What changed in this filing

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Item 1. Financial Statements

2024-08-08 compared with 2024-05-10 · 273 added, 317 removed, 637 unchanged (48% of the section changed)

29 unchanged sentences

authorized 75,000,000 shares;

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

21,304,643 and 21,174,856 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Retained earnings

Accumulated other comprehensive loss

Total stockholders' equity

Total liabilities and stockholders' equity

Total shareholders' equity

Total liabilities and shareholders' equity

See accompanying Notes to Unaudited Condensed

6 unchanged sentences

Three Months Ended

Six Months Ended

Interest income

5 unchanged sentences

Depreciation and amortization

Total operating expenses

Total expenses

Income before income tax expense

10 unchanged sentences

Three Months Ended

Other comprehensive income/(loss);

change in funded status of pension plan

Six Months Ended

Other comprehensive income/(loss);change in funded status of pension plan

Comprehensive income

6 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

44 unchanged sentences

Three Months Ended

Six Months Ended

Common Stock (Shares Outstanding)

45 unchanged sentences

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

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.

Results for the six-month period ended June 30, 2024 are not necessarily indicative

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

Certain information and footnote disclosures normally

23 unchanged sentences

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.

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.

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 periods ending March 31, 2024 and 2023:

the primary components of Other Income for the three-month and six-month periods ending June 30, 2024 and 2023:

Schedule of other income

Three Months Ended

Six Months Ended

(In thousands)

Origination and servicing fees from third party receivables

11 unchanged sentences

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

16 unchanged sentences

Finance lease

Schedule of maturities of lease liabilities

Maturities of lease liabilities were as follows:

Schedule of maturities of lease liabilities

(In thousands)

Year Ending December 31,

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

2024 (excluding the six months ended June 30, 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 expense

Schedule of lease cost

Three Months Ended

Six Months Ended

(In thousands)

Operating lease cost

6 unchanged sentences

Three Months Ended

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

Six Months Ended

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 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.

For the three and six months ended June 30, 2024,

we recorded stock-based compensation costs in the amount of $ 809,000 and $ 1.6 million, respectively.

These stock-based compensation costs

were $ 905,000 and $ 1.8 million for the three and six months ended June 30, 2023.

As of June 30, 2024, unrecognized stock-based compensation

costs to be recognized over future periods equaled $ 4.4 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 three months ended March 31, 2024:

stock option activity for the six months ended June 30, 2024:

Schedule of stock option activity

6 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 March 31, 2024 and December 31, 2023:

the price distribution of stock options outstanding and exercisable as of June 30, 2024 and December 31, 2023:

Schedule of price distribution

of stock options

of stock options outstanding and exercisable

Number of shares as of

March 31, 2024

June 30, 2024

December 31, 2023

6 unchanged sentences

$10.00 - $10.99

$7.00 - $7.99

$10.00 - $10.99

At March 31, 2024 the aggregate intrinsic value

At June 30, 2024 the aggregate intrinsic value

of options outstanding and exercisable was $ 29.7 million and $ 26.8 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.

There were 1.4 million options exercised for

the six months ended June 30, 2024 compared to 2.8 million 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.

was $ 6.2 million and $ 13.3 million for the six-month periods ended June 30, 2024 and 2023.

There were 2,894,000 shares available for future

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

stock option grants under existing plans as of June 30, 2024.

Purchases of Company Stock

The table below describes

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

the purchase of our common stock for the six months ended June 30, 2024 and 2023:

Schedule of purchase of our

Three Months Ended

March 31, 2024

March 31, 2023

Six Months Ended

June 30, 2024

June 30, 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 March 31, 2024, we were in compliance with all such covenants.

As of June 30, 2024, we were in compliance with all such covenants.

In addition, certain of our debt agreements other than our

3 unchanged sentences

accompanied by acceleration of such other indebtedness.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Provision for Contingent

19 unchanged sentences

have a material impact on its consolidated financial statements.

Our portfolio of finance receivables

consists of small-balance homogeneous contracts comprising a single segment and class that is collectively evaluated for impairment on

a portfolio basis according to delinquency status.

Our contract purchase guidelines are designed to produce a homogenous portfolio.

key terms such as interest rate, length of contract, monthly payment and amount financed, there is relatively little variation from the

average for the portfolio.

(2) Finance Receivables

Our portfolio

of finance receivables consists of small-balance homogeneous contracts comprising a single segment and class that is collectively evaluated

for impairment on a portfolio basis according to delinquency status.

Our contract purchase guidelines are designed to produce a homogenous

For key terms such as interest rate, length of contract, monthly payment and amount financed, there is relatively little variation

from the average for the portfolio.

We report delinquency on a contractual basis.

Once a contract becomes greater than 90 days delinquent, we do

not recognize additional interest income until the obligor under the contract makes sufficient payments to be less than 90 days delinquent.

