CPSS filing — read by section

CONSUMER PORTFOLIO SERVICES, INC. 10-K 
 
 Table of Contents 

 UNITED STATES SECURITIES AND EXCHANGE COMMISSION 

 WASHINGTON, D.C. 20549 

 FORM 10-K 

 ☒ ANNUAL REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended December 31 , 2024 

 ☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from 
 to 

 Commission file number: 001-14116 

 CONSUMER PORTFOLIO SERVICES, INC. 

 (Exact name of registrant as specified in its
charter) 

 California 
 33-0459135 

 (State or other jurisdiction of incorporation or organization) 
 (I.R.S. Employer Identification No.) 

 3800 Howard Hughes Pkwy , Las Vegas , NV 
 89169 

 (Address of principal executive offices) 
 (Zip Code) 

 Registrant’s telephone number, including
area code: ( 949 ) 753-6800 

 Securities registered pursuant to Section 12(b)
of the Act: 

 Title of Each Class 
 Trading Symbol 
 Name of Each Exchange on Which Registered 

 Common Stock, no par value 
 CPSS 
 The Nasdaq Stock Market LLC (Global Market) 

 Securities registered pursuant to Section 12(g)
of the Act: None 

 Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes ☐
 No ☒

 Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐
 No ☒

 Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting
company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 Large accelerated filer
☐ 
 Accelerated filer ☒ 

 Non-accelerated filer ☐ 
 Smaller
reporting company ☒ 

 Emerging Growth Company ☐ 

 Indicate by check mark whether the registrant has filed a report
on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☒ 

 If securities are registered pursuant to Section 12(b) of the Act,
indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements. ☐ 

 Indicate by check mark whether any of those error corrections are restatements
that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during
the relevant recovery period pursuant to §240.10D-1(b). ☐

 Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes ☐
 No ☒ 

 The aggregate market value of the 7,202,007 shares of the registrant’s
common stock held by non-affiliates as of the date of June 30, 2024, based upon the closing price of the registrant’s common stock
of $9.80 per share reported by Nasdaq as of that date, was approximately $ 70,579,669 . For purposes of this computation, a registrant sponsored
pension plan and all directors and executive officers are deemed to be affiliates. Such determination is not an admission that such plan,
directors and executive officers are, in fact, affiliates of the registrant.

 The number of shares of the registrant’s Common Stock outstanding on
March 10, 2025 was 21,443,198 .

 TABLE
OF CONTENTS 

 PART I 
 
 Item 1. Business 
 1 

 Item 1A. Risk Factors 
 16 

 Item 1B. Unresolved Staff Comments (not applicable) 
 29 

 Item 1C. Cybersecurity 
 29 

 Item 2. Properties 
 30 

 Item 3. Legal Proceedings 
 31 

 Item 4. Mine Safety Disclosures 
 31 
 
 Information about Our Executive Officers (not applicable) 
 32 

 PART II 
 
 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 
 34 

 Item 6. [Reserved] 
 34 

 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 
 34 

 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 
 49 

 Item 8. Financial Statements and Supplementary Data 
 50 
 
 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 
 50 

 Item 9A. Controls and Procedures 
 50 

 Item 9B. Other Information 
 51 

 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections (not applicable) 
 51 
 
 PART III 
 
 Item 10. Directors, Executive Officers and Corporate Governance 
 52 

 Item 11. Executive Compensation 
 54 

 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 
 65 

 Item 13. Certain Relationships and Related Transactions, and Director Independence 
 67 

 Item 14. Principal Accountant Fees and Services 
 68 
 
 PART IV 
 
 Item 15. Exhibits, Financial Statement Schedules 
 70 

 Item 16. Form 10-K Summary 
 70 

 i 

 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. You 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 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; or 

 · 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
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 rates; 

 · our ability to generate sufficient operating and financing cash flows; 

 · competition; 

 · the level of losses incurred on contracts in our managed portfolio; 

 · adverse decisions by courts or regulators; 

 2 

 · 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; and 

 · 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
conditions. 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. For these
statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995.

 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.

 iii 

 PART I

 Item 1. Business

 Overview

 We are a specialty finance
company. Our business is to purchase and service retail automobile contracts originated primarily by franchised automobile dealers and,
to a lesser extent, by select independent dealers in the United States in the sale of new and used automobiles, light trucks and passenger
vans. Through our automobile contract purchases, we provide indirect financing to the customers of dealers who have limited credit histories
or past credit problems, who we refer to as sub-prime customers. We serve as an alternative source of financing for dealers, facilitating
sales to customers who otherwise might not be able to obtain financing from traditional sources, such as commercial banks, credit unions
and the captive finance companies affiliated with major automobile manufacturers. In addition to purchasing installment purchase contracts
directly from dealers, we also have (i) originated vehicle purchase money loans by lending directly to consumers and have (ii) acquired
installment purchase contracts in four merger and acquisition transactions, and (iii) purchased immaterial amounts of vehicle purchase
money loans from non-affiliated lenders. In this report, we refer to all of such contracts and loans as "automobile contracts."

 We were incorporated and
began our operations in March 1991. From inception through December 31, 2024, we have purchased a total of approximately $23.0 billion
of automobile contracts from dealers. In addition, we acquired a total of approximately $822.3 million of automobile contracts in mergers
and acquisitions in 2002, 2003, 2004 and 2011. Contract purchase volumes and managed portfolio levels for the five years ended December
31, 2024 are shown in the table below. Managed portfolio comprises both contracts we owned and those we were servicing for third parties.

 Contract Purchases and Outstanding Managed Portfolio 

 $ in thousands 

 Year 
 Contracts Purchased in Period 
 Managed Portfolio at Period End 

 2020 
 742,584 
 2,174,972 

 2021 
 1,146,321 
 2,249,069 

 2022 
 1,854,385 
 3,001,308 

 2023 
 1,357,752 
 3,194,623 

 2024 
 1,681,941 
 3,665,725 

 Our principal executive offices
are in Las Vegas, Nevada. Most of our operational and administrative functions take place in Irvine, California. Credit and underwriting
functions are performed primarily in our California branch with certain of these functions also performed in our Florida and Nevada branches.
We service our automobile contracts from our California, Nevada, Virginia, Florida, and Illinois branches.

 Most of our contract acquisitions
volume results from our purchases of retail installment sales contracts from franchised or independent automobile dealers. We establish
relationships with dealers through our employee sales representatives, who contact prospective dealers to explain our automobile contract
purchase programs, and thereafter provide dealer training and support services. Our sales representatives represent us exclusively. They
may work from our Irvine branch, our Las Vegas branch, or in the field, in which case they work remotely and support dealers in their
geographic area. Our sales representatives present dealers with a sales package, which includes our promotional material containing the
terms offered by us for the purchase of automobile contracts, a copy of our standard-form dealer agreement, and required documentation
relating to automobile contracts. As of December 31, 2024, we had 122 sales representatives, and in that month, we received applications
from 8,600 dealers in 47 states. As of December 31, 2024, approximately 72% of our active dealers were franchised new car dealers that
sell both new and used vehicles, and the remainder were independent used car dealers.

 1 

 We have in the past solicited
credit applications directly from prospective automobile consumers through the internet under a program we refer to as our direct lending
platform. For qualified applicants we offered terms similar to those that we offer through dealers, though without a down payment requirement
and with more restrictive loan-to-value and credit score requirements. Applicants approved in this fashion are free to shop for and purchase
a vehicle from a dealer of their choosing, after which we entered into a note and security agreement directly with the consumer. We terminated
our direct lending platform in September 2023 and we do not intend to originate any such loans going forward. However, we intend to continue
servicing our existing direct loans. As of December 31, 2024, automobile contracts under the direct lending platform represented 1.6%
of our outstanding managed portfolio.

 For the year ended December
31, 2024 approximately 91% of the automobile contracts originated under our programs consisted of financing for used cars and 9% consisted
of financing for new cars.

 We generally solicit applications
with the intent of originating contracts to hold as investments in our own portfolio. However, in May 2021 we began purchasing some contracts
for immediate sale to a third-party to whom we refer applications that do not meet our lending criteria. We service all such contracts
on behalf of the third-party.

 For contracts we originate
for our own portfolio, we generally finance them on a long-term basis through securitizations. Securitizations are transactions in which
we sell a specified pool of automobile contracts to a special purpose subsidiary of ours. The subsidiary in turn issues (or contributes
to a trust that issues) asset-backed securities, which are purchased by institutional investors. Since 1994, we have completed 103 term
securitizations of approximately $20.6 billion in automobile contracts. We depend upon the availability of short-term warehouse credit
facilities as interim financing for our contract purchases prior to the time we pool those contracts for a securitization. As of December
31, 2024, we had two such short-term warehouse facilities with a total maximum borrowing capacity of $535 million.

 Sub-Prime Auto Finance Industry

 Automobile financing is the
second largest consumer finance market in the United States. The automobile finance industry can be considered a continuum where participants
choose to provide financing to consumers in various segments of the spectrum of creditworthiness depending on each participant’s
business strategy. We operate in a segment of the spectrum that is frequently referred to as sub-prime since we provide financing to less
credit-worthy borrowers at higher rates of interest than more credit-worthy borrowers are likely to obtain.

 Traditional automobile finance
companies, such as banks, their subsidiaries, credit unions and captive finance subsidiaries of automobile manufacturers, generally lend
to the most creditworthy, or so-called prime borrowers, although some traditional lenders are significant participants in the sub-prime
segment in which we operate. Historically, independent companies specializing in sub-prime automobile financing and subsidiaries of larger
financial services companies have competed in the sub-prime segment which we believe remains highly fragmented, with no single company
having a dominant position in the market.

 Our automobile financing programs
are designed to serve sub-prime customers, who generally have limited credit histories or past credit problems. Because we serve customers
who are unable to meet certain credit standards, we incur greater risks, and generally receive interest rates higher than those charged
in the prime credit market. We also sustain a higher level of credit losses because of the higher risk customers we serve.

 2 

 Contract Acquisitions

 When a retail automobile buyer
elects to obtain financing from a dealer, the dealer takes a credit application to submit to its financing sources. Typically, a dealer
will submit the buyer’s application to more than one financing source for review. We believe the dealer’s decision to choose a financing
source is based primarily on: (i) the interest rate and monthly payment made available to the dealer’s customer; (ii) any fees to be charged
to (or paid to) the dealer by the financing source; (iii) the timeliness, consistency, and predictability of response; (iv) funding turnaround
time; (v) any conditions to purchase; and (vi) the financial stability of the financing source. Dealers can send credit applications to
us by entering the necessary data on our website or through one of two third-party application aggregators. For the year ended December
31, 2024, we received 3.3 million applications. Approximately 57% of all applications came through DealerTrack (the industry leading dealership
application aggregator), 43% via another aggregator, Route One. A portion of the DealerTrack and Route One volume are applications from
our pass-through arrangements with other lenders who send us applications from their dealers in cases where those lenders choose not to
approve those applications. For the year ended December 31, 2024, such pass-through applications represented 41% of our total applications.
For the year ended December 31, 2024, our automated application decisioning system produced our initial decision within seconds on approximately
99% of those applications.

 Upon receipt an application,
if the application meets certain minimum criteria, we immediately order two credit reports to document the buyer’s credit history and
an alternative data credit score provided by a major credit reporting bureau. If, upon review by our proprietary automated decisioning
system, or in some cases, one of our credit analysts, we determine that the applicant and structure of the automobile financing contract
meets our criteria, we advise the dealer of our decision to approve the contract and the terms under which we will purchase it. For applications
that do not meet our criteria, we may forward them to one or more business partners who also invest in subprime automobile contracts.
In the case of one third-party partner, as described above, we may purchase contracts they approve, followed by immediate resale to them,
after which we retain the servicing. If this third-party declines the application, we advise the dealer that we will not purchase the
contract. Other partners to whom we refer applications may or may not choose to purchase such contracts by working directly with the dealers
who submitted the applications. Unless otherwise notated, contract origination and managed portfolio data discussed herein includes third-party
contracts.

 Dealers with which we do business
are under no obligation to submit any automobile contracts to us, nor are we obligated to purchase any automobile contracts from them.
During the year ended December 31, 2024, no dealer accounted for as much as 2% of the total number of automobile contracts we purchased.

 Under our direct lending platform,
the applicant submits a credit application directly to us via our website, or in some cases, through a third-party who accepts such applications
and refers them to us for a fee. In either case, we process the application with the same automated application decisioning process as
described above for applications from dealers. We then advise the applicant as to whether we would grant them credit and on what terms.

 The following table sets forth
the geographical sources of the automobile contracts we originated (based on the addresses of the customers as stated on our records)
during the years ended December 31, 2024 and 2023.

 Contracts Purchased During the Year Ended 

 December 31, 2024 
 December 31, 2023 

 Number 
 Percent (1) 
 Number 
 Percent (1) 

 Texas 
 5,985 
 7.8% 
 4,620 
 7.1% 

 Ohio 
 5,643 
 7.3% 
 4,015 
 6.2% 

 California 
 4,583 
 6.0% 
 3,911 
 6.0% 

 Illinois 
 4,399 
 5.7% 
 4,482 
 6.9% 

 Florida 
 4,148 
 5.4% 
 3,489 
 5.4% 

 Georgia 
 3,432 
 4.5% 
 2,598 
 4.0% 

 Other States 
 48,819 
 63.4% 
 42,022 
 64.5% 

 Total 
 77,009 
 100.0% 
 65,137 
 100.0% 

 (1) Percentages may not total to 100.0% due to rounding. 

 3 

 The following table sets forth the geographic concentrations
of our outstanding managed portfolio as of December 31, 2024 and 2023.

 Outstanding Managed Portfolio as of 

 December 31, 2024 
 December 31, 2023 

 Amount 
 Percent (1) 
 Amount 
 Percent (1) 

 ($ in millions) 

 California 
 $ 275.2 
 7.5% 
 $ 274.7 
 8.6% 

 Texas 
 287.3 
 7.8% 
 237.6 
 7.4% 

 Ohio 
 265.5 
 7.2% 
 232.7 
 7.3% 

 Illinois 
 204.3 
 5.6% 
 173.3 
 5.4% 

 Florida 
 185.0 
 5.0% 
 160.2 
 5.0% 

 Pennsylvania 
 168.3 
 4.6% 
 152.8 
 4.8% 

 All others 
 2,280.1 
 62.2% 
 1,963.3 
 61.5% 

 Total 
 $ 3,665.7 
 100.0% 
 $ 3,194.6 
 100.0% 

 (1) Percentages may not total to 100.0% due to rounding. 

 We purchase automobile contracts
from dealers at a price generally computed as the total amount financed under the automobile contracts, adjusted for an acquisition fee,
which may be comprised of multiple components and which may either increase or decrease the automobile contract purchase price we pay.
The amount of the acquisition fee, and whether it results in an increase or decrease to the automobile contract purchase price, is based
on the perceived credit risk of and, in some cases, the interest rate on the automobile contract. The following table summarizes the
average net acquisition fees we charged dealers and the weighted average annual percentage rate on contracts purchased for our own portfolio
for the periods shown:

 2024 
 2023 
 2022 
 2021 
 2020 

 Average net acquisition fee charged (paid) to dealers (1) 
 $ (50 ) 
 $ 98 
 $ (150 ) 
 $ (65 ) 
 $ 71 

 Average net acquisition fee as % of amount financed (1) 
 -0.2% 
 1.3% 
 -0.7% 
 -0.3% 
 0.4% 

 Weighted average annual percentage interest rate 
 20.4% 
 20.9% 
 18.4% 
 17.8% 
 19.3% 

 (1) 
 Not applicable to direct lending platform 

 Our pricing strategy is driven
by our objectives for new contract purchase quantities and maximizing our risk adjusted yield. We believe that levels of acquisition fees
are determined primarily by competition in the marketplace, which has been robust over the periods presented, and by our pricing strategy.
We make changes to our pricing algorithm based on our volume goals, our own costs for borrowing and periodic recalibration of our risk-based
scoring models.

 We have offered eight different
financing programs, and price each program according to the relative credit risk. Our programs cover a wide band of the sub-prime credit
spectrum and are labeled as follows:

 First Time Buyer 
– This program accommodates an applicant who has limited significant past credit history, such as a previous auto loan. Since the
applicant has limited credit history, the contract interest rate and dealer acquisition fees tend to be higher, and the loan amount, loan-to-value
ratio, down payment, and payment-to-income ratio requirements tend to be more restrictive compared to our other programs.

 4 

 Mercury / Delta 
– This program accommodates an applicant who may have had significant past non-performing credit including recent derogatory credit.
As a result, the contract interest rate and dealer acquisition fees tend to be higher, and the loan amount, loan-to-value ratio, down
payment, and payment-to-income ratio requirements tend to be more restrictive compared to our other programs.

 Standard 
– This program accommodates an applicant who may have significant past non-performing credit, but who has also exhibited some performing
credit in their history. The contract interest rate and dealer acquisition fees are comparable to the First Time Buyer and Mercury/Delta
programs, but the loan amount and loan-to-value ratio requirements are somewhat less restrictive.

 Alpha –
This program accommodates applicants who may have a discharged bankruptcy, but who have also exhibited performing credit. In addition,
the program allows for homeowners who may have had other significant non-performing credit in the past. The contract interest rate and
dealer acquisition fees are lower than the Standard program, down payment and payment-to-income ratio requirements are somewhat less restrictive.

 Alpha Plus –
This program accommodates applicants with past non-performing credit, but with a stronger history of recent performing credit, such as
auto or mortgage related credit, and higher incomes than the Alpha program. Contract interest rates and dealer acquisition fees are lower
than the Alpha program.

 Super Alpha 
– This program accommodates applicants with past non-performing credit, but with a somewhat stronger history of recent performing
credit, including auto or mortgage related credit, and higher incomes than the Alpha Plus program. Contract interest rates and dealer
acquisition fees are lower, and the maximum loan amount is somewhat higher, than the Alpha Plus program.

 Preferred 
- This program accommodates applicants with past non-performing credit, but who demonstrate a somewhat stronger history of recent performing
credit than the Super Alpha program. Contract interest rates and dealer acquisition fees are lower, and the maximum loan amount is somewhat
higher than the Super Alpha program.

 Meta - This
program accommodates applicants with past non-performing credit, but who demonstrate a stronger history of recent performing credit than
the Preferred program. Contract interest rates and dealer acquisition fees are lower, and the maximum loan amount is somewhat higher than
the Preferred program.

 Our upper credit tier products,
which are our Meta, Preferred, Super Alpha, Alpha Plus and Alpha programs, accounted for approximately 89% of our new contract acquisitions
for our own portfolio in 2024, 83% in 2023, and 80% in 2022, measured by aggregate amount financed.

 The following table identifies
the credit program, sorted from highest to lowest credit quality, under which we originated automobile contracts during the years ended
December 31, 2024 and 2023.

 Contracts Purchased During the Year Ended (1) 

 December 31, 2024 
 December 31, 2023 

 (dollars in thousands) 

 Program 
 Amount Financed 
 Percent (1) 
 Amount Financed 
 Percent (1) 

 Meta 
 $ 55,241 
 3.3% 
 $ 45,319 
 3.3% 

 Preferred 
 278,044 
 16.5% 
 175,122 
 12.9% 

 Super Alpha 
 338,156 
 20.1% 
 265,385 
 19.5% 

 Alpha Plus 
 372,345 
 22.1% 
 179,526 
 13.2% 

 Alpha 
 424,433 
 25.2% 
 383,512 
 28.2% 

 Standard 
 116,159 
 6.9% 
 103,499 
 7.6% 

 Mercury / Delta 
 27,554 
 1.6% 
 52,250 
 3.8% 

 First Time Buyer 
 37,317 
 2.2% 
 52,313 
 3.9% 

 Third Parties 
 32,692 
 1.9% 
 100,826 
 7.4% 

 $ 1,681,941 
 100.0% 
 $ 1,357,752 
 100.0% 

 (1) Percentages may not total to 100.0% due to rounding. 

 5 

 We attempt to control misrepresentation
regarding the customer’s credit worthiness by carefully screening the automobile contracts we originate, by establishing and maintaining
professional business relationships with dealers, and by including certain representations and warranties by the dealer in the dealer
agreement. Pursuant to the dealer agreement, we may require the dealer to repurchase any automobile contract if the dealer breaches its
representations or warranties. There can be no assurance, however, that any dealer will have the willingness or the financial resources
to satisfy their repurchase obligations to us.

 Contract Funding

 For automobile contracts that
we purchase from dealers, we require that the contract be originated by a dealer that has entered into a dealer agreement with us. Under
our direct lending platform, we required the customer to sign a note and security agreement. In each case, the contract is secured by
a first priority lien on a new or used automobile, light truck or passenger van and must meet our funding criteria. In addition, each
automobile contract requires the customer to maintain physical damage insurance covering the financed vehicle and naming us as a loss
payee. We may, nonetheless, suffer a loss upon theft or physical damage of any financed vehicle if the customer fails to maintain insurance
as required by the automobile contract and is unable to pay for repairs to or replacement of the vehicle.

 Our technology and human expertise
provides for a 360-degree evaluation of an applicant’s employment and residence stability, income level and affordability, and creditworthiness
in relation to the desired collateral securing the automobile contract. This perspective is used to assign application and structure allowances
and limits related to price, term, amount of down payment, monthly payment, and interest rate; type of vehicle; and principal amount of
the automobile contract in relation to the value of the vehicle.

 Specifically, our funding
guidelines generally limit the maximum principal amount of a purchased automobile contract to 125% of wholesale book value in the case
of used vehicles or to 125% of the manufacturer’s invoice in the case of new vehicles, plus, in each case, sales tax, licensing and, when
the customer purchases such additional items, a service contract or a product to supplement the customer’s casualty policy in the
event of a total loss of the related vehicle. We generally do not finance vehicles that are more than 15 model years old or have more
than 200,000 miles. The maximum term of a purchased contract is 78 months, although we consider the program, amount financed, and mileage
as significant factors in determining the maximum term of a contract. Automobile contract purchase criteria are subject to change from
time to time as circumstances may warrant. Prior to purchasing an automobile contract, our funding staff verify the customer’s employment,
income, residency, and credit information by contacting various parties noted on the customer’s application, credit information bureaus
and other sources. In addition, we contact each customer by telephone to confirm that the customer understands and agrees to the terms
of the related automobile contract. During this " welcome call, " 
we also ask the customer a series of open-ended questions about his application and the contract, which may uncover potential misrepresentations.

