consist of five classes.

The sold notes, issued by CPS Auto Receivables Trust 2024-B, consist of five classes.

of the notes were provided by Standard & Poor’s and DBRS Morningstar, and were based on the structure of the transaction, the

1 unchanged sentence

The weighted average yield on the notes is approximately

The 2023-D transaction has initial credit enhancement

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The 2024-B transaction has initial credit enhancement

consisting of a cash deposit equal to 1.00% of the original receivable pool balance and overcollateralization of 5.15%.

4 unchanged sentences

under the Securities Act of 1933, or any state securities law.

On April 10, 2024, our Compensation Committee

evaluated and determined the non-equity incentive plan payment amounts earned under the Executive Management Bonus Plan for each of our

executive officers for fiscal year ended December 2023.

The Company thereafter paid those amounts in April 2024, including $3,005,000

for Charles E.

Bradley, Jr., $582,063 for Michael T.

Lavin, $385,655 for Danny Bharwani, $413,406 for Teri L.

Robinson, and $367,472 for

Cautionary Note Regarding

Forward-Looking Statements

Discussions of certain matters

contained in this report may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as

amended (the “Securities Act”) and Section 21E of the Exchange Act, and as such, may involve risks and uncertainties.

can generally identify forward-looking statements as statements containing the words “will,” “would,” “believe,”

“may,” “could,” “expect,” “anticipate,” “intend,” “estimate,”

“assume,” “plans,” “goals, “strategy,” “future,” “likely,” “should”

or other similar expressions.

Examples of forward-looking

statements include, among others, statements we make regarding:

charge-offs and recovery rates;

the willingness

or ability of obligors to pay pursuant to contractual terms;

our ability to enforce

rights under contracts;

our ability to and

rates at which we plan to acquire automobile contracts;

the anticipated

levels of recoveries upon sale of repossessed vehicles;

revenues or expenses;

provisions for credit

expected industry

and general economic trends;

accrued losses for

legal contingencies;

anticipated deferred

estimates of taxable

our ability to service

and repay our debt;

the structuring

of securitization transactions as secured financings and the effects of such structures on financial items and future profitability;

the effect of the

change in structure on our profitability and the duration of the period in which our profitability would be affected by the change in

securitization structure.

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Our actual results, performance

and achievements may differ materially from the results, performance and achievements expressed or implied in such forward-looking statements.

Some of the factors that might cause such a difference include, but are not limited to, the following:

unexpected exogenous

events, such as a widespread public health emergency;

mandates imposed

in reaction to such events, such as prohibitions of otherwise permissible activity;

changes in general

economic conditions;

changes in performance of our automobile contracts

increases in interest

our ability to generate

sufficient operating and financing cash flows;

the level of losses

incurred on contracts in our managed portfolio;

adverse decisions

by courts or regulators;

regulatory changes

with respect to consumer finance;

changes in the market

for used vehicles;

levels of cash releases

from existing pools of contracts;

the terms on which

we are able to finance contract purchases;

the willingness

or ability of dealers to assign contracts to us on acceptable terms;

the terms on which

we are able to complete term securitizations once contracts are acquired;

any breach in the

security of our systems;

such other factors

as discussed through the “Risk Factors” section of this report.

Forward-looking statements

are neither historical facts nor guarantees of performance.

Instead, they are based only on our current beliefs, expectations and assumptions

regarding the future of our business, plans and strategies, projections, anticipated events and trends, the economy and other uncertain

Because forward-looking statements relate to the future, they involve risks, uncertainties and assumptions.

Actual results

may differ from expectations due to many factors beyond our ability to control or predict, including those described herein, and in any

documents incorporated by reference in this report.

Therefore, you should not rely on any of these forward-looking statements.

statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform

We undertake no obligation to

publicly update any forward-looking information.

You are advised to consult any additional disclosure we make in our periodic reports

filed with the SEC.

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-Q

Item 1. Financial Statements