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

In January 2018 the Company

adopted the fair value method of accounting for finance receivables acquired after 2017.

Finance receivables measured at fair value are

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

Once a contract becomes greater than 90 days delinquent,

we do not recognize additional interest income until the obligor under the contract makes sufficient payments to be less than 90 days

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

to principal reduction.

2018 the Company adopted the fair value method of accounting for finance receivables acquired after 2017.

Finance receivables measured

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

We consider an automobile

12 unchanged sentences

The following table summarizes the delinquency status

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

of finance receivables as of June 30, 2024 and December 31, 2023:

Schedule of delinquency status

2 unchanged sentences

(In thousands)

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Finance receivables totaling

$ 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

$ 442,000 and $ 1.1 million at June 30, 2024 and December 31, 2023, respectively, have been placed on non-accrual status as a result of

their delinquency status.

27 unchanged sentences

between various segments of our portfolio.

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Our methodology incorporates

12 unchanged sentences

The following table presents

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)

the amortized cost basis of our finance receivables by annual vintage as of June 30, 2024 and December 31, 2023.

Schedule of finance receivables by annual vintage

Annual Vintage Pool

(In thousands)

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 periods ended March 31, 2024 and 2023:

a summary of the activity for the allowance for finance credit losses for the three-month and six-month periods ended June 30, 2024 and

Schedule of allowance for finance credit losses

Three Months Ended

Six Months Ended

(In thousands)

Balance at beginning of period

1 unchanged sentence

Balance at end of period

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:

the gross charge-offs by year of origination of our finance receivables for the three-month and six-month ended June 30, 2024 and 2023:

Schedule of gross charge-off

Three Months Ended

Six Months Ended

Annual Vintage Pool

(In thousands)

2014 and prior

12 unchanged sentences

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

16 unchanged sentences

February 2031

November 2031

_________________

3 unchanged sentences

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

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.

are $ 524.2 million in 2024, $ 879.3 million in 2025, $ 582.5 million in 2026, $ 385.6 million in 2027, $ 243.6 million in 2028, $ 102.8 million

in 2029, and $ 18.2 million in 2030.

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

Balance Sheet.

Debt issuance costs of $ 14.6

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

debt was sold in private placement transactions to qualified institutional buyers.

The debt was issued through our wholly-owned bankruptcy

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

Debt issuance

costs of $ 17.2 million and $ 14.6 million as of June 30, 2024 and December 31, 2023, respectively, 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.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The terms of the securitization

agreements related to the issuance of the securitization trust debt and the warehouse credit facilities require that we meet certain delinquency

and credit loss criteria with respect to the pool of receivables, and certain of the agreements require that we maintain minimum levels

of liquidity and not exceed maximum leverage levels.

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

We are responsible for the administration

and collection of the automobile contracts.

The securitization agreements also require certain funds be held in restricted cash accounts

to provide additional collateral for the borrowings, to be applied to make payments on the securitization trust debt or as pre-funding

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

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.

the securitization trust debt was sold in private placement transactions to qualified institutional buyers.

The debt was issued through

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

of the securitization agreements related to the issuance of the securitization trust debt and the warehouse credit facilities require

that we meet certain delinquency and credit loss criteria with respect to the pool of receivables, and certain of the agreements require

that we maintain minimum levels of liquidity and not exceed maximum leverage levels.

As of June 30, 2024, we were in compliance with

all such covenants.

We are responsible for the administration and collection of the automobile contracts.

The securitization agreements

also require certain funds be held in restricted cash accounts to provide additional collateral for the borrowings, to be applied to

make payments on the securitization trust debt or as pre-funding proceeds from a term securitization prior to the purchase of additional

As of June 30, 2024, restricted cash under the various agreements totaled approximately $ 256.9 million.

Interest expense

on the securitization trust debt consists of the stated rate of interest plus amortization of additional costs of borrowing.

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 March 31, 2024 and December 31, 2023 are summarized below:

our other debt outstanding at June 30, 2024 and December 31, 2023 are summarized below:

Schedule of debt outstanding

3 unchanged sentences

Warehouse lines of credit

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

3.00% over CP yield rate (Minimum 3.75%) 8.44% and 8.58% at June 30, 2024 and December 31 2023, respectively

4.50% over a commercial paper rate (Minimum 7.50%) 9.83% and 9.63% at June 30 2024, and December 31 2023, respectively

Residual interest financing

1 unchanged sentence

Subordinated renewable notes

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

Weighted average rate of 9.20 % and 8.45 % at June 30, 2024 and December 31, 2023, respectively

Weighted average maturity of July 2026 and February 2026 at June 30, 2024 and December 31, 2023, respectively

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

4 unchanged sentences

There was $ 13.3 million outstanding

under this facility at March 31, 2024.

under this facility at June 30, 2024.