 Credit Scoring . We
use proprietary scoring models to assign two internal "credit scores" at the time the application is received. These proprietary
scores are used to help determine whether we want to approve the application and, if so, the program and pricing we will offer either
to the dealer, or in the case of our direct lending platform, directly to the customer. Our internal credit scores are based on a variety
of parameters including traditional and alternative credit history, data derived from other sources such as house/rental payment, length
of employment, residence stability and total income. When the dealer proposes a structure for the contract, our scores consider various
deal structure parameters such as down payment amount, loan to value, payment to income, make and model, vehicle class, and mileage. We
have developed our credit scores utilizing statistical risk management techniques and historical performance data from our managed portfolio.
We believe this improves our allocation of credit evaluation resources, enhances our competitiveness in the marketplace and manages the
risk inherent in the sub-prime market.

 6 

 Characteristics of Contracts. All
the automobile contracts we purchase are fully amortizing and provide for level payments over the term of the automobile contract. All
automobile contracts may be prepaid at any time without penalty. The table below compares certain characteristics, at the time of origination,
of our contract purchases for the years ended December 31, 2024 and 2023:

 Contracts Purchased During the Year Ended 

 December 31, 2024 
 December 31, 2023 

 Average Original Amount Financed 
 $ 21,931 
 $ 20,845 

 Weighted Average Original Term 
 71 months 
 67 months 

 Average Down Payment Percent 
 10.7% 
 10.7% 

 Average Vehicle Purchase Price 
 $ 20,499 
 $ 19,651 

 Average Age of Vehicle 
 7 years 
 7 years 

 Average Age of Customer 
 42 years 
 42 years 

 Average Time in Current Job 
 5 years 
 5 years 

 Average Household Annual Income 
 $ 74,655 
 $ 72,930 

 Dealer Compliance . The
dealer agreement and related assignment contain representations and warranties by the dealer that an application for state registration
of each financed vehicle, naming us as secured party with respect to the vehicle, was effected by the time of sale of the related automobile
contract to us, and that all necessary steps have been taken to obtain a perfected first priority security interest in each financed vehicle
in favor of us under the laws of the state in which the financed vehicle is registered. To the extent that we do not receive such state
registration within three months of purchasing the automobile contract, our dealer compliance group will work with the dealer to rectify
the situation. If these efforts are unsuccessful, we generally will require the dealer to repurchase the automobile contract.

 Servicing and Collections

 We currently service all automobile
contracts that we own as well as those automobile contracts we service for third parties. We organize our servicing activities based on
the tasks performed by our personnel. Our servicing activities consist of mailing monthly billing statements; contacting obligors whose
payments are late; accounting for and posting of all payments received; responding to customer inquiries; taking all necessary action
to maintain the security interest granted in the financed vehicle or other collateral; skip tracing; repossessing and liquidating the
collateral when necessary; collecting deficiency balances; and generally monitoring each automobile contract and the related collateral.
For contracts that we securitize, we are typically entitled to receive a base monthly servicing fee equal to 2.5% per annum computed as
a percentage of the declining outstanding principal balance of the non-charged-off automobile contracts . The servicing fee is included
in interest income for contracts that are pledged to a warehouse credit facility or a securitization transaction. For contracts we service
for third parties, we receive a base monthly servicing fee equal to 2.5%, and certain other incentive fees tied to credit performance.

 Collection Procedures. We
believe that our ability to monitor performance and collect payments owed from sub-prime customers is primarily a function of our collection
approach and support systems. We believe that if payment problems are identified early and our collection staff works closely with customers
to address these problems, it is possible to correct many problems before they deteriorate further. To this end, we utilize pro-active
collection procedures, which include making early and frequent contact with delinquent customers; educating customers as to the importance
of making payments according to their contract schedule; and employing a consultative and customer service approach to assist the customer
in meeting his or her obligations, which includes attempting to identify the underlying causes of delinquency and cure them whenever possible.
In support of our collection activities, we maintain a computerized collection system specifically designed to service automobile contracts
with sub-prime customers. We engage a nearshore third-party call center to supplement the efforts the collectors in our five branch locations.
As of December 31, 2024, our nearshore partner had approximately 47 agents assigned to our portfolio.

 7 

 We attempt to make telephonic
contact with delinquent customers from one to 20 days after their monthly payment due date, depending on our risk-based assessment of
the customer’s likelihood of payment during early stages of delinquency. If a customer has authorized us to do so, we may also send
automated text message reminders at various stages of delinquency and our collectors may also choose to contact a customer via text message
instead of, or in addition to, via telephone. Our customers can contact us via a toll-free number where they may choose to speak with
a collector or to use our automated voice response system to access information about their account or to make a payment. They may respond
to our collector’s text messages or chat with one of our collectors while logged into our website. Our contact priorities may be
based on the customers’ physical location, stage of delinquency, size of balance or other parameters. Our collectors inquire of the customer
the reason for the delinquency and when we can expect to receive the payment. The collector attempts to get the customer to make a payment
or a promise for the payment for a time generally not to exceed one week from the date of the call. If the customer makes such a promise,
the account is routed to a promise queue and is not contacted until the outcome of the promise is known. If the payment is made by the
promise date and the account is no longer delinquent, the account is routed out of the collection system. If the payment is not made,
or if the payment is made, but the account remains delinquent, the account is returned to a collector’s queue for subsequent contacts.

 If a customer fails to make
or keep promises for payments, or if the customer is uncooperative or attempts to evade contact or hide the vehicle, a supervisor will
review the collection activity relating to the account to determine if repossession of the vehicle is warranted. Generally, such a decision
will occur between the 60th and 90th day past the customer’s payment due date, but could occur sooner or later, depending on the specific
circumstances. Contracts originated since January 2018 are accounted for at fair value and the economic impact of repossessions is incorporated
into the estimated net yield on those contracts. For contracts originated prior to January 2018, which are not accounted for at fair value,
we suspend interest accruals on contracts where the vehicle has been repossessed and reclassify the remaining automobile contract balance
to other assets. In addition, we apply a specific reserve to such contracts so that the net balance represents the estimated remaining
balance after the proceeds of the sale of the vehicle are applied, net of related costs.

 If we elect to repossess the
vehicle, we assign the task to an independent national repossession service. Such services are licensed and/or bonded as required by law.
Upon repossession it is stored until it is picked up by a wholesale auction that we designate, where it is kept until sold. Prior to sale,
the customer has the right to redeem the vehicle by paying the contract in full. In some cases, we may return the vehicle to the customer
if they pay all, or what we deem to be a sufficient amount, of the past due amount. Financed vehicles that have been repossessed are generally
resold through unaffiliated automobile auctions, which are attended principally by car dealers. Net liquidation proceeds are applied to
the customer’s outstanding obligation under the automobile contract. Such proceeds usually are insufficient to pay the customer’s obligation
in full, resulting in a deficiency. In most cases we will continue to contact our customers to recover all or a portion of this deficiency
for up to several years after charge-off. From time to time, we sell certain charged off accounts to unaffiliated purchasers who specialize
in collecting such accounts.

 Contracts originated since
January 2018 are accounted for at fair value and the economic impact of late payments is incorporated into the estimated net yield on
those contracts. For contracts originated prior to January 2018, which are not accounted for at fair value, we suspend interest accruals
on contracts once an automobile contract becomes greater than 90 days delinquent. We do not recognize additional interest income until
the borrower makes sufficient payments to be less than 90 days delinquent. Any payments received by a borrower, regardless of their stage
of delinquency are first applied to outstanding accrued interest and then to principal reduction.

 We generally charge off the
balance of any contract by the earlier of the end of the month in which the automobile contract becomes five scheduled installments past
due or, in the case of repossessions, the month after we receive the proceeds from the liquidation of the financed vehicle or if the vehicle
has been in repossession inventory for more than three months. In the case of repossession, the amount of the charge-off is the difference
between the outstanding principal balance of the defaulted automobile contract and the net repossession sale proceeds.

 Credit Experience

 Our primary method of monitoring
ongoing credit quality of our portfolio is to closely review monthly delinquency, default and net charge off activity and the related
trends. Our internal credit performance data consistently show that new receivables have lower levels of delinquency and losses early
in their lives, with delinquencies increasing throughout their lives and incremental losses gradually increasing to a peak around 18
months, after which they gradually decrease. The weighted average seasoning of our total owned portfolio, represented in the tables below,
was 17 months, 19 months, and 17 months as of December 31, 2024, December 31, 2023, and December 31, 2022, respectively. Our financial
results are dependent on the performance of the automobile contracts in which we retain an ownership interest. Broad economic factors
such as recessions and significant changes in unemployment levels influence the credit performance of our portfolio, as does the weighted
average age of the receivables at any given time. The tables below document the delinquency, repossession, and net credit loss experience
of all such automobile contracts that we own as of the respective dates shown.

 8 

 Delinquency, Repossession
and Extension Experience 

 December 31, 2024 
 December 31, 2023 
 December 31, 2022 

 Number of 
 
 Number of 
 
 Number of 
 
 Contracts 
 Amount 
 Contracts 
 Amount 
 Contracts 
 Amount 

 Delinquency Experience 
 (Dollars in thousands) 

 Gross servicing portfolio (1) 
 201,441 
 $ 3,490,960 
 179,198 
 $ 2,970,066 
 170,658 
 $ 2,795,383 

 Period of delinquency (2) 
 
 31-60 days 
 14,643 
 243,068 
 13,337 
 210,200 
 13,434 
 201,764 

 61-90 days 
 7,244 
 114,633 
 6,717 
 104,144 
 5,481 
 80,146 

 91+ days 
 4,477 
 65,081 
 3,252 
 50,610 
 2,148 
 31,036 

 Total delinquencies (2) 
 26,364 
 422,782 
 23,306 
 364,954 
 21,063 
 312,946 

 Amount in repossession (3) 
 6,227 
 95,620 
 4,653 
 67,182 
 2,904 
 41,401 

 Total delinquencies and amount in repossession (2) 
 32,591 
 $ 518,402 
 27,959 
 $ 432,136 
 23,967 
 $ 354,347 

 Delinquencies as a percentage of gross servicing portfolio 
 13.1% 
 12.1% 
 13.0% 
 12.3% 
 12.3% 
 11.2% 

 Total delinquencies and amount in repossession as a percentage of gross servicing portfolio 
 16.2% 
 14.8% 
 15.6% 
 14.5% 
 14.0% 
 12.7% 

 Extension Experience 
 
 Contracts with one extension, accruing 
 33,623 
 $ 601,049 
 33,920 
 $ 610,617 
 27,584 
 $ 464,323 

 Contracts with two or more extensions, accruing 
 47,227 
 701,158 
 42,462 
 563,308 
 38,714 
 417,682 

 80,850 
 1,302,207 
 76,382 
 1,173,925 
 66,298 
 882,005 

 Contracts with one extension, non-accrual (4) 
 3,483 
 53,018 
 2,367 
 38,933 
 981 
 14,792 

 Contracts with two or more extensions, non-accrual (4) 
 4,052 
 60,660 
 2,081 
 27,497 
 1,485 
 15,395 

 7,535 
 113,678 
 4,448 
 66,430 
 2,466 
 30,187 

 Total accounts with extensions 
 88,385 
 $ 1,415,885 
 80,830 
 $ 1,240,355 
 68,764 
 $ 912,192 

 (1) All amounts and percentages
are based on the amount remaining to be repaid on each automobile contract. The information in the table represents the gross principal
amount of all automobile contracts we purchased, including automobile contracts we subsequently sold in securitization transactions that
we continue to service. The table does not include certain contracts we have serviced for third parties on which we earn servicing fees
only, and have no credit risk. 

 (2) We consider an automobile contract delinquent when an obligor fails to make at least 90% of a contractually due payment by the following
due date, which date may have been extended within limits specified in the servicing agreements. The period of delinquency is based on
the number of days payments are contractually past due. Automobile contracts less than 31 days delinquent are not included. The delinquency
aging categories shown in the tables reflect the effect of extensions. 

 (3) Amount in repossession represents the contract balance on financed vehicles that have been repossessed but not yet liquidated. 

 (4) We do not recognize interest income on accounts past due more than 90 days. 

 9 

 Net Credit Loss Experience
 (1) 

 Total Managed Portfolio
(Excludes Third Party Portfolio) 

 Year Ended December 31, 

 2024 
 2023 
 2022 

 (Dollars in thousands) 

 Average portfolio outstanding 
 $ 3,209,988 
 $ 2,913,571 
 $ 2,539,110 

 Net charge-offs as a percentage of average portfolio (2) 
 7.6% 
 6.5% 
 4.5% 

 (1) All amounts and percentages are based on the principal amount scheduled to be paid on each automobile contract contracts. The information
in the table represents all automobile contracts we service, excluding certain contracts we have serviced for third parties on which we
earn servicing fees only, and have no credit risk. 

 (2) Net charge-offs include the remaining principal balance, after the application of the net proceeds from the liquidation of the
vehicle (excluding accrued and unpaid interest) and amounts collected after the date of charge-off, including some recoveries which have
been classified as other income in the accompanying financial statements. 

 Extensions 

 In certain circumstances we
will grant obligors one-month payment extensions to assist them with temporary cash flow problems. In general, an obligor will not be
permitted more than two such extensions in any 12-month period and no more than eight over the life of the contract. The only modification
of terms is to advance the obligor’s next due date, generally by one month, though in some cases we may permit a longer extension,
and in any case an advance in the maturity date corresponding to the advance of the due date. 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 basic question in deciding to grant an extension
is whether we will (a) be delaying an inevitable repossession and liquidation or (b) risk losing the vehicle as a result of not being
able to locate the obligor and vehicle. In both of those situations, the loss would likely be higher than if the vehicle had been repossessed
without the extension. The benefits of granting an extension include minimizing current losses and delinquencies, minimizing lifetime
losses, getting the obligor’s account current (or close to it) and building goodwill with the obligor so that he might prioritize
us over other creditors on future payments. Our servicing staff are trained to identify when a past due obligor is facing a temporary
problem that may be resolved with an extension.

 The credit assessment for granting an extension
is initially made by our collector, who bases the recommendation on the collector’s discussions with the obligor. In such assessments
the collector will consider, among other things, the following factors: (1) the reason the obligor has fallen behind in payments; (2)
whether or not the reason for the delinquency is temporary, and if it is, have conditions changed such that the obligor can begin making
regular monthly payments again after the extension; (3) the obligor’s past payment history, including past extensions if applicable; and
(4) the obligor’s willingness to communicate and cooperate on resolving the delinquency. If the collector believes the obligor is
a good candidate for an extension, he must obtain approval from his supervisor, who will review the same factors stated above prior to
offering the extension to the obligor. During 2020 we incorporated an algorithmic extension score card which provides our staff with an
objective and quantitative assessment of whether or not a obligor is a good candidate for an extension, based on the current circumstances
of the account. The extension score card was developed by our internal risk management team and is derived from the post-extension performance
of accounts in our managed portfolio.

 10 

 After receiving an extension,
an account remains subject to our normal policies and procedures for interest accrual, reporting delinquency and recognizing charge-offs.
We believe that a prudent extension program is an integral component to mitigating losses in our portfolio of sub-prime automobile receivables.
The table below summarizes the status, as of December 31, 2024, for accounts that received extensions from 2013 through 2023:

 Period of Extension 
 # of Extensions Granted 
 Active or Paid Off at December 31, 2024 
 % Active or Paid Off at December 31, 2024 
 Charged Off > 6 Months After Extension 
 % Charged Off > 6 Months After Extension 
 Charged Off <= 6 Months After Extension 
 % Charged Off <= 6 Months After Extension 
 Avg Months to Charge Off Post Extension 

 2013 
 23,398 
 11,131 
 47.6% 
 11,282 
 48.2% 
 985 
 4.2% 
 23 

 2014 
 25,773 
 10,423 
 40.4% 
 14,485 
 56.2% 
 865 
 3.4% 
 25 

 2015 
 53,319 
 21,965 
 41.2% 
 30,051 
 56.4% 
 1,303 
 2.4% 
 26 

 2016 
 80,897 
 35,108 
 43.4% 
 42,954 
 53.1% 
 2,835 
 3.5% 
 26 

 2017 
 133,847 
 55,504 
 41.5% 
 68,124 
 50.9% 
 10,219 
 7.6% 
 23 

 2018 
 121,531 
 57,265 
 47.1% 
 53,268 
 43.8% 
 10,998 
 9.0% 
 20 

 2019 
 71,548 
 42,621 
 59.6% 
 22,507 
 31.5% 
 6,420 
 9.0% 
 19 

 2020 
 83,170 
 56,198 
 67.6% 
 23,305 
 28.0% 
 3,667 
 4.4% 
 21 

 2021 
 47,010 
 33,486 
 71.2% 
 12,288 
 26.1% 
 1,236 
 2.6% 
 19 

 2022 
 56,142 
 39,610 
 70.6% 
 14,578 
 26.0% 
 1,954 
 3.5% 
 15 

 2023 
 83,113 
 65,309 
 78.6% 
 14,545 
 17.5% 
 3,259 
 3.9% 
 11 

 We view these results as a
confirmation of the effectiveness of our extension program. We consider accounts that have had extensions and were active or paid off
as of December 31, 2024 to be successful. Successful extensions result in continued payments of interest and principal (including payment
in full in many cases). Without the extension, however, the account may have defaulted, and we would have likely incurred a substantial
loss and no additional interest revenue.

 For extension accounts that
ultimately charged off, we consider accounts that charged off more than six months after the extension to be at least partially successful.
In such cases, despite the ultimate loss, we received additional payments of principal and interest that otherwise we would not have
received.

 Additional information about our extensions is provided in the tables
below:

 For the Year Ended 

 December 31, 2024 
 December 31, 2023 
 December 31, 2022 

 Average number of extensions granted per month 
 7,540 
 6,926 
 4,689 

 Average number of outstanding accounts 
 189,460 
 176,438 
 162,264 

 Average monthly extensions as % of average outstandings 
 4.0% 
 3.9% 
 2.9% 

 11 

 December 31, 2024 
 December 31, 2023 
 December 31, 2022 

 Number of Contracts 
 Amount 
 Number of Contracts 
 Amount 
 Number of Contracts 
 Amount 

 (Dollars in thousands) 

 Contracts with one extension 
 37,106 
 $ 654,067 
 36,287 
 $ 649,551 
 28,565 
 $ 479,114 

 Contracts with two extensions 
 22,452 
 382,301 
 19,335 
 326,552 
 13,730 
 180,547 

 Contracts with three extensions 
 13,300 
 214,194 
 10,109 
 133,207 
 9,837 
 108,986 

 Contracts with four extensions 
 7,462 
 99,071 
 6,784 
 67,735 
 7,938 
 76,220 

 Contracts with five extensions 
 4,645 
 43,264 
 5,197 
 42,734 
 5,425 
 45,519 

 Contracts with six extensions 
 3,420 
 22,988 
 3,118 
 20,576 
 3,269 
 21,806 

 88,385 
 $ 1,415,885 
 80,830 
 $ 1,240,355 
 68,764 
 $ 912,192 

 Gross servicing portfolio (Excludes Third Party Portfolio) 
 201,441 
 $ 3,490,960 
 179,198 
 $ 2,970,066 
 170,658 
 $ 2,795,383 

 Non-Accrual Receivables 

 It is not uncommon for our
obligors to fall behind in their payments. However, with the diligent efforts of our servicing staff and systems for managing our collection
efforts, we regularly work with our customers to resolve delinquencies. Our staff is trained to employ a counseling approach to assist
our customers with their cash flow management skills and help them to prioritize their payment obligations to avoid losing their vehicle
to repossession. Through our experience, we have learned that once a contract becomes greater than 90 days past due, it is more likely
than not that the delinquency will not be resolved and will ultimately result in a charge-off. Contracts originated since January 2018
are accounted for at fair value and the economic impact of late payments is incorporated into the estimated net yield on those contracts.

 If an obligor exceeds the
90 days past due threshold at the end of one period, and then makes the necessary payments such that it becomes equal to or below 90 days
delinquent at the end of a subsequent period, the related contract would be restored to full accrual status for our financial reporting
purposes. At the time a contract is restored to full accrual in this manner, there can be no assurance that full repayment of interest
and principal will ultimately be made. However, we monitor each obligor’s payment performance and are aware of the severity of his
delinquency at any time. The fact that the delinquency has been reduced below the 90-day threshold is a positive indicator. Should the
contract again exceed the 90-day delinquency level at the end of any reporting period, it would again be reflected as a non-accrual account.

 Our policy for placing a contract
on non-accrual status is independent of our policy to grant an extension. In practice, it would be an uncommon circumstance where an extension
was granted and the account remained in a non-accrual status, since the goal of the extension is to bring the contract current (or nearly
current).

 Securitization of Automobile Contracts

 Throughout the period for which
information is presented in this report, we have purchased automobile contracts with the intention of financing them on a long-term basis
through securitizations, and on an interim basis through warehouse credit facilities. All such financings have involved identification
of specific automobile contracts, sale of those automobile contracts (and associated rights) to one of our special-purpose subsidiaries,
and issuance of asset-backed securities to be purchased by institutional investors. Depending on the structure, these transactions may
be accounted for under generally accepted accounting principles as sales of the automobile contracts or as secured financings.

 12 

 When structured to be treated
as a secured financing for accounting purposes, the subsidiary is consolidated with us. Accordingly, the sold automobile contracts and
the related debt appear as assets and liabilities, respectively, on our consolidated balance sheet. We then periodically (i) recognize
interest and fee income on the contracts, (ii) recognize interest expense on the securities issued in the transaction and (iii) record
as expense a provision for credit losses on the contracts. Effective January 1, 2018, we adopted the fair value method of accounting for
finance receivables acquired on or after that date. For these receivables, we recognize interest income on a level yield basis using that
internal rate of return as the applicable interest rate. We do not record an expense for provision for credit losses on these receivables
because such credit losses are included in our computation of the appropriate level yield.

 Since 1994 we have conducted
103 term securitizations of automobile contracts that we originated under our regular programs. As of December 31, 2024, 17 of those securitizations
are active and all are structured as secured financings. We generally conduct our securitizations on a quarterly basis, near the beginning
of each calendar quarter, resulting in four securitizations per calendar year. However, we completed only three securitizations in 2020.
In April 2020 we postponed our planned securitization due to the onset of the pandemic and the effective closure of the capital markets
in which our securitizations are executed. Subsequently we successfully completed securitizations in June and September 2020.

 Our recent history of term securitizations is summarized
in the table below:

 Recent Asset-Backed Securitizations 

 $ in thousands 

 Period 
 Number of Term

 Securitizations
 
 Amount of

 Receivables
 
 2018 
 4 
 883,452 

 2019 
 4 
 1,014,124 

 2020 
 3 
 741,867 

 2021 
 4 
 1,145,002 

 2022 
 4 
 1,537,383 

 2023 
 4 
 1,352,114 

 2024 
 4 
 1,533,854 

 From time to time we have
also completed financings of our residual interests in other securitizations that we and our affiliates previously sponsored. On June
30, 2021, we completed a $50.0 million securitization of residual interests from previously issued securitizations. In this residual interest
financing transaction, qualified institutional buyers purchased $50.0 million of asset-backed notes secured by residual interests in three
CPS securitizations consecutively conducted from January 2018 through July 2018, and an 80% interest in a CPS affiliate that owns the
residual interests in the eight CPS securitizations conducted from October 2018 through September 2020. As of December 31, 2024, the notes
had a principal balance of $50.0 million.

 On March 31, 2024, we completed
a new residual interest financing of our residual interests from previously issued securitizations in the amount of $50.0 million. In
this residual interest financing transaction, 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%. As of December 31, 2024, the notes had a principal balance of $50.0 million.

 Generally, prior to a securitization
transaction we fund our automobile contract acquisitions primarily with proceeds from warehouse credit facilities. Our current short-term
funding capacity is $535 million, comprising two credit facilities. The first credit facility was established in May 2012. This facility
was most recently renewed in July 2024, extending the revolving period to July 2026, with an optional amortization period through July
2027. In addition, the capacity was increased from $200 million to $335 million in December 2024.

 13 

 In November 2015, we entered
into another $100 million facility. In June 2022, we increased the capacity of our credit agreement with Ares Agent Services, L.P. from
$100 million to $200 million. This facility was most recently renewed in March 2024, extending the revolving period to March 2026, followed
by an amortization period to March 2028.

 In a securitization and in
our warehouse credit facilities, we are required to make certain representations and warranties, which are generally similar to the representations
and warranties made by dealers in connection with our purchase of the automobile contracts. If we breach any of our representations or
warranties, we may be required to repurchase the automobile contract at a price equal to the principal balance plus accrued and unpaid
interest. We may then be entitled under the terms of our dealer agreement to require the selling dealer to repurchase the contract at
a price equal to our purchase price, less any principal payments made by the customer. Subject to any recourse against dealers, we will
bear the risk of loss on repossession and resale of vehicles under automobile contracts that we repurchase.

 Whether a securitization is
treated as a secured financing or as a sale for financial accounting purposes, the related special purpose subsidiary may be unable to
release excess cash to us if the credit performance of the securitized automobile contracts falls short of pre-determined standards. Such
releases represent a material portion of the cash that we use to fund our operations. An unexpected deterioration in the performance of
securitized automobile contracts could therefore have a material adverse effect on both our liquidity and results of operations, regardless
of whether such automobile contracts are treated as having been sold or as having been financed.

 Certain of our securitization
transactions and our warehouse credit facilities contain various financial covenants requiring certain minimum financial ratios and results.
Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels. In addition, certain
securitization and non-securitization related debt contain cross-default provisions that would allow certain creditors to declare a default
if a default occurred under a different facility. As of December 31, 2024, we were in compliance with all such covenants.

 Competition

 The automobile financing business
is highly competitive. We compete with several national, regional and local finance companies with operations similar to ours. In addition,
competitors or potential competitors include other types of financial services companies, such as banks, leasing companies, credit unions
providing retail loan financing and lease financing for new and used vehicles, and captive finance companies affiliated with major automobile
manufacturers. Many of our competitors and potential competitors possess substantially greater financial, sales, technical, personnel
and other resources than we do. Moreover, our future profitability will be directly related to the availability and cost of our capital
in relation to the availability and cost of capital to our competitors. Our competitors and potential competitors include far larger,
more established companies that have access to capital markets for unsecured commercial paper and investment grade-rated debt instruments
and to other funding sources that may be unavailable to us. Many of these companies also have long-standing relationships with dealers
and may provide other financing to dealers, including floor plan financing for the dealers’ purchase of automobiles from manufacturers,
which we do not offer.

 We believe that the principal
competitive factors affecting a dealer’s decision to offer automobile contracts for sale to a particular financing source are the monthly
payment amount made available to the dealer’s customer, the purchase price offered for the automobile contracts, the timeliness
of the response to the dealer upon submission of the initial application, the amount of required documentation, the consistency and timeliness
of purchases and the financial stability of the funding source. While we believe that we can obtain from dealers sufficient automobile
contracts for purchase at attractive prices by consistently applying reasonable underwriting criteria and making timely purchases of qualifying
automobile contracts, there can be no assurance that we will do so.

 14 

 Regulation

 Numerous federal and state
consumer protection laws, including the federal Truth-In-Lending Act, the federal Equal Credit Opportunity Act, the federal Fair
Debt Collection Practices Act and the Federal Trade Commission Act, regulate consumer credit transactions. These laws mandate certain
disclosures with respect to finance charges on automobile contracts and impose certain other restrictions. In most states, a license is
required to engage in the business of purchasing automobile contracts from dealers. In addition, laws in a number of states impose limitations
on the amount of finance charges that may be charged by dealers on credit sales. The so-called Lemon Laws enacted by various states provide
certain rights to purchasers with respect to automobiles that fail to satisfy express warranties. The application of Lemon Laws or violation
of such other federal and state laws may give rise to a claim or defense of a customer against a dealer and its assignees, including us
and those who purchase automobile contracts from us. The dealer agreement contains representations by the dealer that, as of the date
of assignment of automobile contracts, no such claims or defenses have been asserted or threatened with respect to the automobile contracts
and that all requirements of such federal and state laws have been complied with in all material respects. Although a dealer would be
obligated to repurchase automobile contracts that involve a breach of such warranty, there can be no assurance that the dealer will have
the financial resources to satisfy its repurchase obligations. Certain of these laws also regulate our servicing activities, including
our methods of collection.

 We are subject to supervision
and examination by the Consumer Financial Protection Bureau (the “CFPB”), a federal agency created by the Dodd-Frank Wall
Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The CFPB has rulemaking, supervisory and enforcement authority
over “non-banks,” including us. The CFPB is specifically authorized, among other things, to take actions to prevent companies
from engaging in “unfair, deceptive or abusive” acts or practices in connection with consumer financial products and services,
and to issue rules requiring enhanced disclosures for consumer financial products or services. The CFPB also has authority
to interpret, enforce and issue regulations implementing enumerated consumer laws, including certain laws that apply to us.

 The Dodd-Frank Act and related
regulations are likely to affect our cost of doing business, may limit or expand our permissible activities, may affect the competitive
balance within our industry and market areas and could have a material adverse effect on us. 

 In addition to the CFPB, other
state and federal agencies have the ability to regulate aspects of our business. For example, the Dodd-Frank Act provides a mechanism
for state Attorneys General to investigate us. In addition, the Federal Trade Commission has jurisdiction to investigate aspects of our
business. We expect that regulatory investigation by both state and federal agencies will continue, and there can be no assurance that
the results of such investigations will not have a material adverse effect on us.

 We believe that we are currently
in material compliance with applicable statutes and regulations; however, there can be no assurance that we are correct, nor that we will
be able to maintain such compliance. The past or future failure to comply with applicable statutes and regulations could have a material
adverse effect on us. Furthermore, the adoption of additional statutes and regulations, changes in the interpretation and enforcement
of current statutes and regulations or the expansion of our business into jurisdictions that have adopted more stringent regulatory requirements
than those in which we currently conduct business could have a material adverse effect on us. In addition, due to the consumer-oriented
nature of our industry and the application of certain laws and regulations, industry participants are regularly named as defendants in
litigation involving alleged violations of federal and state laws and regulations and consumer law torts, including fraud. Many of these
actions involve alleged violations of consumer protection laws. A significant judgment against us or within the industry in connection
with any such litigation could have a material adverse effect on our financial condition, results of operations or liquidity.

 Human Capital

 We rely on our employees for
everything we do. To make our business work, we seek to supply employees with the tools and knowledge they need to succeed. In addition
to new hire training, we provide mentor programs and management workshops. We offer an education costs assistance program to help with
college tuition and costs incurred to obtain job related certifications and licenses.

 15 

 Workforce Allocation and
Diversity We had 933 employees as of December 31, 2024. Our employee population was 67% female, and 71% self-identified as ethnically
diverse (defined as all EEOC classifications other than white). Broken out by function, our human capital was allocated thus: 14 were
senior management personnel; 552 were servicing personnel; 195 were automobile contract origination personnel; 122 were sales personnel;
50 were various administrative personnel including human resources, legal, accounting and systems.

 Compensation and benefits 
We offer a total rewards package, which includes competitive compensation, incentives, and comprehensive benefits that will attract, retain,
and motivate talent within our organization. Our compensation and benefits package includes competitive pay, healthcare, mental health,
retirement benefits, as well as paid time off and holidays, disability benefits, and volunteer time off, along with other benefits and
employee resources. We offer performance pay to help enhance career development.

 Employee Engagement 
Our means of evaluating our human capital resources include, on an individual basis, annual performance reviews and annual meetings with
senior management on or close to the employee’s anniversary date. Most departments meet one-on-one with employees monthly
to discuss performance, suggestions, and concerns. On an aggregate basis, we distribute new hire surveys and host department round table
meetings. The feedback from the meetings and survey results are reviewed by senior management and used to assist in reviewing our human
capital strategies, programs, and practices. Our COO holds town hall meetings to provide company-wide updates and conduct open Q&A
for all employees. We foster collaboration through charity committees which plan events to raise funds and/or provide resources to various
501(c)(3) organizations in our communities. We also offer paid community service time. Metrics used in human capital management include
average employee tenure and annual turnover rate. We believe that our relations with our employees are good. We are not a party to any
collective bargaining agreement.

 Available Information 

 Our internet address is www.consumerportfolio.com .
We make available free of charge on our internet web site our annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to,
the Securities and Exchange Commission.

 Item 1A. RISK FACTORS

 We are subject to various risks that may materially harm our business,
prospects, financial condition and results of operations. An investment in our common stock is speculative and involves risk. In evaluating
an investment in shares of our common stock, you should carefully consider the risks described below, together with the other information
included in this Annual Report on Form 10-K. 

 The risks described below are not the only risks we face. If any
of the events described in the following risk factors actually occurs, or if additional risks and uncertainties later materialize that
are not presently known to us or that we currently deem immaterial, then our business, prospects, results of operations and financial
condition could be materially adversely affected. In that event, the trading price of our common stock could decline, and you may lose
all or part of your investment in our shares. The risks discussed below include forward-looking statements, and our actual results may
differ substantially from those discussed in these forward-looking statements. See "Cautionary Note Regarding Forward-Looking Statements." 

 16 

 Risks Related to Our Business

 We Require a Substantial Amount of Cash to Service Our Substantial
Debt.

 To service our existing substantial
indebtedness, we require a significant amount of cash. Our ability to generate cash depends on many factors, including our successful
financial and operating performance. Our financial and operational performance depends upon a number of factors, many of which are beyond
our control. These factors include, without limitation:

 · the economic and competitive conditions in the asset-backed securities market; 

 · the performance of our current and future automobile contracts; 

 · the performance of our residual interests from our securitizations and warehouse credit facilities; 

 · any operating difficulties or pricing pressures we may experience; 

 · our ability to obtain credit enhancement for our securitizations; 

 · our ability to establish and maintain dealer relationships; 

 · the passage of laws or regulations that affect us adversely; 

 · our ability to compete with our competitors; and 

 · our ability to acquire and finance automobile contracts. 

 Depending upon the outcome
of one or more of these factors, we may not be able to generate sufficient cash flow from operations or obtain sufficient funding to satisfy
all of our obligations. Such factors may result in our being unable to pay our debts timely or as agreed. If we were unable to pay our
debts, we would be required to pursue one or more alternative strategies, such as selling assets, refinancing or restructuring our indebtedness
or selling additional equity capital. These alternative strategies might not be feasible at the time, might prove inadequate, or could
require the prior consent of our lenders. If executed, these strategies could reduce the earnings available to our shareholders.

 We Need Substantial Liquidity to Operate Our Business.

 We have historically funded
our operations principally through internally generated cash flows, sales of debt and equity securities, including through securitizations
and warehouse credit facilities, borrowings under senior secured debt agreements and sales of subordinated notes. However, we may not
be able to obtain sufficient funding for our future operations from such sources. During 2008, 2009 and much of 2010, our access to the
capital markets was impaired with respect to both short-term and long-term funding. In April 2020 we postponed our planned securitization
due to the onset of the pandemic and the effective closure of the capital markets in which our securitizations are executed. Subsequently
we successfully completed securitizations in June and September 2020, and then on a regular quarterly schedule from January 2021 through
January 2025. While our access to such funding has improved since then, our results of operations, financial condition and cash flows
have been from time to time in the past and may in the future be materially and adversely affected. We require a substantial amount of
cash liquidity to operate our business. Among other things, we use such cash liquidity to:

 · acquire automobile contracts; 

 · fund overcollateralization in warehouse credit facilities and securitizations; 

 · pay securitization fees and expenses; 

 · fund spread accounts in connection with securitizations; 

 · satisfy working capital requirements and pay operating expenses; 

 · pay taxes; and 

 · pay interest expense. 

 17 

 Historically we have matched our liquidity needs
to our available sources of funding by reducing our acquisition of new automobile contracts, at times to merely nominal levels. There
can be no assurance that we will continue to be successful with that strategy.

 Periods of Significant Losses.

 From time to time throughout
our history we have incurred net losses, most recently over the period beginning with the quarter ended September 30, 2008 and ending
with the quarter ended September 30, 2011. We were adversely affected by the economic recession affecting the United States as a whole,
for a time by increased financing costs and decreased availability of capital to fund our purchases of automobile contracts, and by a
decrease in the overall level of sales of automobiles and light trucks. Similar periods of losses began in the quarter ended March 31,
1999 through the quarter ended December 31, 2000 and also from the quarter ended September 30, 2003 through the quarter ended March 31,
2005.

 We expect to earn quarterly
profits during 2025; however, there can be no assurance as to that expectation. Our expectation of profitability is a forward-looking
statement. We discuss the assumptions underlying that expectation under the caption “Cautionary Note Regarding Forward-Looking Statements”
in this report. We identify important factors that could cause actual results to differ, generally in the “Risk Factors” section
of this report, and also under the caption “Cautionary Note Regarding Forward-Looking Statements.” One reason for our expectation
is that we have had positive net income in each of the thirteen fiscal years ended December 31, 2024, although not in every quarter within
that period.

 Our Results of Operations Will Depend on Our Ability
to Secure and Maintain Adequate Credit and Warehouse Financing on Favorable Terms. 

 We depend on various financing
sources, including credit facilities, our securitization program and other secured and unsecured debt issuances, to finance our business
operations. Historically, our primary sources of day-to-day liquidity have been our warehouse credit facilities, in which we sell and
contribute automobile contracts, as often as twice a week, to special-purpose subsidiaries, where they are "warehoused" until
they are financed on a long-term basis through the issuance and sale of asset-backed notes. Upon sale of the notes, funds advanced under
one or more warehouse credit facilities are repaid from the proceeds. Our current short-term funding capacity is $535 million, comprising
two credit facilities. Both warehouse credit facilities have a revolving period during which we may receive advances secured by contributed
automobile contracts, followed by an amortization period during which no further advances may be made, but prior to which outstanding
advances are due and payable. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations –
Liquidity and Capital Resources – Liquidity”.

 Our access to financing sources
depends upon our financial position, general market conditions, availability of bank liquidity, the bank regulatory environment, our compliance
with covenants imposed under our financing agreements, the credit quality of the collateral we can pledge to support secured financings,
and other factors beyond our control. If we are unable to maintain warehouse or securitization financing on acceptable terms, we might
curtail or cease our purchases of new automobile contracts, which could lead to a material adverse effect on our results of operations,
financial condition and liquidity.

 Our Substantial Indebtedness Could Adversely Affect Our Financial
Health and Prevent Us From Fulfilling Our Obligations Under Our Existing Indebtedness

 We currently have and will
continue to have a substantial amount of outstanding indebtedness. At December 31, 2024, we had approximately $3,131.0 million of debt
outstanding. Such debt consisted primarily of $2,594.4 million of securitization trust debt, and also included $410.9 million of warehouse
lines of credit, $99.2 million of residual interest financing debt and $26.5 million in subordinated renewable notes. Our ability to make
payments of principal or interest on, or to refinance, our indebtedness will depend on our future operating performance, and our ability
to enter into additional credit facilities and securitization transactions as well as other debt financings, which, to a certain extent,
are subject to economic, financial, competitive, regulatory, capital markets and other factors beyond our control.

 18 

 If we are unable to generate
sufficient cash flows in the future to service our debt, we may be required to refinance all or a portion of our existing debt or to obtain
additional financing. There can be no assurance that any refinancing will be possible or that any additional financing could be obtained
on acceptable terms. The inability to service or refinance our existing debt or to obtain additional financing would have a material adverse
effect on our financial position, liquidity and results of operations.

 The degree to which we are leveraged creates risks,
including:

 · we may be unable to satisfy our obligations under our outstanding indebtedness; 

 · we may find it more difficult to fund future credit enhancement requirements, operating costs, tax payments, capital expenditures
or general corporate expenditures; 

 · we may have to dedicate a substantial portion of our cash resources to payments on our outstanding indebtedness, thereby reducing
the funds available for operations and future business opportunities; and 

 · increasing our vulnerability to adverse general economic, industry and capital markets conditions. 

 · limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; 

 · placing us at a competitive disadvantage compared to our competitors that have less debt; and 

 · limiting our ability to borrow additional funds. 

 Although we believe we are
able to service and repay such debt, there is no assurance that we will be able to do so. If we do not generate sufficient operating profits,
our ability to make required payments on our debt would be impaired. Failure to pay our indebtedness when due would give rise to various
remedies in favor of any unpaid creditors, and creditors’ exercise of such remedies could have a material adverse effect on our
earnings.

 Our Results of Operations Will Depend on Our Ability to Securitize
Our Portfolio of Automobile Contracts.

 We depend upon our ability
to obtain permanent financing for pools of automobile contracts by conducting term securitization transactions. By "permanent financing"
we mean financing that extends to cover the full term during which the underlying automobile contracts are outstanding and requires repayment
as the underlying automobile contracts are repaid or charged off. By contrast, our warehouse credit facilities permit us to borrow against
the value of such receivables only for limited periods of time. Our past practice and future plan has been and is to repay loans made
to us under our warehouse credit facilities with the proceeds of securitizations. There can be no assurance that any securitization transaction
will be available on terms acceptable to us, or at all. The timing of any securitization transaction is affected by a number of factors
beyond our control, any of which could cause substantial delays, including, without limitation:

 · market conditions; 

 · the approval by all parties of the terms of the securitization; 

 · our ability to acquire a sufficient number of automobile contracts for securitization. 

 During 2008 and 2009 we observed
adverse changes in the market for securitized pools of automobile contracts, which made permanent financing in the form of securitization
transactions difficult to obtain and more costly than in prior periods. These changes included reduced liquidity and reduced demand for
asset-backed securities, particularly for securities carrying a financial guaranty or for securities backed by sub-prime automobile receivables.
We experienced improvements in the capital markets from 2010 through 2019, during which time we completed 36 securitizations. In April
2020 we postponed our planned securitization due to the onset of the pandemic and the effective closure of the capital markets in which
our securitizations are executed. Subsequently we successfully completed securitizations in June and September 2020, and then on a regular
quarterly schedule from January 2021 through January 2025. However, if the market conditions for asset-backed securitizations should reverse,
we would expect a material adverse effect on our results of operations.

 19 

 Our Results of Operations Will Depend on Cash Flows from Our Residual
Interests in Our Securitization Program and Our Warehouse Credit Facilities.

 When we finance our automobile
contracts through securitizations and warehouse credit facilities, we receive cash and retain a residual interest in the assets financed.
Those financed assets are owned by the special-purpose subsidiary that is formed for the related securitization. This residual interest
represents the right to receive the future cash flows to be generated by the automobile contracts in excess of (i) the interest and principal
paid to investors or lenders on the indebtedness issued in connection with the financing, (ii) the costs of servicing the automobile contracts
and (iii) certain other costs incurred in connection with completing and maintaining the securitization or warehouse credit facility.
We sometimes refer to these future cash flows as "excess spread cash flows."

 Under the financial structures
we have used to date in our securitizations and warehouse credit facilities, excess spread cash flows that would otherwise be paid to
the holder of the residual interest are first used to increase overcollateralization or are retained in a spread account within the securitization
trusts or the warehouse facility to provide liquidity and credit enhancement for the related securities.

 While the specific terms and
mechanics vary among transactions, our securitization and warehousing agreements generally provide that we will receive excess spread
cash flows only if the amount of overcollateralization and spread account balances have reached specified levels and/or the delinquency,
defaults or net losses related to the automobile contracts in the automobile contract pools are below certain predetermined levels. In
the event delinquencies, defaults or net losses on automobile contracts exceed these levels, the terms of the securitization or warehouse
credit facility:

 · may require increased credit enhancement, including an increase in the amount required to be on deposit in the spread account to be
accumulated for the particular pool; and 

 · in certain circumstances, may permit affected parties to require the transfer of servicing on some or all of the securitized or warehoused
contracts from us to an unaffiliated servicer. 

 We typically retain residual
interests or use them as collateral to borrow cash. In any case, the future excess spread cash flow received in respect of the residual
interests is integral to the financing of our operations. The amount of cash received from residual interests depends in large part on
how well our portfolio of securitized and warehoused automobile contracts performs. If our portfolio of securitized and warehoused automobile
contracts has higher delinquency and loss ratios than expected, then the amount of money realized from our retained residual interests,
or the amount of money we could obtain from the sale or other financing of our residual interests, would be reduced. Such a reduction,
if it should occur, could have material adverse effects on our future results of operations, financial condition and cash flows.

 Our Results of Operations May be Affected by Changing Economic
Conditions

 We are subject to changes
in general economic conditions that are beyond our control. During periods of economic slowdown or recession, delinquencies, defaults,
repossessions and losses generally increase. These periods also may be accompanied by increased unemployment rates, inflation, decreased
demand for automobiles and declining values of automobiles securing outstanding receivables, which weakens collateral values and increases
the amount of a loss in the event of default. Additionally, higher gasoline prices, the introductions of trade tariffs, declining stock
market values, unstable real estate values, increasing unemployment levels, general availability of consumer credit, changes in vehicle
ownership trends and other factors that impact consumer confidence or disposable income could increase loss frequency and decrease demand
for automobiles as well as weaken collateral values on certain types of automobiles. In addition, during an economic slowdown or recession,
our servicing costs may increase without a corresponding increase in our revenue. No assurance can be given that the underwriting criteria
and collection methods we employ will afford adequate protection against these risks. Any sustained period of increased delinquencies,
defaults, repossessions or losses or increased servicing costs could adversely affect our financial position, liquidity, results of operation
and our ability to enter into future financing transactions.