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

5 unchanged sentences

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.

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 $ 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.

At June 30, 2024 there was $ 50 .0 million outstanding under this facility.

On July 11, 2024, we renewed our two-year $ 200

million revolving credit agreement with Citibank, N.A.

The revolving period for this facility was extended to July 2026 followed by an

amortization period through July 2027 for any receivables pledged at the end of the revolving period.

There was $ 70.7 million outstanding

under this facility at June 30, 2024.

Unamortized debt issuance costs of $ 921,000 and

$ 125,000 as of June 30, 2024 and December 31, 2023, respectively, have been excluded from the amount reported above for residual interest

Similarly, unamortized debt issuance costs of $ 1.8 million and $ 599,000 as of June 30, 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.

(5) Interest Income and Interest Expense

1 unchanged sentence

the components of interest income:

Schedule of interest income

Schedule of interest

Three Months Ended

Six Months Ended

(In thousands)

Interest on finance receivables

6 unchanged sentences

Three Months Ended

Six Months Ended

(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 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:

three-month and six-month periods ended June 30, 2024 and 2023 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 six-month periods ended June 30, 2024 and 2023:

Schedule of earnings per share

Three Months Ended

Six Months Ended

(In thousands)

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

1 unchanged sentence

Weighted average number of common shares used to compute diluted earnings per share

If the anti-dilutive effects

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.

the anti-dilutive effects of common stock equivalents were considered, shares included in the diluted earnings per share calculation for

the three-month and six-month periods ended June 30, 2024 would have included an additional 1.7 million shares attributable to the exercise

of outstanding options and warrants.

F or the three-month and six-month periods ended June 30, 2023

would have included an additional 1.5 million shares included in the diluted earnings per share calculation.

(7) Income Taxes

We file numerous consolidated

and separate income tax returns with the United States and with many states.

With few exceptions, we are no longer subject to U.S.

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

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

file a consolidated federal income tax return and combined or stand-alone state franchise tax returns for certain states.

We utilize the

asset and liability method of accounting for income taxes, under which deferred income taxes are recognized for the future tax consequences

attributable to the differences between the financial statement values of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those

temporary differences are expected to be recovered or settled.

The effect on deferred taxes of a change in tax rates is recognized in

income in the period that includes the enactment date.

Deferred tax assets are recognized

subject to management’s judgment that realization is more likely than not.

A valuation allowance is recognized for a deferred tax

asset if, based on the weight of the available evidence, it is more likely than not that some portion of the deferred tax asset will not

numerous consolidated and separate income tax returns with the United States and with many states.

With few exceptions, we are no longer

subject to U.S.

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

June 30, 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.

and its subsidiaries file a consolidated federal income tax return and combined or stand-alone state franchise tax returns for certain

We utilize the asset and liability method of accounting for income taxes, under which deferred income taxes are recognized for

the future tax consequences attributable to the differences between the financial statement values of existing assets and liabilities

and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable

income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred taxes of a change

in tax rates is recognized in income in the period that includes the enactment date.

tax assets are recognized subject to management’s judgment that realization is more likely than not.

A valuation allowance is recognized

for a deferred tax asset if, based on the weight of the available evidence, it is more likely than not that some portion of the deferred

tax asset will not be realized.

In making such judgments, significant weight is given to evidence that can be objectively verified.

Although realization

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.

Our net deferred tax asset of $3.5 million consists of approximately $ 2.2 million

realization is not assured, we believe that the realization of the recognized net deferred tax asset of $ 2.4 million as of June 30, 2024

is more likely than not based on forecasted future net earnings.

Our net deferred tax asset of $ 2.4 million consists of approximately

$ 1.3 million of net U.S.

federal deferred tax assets and $ 1.1 million of net state deferred tax assets.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Income tax expense was $ 2 .0

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 %.

Income tax expense was $ 2 .0 million

and $ 4 .0 million for the three months and six months ended June 30, 2024, representing effective income tax rates of 30 %, compared to

income tax expense of $ 4.7 million and $ 9.3 million for the three months and six months ended June 30, 2023, and represents an effective

income tax rates of 25 %.

(8) Legal Proceedings

30 unchanged sentences

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

at each measurement date, most recently as of June 30, 2024, our best estimate of probable incurred losses for legal contingencies, including

the matters identified above.

1 unchanged sentence

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,

on such information as is available to us, we believe that the total of probable incurred losses for legal contingencies as of June 30,

2024 is $ 2.3 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.

those described or identified above, as of June 30, 2024 does not exceed $ 4.3 million.

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

"Fair Value Measurements" clarifies the principle that fair value should be based on the assumptions market participants would

use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those

Under the standard, fair value measurements would be separately disclosed by level within the fair value hierarchy.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

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

ASC 820, "Fair Value

Measurements" clarifies the principle that fair value should be based on the assumptions market participants would use when pricing

an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions.

the standard, fair value measurements would be separately disclosed by level within the fair value hierarchy.