 20 

 We sell repossessed automobiles
at wholesale auction markets located throughout the United States. Depressed wholesale prices for used automobiles may result in, or increase,
a loss upon our disposition of repossessed vehicles and we may be unable to collect the resulting deficiency balances. Depressed wholesale
prices for used automobiles may result from manufacturer incentives or discounts on new vehicles, financial difficulties of new vehicle
manufacturers, discontinuance of vehicle brands and models, increased used vehicle inventory resulting from significant liquidations of
rental or fleet inventories and increased trade-ins due to promotional programs offered by new vehicle manufacturers. Additionally, higher
gasoline prices may decrease the wholesale auction values of certain types of vehicles. Decreased auction proceeds resulting from the
depressed prices at which used automobiles may be sold during periods of economic slowdown or low retail demand could result in higher
losses for us. Further, we are dependent on the efficient operation of the wholesale auction markets. If the operations of the wholesale
auction markets are disrupted, we may be unable to sell our used vehicles at sufficient volume and/or pricing.

 The number of delinquencies,
defaults, losses and repossessions on sub-prime automobile receivables has historically been significantly influenced by the employment
status of obligors on automobile loan contracts. Any general weakness in the economy may affect sub-prime obligors more strongly than
the population as a whole.

 Furthermore, the global financial
markets have at times experienced increased volatility due to uncertainty surrounding the level and sustainability of the sovereign debt
of various countries. Concerns regarding sovereign debt may spread to other countries at any time. There can be no assurance that this
uncertainty relating to the sovereign debt of various countries will not lead to further disruption of the financial and credit markets
in the United States, which could adversely affect our financial position, liquidity, results of operation and our ability to enter into
future financing transactions.

 A deterioration in economic
conditions and certain economic factors, such as reduced business activity, high unemployment, interest rates, housing prices, energy
prices (including the price of gasoline), increased consumer indebtedness (including of obligors on the receivables), lack of available
credit, the rate of inflation (such as the recent increase in inflation) and consumer perceptions of the economy, as well as other factors,
such as terrorist events, civil unrest, cyber-attacks, public health emergencies, extreme weather conditions or significant changes in
the geopolitical environment (such as the ongoing military conflict between Ukraine and Russia and the conflict in Israel) and/or public
policy, including increased state, local or federal taxation, could adversely affect the ability and willingness of obligors to meet their
payment obligations under the receivables we originate. Our operating results could be adversely affected if obligors are unable to make
timely payments on their receivables.

 The above described negative
economic factors, as well as others, have also historically resulted in decreased consumer demand for motor vehicles, which may result
in an increase in the inventory of used motor vehicles and depress the price at which repossessed motor vehicles may be sold or delay
the timing of those sales. If the default rate on our receivables increases and the price at which the vehicles may be sold at auction
declines, our financial position, liquidity, results of operation and our ability to enter into future financing transactions may be adversely
affected.

 If Interest Rates Rise, Our Results of Operations May Be Impaired.

 Our principal means of financing
our portfolio of automobile contracts is to issue asset-backed notes in securitizations. The interest payable on such notes is our largest
expense. Although such expense is fixed with respect to issued securitization trust debt, the terms of future securitizations may vary.

 The credit spread between
the interest rates payable on our securitization trust debt and the rates payable on risk-free investments has varied. The Federal Reserve
increased interest rates multiple times in 2022 and 2023. As a result, we experienced increased interest expense in 2023. In 2024, the
Federal Reserve lowered short term interest rates. The pace and direction of additional interest rate changes remain uncertain. If interest
rates on risk-free debt increase, or if our spread above risk-free rates increase, or both, we would expect an increase in interest expense.
If interest rates in general should rise, our expenses would likewise rise, which could have a material adverse effect on our financial
position, liquidity, results of operation and our ability to enter into future financing transactions.

 21 

 If We Are Unable to Compete Successfully with our Competitors,
Our Results of Operations May Be Impaired.

 The automobile financing business
is highly competitive. We compete with a number of national, regional and local finance companies. In addition, competitors or potential
competitors include other types of financial services companies, such as commercial banks, savings and loan associations, leasing companies,
credit unions providing retail loan financing and lease financing for new and used vehicles and captive finance companies affiliated with
major automobile manufacturers, such as Ford Motor Credit Company, LLC and General Motors Financial Company, Inc. Many of our competitors
and potential competitors possess substantially greater financial, sales, technical, personnel and other resources than we do, including
greater access to capital markets for unsecured commercial paper and investment grade rated debt instruments, and to other funding sources
which may be unavailable to us. Moreover, our future profitability will be directly related to the availability and cost of our capital
relative to that of our competitors. Many of these companies also have long-standing relationships with automobile dealers and may provide
other financing to dealers, including floor plan financing for the dealers’ purchases of automobiles from manufacturers, which we do not
offer. There can be no assurance that we will be able to continue to compete successfully and, as a result, we may not be able to purchase
automobile contracts from dealers at a price acceptable to us, which could result in reductions in our revenues or the cash flows available
to us.

 If Our Dealers Do Not Submit a Sufficient Number of Suitable Automobile
Contracts to Us for Purchase, Our Results of Operations May Be Impaired.

 We are dependent upon establishing
and maintaining relationships with a large number of unaffiliated automobile dealers to supply us with automobile contracts. During the
years ended December 31, 2024 and 2023, no single dealer accounted for as much as 2% of the automobile contracts we purchased. The agreements
we have with dealers to purchase automobile contracts do not require dealers to submit a minimum number of automobile contracts for purchase.
The failure of dealers to submit automobile contracts that meet our underwriting criteria could result in reductions in our revenues or
the cash flows available to us, and, therefore, could have an adverse effect on our results of operations.

 If a Significant Number of Our Automobile Contracts Experience
Defaults, Our Results of Operations May Be Impaired.

 We specialize in the purchase
and servicing of automobile contracts to finance automobile purchases by sub-prime customers, those who have limited credit history, low
income, or past credit problems. Such automobile contracts entail a higher risk of non-performance, higher delinquencies and higher losses
than automobile contracts with more creditworthy customers. While we believe that our pricing of the automobile contracts and the underwriting
criteria and collection methods we employ enable us to control, to a degree, the higher risks inherent in automobile contracts with sub-prime
customers, no assurance can be given that such pricing, criteria and methods will afford adequate protection against such risks.

 If automobile contracts that
we purchase and hold experience defaults to a greater extent than we have anticipated, this could materially and adversely affect our
results of operations, financial condition, cash flows and liquidity. Our results of operations, financial condition, cash flows and liquidity,
depend, to a material extent, on the performance of automobile contracts that we purchase, warehouse and securitize. A portion of the
automobile contracts that we acquire will default or prepay. In the event of payment default, the collateral value of the vehicle securing
an automobile contract realized by us in a repossession will generally not cover the outstanding principal balance on that automobile
contract and the related costs of recovery.

 For our receivables originated
prior to January 2018, we maintain an allowance for credit losses on automobile contracts held on our balance sheet, which reflects our
estimates of probable credit losses that can be reasonably estimated. If the allowance is inadequate, then we would recognize the losses
in excess of the allowance as an expense and our results of operations could be adversely affected.

 Receivables originated since
January 2018 are recorded at fair value and incorporate estimates include the timing and severity of future credit losses. If actual credit
losses were to exceed our estimates, we might be required to change our estimates, which could result in a fair value adjustment to those
receivables or reduced interest income for those receivables in subsequent periods.

 22 

 In addition, under the terms
of our warehouse credit facilities, we are not able to borrow against defaulted automobile contracts, including automobile contracts that
are, at the time of default, funded under our warehouse credit facilities, which will reduce the overcollateralization of those warehouse
credit facilities and possibly reduce the amount of cash flows available to us.

 If We Lose Servicing Rights on Our Portfolio of Automobile Contracts,
Our Results of Operations Would Be Impaired.

 We are entitled to receive
servicing fees only while we act as servicer under the applicable sale and servicing agreements governing our warehouse credit facilities
and securitizations. Under such agreements, we may be terminated as servicer upon the occurrence of certain events, including:

 · our failure generally to observe and perform our responsibilities and other covenants; 

 · certain bankruptcy events; or 

 · the occurrence of certain events of default under the documents governing the facilities. 

 The loss of our servicing
rights could materially and adversely affect our results of operations, financial condition and cash flows. Our results of operations,
financial condition and cash flow, would be materially and adversely affected if we were to be terminated as servicer with respect to
a material portion of our managed portfolio.

 If We Lose Key Personnel, Our Results of Operations May Be Impaired.

 Our senior management team
averages over 20 years of service with us. Our future operating results depend in significant part upon the continued service of
our key senior management personnel, none of whom is bound by an employment agreement. Our future operating results also depend in part
upon our ability to attract and retain qualified management, technical, sales and support personnel for our operations. Competition for
such personnel is intense. We cannot assure you that we will be successful in attracting or retaining such personnel. Conversely, adverse
general economic conditions may have had a countervailing effect. The loss of any key employee, the failure of any key employee to perform
in his or her current position or our inability to attract and retain skilled employees, as needed, could materially and adversely affect
our results of operations, financial condition and cash flow.

 If We Fail to Comply with Regulations, Our Results of Operations
May Be Impaired.

 Failure to materially comply
with all laws and regulations applicable to us could materially and adversely affect our ability to operate our business. Our business
is subject to numerous federal and state consumer protection laws and regulations, which, among other things:

 · require us to obtain and maintain certain licenses and qualifications; 

 · limit the interest rates, fees and other charges we are allowed to charge; 

 · limit or prescribe certain other terms of our automobile contracts; 

 · require specific disclosures to our customers; 

 · define our rights to repossess and sell collateral; and 

 · maintain safeguards designed to protect the security and confidentiality of customer information. 

 Our industry is also at times
investigated by regulators and offices of state attorneys general, which could lead to enforcement actions, fines and penalties, or the
assertion of private claims and lawsuits against us. The Consumer Financial Protection Bureau (“CFPB”) and the Federal Trade
Commission (“FTC”) have the authority to investigate consumer complaints against us, to conduct inquiries at their own instance,
and to recommend enforcement actions and seek monetary penalties. The FTC has conducted and concluded an inquiry into our practices, and
proposed remedial action against us in 2014, to which we consented. The CFPB has adopted regulations that place us and other companies
similar to us under its supervision. A host of state and local governmental agencies have jurisdiction over material portions of our business,
and might take action adverse to us. No assurance can be given as to whether any of such hypothetical proceedings might materially and
adversely affect us.

 23 

 If we fail to comply with
applicable laws and regulations, such failure could result in penalties, litigation losses and expenses, damage to our reputation, or
the suspension or termination of our licenses to conduct business, which would materially adversely affect our results of operations,
financial condition and stock price. In addition, new federal and state laws or regulations or changes in the ways that existing rules
or laws are interpreted or enforced could limit our activities in the future or significantly increase the cost of compliance. Furthermore,
judges or regulatory bodies could interpret current rules or laws differently than the way we do, leading to such adverse consequences
as described above. The resolution of such matters may require considerable time and expense, and if not resolved in our favor, may result
in fines or damages, and possibly an adverse effect on our financial condition.

 We believe that we are in
compliance in all material respects with all such laws and regulations, and that such laws and regulations have had no material adverse
effect on our ability to operate our business. However, we may be materially and adversely affected if we fail to comply with:

 · applicable laws and regulations; 

 · changes in existing laws or regulations; 

 · changes in the interpretation of existing laws or regulations; or 

 · any additional laws or regulations that may be enacted in the future. 

 Changes in Law and Regulations May Have
an Adverse Effect on Our Business.

 Existing law, regulations and
interpretations may change in ways that increase our costs of compliance.

 In addition to direct costs,
such compliance requires forms, processes, procedures, controls and in the infrastructure to support these requirements. Compliance may
create operational constraints and place limits on pricing. Laws in the financial services industry are designed primarily for the protection
of consumers. The failure to comply could result in significant statutory civil and criminal penalties, monetary damages, attorneys’
fees and costs, possible revocation of licenses and damage to reputation, brand and valued customer relationships.

 At this time, it is difficult
to predict the extent to which new regulations or amendments will affect our business. However, compliance with these new laws and regulations
may result in additional cost and expenses, which may adversely affect our results of operations, financial condition or liquidity. For
example, as governments, investors and other stakeholders face pressures to accelerate actions to address climate change and other environmental,
governance and social topics, governments may implement regulations or investors and other stakeholders may adopt new investment policies
or otherwise impose new expectations that cause significant shifts in disclosure, commerce and consumption behaviors, any or all of which
may have negative effects on our business and/or reputation.

 Risk Retention Rules May Limit Our Liquidity
and Increase Our Capital Requirements.

 Securitizations of automobile
receivables executed after December 2016 have been and will be subject to risk retention requirements, which generally require that sponsors
of asset-backed securities (ABS), such as us, retain not less than five percent of the credit risk of the assets collateralizing the ABS
issuance. The rule also sets forth prohibitions on transferring or hedging the credit risk that the sponsor is required to retain. Similar
but not identical risk retention requirements are applicable after December 2018 to securitization transactions where purchasers of the
ABS have sufficient contacts with the European Union. Because the rules place an upper limit on the degree to which we may use financial
leverage, our securitization structures may require more capital of us, or may release less cash to us, than might be the case in the
absence of such rules.

 24 

 If We Experience Unfavorable Litigation Results, Our Results of
Operations May Be Impaired.

 We operate in a litigious
society and currently are, and may in the future be, named as defendants in litigation, including individual and class action lawsuits
under consumer credit, consumer protection, theft, privacy, data security, automated dialing equipment, debt collections and other laws.
Many of these cases present novel issues on which there is no clear legal precedent, which increases the difficulty in predicting both
the potential outcomes and costs of defending these cases. We are subject to regulatory examinations, investigations, inquiries, litigation,
and other actions by licensing authorities, state attorneys general, the FTC, the CFPB and other governmental bodies relating to our activities.
The litigation and regulatory actions to which we are or may become subject involve or may involve potential compensatory or punitive
damage claims, fines, sanctions or injunctive relief that, if granted, could require us to pay damages or make other expenditures in amounts
that could have a material adverse effect on our financial position and our results of operations. We have recorded loss contingencies
in our financial statements only for matters on which losses are probable and can be reasonably estimated. Our assessments of these matters
involve significant judgments, and may change from time to time. Actual losses incurred by us in connection with judgments or settlements
of these matters may be more than our associated reserves. Furthermore, defending lawsuits and responding to governmental inquiries or
investigations, regardless of their merit, could be costly and divert management’s attention from the operation of our business.
Unfavorable outcomes in any such current or future proceedings could materially and adversely affect our results of operations, financial
conditions and cash flows. As a consumer finance company, we are subject to various consumer claims and litigation seeking damages and
statutory penalties based upon, among other things, disclosure inaccuracies and wrongful repossession, which could take the form of a
plaintiff’s class action complaint. We, as the assignee of finance contracts originated by dealers, may also be named as a co-defendant
in lawsuits filed by consumers principally against dealers. We are also subject to other litigation common to the automobile industry
and to businesses in general. The damages and penalties claimed by consumers and others in these types of matters can be substantial.
The relief requested by the plaintiffs varies but includes requests for compensatory, statutory and punitive damages.

 While we intend to vigorously
defend ourselves against such proceedings, there is a chance that our results of operations, financial condition and cash flows could
be materially and adversely affected by unfavorable outcomes.

 Negative Publicity Associated with Litigation, Governmental Investigations,
Regulatory Actions, and other Public Statements Could Damage Our Reputation.

 From time to time there are
negative news stories about the “sub-prime” credit industry. Such stories may follow the announcements of litigation or regulatory
actions involving us or others in our industry. Negative publicity about our alleged or actual practices or about our industry generally
could adversely affect our stock price and our ability to retain and attract employees, which could in turn negatively affect our results
of operations or cashflows.

 If We Experience Problems with Our Originations, Accounting or
Collection Systems, Our Results of Operations May Be Impaired.

 We are dependent on our receivables
originations, accounting and collection systems to service our portfolio of automobile contracts. We also rely on third-party service
providers to facilitate certain aspects of our business. Our systems and the systems of our third-party service providers are vulnerable
to damage or interruption from natural disasters, power loss, telecommunication failures, terrorist attacks, cyberattacks, computer viruses
and other events. A significant number of our systems are not redundant, and our disaster recovery planning is not sufficient for every
eventuality. Our systems are also subject to break-ins, sabotage and intentional acts of vandalism by internal employees and contractors
as well as third parties. Our third-party service providers face similar threats. Despite any precautions we may take, such problems could
result in interruptions in our services, litigation, and regulatory exposure, which could harm our reputation and financial condition.
We do not carry business interruption insurance sufficient to compensate us for losses that may result from interruptions in our service
as a result of system failures. Such systems problems could materially and adversely affect our results of operations, financial conditions
and cash flows.

 25 

 A Breach in the Security of Our Systems Could Result in the Disclosure
of Confidential Information, Subject us to Liability.

 We hold in our systems confidential
financial and other personal data with respect to our customers, which may be of value to identity thieves and others if revealed. Although
we endeavor to protect the security of our computer systems and the confidentiality of customer information entrusted to us, there can
be no assurance that our security measures will provide adequate security.

 It is possible that we may
not be able to anticipate, detect or recognize threats to our systems or to implement effective preventive measures against all security
breaches, especially because the techniques used change frequently, or are not recognized until launched, because of the rising use of
artificial intelligence, and because cyberattacks can originate from a wide variety of sources, including third parties outside the Company
such as persons who are associated with external service providers or who are or may be involved in organized crime or linked to terrorist
organizations.

 Such persons may also attempt
to fraudulently induce employees or other users of our systems to disclose sensitive information in order to gain access to our data or
that of our customers.

 These risks may increase in
the future as we continue to increase our mobile-payment and other internet-based product offerings and expand our use of web or cloud-based
products and applications.

 A successful penetration of
the security of our systems could cause serious negative consequences, including disruption of our operations, misappropriation of confidential
information, or damage to our computers or systems, and could result in violations of applicable privacy and other laws, financial loss
to us or to our customers, customer dissatisfaction, significant litigation and regulatory exposure and harm to our reputation, any or
all of which could have a material adverse effect on us.

 Because We Are Subject to Many Restrictions in Our Existing Credit
Facilities and Securitization Transactions, Our Ability to Pay Dividends or Engage in Specified Transactions May Be Impaired.

 The terms of our existing
credit facilities, term securitizations and our other outstanding debt impose significant operating and financial restrictions on us and
our subsidiaries and require us to meet certain financial tests. These restrictions may have an adverse effect on our business activities,
results of operations and financial condition. These restrictions may also significantly limit or prohibit us from engaging in certain
transactions, including the following:

 · incurring or guaranteeing additional indebtedness; 

 · making capital expenditures in excess of agreed upon amounts; 

 · paying dividends or other distributions to our shareholders or redeeming, repurchasing or retiring our capital stock or subordinated
obligations; 

 · making investments; 

 · creating or permitting liens on our assets or the assets of our subsidiaries; 

 · issuing or selling capital stock of our subsidiaries; 

 · transferring or selling our assets; 

 · engaging in mergers or consolidations; 

 · permitting a change of control of our company; 

 · liquidating, winding up or dissolving our company; 

 · changing our name or the nature of our business, or the names or nature of the business of our subsidiaries; and 

 · engaging in transactions with our affiliates outside the normal course of business. 

 26 

 These restrictions may limit
our ability to obtain additional sources of capital, which may limit our ability to generate earnings. In addition, the failure to comply
with any of the covenants of one or more of our debt agreements could cause a default under other debt agreements that may be outstanding
from time to time. A default, if not waived, could result in acceleration of the related indebtedness, in which case such debt would become
immediately due and payable. A continuing default or acceleration of one or more of our credit facilities or any other debt agreement,
would likely cause a default under other debt agreements that otherwise would not be in default, in which case all such related indebtedness
could be accelerated. If this occurs, we may not be able to repay our debt or borrow sufficient funds to refinance our indebtedness. Even
if any new financing is available, it may not be on terms that are acceptable to us or it may not be sufficient to refinance all of our
indebtedness as it becomes due.

 In addition, the transaction
documents for our securitizations restrict our securitization subsidiaries from declaring or making payment to us of (i) any dividend
or other distribution on or in respect of any shares of their capital stock, or (ii) any payment on account of the purchase, redemption,
retirement or acquisition of any option, warrant or other right to acquire shares of their capital stock unless (in each case) at the
time of such declaration or payment (and after giving effect thereto) no amount payable under any transaction document with respect to
the related securitization is then due and owing, but unpaid. These restrictions may limit our ability to receive distributions in respect
of the residual interests from our securitization facilities, which may limit our ability to generate earnings.

 Risks Related to Fair Value Accounting

 Receivables we’ve
acquired since January 1, 2018 are accounted for based on the fair value method of accounting. The risks described below are risks related
to fair value accounting.

 If Actual Results for Our Receivables Materially Deviate from
Our Estimates, We May Be Required to Reduce the Interest Income We Recognize for Some or All of the Receivables Measured at Fair Value.

 We
recognize interest income on receivables accounted under fair value based on a level yield internal rate of return that we calculate based
the terms of the receivables and our estimates at the time of acquisition of the future performance of those receivables. Such estimates
include the timing and severity of future credit losses and the rates of amortization and of prepayments. If actual credit losses were
to exceed our estimates, or if the actual amortization and prepayments of the receivables were to be materially different from our estimates,
we might be required to change our estimates, which could result in a reduced interest income for those receivables in subsequent periods.

 If Actual Results for Our Receivables Materially Deviate from
Our Estimates, We May Be Required to Reduce the Recorded Value for Some or All of the Receivables Measured at Fair Value.

 We
re-evaluate the recorded value of receivables measured at fair value at the close of each quarter. If the re-evaluation were to yield
a value materially different from the previous recorded value, an adjustment would be required. If actual credit losses were to exceed
our estimates, or if the actual amortization and prepayments of the receivables were to be materially different from our estimates, we
might be required to adjust the recorded value of such receivables. A downward readjustment in recorded value would correspondingly reduce
our income and book value for and as of the end of the related quarter.

 If Actual Market Conditions Indicate That the Amount a Market
Participant Would Pay for Our Receivables is Materially Lower Than Our Recorded Value, We May Be Required to Reduce the Recorded Value
for Some or All of the Receivables Measured at Fair Value.

 The
fair value of an asset is, by definition, the exchange price in an orderly transaction between market participants. Receivables such as
ours are not regularly traded on exchanges where we can observe prices for exchanges of similar assets. We may therefore rely on estimates
of what a market participant would pay for our receivables. If such estimated value were to be materially different from our recorded
value, we might be required to adjust the recorded value of our receivables. A downward readjustment in recorded value would correspondingly
reduce our income and book value.

 27 

 Risks Related to General Factors

 If The Economy of All or Certain Regions of the United States
Falls into Recession, Our Results of Operations May Be Impaired.

 Our business is directly related
to sales of new and used automobiles, which are sensitive to employment rates, prevailing interest rates and other domestic economic conditions.
Delinquencies, repossessions and losses generally increase during economic slowdowns or recessions. Because of our focus on sub-prime
customers, the actual rates of delinquencies, repossessions and losses on our automobile contracts could be higher under adverse economic
conditions than those experienced in the automobile finance industry in general, particularly in the states of California, Texas, Ohio,
Illinois and Florida, states in which our automobile contracts are geographically concentrated. Any sustained period of economic slowdown
or recession could adversely affect our ability to acquire suitable automobile contracts, or to securitize pools of such automobile contracts.
The timing of any economic changes is uncertain, and weakness in the economy could have an adverse effect on our business and that of
the dealers from which we purchase automobile contracts and result in reductions in our revenues or the cash flows available to us.

 A Pandemic or Other Public Health Emergency Could Have Adverse Effects 

 The extent to which obligors on our automobile
contracts may be adversely affected by a pandemic or other public health emergency, by loss of employment, and by related efforts of governments
to slow the spread of a disease outbreak throughout the nation and world cannot be predicted. These occurrences could have a material
adverse effect on the ability of obligors to make timely payments to us.

 Depending on the extent to which a pandemic or
other public health emergency adversely affects the United States economy, it may also have the effect of heightening many of the other
risks described in this “Risk Factors” section, such as those related to our business or operations, the ability or willingness
of our customers to make timely payments, and risks of geographic concentrations.

 Our Results of Operations May Be Impaired as a Result of Natural
Disasters.

 Our automobile contracts are
geographically concentrated in the states of California, Florida, and Texas. Such states may be particularly susceptible to natural disasters:
earthquake in the case of California, and hurricanes and flooding in Florida and Texas. Natural disasters, in those states or others,
could cause a material number of our vehicle purchasers to lose their jobs, or could damage or destroy vehicles that secure our automobile
contracts. In either case, such events could result in our receiving reduced collections on our automobile contracts, and could thus result
in reductions in our revenues or the cash flows available to us.

 Effect of Social, Economic and Other Factors on Losses. 

 The ability of our customers to make payments
on automobile contracts will be affected by a variety of social and economic factors, most notably the extent to which our customers remain
gainfully employed. Other economic factors include interest rates, general unemployment levels, the rate of inflation, adjustments in
monthly mortgage payments and consumer perceptions of economic conditions generally and the effect of any government stimulus programs
and consumer protection/payment relief efforts. Social factors include changes in consumer confidence levels, consumer attitudes toward
bankruptcy and the repayment of indebtedness and consumer perceptions of political events and shifts, which may be affected by the pandemic.
We are generally unable to determine whether or to what extent economic or social factors will affect the performance of our portfolio
of automobile contracts, but caution that a recession or depression in local, regional or national economies would be expected to increase
delinquencies and losses, which would adversely affect our financial condition and results of operations.

 28 

 If an Increase in Interest Rates Results in a Decrease in Our
Cash Flows from Excess Spread, Our Results of Operations May Be Impaired.

 Our profitability is largely
determined by the difference, or "spread," between the effective interest rate we receive on the automobile contracts that we
acquire and the interest rates payable under warehouse credit facilities and on the asset-backed securities issued in our securitizations.
In the past, disruptions in the market for asset-backed securities resulted in an increase in the interest rates we paid on asset-backed
securities. Should similar disruptions take place in the future, we may pay higher interest rates on asset-backed securities issued in
the future. Although we have the ability to partially offset increases in our cost of funds by increasing fees we charge to dealers when
purchasing automobile contracts, or by demanding higher interest rates on automobile contracts we purchase, there is no assurance that
such actions will materially offset increases in interest we pay to finance our managed portfolio. As a result, an increase in prevailing
interest rates could cause us to receive less excess spread cash flows on automobile contracts, and thus could adversely affect our earnings
and cash flows. See “Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk.”

 Risks Related to Our Common Stock

 Our Common Stock Is Thinly-Traded.

 Our stock is thinly-traded,
which means investors will have limited opportunities to sell their shares of common stock in the open market. Limited trading of our
common stock also contributes to more volatile price fluctuations. Because there historically has been low trading volume in our common
stock, there can be no assurance that our stock price will not decline as additional shares are sold in the public market. As of December
31, 2024, our directors and executive officers collectively owned 13.0 million shares of our common stock, or approximately 61% of total
shares outstanding.

 We Do Not Intend to Pay Dividends on Our Common Stock.

 We have never declared or
paid any cash dividends on our common stock. We currently intend to retain any future earnings and do not expect to pay any dividends
in the foreseeable future.

 Item 1B. Unresolved Staff Comments

 Not applicable.

 Item 1C. Cybersecurity

 Risk Management and Strategy 

 Our information security policies
and processes are designed to assess, identify, and manage material risks from cybersecurity threats, including protecting the security
and confidentiality of consumer information. We use various tools and strategies to identify and assess material risks from cybersecurity
threats. We conduct ongoing cybersecurity gap analysis and risks assessments, vulnerability testing, and penetration testing. The cybersecurity
risk assessments, vulnerability testing, and penetration testing are designed to identify internal and external risks to the security
of our information systems.
 
 We also actively monitor our
systems and connections for abnormal activity, including malicious phishing attempts. This includes the use of intrusion detection systems,
log analysis, and real-time monitoring of critical systems. We have an incident reporting portal available to all employees to submit
any issues they suspect may pose a risk to our information technology (“IT”) systems and security.
 
 29 

 We use the results of the
above-described tools and strategies to assess the sufficiency of the safeguards in place to manage material risks from cybersecurity
threats, to enhance such safeguards, or implement new safeguards, as necessary. We have several safeguards in place to manage material
risks from cybersecurity threats. We have security awareness training for our employees, including ongoing simulated phishing email campaigns.
We utilize firewalls, anti-virus software, encryption on stored data and communication channels, secure web portals for remote access
to our systems, password security, and two-factor authentication. We continuously update our software and security patches. We restrict
inbound email attachments, certain websites, and cloud-based drives. We monitor and restrict information transfers to and from unauthorized
IP addresses. We also have physical security safeguards for our locations and data centers. We back up our systems and data regularly.
In addition, we have a disaster recovery program designed to help us respond to and recover from an interruption of critical IT services.
 
 As part of our overall risk
management processes, we engage in a multi-departmental strategy to assess and incorporate the above processes and involve other departments
as needed, including IT, Systems, Risk Management, and Legal. We engage assessors, consultants, auditors, or other third parties to assist
with some of the processes above, including conducting risk and gap assessments, IT audits and consulting, system monitoring, vulnerability
testing, and penetration testing. To oversee and identify material cybersecurity risks associated with our use of third-party service
providers , we limit data access for third-party service providers to only the data that is necessary for the given function and conduct
due diligence on our service providers including their information security practices. We require our service providers to maintain appropriate
safeguards for the security of consumer information.
 
 We cannot assure that our
information security policies and processes will be effective in protecting us from cybersecurity threats. Risks from cybersecurity threats
have not materially affected us. However, if we experience a material cybersecurity incident it is reasonably likely to materially affect
us, including our business strategy, results of operations, or financial condition. For more information, please see Item 1A. Risk Factors
of this Report, including the risk factors titled “If We Experience Problems with Our Originations, Accounting or Collection Systems,
Our Results of Operations May Be Impaired” and “A Breach in the Security of Our Systems Could Result in the Disclosure of
Confidential Information, or Subject us to Liability.”
 
 Governance 

 The Senior Vice President
of Systems and the Vice President of IT are responsible for assessing and managing material risks from cybersecurity threats through the
implementation of the Company’s information security policies and processes. The Senior Vice President of Systems has over 20 years
in IT and cybersecurity experience with the Company. The Vice of President IT has over 15 years in IT and cybersecurity experience with
the Company and has earned industry certifications in IT. The Senior Vice President of Systems and the Vice President of IT report to
the Executive Vice President of Risk, Systems, and IT.
 
 The Senior Vice President
of Systems and the Vice President of IT work directly with the internal and external IT personnel to implement our information security
policies and processes, including those described in the “Risk Management and Strategy” above. They are informed about and
monitor the prevention, detection, mitigation, and remediation or prevention of cybersecurity incidents through those processes. They
regularly report on the status of these matters to the Executive Vice President of Risk, Systems, and IT. 
 
 The Board, as a whole, is
responsible for risk oversight, including cybersecurity risk. As part of this oversight, the Executive Vice President of Risk, Systems,
and IT reports to the Board annually on the status of and developments in the Company’s information security policies and processes. 
 
 Item 2. Properties

 Our principal executive offices
are located in Las Vegas, Nevada, where we currently lease approximately 45,000 square feet of general office space from an unaffiliated
lessor. The annual base rent is approximately $1.6 million through 2029.

 Our operating headquarters
are located in Irvine, California, where we currently lease approximately 69,000 square feet of general office space from an unaffiliated
lessor. The annual base rent is approximately $2.5 million through 2029.

 30 

 The remaining three regional
servicing centers occupy a total of approximately 65,000 square feet of leased space in Chesapeake, Virginia; Maitland, Florida; and Oak
Brook, Illinois. The termination dates of such leases range from 2025 to 2031. The annual base rent for these facilities total approximately
$1.4 million.

 Item 3. 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 2024 a motion for certification of a class was filed. Prior to the motion being ruled upon, summary judgment was granted in our
favor, disposing of the claims against CPS. An appeal of the summary judgment ruling was filed on October 25, 2024 and a cross appeal
of the denial of the motion to compel arbitration was filed on October 31, 2024.

 Wage and Hour Claim. 
On September 24, 2018, a former employee filed a lawsuit against us in the Superior Court of Orange County, California, alleging that
we incorrectly classified our sales representatives as outside salespersons exempt from overtime wages, mandatory break periods and certain
other employee protective provisions of California and federal law. The complaint sought injunctive relief, an award of unpaid wages,
liquidated damages, and attorney fees and interest. The plaintiff purported 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 approved by the court on October 9, 2024. Under the settlement, the Company paid, after September 30, 2024, $1.1 million to the settlement
administrator.

 In General. There can
be no assurance as to the outcomes of the matters described or referenced above. We record at each measurement date, most recently as
of December 31, 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 range of reasonably possible losses for the legal proceedings and contingencies we face, including those described
or identified above, as of December 31, 2024 does not exceed $3.2 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
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.

 Item 4. Mine Safety Disclosures

 Not applicable.

 31 

 Information about Our Executive Officers

 Set forth below are the names, ages, offices held, tenure, and certain
biographical information of each of our executive officers as of the filing of this report:

 Charles E. Bradley, Jr .,
65, has been our Chief Executive Officer since January 1992, a director since our formation in March 1991, and was elected Chairman of
the Board of Directors in July 2001. Prior to that he was our President from March 1991 to December 2022. From April 1989 to November
1990, he served as Chief Operating Officer of Barnard and Company, a private investment firm. From September 1987 to March 1989, Mr. Bradley,
Jr. was an associate of The Harding Group, a private investment banking firm. Mr. Bradley does not currently serve on the board of
directors of any other publicly-traded companies.

 Michael T. Lavin, 
52, has been President since December 2022, Chief Operating Officer since February 2019, and our Chief Legal Officer since March 2014. 
Prior to that, he was our Executive Vice President since March 2014, Senior Vice President – General Counsel since March 2013,
Senior Vice President and Corporate Counsel since May 2009 and our Vice President- Legal since joining the Company in November of 2001. 
Mr. Lavin was previously engaged as an associate at a large law firm and a spin off start up law firm.

 Danny Bharwani , 57,
has been Chief Financial Officer since September 2022 and Executive Vice President – Finance since December 2022. Previously, he
was our Senior Vice President – Finance from April 2016 to December 2022 and Vice President – Finance from June 2002 to April
2016. He joined us as Assistant Controller in August 1997. Mr. Bharwani was previously employed as Assistant Controller at The Todd-AO
Corporation, from 1989 to 1997.

 Christopher Terry, 
57, has been Executive Vice President of Risk Management, Systems, and IT since December 2022. Prior to that he was our Senior Vice President
of Risk Management, Systems, and IT from October 2018 to December 2022, and Senior Vice President of Risk Management from May 2017 to
October 2018. Prior to that, he was our Senior Vice President of Servicing from May 2005 to August 2013. He was Senior Vice President
of Asset Recovery from August 2013 to May 2017 and from January 2003 to May 2005. He joined us in January 1995 as a loan officer, held
a series of successively more responsible positions, and was promoted to Vice President - Asset Recovery in June 1999. Mr. Terry
was previously a branch manager with Norwest Financial from 1990 to October 1994.

 Teri L. Robinson, 62,
has been Executive Vice President of Sales and Originations since December 2022. Prior to that she was Senior Vice President of Sales
and Originations from June 2020 to December 2022 and Senior Vice President of Originations from April 2007 to June 2020. Prior to that,
she held the position of Vice President of Originations since August 1998. She joined the Company in June 1991 as an Operations Specialist,
and held a series of successively more responsible positions. Previously, Ms. Robinson held an administrative position at Greco &
Associates.

 Michele Baumeister ,
58, has been Senior Vice President of Originations since June 2023. Prior to that she was the Vice President of Originations from March
2017 to June 2023. She started with the Company in March 1997 as a Loan Processor and held a series of more senior positions within the
Originations Department. Ms. Baumeister was previously a personal banker with Western Financial.

 April Crisp , 38, has been the Senior Vice
President of Compliance and Regulatory Affairs since June 2023. Prior to that, she was the Vice President of Legal from August 2016 to
June 2023, and the Assistant Vice President of Legal from November 2013 to August 2016. Ms. Crisp is a California barred attorney.

 Charles Gonel , 44,
has been Senior Vice President of Servicing since June 2023. Prior to that he was the Vice President of Collections from March 2015 to
June 2023. He joined the Company in March 2008 as a Collections Analyst and transferred into the Risk Management Department in 2010
where he held a sequence of increasingly more responsible positions. Prior to joining CPS, he was a Quality Assurance Analyst with AT&T
Wireless.

 32 

 John P. Harton , 60,
has been Senior Vice President – Business Development since June 2020. Prior to that he was Senior Vice President – Program
Development from March 2019 to June 2020, Senior Vice President – Marketing from March 2014 to March 2019 , and Vice President –
Marketing from April 2010 to March 2014. He joined the Company in April 1996 as a loan officer, held a series of successively more responsible
positions, and was promoted to Vice President - Originations in June 2007. Mr. Harton was previously a branch manager with American General
Finance from 1990 to March 1996.

 Catrina Ralston , 49,
has been Senior Vice President of Human Resources since December 2022. Prior to that, she was Vice President - Human Resources since March
2016. She joined the Company in 1997 as an Operations Clerk and transferred into the Human Resources Department in 2001 where she held
a series of successively more responsible positions. Prior to joining CPS, Ms. Ralston worked as a customer service representative for
the City of Virginia Beach Parks & Recreation Department.

 Lisette Reynoso , 37,
has been Senior Vice President and General Counsel since June 2023. Prior to that she was the Vice President of Legal from January 2020
to June 2023, the Assistant Vice President of Legal/Corporate Counsel from December 2018 to January 2020, and Corporate Counsel from December
2015 to December 2018. Ms. Reynoso is a California barred attorney.

 Susan Ryan , 53, has
been Senior Vice President of Servicing since June 2023. Prior to that she was the Vice President of Collections from March 2015 to June
2023. She started with the Company in 2003 as a Deficiency Supervisor where she took on more responsibility over time. Prior to joining
CPS, she was a Deficiency Supervisor with The Finance Company.

 Steve Schween , 62,
has been Senior Vice President of Systems since December 2022. Previously, he was Vice President of Systems from February 2014. He joined
in the Company in 2000 as a Systems Analyst and took on more responsibility over time. Mr. Schween was previously a Systems Analyst with
Jeunique International.

 33 

 PART II

 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

 The Company’s Common Stock is traded on the
Nasdaq Global Market, under the symbol " CPSS. " 
As of January 1, 2025, there were 28 holders of record of the Company’s Common Stock.

 To date, we have not declared
or paid any dividends on our Common Stock. The payment of future dividends, if any, on our Common Stock is within the discretion of the
Board of Directors and will depend upon our income, capital requirements and financial condition, and other relevant factors. The instruments
governing our outstanding debt place certain restrictions on the payment of dividends. We do not intend to declare any dividends on our
Common Stock in the foreseeable future, but instead intend to retain any cash flow for use in our operations.

 Issuer Purchases of Equity Securities in the
Fourth Quarter 

 Total Number of 
 Average 
 Total Number of Shares Purchased as Part of Publicly 
 Approximate Dollar Value of Shares that May Yet be Purchased 

 Shares 
 Price Paid 
 Announced Plans or 
 Under the Plans or 

 Period(1) 
 Purchased 
 per Share 
 Programs(2) 
 Programs 

 October 2024 
 – 
 $ – 
 – 
 $ 6,259,660 

 November 2024 
 – 
 – 
 – 
 6,259,660 

 December 2024 
 – 
 – 
 – 
 6,259,660 

 Total 
 – 
 $ – 
 – 
 
 (1) Each monthly period is the calendar month. 

 (2) Through December 31, 2024, our board of directors had authorized the purchase of up to $123.2 million
of our outstanding securities, which program was first announced in our annual report for the year 2002, filed on March 26, 2003.
All purchases described in the table above were under the plan announced in March 2003, which has no fixed expiration date. 

 Item 6. [Reserved]

 Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of Operations

 The following discussion
of our financial condition and results of operations for the years ended December 31, 2024 and 2023 should be read in conjunction with
our consolidated financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K.
Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans,
objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these
forward-looking statements as a result of a number of factors. We use words such as anticipate, estimate, plan, project, continuing, ongoing,
expect, believe, intend, may, will, should, could, and similar expressions to identify forward-looking statements. See "Cautionary
Note Regarding Forward-Looking Statements." 

 34 

 Discussions of 2022 items
and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” in Item 7 of the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2023. 

 Overview

 We are a specialty finance
company. Our business is to purchase and service retail automobile contracts originated primarily by franchised automobile dealers and,
to a lesser extent, by select independent dealers in the United States in the sale of new and used automobiles, light trucks and passenger
vans. Through our automobile contract purchases, we provide indirect financing to the customers of dealers who have limited credit histories
or past credit problems, who we refer to as sub-prime customers. We serve as an alternative source of financing for dealers, facilitating
sales to customers who otherwise might not be able to obtain financing from traditional sources, such as commercial banks, credit unions
and the captive finance companies affiliated with major automobile manufacturers. In addition to purchasing installment purchase contracts
directly from dealers, we also have (i) originated vehicle purchase money loans by lending directly to consumers, (ii) acquired installment
purchase contracts in four merger and acquisition transactions, and (iii) purchased immaterial amounts of vehicle purchase money loans
from non-affiliated lenders. In this report, we refer to all of such contracts and loans as "automobile contracts."

 We were incorporated and
began our operations in March 1991. From inception through December 31, 2024, we have purchased a total of approximately $23.0 billion
of automobile contracts from dealers. In addition, we acquired a total of approximately $822.3 million of automobile contracts in mergers
and acquisitions in 2002, 2003, 2004 and 2011. Contract purchase volumes and managed portfolio levels for the five years ended December
31, 2024 are shown in the table below. Managed portfolio comprises both contracts we owned and those we were servicing for third parties.

 Contract Purchases and Outstanding Managed Portfolio 

 $ in thousands 

 Year 
 Contracts Purchased in Period 
 Managed Portfolio at Period End 

 2020 
 742,584 
 2,174,972 

 2021 
 1,146,321 
 2,249,069 

 2022 
 1,854,385 
 3,001,308 

 2023 
 1,357,752 
 3,194,623 

 2024 
 1,681,941 
 3,665,725 

 Our principal executive offices
are in Las Vegas, Nevada. Most of our operational and administrative functions take place in Irvine, California. Credit and underwriting
functions are performed primarily in our California branch with certain of these functions also performed in our Florida and Nevada branches.
We service our automobile contracts from our California, Nevada, Virginia, Florida, and Illinois branches.

 The programs we offer to dealers
and consumers are intended to serve a wide range of sub-prime customers, primarily through franchised new car dealers. We originate automobile
contracts with the intention of financing them on a long-term basis through securitizations. Securitizations are transactions in which
we sell a specified pool of contracts to a special purpose subsidiary of ours, which in turn issues asset-backed securities to fund the
purchase of the pool of contracts from us.

 Securitization and Warehouse Credit Facilities

 Throughout the period for which information is
presented in this report, we have purchased automobile contracts with the intention of financing them on a long-term basis through securitizations,
and on an interim basis through warehouse credit facilities. All such financings have involved identification of specific automobile contracts,
sale of those automobile contracts (and associated rights) to one of our special-purpose subsidiaries, and issuance of asset-backed securities
to be purchased by institutional investors. Depending on the structure, these transactions may be accounted for under generally accepted
accounting principles as sales of the automobile contracts or as secured financings. All of our active securitizations are structured
as secured financings.

 35 

 When structured to be treated as a secured financing
for accounting purposes, the subsidiary is consolidated with us. Accordingly, the sold automobile contracts and the related debt appear
as assets and liabilities, respectively, on our consolidated balance sheet. We then periodically (i) recognize interest and fee income
on the contracts, and (ii) recognize interest expense on the securities issued in the transaction. For automobile contracts acquired before
2018, we also periodically record as expense a provision for credit losses on the contracts; for automobile contracts acquired after 2017
we take account of estimated credit losses in our computation of a level yield used to determine recognition of interest on the contracts.

 Since 1994 we have conducted
103 term securitizations of automobile contracts that we originated under our regular programs. As of December 31, 2024, 17 of those securitizations
are active and all are structured as secured financings. We generally conduct our securitizations on a quarterly basis, near the beginning
of each calendar quarter, resulting in four securitizations per calendar year. However, we completed only three securitizations in 2020.
In April 2020 we postponed our planned securitization due to the onset of the pandemic and the effective closure of the capital markets
in which our securitizations are executed. Subsequently we successfully completed securitizations in June and September 2020.