ASC 820 defines fair value,

establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement

and enhances disclosure requirements for fair value measurements.

defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of

fair value measurement and enhances disclosure requirements for fair value measurements.

The three levels are defined as follows:

level 1 - inputs to the valuation

methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets;

level 2 – inputs to the valuation

methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or

liability, either directly or indirectly, for substantially the full term of the financial instrument;

and level 3 – inputs to the

valuation methodology are unobservable and significant to the fair value measurement.

Effective January 2018 we

have elected to use the fair value method to value our portfolio of finance receivables acquired in January 2018 and thereafter.

Our valuation policies and

procedures have been developed by our Accounting department in conjunction with our Risk department and with consultation with outside

valuation experts.

Our policies and procedures have been approved by our Chief Executive and our Board of Directors and include methodologies

for valuation, internal reporting, calibration and back testing.

Our periodic review of valuations includes an analysis of changes in

fair value measurements and documentation of the reasons for such changes.

There is little available third-party information such as broker

quotes or pricing services available to assist us in our valuation process.

Our level 3, unobservable

inputs reflect our own assumptions about the factors that market participants use in pricing similar receivables and are based on the

best information available in the circumstances.

They include such inputs as estimates for the magnitude and timing of net charge-offs

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 March

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

receivables and our assessment of potential additional future net losses on the portfolio of finance receivables carried at fair value

and did not record a mark down to that portfolio.

1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets;

– inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that

are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument;

and level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

January 2018 we have elected to use the fair value method to value our portfolio of finance receivables acquired in January 2018 and

Our valuation

policies and procedures have been developed by our Accounting department in conjunction with our Risk department and with consultation

with outside valuation experts.

Our policies and procedures have been approved by our Chief Executive and our Board of Directors and

include methodologies for valuation, internal reporting, calibration and back testing.

Our periodic review of valuations includes an

analysis of changes in fair value measurements and documentation of the reasons for such changes.

There is little available third-party

information such as broker quotes or pricing services available to assist us in our valuation process.

3, unobservable inputs reflect our own assumptions about the factors that market participants use in pricing similar receivables and

are based on the best information available in the circumstances.

They include such inputs as estimates for the magnitude and timing

of net charge-offs 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.

quarter ended June 30, 2024, the Company evaluated the appropriate fair value and future earnings rate of existing receivables compared

to recently acquired receivables and our assessment of potential additional future net losses on the portfolio of finance receivables

carried at fair value and did not record a mark down to that portfolio.

The table below presents

2 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

Balance at beginning of period

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CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

2 unchanged sentences

Schedule of finance receivables to their contractual balances

March 31, 2024

June 30, 2024

December 31, 2023

6 unchanged sentences

Fair Values as of

Weighted Avg.

Unobservable Inputs

2 unchanged sentences

Discount rate

11.0% - 11.9%

11.0% - 11.7%

Cumulative net losses

10.0% - 22.4%

10.0% - 21.7%

The following table summarizes

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

the delinquency status of these finance receivables measured at fair value as of June 30, 2024 and December 31, 2023:

Schedule of delinquency status of finance receivables measured at fair value

1 unchanged sentence

Delinquency Status

Repossessed vehicle inventory,

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 March 31, 2024 and 2023.

or out of level 1, level 2 or level 3 assets and liabilities for the three months ended June 30, 2024 and 2023.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The estimated fair values

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

of financial assets and liabilities at June 30, 2024 and December 31, 2023, were as follows:

Schedule of fair values of financial assets and liabilities

As of March 31, 2024

As of June 30, 2024

Financial Instrument

23 unchanged sentences

(10) Subsequent Events

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 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

historical performance of similar receivables and CPS’s experience as a servicer.

The weighted average yield on the notes is approximately

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%.

The transaction

agreements require accelerated payment of principal on the notes to reach overcollateralization of the lesser of 8.40% of the original

receivable pool balance, or 23.15% of the then outstanding pool balance.

The transaction was a private offering of securities, not registered

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

On July 11, 2024, we renewed

our two-year revolving credit agreement with Citibank, N.A.

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

by an amortization period through July 2027 for any receivables pledged at the end of the revolving period.

There was $70.7 million outstanding

under this facility at June 30, 2024.

Cautionary Note Regarding

5 unchanged sentences

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

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

or other similar expressions.

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

“should” or other similar expressions.

Examples of forward-looking

1 unchanged sentence

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;

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

provisions for credit losses;

expected industry and general economic trends;

accrued losses for legal contingencies;

anticipated deferred tax assets;

estimates of taxable income;

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.

Our actual results, performance

1 unchanged sentence

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;

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.

increases in interest rates;

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

13 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-Q

Item 1. Financial Statements