 Our recent history of term securitizations is summarized
in the table below:

 Recent Asset-Backed Securitizations 

 $ in thousands 

 Period 
 Number of Term Securitizations 
 Amount of

 Receivables
 
 2018 
 4 
 883,452 

 2019 
 4 
 1,014,124 

 2020 
 3 
 741,867 

 2021 
 4 
 1,145,002 

 2022 
 4 
 1,537,383 

 2023 
 4 
 1,352,114 

 2024 
 4 
 1,533,854 

 Generally, prior to a securitization
transaction we fund our automobile contract acquisitions primarily with proceeds from warehouse credit facilities. Our current short-term
funding capacity is $535 million, comprising two credit facilities. The first credit facility was established in May 2012. This facility
was most recently renewed in July 2024, extending the revolving period to July 2026, with an optional amortization period through July
2027. In addition, the capacity was increased to $335 million in December 2024.

 In November 2015, we entered
into another $100 million facility. In June 2022, we doubled the capacity for this facility from $100 million to $200 million. This facility
was most recently renewed in March 2024, extending the revolving period to March 2026, followed by an amortization period to March 2028.

 In a securitization and in
our warehouse credit facilities, we are required to make certain representations and warranties, which are generally similar to the representations
and warranties made by dealers in connection with our purchase of the automobile contracts. If we breach any of our representations or
warranties, we will be obligated to repurchase the automobile contract at a price equal to the principal balance plus accrued and unpaid
interest. We may then be entitled under the terms of our dealer agreement to require the selling dealer to repurchase the contract at
a price equal to our purchase price, less any principal payments made by the customer. Subject to any recourse against dealers, we will
bear the risk of loss on repossession and resale of vehicles under automobile contracts that we repurchase.

 36 

 In a securitization, the related
special purpose subsidiary may be unable to release excess cash to us if the credit performance of the securitized automobile contracts
falls short of pre-determined standards. Such releases represent a material portion of the cash that we use to fund our operations. An
unexpected deterioration in the performance of securitized automobile contracts could therefore have a material adverse effect on both
our liquidity and results of operations.

 Critical Accounting Estimates

 We believe that our accounting
policies related to (a) Finance Receivables at Fair Value, (b) Allowance for Finance Credit Losses, (c) Term Securitizations, (d) Accrual
for Contingent Liabilities and (e) Income Taxes are the most critical to understanding and evaluating our reported financial results.
Such policies are described below.

 Finance Receivables Measured 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. 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.
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.

 We re-evaluate the fair value
of such receivables at the close of each measurement period. If the re-evaluation were to yield a value materially different from the
recorded value, an adjustment, which we also refer to as a mark, would be required. Results for the years ended December 31, 2024 and
2023 include marks of $21.0 and $12.0 million, respectively, to the carrying value of the portion of the receivables portfolio accounted
for at fair value. The marks are estimates based on our evaluation of the appropriate fair value and future earnings rate of existing
receivables compared to recently acquired receivables and increases or decreases in our estimates of future net losses.

 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.

 Term Securitizations

 Our term securitization structure has generally
been as follows:

 We sell automobile contracts
we acquire to a wholly-owned special purpose subsidiary, which has been established for the limited purpose of buying and reselling our
automobile contracts. The special-purpose subsidiary then transfers the same automobile contracts to another entity, typically a statutory
trust. The trust issues interest-bearing asset-backed securities, in a principal amount equal to or less than the aggregate principal
balance of the automobile contracts. We typically sell these automobile contracts to the trust at face value and without recourse, except
that representations and warranties similar to those provided by the dealer to us are provided by us to the trust. One or more investors
purchase the asset-backed securities issued by the trust; the proceeds from the sale of the asset-backed securities are then used to purchase
the automobile contracts from us. We may retain or sell subordinated asset-backed securities issued by the trust or by a related entity.

 37 

 We structure our securitizations
to include internal credit enhancement for the benefit the investors (i) in the form of an initial cash deposit to an account ( " spread
account " ) held by the trust, (ii) in the form of overcollateralization
of the senior asset-backed securities, where the principal balance of the senior asset-backed securities issued is less than the principal
balance of the automobile contracts, (iii) in the form of subordinated asset-backed securities, or (iv) some combination of such internal
credit enhancements. The agreements governing the securitization transactions require that the initial level of internal credit enhancement
be supplemented by a portion of collections from the automobile contracts until the level of internal credit enhancement reaches specified
levels, which are then maintained. The specified levels are generally computed as a percentage of the principal amount remaining unpaid
under the related automobile contracts. The specified levels at which the internal credit enhancement is to be maintained will vary depending
on the performance of the portfolios of automobile contracts held by the trusts and on other conditions, and may also be varied by agreement
among us, our special purpose subsidiary, the insurance company, if any, and the trustee. Such levels have increased and decreased from
time to time based on performance of the various portfolios, and have also varied from one transaction to another. The agreements governing
the securitizations generally grant us the option to repurchase the sold automobile contracts from the trust when the aggregate outstanding
balance of the automobile contracts has amortized to a specified percentage of the initial aggregate balance.

 Upon each transfer of automobile
contracts in a transaction structured as a secured financing for financial accounting purposes, we retain on our consolidated balance
sheet the related automobile contracts as assets and record the asset-backed notes or loans issued in the transaction as indebtedness.

 We receive periodic base servicing
fees for the servicing and collection of the automobile contracts. Under our securitization structures treated as secured financings for
financial accounting purposes, such servicing fees are included in interest income from the automobile contracts. In addition, we are
entitled to the cash flows from the trusts that represent collections on the automobile contracts in excess of the amounts required to
pay principal and interest on the asset-backed securities, base servicing fees, and certain other fees and expenses (such as trustee and
custodial fees). Required principal payments on the asset-backed notes are generally defined as the payments sufficient to keep the principal
balance of such notes equal to the aggregate principal balance of the related automobile contracts (excluding those automobile contracts
that have been charged off), or a pre-determined percentage of such balance. Where that percentage is less than 100%, the related securitization
agreements require accelerated payment of principal until the principal balance of the asset-backed securities is reduced to the specified
percentage. Such accelerated principal payment is said to create overcollateralization of the asset-backed notes.

 If the amount of cash required
for payment of fees, expenses, interest and principal on the senior asset-backed notes exceeds the amount collected during the collection
period, the shortfall is withdrawn from the spread account, if any. If the cash collected during the period exceeds the amount necessary
for the above allocations plus required principal payments on the subordinated asset-backed notes, and there is no shortfall in the related
spread account or the required overcollateralization level, the excess is released to us. If the spread account and overcollateralization
is not at the required level, then the excess cash collected is retained in the trust until the specified level is achieved. Although
spread account balances are held by the trusts on behalf of our special-purpose subsidiaries as the owner of the residual interests (in
the case of securitization transactions structured as sales for financial accounting purposes) or the trusts (in the case of securitization
transactions structured as secured financings for financial accounting purposes), we are restricted in use of the cash in the spread accounts.
Cash held in the various spread accounts is invested in high quality, liquid investment securities, as specified in the securitization
agreements. The interest rate payable on the automobile contracts is significantly greater than the interest rate on the asset-backed
notes. As a result, the residual interests described above historically have been a significant asset of ours.

 In all of our term securitizations
and warehouse credit facilities, whether treated as secured financings or as sales, we have sold the automobile contracts (through a subsidiary)
to the securitization entity. The difference between the two structures is that in securitizations that are treated as secured financings
we report the assets and liabilities of the securitization trust on our consolidated balance sheet. Under both structures, recourse to
us by holders of the asset-backed securities and by the trust, for failure of the automobile contract obligors to make payments on a timely
basis, is limited to the automobile contracts included in the securitizations or warehouse credit facilities, the spread accounts and
our retained interests in the respective trusts.

 38 

 Accrual for Contingent Liabilities

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

 We have recorded a liability
as of December 31, 2024, which represents our best estimate of probable incurred losses for legal contingencies at that date. 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 range of reasonably possible losses for the legal proceedings and contingencies described or referenced above, as
of December 31, 2024 does not exceed $3.2 million.

 Accordingly, we believe that
the ultimate resolution of such legal proceedings and contingencies, after taking into account our current litigation reserves, 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 significantly exceed the reserves
we have accrued; as a result, the outcome of a particular matter may 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.

 Income Taxes

 We account for income taxes
under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are
determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities
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
be realized. In making such judgements, significant weight is given to evidence that can be objectively verified.

 In determining the possible
future realization of deferred tax assets, we have considered future taxable income from the following sources: (a) reversal of taxable
temporary differences; and (b) forecasted future net earnings from operations. Based upon those considerations, we have concluded that
it is more likely than not that the U.S. and state net operating loss carryforward periods provide enough time to utilize the deferred
tax assets pertaining to the existing net operating loss carryforwards and any net operating loss that would be created by the reversal
of the future net deductions which have not yet been taken on a tax return. Our estimates of taxable income are forward-looking statements,
and there can be no assurance that our estimates of such taxable income will be correct. Factors discussed under "Risk Factors,"
and under the heading “Cautionary Note Regarding Forward-Looking Statements." may affect whether such projections prove to
be correct.

 We recognize interest and
penalties related to unrecognized tax benefits within the income tax expense line in the accompanying consolidated statements of operations.
Accrued interest and penalties are included within the related tax liability line in the consolidated balance sheets.

 39 

 Uncertainty of Capital Markets and General Economic Conditions

 We depend upon the availability
of warehouse credit facilities and access to long-term financing through the issuance of asset-backed securities collateralized by our
automobile contracts. Since 1994, we have completed 103 term securitizations of approximately $20.6 billion in contracts. We generally
conduct our securitizations on a quarterly basis, near the beginning of each calendar quarter, resulting in four securitizations per calendar
year. However, we completed only three securitizations in 2020. In April 2020 we postponed our planned securitization due to the onset
of the pandemic and the effective closure of the capital markets in which our securitizations are executed. Subsequently, we successfully
completed securitizations in June and September 2020, and then on a regular quarterly schedule from January 2021 through January 2025.

 Financial Covenants 

 Certain of our securitization
transactions and our warehouse credit facilities contain various financial covenants requiring certain minimum financial ratios and results.
Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels. In addition, certain
securitization and non-securitization related debt contain cross-default provisions that would allow certain creditors to declare a default
if a default occurred under a different facility. As of December 31, 2024 we were in compliance with all such financial covenants.

 Results of Operations 

 Comparison of Operating Results for the year ended December 31,
2024 with the year ended December 31, 2023 

 Revenues . During the year ended
December 31, 2024, our revenues were $393.5 million, an increase of $41.5 million, or 11.8%, from the prior year revenues of $352.0 million.
The primary reason for the increase in revenues is the increase in interest income resulting from the increase in the average outstanding
balance of finance receivables measured at fair value. Revenues for the years ended December 31, 2024 and 2023 include fair value marks
of $21.0 and $12.0 million, respectively, to the carrying value of the portion of the receivables portfolio accounted for at fair value.
The marks are estimates based on our evaluation of the appropriate fair value and future earnings rate of existing receivables compared
to recently acquired receivables and increases or decreases in our estimates of future net losses. The fair value mark in the current
period also includes an increase in our estimates of cash receipts from interest and fees compared to our estimates at the time of acquisition.
For the year ended December 31, 2024, our re-evaluation of the fair values of these receivables resulted in a mark up for certain older
receivables and a mark down to the fair values of newer receivables. The fair value mark up on the older receivables exceeded the mark
down to the newer receivables resulting in a net mark up of $21.0 million.

 Interest income for the year
ended December 31, 2024 increased $34.7 million, or 10.6%, to $364.0 million from $329.2 million in the prior year. The primary reason
for the increase in interest income is the 10.2% increase in the average balance of our loan portfolio over the prior year period. The
interest yield on our total loan portfolio stayed the same at 11.3% in the prior year period to 11.3% in the current year period. The
table below shows the average balance and interest yield of our loan portfolio for the years ended December 31, 2024 and 2023:

 Year Ended December 31, 

 2024 
 2023 

 (Dollars in thousands) 

 Average 
 
 Interest 
 Average 
 
 Interest 

 Balance 
 Interest 
 Yield 
 Balance 
 Interest 
 Yield 

 Interest Earning Assets 
 
 Loan portfolio 
 $ 3,209,988 
 $ 363,962 
 11.3% 
 $ 2,913,571 
 $ 329,219 
 11.3% 

 40 

 Other income was $8.5 million
for the year ended December 31, 2024 compared to $10.8 million for the year ended December 31, 2023. This 20.8% decrease was primarily
driven by the decrease in origination and servicing fees we earned from third party receivables. These fees were $7.3 million for the
year ended December 31, 2024 and $9.3 million in the prior year period.

 Expenses . Our operating expenses
consist largely of interest expense, provision for credit losses, employee costs, sales and general and administrative expenses. Provision
for credit losses is affected by the balance and credit performance of our portfolio of finance receivables (other than our portfolio
of finance receivables measured at fair value, as to which expected credit losses have the effect of reducing the interest rate applicable
to such receivables). Interest expense is affected by the volume of automobile contracts we purchased during the trailing 12-month period
and the use of our warehouse facilities and asset-backed securitizations to finance those contracts and, more significantly, on the interest
rates on these facilities. Employee costs and general and administrative expenses are incurred as applications and automobile contracts
are received, processed and serviced. Factors that affect margins and net income include changes in the automobile and automobile finance
market environments, and macroeconomic factors such as interest rates and changes in the unemployment level.

 Employee costs include base
salaries, commissions and bonuses paid to employees, and certain expenses related to the accounting treatment of outstanding stock options,
and are one of our most significant operating expenses. These costs (other than those relating to stock options) generally fluctuate with
the level of applications and automobile contracts processed and serviced, which can be measured by our managed portfolio outstanding.

 Other operating expenses consist
largely of facilities expenses, telephone and other communication services, credit services, computer services, sales and advertising
expenses, and depreciation and amortization.

 Total operating expenses were
$366.1 million for the year ended December 31, 2024, compared to $290.9 million for the prior year, an increase of $75.2 million, or 25.8%.
The increase is primarily due to increases in interest expense, employee costs and the amount of reductions to provision for credit losses
expenses.

 Employee costs increased by
$8.0 million or 9.1%, to $96.2 million during the year ended December 31, 2024, representing 26.3% of total operating expenses. Employee
costs were $88.1 million in the prior year, or 30.3% of total operating expenses. The increase in employee costs can be attributed to
the increase in our outstanding managed portfolio.

 The table below summarizes
our employees by category as well as contract purchases and units in our managed portfolio as of, and for the years ended, December 31,
2024 and 2023:

 December 31, 2024 
 December 31, 2023 

 Amount 
 Amount 

 ($ in millions) 

 Contracts purchased (dollars) 
 $ 1,681.9 
 $ 1,357.8 

 Contracts purchased (units) 
 77,009 
 65,137 

 Managed portfolio outstanding (dollars) 
 $ 3,491.0 
 $ 2,970.1 

 Managed portfolio outstanding (units) 
 201,441 
 179,198 

 Number of Originations staff 
 195 
 185 

 Number of Sales staff 
 122 
 105 

 Number of Servicing staff 
 552 
 529 

 Number of other staff 
 64 
 71 

 Total number of employees 
 933 
 890 

 41 

 General and administrative expenses
include costs associated with purchasing and servicing our portfolio of finance receivables, including expenses for facilities, credit
services, and telecommunications. General and administrative expenses were $54.7 million, an increase of $4.7 million, or 9.4%, compared
to the previous year and represented 14.9% of total operating expenses.

 Interest expense for the year
ended December 31, 2024 increased by $44.6 million to $191.3 million, or 30.4%, compared to $146.6 million in the previous year. Interest
expense represented 52.3% of total operating expenses in 2023.

 Interest on securitization
trust debt increased by $39.6 million, or 32.6%, for the year ended December 31, 2024 compared to the prior year. The average balance
of securitization trust debt increased 11.3% to $2,596.6 million for the year ended December 31, 2024 compared to $2,333.5 million for
the year ended December 31, 2023. The annualized average rate on our securitization trust debt was 6.2% for the year ended December 31,
2024 compared to 5.2% in the prior year period. For each quarterly securitization transaction, the blended cost of funds is ultimately
the result of many factors including the market interest rates for benchmark swaps of various maturities against which our bonds are
priced and the margin over those benchmarks that investors are willing to accept, which in turn, is influenced by investor demand for
our bonds at the time of the securitization. These and other factors have resulted in fluctuations in our securitization trust debt interest
costs. The blended interest rates of our recent securitizations are summarized in the table below:

 Blended Cost of Funds on Recent Asset-Backed Term Securitizations 

 Period 
 Blended Cost of Funds 

 January 2021 
 1.11% 

 April 2021 
 1.65% 

 July 2021 
 1.55% 

 October 2021 
 2.09% 

 January 2022 
 2.54% 

 April 2022 
 4.83% 

 July 2022 
 6.02% 

 October 2022 
 8.48% 

 January 2023 
 6.48% 

 April 2023 
 7.17% 

 July 2023 
 7.13% 

 October 2023 
 7.89% 

 January 2024 
 6.51% 

 April 2024 
 6.69% 

 June 2024 
 6.56% 

 September 2024 
 5.52% 

 Interest expense on warehouse
lines of credit was $19.3 million for the year ended December 31, 2024 compared to $19.2 million in the prior year. The increase was due
to higher rates of our credit lines during 2024 compared to 2023. The average yield of our warehouse debt was 10.8% during 2024 compared
to 10.6% million in 2023.

 In June 2021, we completed a
residual interest financing of our residual interests from previously issued securitizations in the amount of $50.0 million. In March
2024, we completed a new residual interest financing of our residual interests from previously issued securitizations in the amount of
$50.0 million. Interest expense on residual interest financing was $8.7 million for the year ended December 31, 2024 compared to $4.2
million in the prior year.

 42 

 Interest expense on our subordinated
renewable notes was $2.2 million in 2024 compared to $1.8 million in the prior year. The average balance of the notes increased from $20.9
million in the prior year to $22.9 million for the year ended December 31, 2024. The average interest rate on our subordinated notes was
9.8% during 2024 compared to 8.7% million in 2023.

 The following table presents
the components of interest income and interest expense and a net interest yield analysis for the years ended December 31, 2024 and 2023:

 Year Ended December 31, 

 2024 
 2023 

 (Dollars in thousands) 

 Annualized 
 
 Annualized 

 Average 
 
 Average 
 Average 
 
 Average 

 Balance (1) 
 Interest 
 Yield/Rate 
 Balance (1) 
 Interest 
 Yield/Rate 

 Interest Earning Assets 
 
 Loan portfolio 
 $ 3,209,988 
 $ 363,962 
 11.3% 
 $ 2,913,571 
 $ 329,219 
 11.3% 

 Interest Bearing Liabilities 
 
 Warehouse lines of credit 
 $ 178,518 
 19,292 
 10.8% 
 $ 181,742 
 19,192 
 10.6% 

 Residual interest financing 
 91,803 
 8,702 
 9.5% 
 50,000 
 4,199 
 8.4% 

 Securitization trust debt 
 2,596,554 
 161,014 
 6.2% 
 2,333,472 
 121,408 
 5.2% 

 Subordinated renewable notes 
 22,886 
 2,249 
 9.8% 
 20,936 
 1,832 
 8.7% 

 $ 2,889,761 
 191,257 
 6.6% 
 $ 2,586,150 
 146,631 
 5.7% 

 Net interest income/spread 
 
 $ 172,705 
 
 $ 182,588 
 
 Net interest margin (3) 
 
 5.4% 
 
 6.3% 

 Ratio of average interest earning assets to average interest bearing liabilities 
 111% 
 
 113% 
 
 (1) 
 Average balances are based on month end balances except for
 warehouse lines of credit, which are based on daily balances. 

 (2) 
 Net of deferred fees and direct costs. 

 (3) 
 Net interest income divided by average interest earning assets. 

 43 

 Year Ended December 31, 2024 

 Compared to December 31, 2023 

 Total Change 
 Change Due to Volume 
 Change Due to Rate 

 Interest Earning Assets 
 (In thousands) 

 Loan portfolio 
 $ 34,743 
 $ 33,494 
 $ 1,249 

 Interest Bearing Liabilities 
 
 Warehouse lines of credit 
 100 
 (340 ) 
 440 

 Residual interest financing 
 4,503 
 3,511 
 992 

 Securitization trust debt 
 39,606 
 13,688 
 25,918 

 Subordinated renewable notes 
 417 
 170 
 247 

 44,626 
 17,029 
 27,597 

 Net interest income/spread 
 $ (9,883 ) 
 $ 16,465 
 $ (26,348 ) 

 For our receivables originated
prior to January 2018, we maintain an allowance for credit losses on automobile contracts held on our balance sheet, which reflects our
estimates of probable credit losses that can be reasonably estimated. For the year ended December 31, 2024, we recorded a reduction to
provision for credit losses on finance receivables in the amount of $5.3 million. In the prior year period, we recorded similar reductions
to provision for credit losses in the amount of $22.3 million. The adjustments recorded to reduce provisions for credit losses in both
periods were primarily due to better than expected credit performance for these receivables. The allowance applies only to our finance
receivables originated through December 2017, which we refer to as our legacy portfolio. The legacy portfolio balance decreased
from $27.6 million on December 31, 2023 to $5.4 million on December 31, 2024. Finance receivables that we have originated since January
2018 are accounted for at fair value. Under the fair value method of accounting, we recognize interest income net of expected credit
losses. Thus, no provision for credit loss expense is recorded for finance receivables measured at fair value.

 Sales expense consists primarily
of commission-based compensation paid to our employee sales representatives. Our sales representatives earn a salary plus commissions
based on volume of contract purchases and sales of ancillary products and services that we offer our dealers. Sales expense increased
by $1.5 million to $22.8 million during the year ended December 31, 2024 and represented 6.2% of total operating expenses. We purchased
$1,681.9 million of new contracts during the year ended December 31, 2024 compared to $1,357.8 million in the prior year period.

 Occupancy expenses were $5.6
million in 2024 which is down from $6.4 million in 2023.

 Depreciation and amortization
expenses increased to $862,000 compared to $847,000 in the prior year.

 For the year ended December
31, 2024, we recorded income tax expense of $8.2 million, representing a 30% effective tax rate. In the prior period, our income tax expense
was $15.6 million, also representing a 26% effective tax rate.

 44 

 Liquidity and Capital Resources

 Liquidity

 Our business requires substantial
cash to support our purchases of automobile contracts and other operating activities. Our primary sources of cash have been cash flows
from the proceeds from term securitization transactions and other sales of automobile contracts, amounts borrowed under various revolving
credit facilities (also sometimes known as warehouse credit facilities), customer payments of principal and interest on finance receivables,
fees for origination of automobile contracts, and releases of cash from securitization transactions and their related spread accounts.
Our primary uses of cash have been the purchases of automobile contracts, repayment of amounts borrowed under lines of credit, securitization
transactions and otherwise, operating expenses such as employee, interest, occupancy expenses and other general and administrative expenses,
the establishment of spread accounts and initial overcollateralization, if any, the increase of credit enhancement to required levels
in securitization transactions, and income taxes. There can be no assurance that internally generated cash will be sufficient to meet
our cash demands. The sufficiency of internally generated cash will depend on the performance of securitized pools (which determines the
level of releases from those pools and their related spread accounts), the rate of expansion or contraction in our managed portfolio,
and the terms upon which we are able to acquire and borrow against automobile contracts.

 Net cash provided by operating
activities for the years ended December 31, 2024, 2023 and 2022 was $233.8 million, $238.0 million and $215.9 million, respectively. Net
cash from operating activities is generally provided by net income from operations adjusted for significant non-cash items such as our
provision for credit losses and interest accretion on fair value receivables.

 Net cash used in investing
activities for the year ended December 31, 2024, 2023 and 2022 was $769.7 million, $359.5 million and $713.9 million, respectively. Cash
used in investing activities generally relates to purchases of automobile contracts. Purchases of finance receivables were $1,653.0 million
(includes acquisition fees paid), $1,251.0 million and $1,673.2 million in 2024, 2023 and 2022, respectively. Cash provided by investing
activities primarily results from principal payments and other proceeds received on finance receivables.

 Net cash provided by financing
activities were $547.9 million and $84.2 million in 2024 and 2023, respectively. Net cash used in financing activities for the year ended
December 31, 2022 was $484.2 million. Cash used or provided by financing activities is primarily related to the issuance of securitization
trust debt, reduced by the amount of repayment of securitization trust debt and net proceeds or repayments on our warehouse lines of credit
and other debt. We issued $1,453.9 million in new securitization trust debt in 2024 compared to $1,235.5 million in 2023 and $1,411.0
million in 2022. Repayments of securitization debt were $1,124.1 million, $1,078.4 million and $1,060.1 million in 2024, 2023 and 2022,
respectively.

 We purchase automobile contracts
from dealers for a cash price approximately equal to their principal amount, adjusted for an acquisition fee which may either increase
or decrease the automobile contract purchase price. Those automobile contracts generate cash flow, however, over a period of years. We
have been dependent on warehouse credit facilities to purchase automobile contracts and our securitization transactions for long term
financing of our contracts. In addition, we have accessed other sources, such as residual financings and subordinated debt in order to
finance our continuing operations.

 The acquisition of automobile
contracts for subsequent financing in securitization transactions, and the need to fund spread accounts and initial overcollateralization,
if any, and increase credit enhancement levels when those transactions take place, results in a continuing need for capital. The amount
of capital required is most heavily dependent on the rate of our automobile contract purchases, the required level of initial credit enhancement
in securitizations, and the extent to which the previously established trusts and their related spread accounts either release cash to
us or capture cash from collections on securitized automobile contracts. Of those, the factor most subject to our control is the rate
at which we purchase automobile contracts.

 45 

 We are and may in the future
be limited in our ability to purchase automobile contracts due to limits on our capital. As of December 31, 2024, we had unrestricted
cash of $11.7 million and $124.1 million aggregate available borrowings under our two warehouse credit facilities (assuming the availability
of sufficient eligible collateral). As of December 31, 2024, we had approximately $23.0 million of such eligible collateral. During 2024,
we completed four securitizations aggregating $1,453.9 million of notes sold. In January 2025, we completed another securitization with
$442.4 million of notes sold. Cash proceeds from this securitization were used to pay down the outstanding balance on our two warehouse
credit facilities thus increasing the amounts available for borrowing under these facilities. Our plans to manage our liquidity include
maintaining our rate of automobile contract purchases at a level that matches our available capital, and, as appropriate, minimizing our
operating costs. If we are unable to complete such securitizations, we may be unable to increase our rate of automobile contract purchases,
in which case our interest income and other portfolio related income could decrease.

 Our liquidity will also be
affected by releases of cash from the trusts established with our securitizations. While the specific terms and mechanics of each spread
account vary among transactions, our securitization agreements generally provide that we will receive excess cash flows, if any, only
if the amount of credit enhancement has reached specified levels and the delinquency or net losses related to the automobile contracts
in the pool are below certain predetermined levels. In the event delinquencies or net losses on the automobile contracts exceed such levels,
the terms of the securitization may require increased credit enhancement to be accumulated for the particular pool. There can be no assurance
that collections from the related trusts will continue to generate sufficient cash.

 Our warehouse credit facilities
contain various financial covenants requiring certain minimum financial ratios and results. Such covenants include maintaining minimum
levels of liquidity and net worth and not exceeding maximum leverage levels. 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. As of December 31, 2024, we were in compliance with all such financial covenants.

 We currently have and will
continue to have a substantial amount of outstanding indebtedness. At December 31, 2024, we had approximately $3,130.9 million of debt
outstanding. Such debt consisted primarily of $2,594.4 million of securitization trust debt, and also included $410.9 million of warehouse
lines of credit, $99.2 million of residual interest financing debt and $26.5 million in subordinated renewable notes.

 Although we believe we are
able to service and repay our debt, there is no assurance that we will be able to do so. If our plans for future operations do not generate
sufficient cash flows and earnings, our ability to make required payments on our debt would be impaired. If we fail to pay our indebtedness
when due, it could have a material adverse effect on us and may require us to issue additional debt or equity securities.

 Contractual Obligations

 The following table summarizes
our material contractual obligations as of December 31, 2024 (dollars in thousands):

 Payment Due by Period (1) 

 Less than 
 2 to 3 
 4 to 5 
 More than 

 Total 
 1 Year 
 Years 
 Years 
 5 Years 

 Long Term Debt (2) 
 $ 26,489 
 $ 8,445 
 $ 5,284 
 $ 6,911 
 $ 5,849 

 Operating and Finance Leases 
 $ 22,544 
 $ 4,857 
 $ 4,804 
 $ 4,792 
 $ 8,091 

 (1) Securitization trust debt, in the aggregate amount of $2,594.4 million as of December 31, 2024, is omitted
from this table because it becomes due as and when the related receivables balance is reduced by payments and charge-offs. Expected payments,
which will depend on the performance of such receivables, as to which there can be no assurance, are $987.8 million in 2025, $696.4 million
in 2026, $470.5 million in 2027, $275.1 million in 2028, $126.6 million in 2029, and $38.0 million in 2030. 

 (2) Long-term debt represents subordinated renewable notes. 

 46 

 We anticipate
repaying debt due in 2025 with a combination of cash flows from operations and the potential issuance of new debt. 

 Warehouse Credit Facilities

 The terms on which credit
has been available to us for purchase of automobile contracts have varied in recent years, as shown in the following summary of our warehouse
credit facilities:

 Facility Established in
May 2012. On May 11, 2012, we entered into a $100 million one-year warehouse credit line with Citibank, N.A. The facility is structured
to allow us to fund a portion of the purchase price of automobile contracts by borrowing from a credit facility to our consolidated subsidiary
Page Eight Funding, LLC. 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. In July 2024, we renewed our two-year revolving credit agreement to extend the revolving period to
July 2026 and to include an amortization period through July 2027 for any receivables pledged to the facility at the end of the revolving
period. The Class A loans under the facility generally accrue interest during the revolving period at a per annum rate equal to the CP
Cost of Funds Rate plus 2.85% per annum, with a minimum rate of 3.60% per annum and during the amortization period at a per annum rate
equal to the CP Cost of Funds Rate plus 3.85% per annum, with a minimum rate of 4.60% per annum. On November 1, 2024, we closed a revolving
credit agreement with Oaktree Capital Management, which was subordinate to the credit agreement with Citibank, N.A., and with a $25 million
credit capacity. The addition of the subordinate Class B lender for this facility increased the effective advances up to 95.00% of eligible
finance receivables. The Class B loans under the facility generally accrue interest during the revolving period at a per annum rate equal
to the Adjusted Term SOFR plus 6.40% per annum, with a minimum rate of 7.15% per annum and during the amortization period at a per annum
rate equal to the Adjusted Term SOFR plus 7.40% per annum, with a minimum rate of 8.15% per annum. In December 2024, we increased the
capacity from $225 million to $335 million. At December 31, 2024 there was $269.6 million outstanding under this facility.

 Facility Established in
November 2015. On November 24, 2015, we entered into an additional $100 million one-year warehouse credit line with affiliates of
Credit Suisse Group and Ares Management LP. The facility is structured to allow us to fund a portion of the purchase price of automobile
contracts by borrowing from a credit facility to our consolidated subsidiary Page Nine Funding, LLC. The facility provides for effective
advances up to 85.25% of eligible finance receivables. The loans under the facility accrue interest at a commercial paper rate plus 4.50%
per annum, with a minimum rate of 7.50% per annum. On February 2, 2022, we renewed our two-year revolving credit agreement with Ares Agent
Services, L.P. In June 2022, we increased the capacity of our credit agreement with Ares Agent Services, L.P. from $100 million to $200
million. This facility was most recently renewed in March 2024, extending the revolving period to March 2026 followed by an amortization
period through March 2028 for any receivables pledged to the facility at the end of the revolving period. At December 31, 2024 there was
$145.6 million outstanding under this facility.

 Capital Resources

 Securitization trust debt
is repaid from collections on the related receivables, and becomes due in accordance with its terms as the principal amount of the related
receivables is reduced. Although the securitization trust debt also has alternative final maturity dates, those dates are significantly
later than the dates at which repayment of the related receivables is anticipated, and at no time in our history have any of our sponsored
asset-backed securities reached those alternative final maturities.

 The acquisition of automobile
contracts for subsequent transfer in securitization transactions, and the need to fund spread accounts and initial overcollateralization,
if any, when those transactions take place, results in a continuing need for capital. The amount of capital required is most heavily dependent
on the rate of our automobile contract purchases, the required level of initial credit enhancement in securitizations, and the extent
to which the trusts and related spread accounts either release cash to us or capture cash from collections on securitized automobile contracts.
We plan to adjust our levels of automobile contract purchases and the related capital requirements to match anticipated releases of cash
from the trusts and related spread accounts.

 47 

 Capitalization

 Over the period from January
1, 2022 through December 31, 2024 we have managed our capitalization by issuing and refinancing debt as summarized in the following table:

 Year Ended December 31, 

 2024 
 2023 
 2022 

 (Dollars in thousands) 

 RESIDUAL INTEREST FINANCING: 
 
 Beginning balance 
 $ 49,875 
 $ 49,623 
 $ 53,682 

 Issuances 
 50,000 
 – 
 – 

 Payments 
 – 
 – 
 (4,311 ) 

 Capitalization of deferred financing costs 
 (970 ) 
 – 
 – 

 Amortization of deferred financing costs 
 271 
 252 
 252 

 Ending balance 
 $ 99,176 
 $ 49,875 
 $ 49,623 

 SECURITIZATION TRUST DEBT: 
 
 Beginning balance 
 $ 2,265,446 
 $ 2,108,744 
 $ 1,759,972 

 Issuances 
 1,492,017 
 1,235,534 
 1,411,018 

 Payments 
 (1,162,184 ) 
 (1,078,432 ) 
 (1,060,052 ) 

 Capitalization of deferred financing costs 
 (9,316 ) 
 (7,888 ) 
 (8,681 ) 

 Amortization of deferred financing costs 
 8,421 
 7,488 
 6,487 

 Ending balance 
 $ 2,594,384 
 $ 2,265,446 
 $ 2,108,744 

 SUBORDINATED RENEWABLE NOTES: 
 
 Beginning balance 
 $ 17,188 
 $ 25,263 
 $ 26,459 

 Issuances 
 12,589 
 586 
 4,004 

 Payments 
 (3,288 ) 
 (8,661 ) 
 (5,200 ) 

 Ending balance 
 $ 26,489 
 $ 17,188 
 $ 25,263 

 Residual Interest Financing. On
May 16, 2018, we completed a $40.0 million securitization of residual interests from previously issued securitizations. In this residual
interest financing transaction, qualified institutional buyers purchased $40.0 million of asset-backed notes secured by residual interests
in thirteen CPS securitizations consecutively conducted from September 2013 through December 2016, and an 80% interest in a CPS affiliate
that owns the residual interests in the four CPS securitizations conducted in 2017. The sold notes (“2018-1 Notes”), issued
by CPS Auto Securitization Trust 2018-1, consist of a single class with a coupon of 8.595%. The notes were paid off in February 2022.

 On June 30, 2021, we completed
a $50 million securitization of residual interests from other previously issued securitizations. In this residual interest financing transaction,
qualified institutional buyers purchased $50.0 million of asset-backed notes secured by residual interests in eleven CPS securitizations
consecutively issued from January 2018 and September 2020. The sold notes (“2021-1 Notes”), issued by CPS Auto Securitization
Trust 2021-1, consist of a single class with a coupon of 7.86%. At December 31, 2024 there was $50.0 million outstanding under this facility.

 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 December 31, 2024 there was $50.0 million outstanding
under this facility.

 48 

 The agreed valuation of the
collateral for the 2021-1 and 2024-1 Notes is the sum of the amounts on deposit in the underlying spread accounts for each related securitization
and the over-collateralization of each related securitization, which is the difference between the outstanding principal balances of the
related receivables less the principal balance of the outstanding notes issued in the related securitization. On each monthly payment
date, the 2021-1 and 2024-1 Notes are entitled to interest at the coupon rate and, if necessary, a principal payment necessary to maintain
a specified minimum collateral ratio.

 Securitization Trust Debt. 
Since 2011, we treated all 53 of our securitizations of automobile contracts as secured financings for financial accounting purposes,
and the asset-backed securities issued in such securitizations remain on our consolidated balance sheet as securitization trust debt.
We had $2,594.4 million of securitization trust debt outstanding at December 31, 2024.

 Subordinated Renewable
Notes Debt. In June 2005, we began issuing registered subordinated renewable notes in an ongoing offering to the public.
Upon maturity, the notes are automatically renewed for the same term as the maturing notes, unless we repay the notes or the investor
notifies us within 15 days after the maturity date of his note that he wants it repaid. Renewed notes bear interest at the rate we are
offering at that time to other investors with similar note maturities. Based on the terms of the individual notes, interest payments may
be required monthly, quarterly, annually or upon maturity. At December 31, 2024 there were $26.5 million of such notes outstanding.

 We must comply with certain
affirmative and negative covenants related to debt facilities, which require, among other things, that we maintain certain financial ratios
related to liquidity, net worth, capitalization, investments, acquisitions, restricted payments and certain dividend restrictions. In
addition, certain securitization and non-securitization related debt contain cross-default provisions that would allow certain creditors
to declare default if a default occurred under a different facility. As of December 31, 2024, we were in compliance with all such covenants.

 Item 7A. Quantitative and Qualitative Disclosures About Market
Risk

 Interest Rate Risk

 We are subject to interest
rate risk during the period between when contracts are purchased from dealers and when such contracts become part of a term securitization.
Specifically, the interest rate due on our warehouse credit facilities are adjustable while the interest rates on the contracts are fixed.
Therefore, if interest rates increase, the interest we must pay to our lenders under warehouse credit facilities is likely to increase
while the interest we receive from warehoused automobile contracts remains the same. As a result, excess spread cash flow would likely
decrease during the warehousing period. Additionally, automobile contracts warehoused and then securitized during a rising interest rate
environment may result in less excess spread cash flow to us. Historically, our securitization facilities have paid fixed rate interest
to security holders set at prevailing interest rates at the time of the closing of the securitization, which may not take place until
several months after we purchased those contracts. Our customers, on the other hand, pay fixed rates of interest on the automobile contracts,
set at the time they purchase the underlying vehicles. A decrease in excess spread cash flow could adversely affect our earnings and cash
flow.

 To mitigate, but not eliminate,
the short-term risk relating to interest rates payable under the warehouse facilities, we have historically held automobile contracts
in the warehouse credit facilities for less than four months. To mitigate, but not eliminate, the long-term risk relating to interest
rates payable by us in securitizations, we have usually structured our term securitization transactions to include pre-funding structures,
whereby the amount of notes issued exceeds the amount of contracts initially sold to the trusts. We may continue to use pre-funding structures
in our securitizations. In pre-funding, the proceeds from the pre-funded portion are held in an escrow account until we sell the additional
contracts to the trust. In pre-funded securitizations, we lock in the borrowing costs with respect to the contracts we subsequently deliver
to the securitization trust. However, we incur an expense in pre-funded securitizations equal to the difference between the money market
yields earned on the proceeds held in escrow prior to subsequent delivery of contracts and the interest rate paid on the notes outstanding.
The amount of such expense may vary. Despite these mitigation strategies, an increase in prevailing interest rates would cause us to receive
less excess spread cash flows on automobile contracts, and thus could adversely affect our earnings and cash flows.

 49 

 Item 8. Financial Statements and Supplementary Data

 This report includes Consolidated Financial Statements,
notes thereto and an Independent Auditors’ Report, at the pages indicated below, in the " Index
to Financial Statements. " 

 Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure

 Not applicable.

 Item 9A. Controls and Procedures

 Disclosure Controls and
Procedures . Under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial
Officer, management of the Company has evaluated the effectiveness of the design and operation of the Company’s disclosure controls
and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the " Exchange
Act " ) as of December 31, 2024 (the " Evaluation
Date " ). Based upon that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective
(i) to ensure that information required to be disclosed by us in reports that the Company files or submits under the Exchange Act
is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange
Commission; and (ii) to ensure that information required to be disclosed in the reports that the Company files or submits under the
Exchange Act is accumulated and communicated to our management, including the Company’s Chief Executive Officer and Chief Financial
Officer, to allow timely decisions regarding required disclosures. The certifications of our Chief Executive Officer and Chief Financial
Officer required under Section 302 of the Sarbanes-Oxley Act have been filed as Exhibits 31.1 and 31.2 to this report.

 Internal Control. Management’s
Report on Internal Control over Financial Reporting is included in this Annual Report, immediately below. During the fiscal quarter
ended December 31, 2024, there were no changes in our internal control over financial reporting that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.

 Management’s Report
on Internal Control over Financial Reporting . We are responsible for establishing and maintaining adequate internal control
over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Our internal control over financial
reporting is designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation
of published financial statements.

 Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective
can only provide reasonable assurance with respect to financial statement preparation and presentation.

 Management, with the participation
of the Chief Executive and Chief Financial Officers, assessed the effectiveness of our internal control over financial reporting as of
December 31, 2024. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in the 2013 Internal Control — Integrated Framework. Based on this assessment, management, with the
participation of the Chief Executive and Chief Financial Officers, believes that, as of December 31, 2024, our internal control over financial
reporting is effective based on those criteria.

 Our internal control over
financial reporting as of December 31, 2024, has been audited by Crowe LLP, an independent registered public accounting firm, as stated
in their report which is included herein.

 50 

 Item 9B. Other Information

 During the quarter ended December 31, 2024, no
director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is
defined in Item 408(a) of Regulation S-K.

 Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent
Inspections

 Not Applicable.

 51 

 PART III 

 Item 10. Directors, Executive Officers and Corporate Governance. 

 Directors 

 The names of the Company’s directors, their principal occupations,
and certain other information regarding them are set forth below.

 Charles E. Bradley, Jr ., 65, has been the
Company’s Chief Executive Officer since January 1992, a director since the Company’s formation in March 1991, and was elected
Chairman of the Board in July 2001. Prior to that he was President of the Company from March 1991 to December 2022. From April 1989 to
November 1990, he served as Chief Operating Officer of Barnard and Company, a private investment firm. From September 1987 to March 1989,
Mr. Bradley was an associate of The Harding Group, a private investment banking firm. Having been with the Company since its inception,
Mr. Bradley brings comprehensive knowledge of the Company’s business, structure, history and culture to the Board and the Chairman
position.

 Stephen H. Deckoff , 59, has been a director
of the Company since August 2022. Mr. Deckoff has been the Managing Principal of Black Diamond, Capital Management, L.L.C., (“Black
Diamond”), a privately held alternative asset management firm, since its founding in 1995. In that capacity, he is responsible
for all portfolio management and business operations. Prior to 1995, Mr. Deckoff was a Senior Vice President of Kidder, Peabody &
Co. Inc. (“Kidder”) and head of its Structured Finance Group. Prior to joining Kidder, Mr. Deckoff was a Managing Director
in the Structured Finance Group at Bear Stearns & Co., Inc. (“Bear Stearns”). Before joining Bear Stearns, Mr. Deckoff
worked in the Structured Finance Department of Chemical Securities, Inc. and the Fixed Income Research Department at Drexel Burnham Lambert.
In June 2023, Mr. Deckoff joined the Board of KVH Industries, Inc., a publicly traded company providing connectivity solutions to primarily
maritime customers globally. Mr. Deckoff brings to the Board his extensive financial experience and expertise.

 Louis M. Grasso , 78, has been a director
of the Company since October 2019. Mr. Grasso was the founder and majority owner of PFC Corporation (“PFC”) until his retirement
in November 2011, upon sale of PFC’s portfolio of assets to Capstone Realty Advisors. Over a period of 35 years, PFC Corporation
originated over $1.8 billion of mortgage loans, and issued $1.8 billion of mortgage-backed securities. He brings to the Board knowledge
and experience bearing in particular on the Company’s strategies for meeting its capital requirements, and broad organizational
and management skills.

 William W. Grounds , 69, has been a director
of the Company since December 2021. From 2008 to 2021, he was the President and COO of Infinity World Development Corp., which is a subsidiary
of a sovereign wealth fund in the United Arab Emirates. The principal business of Infinity World Development Corp. was a $5 billion investment
in the CityCenter mixed use integrated resort property located in Las Vegas, Nevada. Mr. Grounds served on the board of MGM Resorts International,
a hospitality and entertainment company, from 2013 to 2021 and of Remark Holdings Inc., a technology company, from 2013 to 2019. Mr.
Grounds joined the Board of PointsBet Holdings Limited, an Australian sports wagering operator and iGaming provider, in December 2022.
In June 2023, Mr. Grounds was appointed to the Board of the GCGRA, the national gaming regulator of the UAE. During his career he has
held senior executive positions in major real estate private equity investment, development and construction entities. Mr. Grounds brings
to the Board experience as a director of publicly-traded companies, and skills in investment and general management.

 Brian J. Rayhill , 62, has been a director
of the Company since August 2006. Mr. Rayhill has been a practicing attorney in New York State since 1988 and the managing attorney of
the Law Office of Brian Rayhill since 2017. As an experienced advocate, counselor and litigator, Mr. Rayhill brings legal knowledge and
perspective to the Company’s Board.

 William B. Roberts , 87, has been a director
of the Company since its formation in March 1991. From 1981 until his retirement at the end of 2020, he was the President of Monmouth
Capital Corp., an investment firm that specializes in management buyouts. Having spent decades in the business of finance, Mr. Roberts
brings to the Company’s Board his perspective and judgment regarding means of financing its business. 

 52 

 James E. Walker III , 62, has been a director
of the Company since August 2022. Mr. Walker is President and Senior Managing Director of Black Diamond Capital Management, where he
oversees general management, drives strategic growth, and identifies new investment opportunities. A co-founder of Black Diamond in 1996,
Mr. Walker rejoined the firm as President in September 2023, bringing extensive leadership and investment experience. Prior to his return
to Black Diamond, Mr. Walker served as Managing Partner of Vinson Ventures, LLC, a boutique investment firm. From 2008 until 2017, Mr.
Walker was a Managing Partner at Fir Tree Partners, where he co-founded the firm’s distressed real estate funds and chaired the
Risk Committee. Following his tenure at Fir Tree, he was a Strategic Partner at Jadian Capital, an alternative investment firm from 2017
to 2021. Throughout his career, Mr. Walker has held numerous board positions. Since November 2017, he has been a board member of Starwood
Real Estate Trust, a private real estate investment firm. In June 2023, he joined the board of Emeco, an Australian mining equipment
rental company. He previously served on the Board of Clarus Corporation, a global company catering to outdoor and consumer enthusiast
markets. Mr. Walker began his career in investment banking at Kidder Peabody and Bear Stearns. Mr. Walker brings to the Board his extensive
investment management experience.

 Gregory S. Washer , 63, has been a director
of the Company since June 2007. He was the President and owner of Clean Fun Promotional Marketing (“Clean Fun”), a promotional
marketing company, from its founding in 1986 through its sale in September 2014. He continued to act as a consultant to Clean Fun through
August 2017, and is now retired. Mr. Washer contributes to the Board significant organizational and operational management skills, combined
with a wealth of experience in promotion and marketing of services.

 Daniel S. Wood , 66, has been a director
of the Company since July 2001. Mr. Wood was President of Carclo Technical Plastics (“Carclo”), a manufacturer of custom injection
moldings, from September 2000 until his retirement in April 2007. Previously, from 1988 to September 2000, he was the Chief Operating
Officer and co-owner of Carrera Corporation, the predecessor to the business of Carclo. As President of Carclo, Mr. Wood was responsible
for the overall operation of that company and for the quality and integrity of its financial statements. He brings to the Board the knowledge
and perspective useful in evaluating the Company’s financial statements, and broad organizational and management skills.

 Executive Officers 

 The information regarding the Company’s
executive officers set forth in Part I of this report under the caption “Information about Our Executive Officers” is incorporated
herein by reference. 

 Code of Ethics 

 The Company has adopted a Code of Ethics for Senior
Financial Officers, which applies to the Company’s chief executive officer, chief financial officer, controller and others. A copy of
the Code of Ethics may be obtained at no charge by written request to the Corporate Secretary at the Company’s principal executive offices.

 Audit and Other Committees 

 The Board of Directors (the “Board”)
has established an Audit Committee, a Compensation Committee, and a Nominating Committee. Each of these three committees operates under
a written charter, adopted by the Board of Directors. The charters are available on the Company’s website, https://ir.consumerportfolio.com/corporate-governance.
The Board of Directors has concluded that each member of these three committees (and every director other than Mr. Bradley, the Company’s
chief executive officer), is independent in accordance with the director independence standards prescribed by Nasdaq, and has determined
that none of them have a material relationship with the Company that would impair their independence from management or otherwise compromise
the ability to act as an independent director.

 53 

 The members of the Audit Committee are Mr. Rayhill
(chairman), Mr. Grasso, Mr. Washer, and Mr. Wood. The Board has determined that each Audit Committee member is independent as defined
under Nasdaq Listing Rules and Rule 10A-3(b)(1) of the Exchange Act.

 The Audit Committee is empowered by the Board
of Directors to review the financial books and records of the Company in consultation with the Company’s accounting and auditing staff
and its independent auditors and to review with the accounting staff and independent auditors any questions that may arise with respect
to accounting and auditing policy and procedure.

 The Board of Directors has further determined
that Mr. Wood has the qualifications and experience necessary to serve as an "audit committee financial expert" as such term
is defined in Item 407 of Regulation S-K promulgated by the SEC. Mr. Wood, as president of Carclo, was responsible for the preparation
and evaluation of the audited financial statements of that company.

 Insider Trading Policy 

 The Company has adopted an insider trading policy 
that governs the purchase, sale, and/or other transactions of our securities by our directors, officers and employees that we believe
is reasonably designed to promote compliance with insider trading laws, rules and regulations, and the applicable exchange listing standards.
A copy of our insider trading policy is filed as Exhibit 19 to this Annual Report on Form 10-K for the fiscal year ended December 31,
2024. In addition, with regard to the Company’s trading in its own securities, it is the Company’s policy to comply with the
federal securities laws and the applicable exchange listing standards. 

 Item 11. Executive Compensation. 

 Compensation Committee
Interlocks and Insider Participation 

 The members of the Compensation Committee are
Mr. Wood (chairman), Mr. Grounds, and Mr. Roberts.

 Compensation Committee Report 

 The Compensation Committee has reviewed and discussed
with the Company’s management the Compensation Discussion and Analysis contained in this report. Based on such review and discussions
and relying thereon, the Compensation Committee has recommended to the Company’s Board of Directors that the Compensation Discussion and
Analysis set forth below be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

 THE COMPENSATION COMMITTEE

 Daniel S. Wood (chairman) William
W. Grounds William B. Roberts

 Compensation Discussion
and Analysis 

 2024 Say-on-Pay Advisory Vote Outcome 

 The Compensation Committee annually considers
the results of the most recent advisory vote by shareholders to approve executive officer compensation. In the 2024 advisory vote, a majority
of the voted shares (92%) approved of the compensation of our named executive officers. The Compensation Committee interprets
that vote as a reason to retain the existing design, purposes and structure of our executive compensation programs. The Compensation
Committee will continue to consider the results from future shareholder advisory votes regarding executive officer compensation in its
future administration of executive compensation.

 54 

 Compensation Objectives 

 The Company’s objectives with respect to compensation
are several. The significant objectives are to cause compensation (i) to be sufficient in total amount to provide reasonable
assurance of retaining key executives, (ii) to include a significant contingent component, so as to provide strong incentives to meet
designated Company objectives, and (iii) to include a significant component tied to the price of the common stock, so as to align management’s
incentives with shareholder interests. The Compensation Committee ("Committee") of the Company’s Board of Directors
is charged with administering the Company’s compensation plans to meet those objectives. To the extent that elements
of compensation would not advance such objectives, or would do so less effectively than would other elements, the Committee seeks to
avoid paying compensation in those forms.

 Role of the Compensation
Committee and the Chief Executive Officer 

 Our Board has authorized the Compensation Committee,
which is composed solely of independent directors, to make all decisions regarding executive compensation, including administration of
our compensation plans. In that regard, the Compensation Committee:

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

 · 
 Reviews and approves all Company goals and objectives (both financial and non-financial) relevant to the compensation of the Chief Executive Officer; 

 · 
 Evaluates, together with the other independent directors, the performance of the Chief Executive Officer in light of these goals and objectives and that individual’s overall effectiveness; 

 · 
 Fixes and approves each element of the compensation of the Chief Executive Officer; 

 · 
 Reviews the performance evaluations of all other members of executive management (the Chief Executive Officer prepares and presents to the Compensation Committee the performance evaluations of the other executive officers); 

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

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

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

The Compensation Committee is authorized to form subcommittee(s) and to retain experts and consultants to assist in the discharge of its
responsibilities. To date it has not done so.

 The Chief Executive Officer, who attends meetings
of the Compensation Committee by invitation of the Committee’s chairman, assists the Committee in determining the compensation of
our other executive officers by, among other things:

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

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

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

 The other executive officers do not have a role
in determining their own compensation, other than to discuss their annual individual performance objectives and results achieved with
the chief executive officer.

 Our Overall Approach 

 The Committee has put into place a compensation
system consisting of three key components: base salary, an annual cash bonus pursuant to an incentive plan, and long-term equity incentives
in the form of stock options.

 55 

 The table below provides comparative information
regarding the components of our year 2024 executive compensation program. We are applying the same elements in our executive compensation
program for the year 2025.

 Element 
 Form 
 Objectives and Basis 

 Base Salary 
 Cash 
 · 
 Attract and retain high quality personnel 

 · 
 Targeted to be superior to compensation offered by our competitors 

 Annual Incentive Bonus 
 Cash 
 · 
 Achieve objectives set annually 

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

 · 
 Actual payout determined by Company and individual performance 

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

 Long-Term Incentive 
 Stock options 
 · 
 Align interests of executives with those of shareholders; 

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

 The Committee has from time to time considered
providing additional elements of executive compensation. It has considered elements such as restricted stock awards, restricted stock
units, compensation contingent on a change in control, defined benefit pension plans, deferred cash compensation, and supplemental retirement
plans (supplemental in the sense that they exceed the limits for tax advantaged treatment). To date, the Committee has elected not to
pay compensation in such forms, having determined that the Company’s objectives are better met by one or more of the elements of compensation
that it does pay.

 Regarding restricted stock and restricted stock
units, the Committee has noted that any form of equity equivalent to or closely tied to common stock does serve to meet the objective
of aligning officers’ personal interest with that of the shareholders generally. The Committee believes, however, that the objective is
better met by grants of stock options than by grants of share equivalents, because recipients of the grants will face the same degree
of variance in results at a lesser cost to the Company, when option grants are compared to grants of restricted stock units. Further,
unlike restricted stock, option grants will not provide a reward to the holder absent an improvement over time in the Company’s
stock price. The Committee has elected not to provide material perquisites as compensation, having determined that cash is a better medium
of exchange.

 Regarding compensation that would be payable contingent
on a change in control of the Company, the Committee believes that there are certain legitimate objectives to be met by such contingent
compensation. As of the date of this report, however, no such contingent compensation plans are in place. Regarding defined benefit pension
plans, deferred cash compensation and supplemental retirement plans, the Committee believes that the Company’s retention objective is
better met by straight cash payments, whether in the form of base salary or in the form of bonus compensation. In particular with respect
to plans for deferred compensation, the Committee believes those make sense for the Company and for the recipient only on the basis of
assumptions regarding future tax rates payable by each. Having no assurance that such assumptions would be correct, the Committee has
chosen not to put into place any special deferred compensation programs for the company’s executive officers. Those officers do
participate in a Company-sponsored tax-deferred savings plan, commonly known as a 401(k) plan, on the same terms available to Company
employees generally.

 The Committee may in the future revisit its conclusions
as to any of the components discussed above, or may consider other forms of compensation.

 The Base Salary Element 

 With respect to the retention objective, the Committee
considers an executive’s base salary to be the most critical component. Acting primarily on the basis of recommendations of the Chief
Executive Officer, the Committee adjusts other officers’ base salaries annually, with the adjustment generally consisting of a 2% to 10%
increase from the prior year’s rate. Where exceptional circumstances apply, such as recruitment of a new executive officer, a promotion
to executive officer status or a special need to retain an individual officer, the chief executive officer may recommend, and the Committee
may approve, a larger increase.

 56 

 The Company’s general approach in setting
the annual compensation of its named executive officers is to set those officers’ base compensation by reference to their base rates
for the preceding year. During the year ended December 2024, the Company’s chief executive officer, Charles E. Bradley, Jr., received
$995,000 in base salary. In setting that rate in 2024, the Committee considered the base salary rate that the Company had paid in the
prior year ($995,000), the desirability of providing an annual increase, the desirability of ensuring retention of the services of the
Company’s incumbent chief executive officer, the Company’s financial performance, and the levels of chief executive officer
compensation prevailing among other financial services companies. The Committee considered whether to adjust officers’ base compensation
for 2024, and determined to increase the base rate for the President and Chief Financial Officer by 4%.

 The Annual Incentive
Bonus (Executive Management Bonus Plan) Element 

 To encourage executive officers and key management
personnel to exercise their best efforts and management skills toward causing the Company to meet its overall objective, and toward achieving
designated specific individual objectives, the Company has implemented an Executive Management Bonus Plan, with annual payouts. Under
the Company’s bonus plan as applied to the year ended December 2024, the Company’s president is eligible to receive a cash bonus
of up to 170% of his base salary and the executive vice presidents are eligible to receive a cash bonus of up to 140% of their base salaries.
The chief executive officer is eligible to receive a cash bonus of up to 600% of his base salary. The Committee is expected to evaluate
each named executive officer’s performance and determine the amount of the Executive Management Bonus Plan award earned by the
end of June 2025.

 The Long-Term Incentive
Compensation Element 

 The Committee may also award incentive and non-qualified
stock options under the Company’s stock option plans. Such awards are designed to assist in the retention of key executives and management
personnel and to create an incentive to create shareholder value over a sustained period of time. The Company believes that stock options
are a valuable tool in compensating and retaining employees. Because the exercise price of all options granted is equal to or above the
fair market value of the Company’s common stock on the date of grant, the option holders may realize value only if the stock price
appreciates from the price on the date the options were granted. This design is intended to focus executives on the enhancement of shareholder
value over the long term.

 During the year ended December 31, 2024, the
Committee did not grant stock options to the Company’s executive officers.

 Other Elements 

 The Company also maintains certain broad-based
employee benefit plans, such as medical and dental insurance, and a qualified defined contribution retirement savings plan (401(k) plan),
in which executive officers are permitted to participate. Such officers participate on the same terms as non-executive personnel who meet
applicable eligibility criteria, and are subject to any legal limitations on the amounts that may be contributed or the benefits that
may be payable under the plans. The Company does not maintain any form of defined benefit pension or retirement plan in which
executive officers may participate, nor does it maintain any form of supplemental retirement savings or supplemental deferred compensation
plan.

 Exercise of Discretion 

 In exercising its discretion as to the level of
executive compensation and its components, the Committee considers a number of factors. Members of the Committee conduct informal surveys
of compensation paid to comparable executives within and without the consumer finance industry. The Committee finds these data useful
primarily in evaluating the overall level of compensation paid or to be paid to the Company’s executive officers. Financial factors
considered include earnings, revenue, originations, and budget attainment. Operational factors considered include individual and group
management goals; indicators of the performance and credit quality of the Company’s servicing portfolio, including levels of delinquencies
and charge-offs; and indicators of successful management of personnel, including employee stability. All of such factors are assessed
with reference to the judgment of the Committee as to the degree of difficulty of achieving desired outcomes. With respect to payment
of annual bonuses and grants of stock options, the Committee also takes note of factors relating to the degree of the Company’s success
over the most recent year.

 57 

 Specific Objectives
and Evaluation 

 In 2024, the Committee
designated specific objectives with respect to the chief executive officer to be accomplished within the year 2024, and fixed weights
to be associated with each such objective. The chief executive officer proposed to the Committee specific annual objectives with respect
to each other executive officer of the Company, which the Committee approved. The Committee anticipates determining the amount of the
Executive Management Bonus Plan award earned by each named executive officer by the end of June 2025.

 Grants of Options 

 The Committee did not award stock options to the
Company’s officers in 2024. 

 The
Committee does not have a policy or practice on when to grant option awards. The Committee does
not have a policy or practice of taking into account material nonpublic information when determining the timing and
terms of option awards, however if a public announcement of material information is anticipated, the grant date of such options may
be deferred at the discretion of the Committee, until after the release 
of such information. The
Company does
not time the disclosure of material nonpublic information for the purpose of affecting the value of executive
compensation. 

 Stock Ownership, Hedging and Pledging 

 Our Board of Directors and Compensation Committee
have considered whether to establish a minimum stock ownership goal for members of our senior management. We have elected not to do so,
considering that such a policy would either be strict and mandatory, in which case it would undermine the compensatory objectives of our
equity compensation plans, or would be merely hortatory, in which case it could be expected to have little effect. We’ve also noted
that the multiyear vesting terms of the equity incentives granted under our plans have the effect of aligning our executives’ individual
personal financial incentives with the future price performance of the Company’s stock.

 As part of our comprehensive compliance policy,
we remind all Company executive officers of the mandatory legal prohibition on selling short company shares and the implications of the
SEC’s short-swing profit rule. We also prohibit Company executive officers from entering into transactions that would have the
effect of causing those individuals to benefit from a decline in the price of the Company stock, such as the purchase of “put”
options. We prohibit such “hedging” transactions but we do not find it appropriate to prohibit our executive officers from
pledging their shares of Company stock as security for a loan. We believe that the beneficial incentives of owning Company stock remain
substantially the same with or without such a pledge.

 Summary of Compensation 

 The following table summarizes all compensation
earned during the three fiscal years ended December 31, 2024 by the Company’s chief executive officer, its chief financial officer, and
the other three most highly compensated individuals (such five individuals, the “named executive officers”) who were serving
in such position or as executive officers at any time in 2024. It lists their names, their principal positions in which they served in
those years, and each component of compensation paid with respect to those years.

 58 

 Summary Compensation Table 

 Name and Principal Position (1) 
 Year 
 Salary 
 Non-Equity 
 Incentive Plan 
 Compensation (2) 
 
 Option 
 Awards (3) 
 
 All Other 
 Compen- 
 sation (4) 
 
 Total 

 Charles E. Bradley, Jr. 
 2024 
 $ 995,000 
 $ – 
 $ – 
 $ 40,611 
 $ 1,035,611 

 Chief Executive Officer 
 2023 
 995,000 
 3,005,000 
 – 
 342 
 4,000,342 

 2022 
 995,000 
 3,980,000 
 5,885,850 
 351 
 10,861,201 

 Michael T. Lavin 
 2024 
 470,000 
 – 
 – 
 47,158 
 517,158 

 President 
 2023 
 452,000 
 582,063 
 – 
 342 
 1,034,405 

 & Chief Operating Officer 
 2022 
 411,000 
 575,000 
 448,200 
 351 
 1,434,551 

 Danny Bharwani 
 2024 
 386,000 
 – 
 – 
 44,871 
 430,871 

 Executive Vice President 
 2023 
 371,000 
 385,655 
 – 
 342 
 756,997 

 & Chief Financial Officer 
 2022 
 331,000 
 324,000 
 298,800 
 351 
 954,151 

 Teri L. Robinson 
 2024 
 386,000 
 – 
 – 
 2,342 
 388,342 

 Executive Vice President 
 2023 
 386,000 
 413,406 
 – 
 342 
 799,748 

 - Sales & Originations 
 2022 
 368,000 
 401,000 
 298,800 
 351 
 1,068,151 

 Christopher Terry 
 2024 
 374,000 
 – 
 – 
 9,534 
 383,534 

 Executive Vice President 
 
 - Risk, Systems & IT 
 
 (1)
 
 Mr. Terry qualified as a named executive officer pursuant to Item 402 of Regulation S-K beginning for the year 2024. 

 (2) 
 The amount of the Non-Equity Incentive Plan Compensation
 award for 2024 is expected to be determined by the end of June 2025. Such amount, when finally determined, will be disclosed in a
 filing under Item 5.02(f) of Form 8-K. 

 (3) 
 Represents the dollar value accrued for financial accounting purposes in connection with the grant of such options, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 and SFAS 123R. Value was estimated using a Black-Scholes model for 2022. For the options granted on January 24, 2022, (comprising 750,000 options granted to Mr. Bradley), the weighted average fair value per option was $5.8558, based on assumptions of 4.11 years expected life, expected volatility of 75.26%, and a risk-free rate of 1.43%. For the options granted on June 24, 2022, (comprising all of the other options granted to named executive officers in 2022), the weighted average fair value per option was $4.98, based on assumptions of 4.11 years expected life, expected volatility of 75.15%, and a risk-free rate of 3.13%. 

 (4) 
 For 2024, includes premiums paid by the Company for group life insurance and employer matching contributions under the Company’s defined contribution plan. Additionally, the amounts include a (i) cash-out of accrued vacation time of $38,269, $26,423 and $22,269 to Messrs. Bradley, Lavin, and Bharwani and (ii) a car allowance of $16,077 and $20,260 for Messrs. Lavin and Bharwani and (iii) gym membership fees of $2,316 for Mr. Lavin. 

 59 

 Grants of Plan-Based Awards in Last Fiscal
Year 

 In the year ended December 31, 2024, we did not
grant any options, stock awards, or stock appreciation rights to any of our named executive officers.

 Our named executive officers are eligible for
awards under our Executive Management Bonus Plan, which are expected to be determined by the end of June 2025. The table below provides
information regarding the awards for which the named executive officers are eligible for the year 2024.

 Grants of Plan-Based Awards 

 Estimated future payouts under non-equity incentive plan awards 

 Name 
 Threshold 
 Target 
 Maximum 

 Mr. Bradley 
 $ – 
 $ 5,970,000 
 $ 5,970,000 

 Mr. Lavin 
 – 
 799,000 
 799,000 

 Mr. Bharwani 
 – 
 540,400 
 540,400 

 Ms. Robinson 
 – 
 540,400 
 540,400 

 Mr. Terry 
 – 
 523,600 
 523,600 

 The “target” and “maximum”
figures appearing in the table above represent the maximum cash payout under the individual executives’ Executive Management
Bonus Plan awards as of the date the incentive was fixed. The chief executive officer, Mr. Bradley, is eligible to receive a cash bonus
of up to 600% of his base salary. The Company’s president, Mr. Lavin, is eligible to receive a cash bonus of up to 170% of his base
salary. The other named executive officers, as executive vice presidents, are eligible to receive a cash bonus of up to 140% of their
base salaries. The actual payout to each individual named in the table above has not been determined as of the date of this report.

 Outstanding Equity Awards at Fiscal Year-end
 
 The following table sets forth as of December
31, 2024 the number of unexercised options held by each of the named executive officers, the number of shares subject to then exercisable
and unexercisable options held by such persons and the exercise price and expiration date of each such option. Each option
referred to in the table was granted at an option price per share no less than the fair market value per share on the date of grant.
None of such individuals holds a stock award; accordingly, only information concerning option awards is presented.

 60 

 Name 
 Number of securities underlying unexercised options (exercisable) 
 Number of securities underlying unexercised options (unexercisable) 
 Option exercise price 
 Option expiration date 

 Charles E. Bradley, Jr. 
 300,000 
 – 
 $ 3.48 
 5/9/2025 

 300,000 
 – 
 $ 3.53 
 8/8/2026 

 240,000 
 – 
 $ 2.47 
 6/1/2027 

 225,000 
 75,000 (1) 
 $ 4.95 
 8/3/2028 

 375,000 
 375,000 (2) 
 $ 10.32 
 1/24/2029 

 150,000 
 150,000 (3) 
 $ 10.25 
 6/24/2029 

 Michael T. Lavin 
 90,000 
 – 
 $ 3.48 
 5/9/2025 

 90,000 
 – 
 $ 3.53 
 8/8/2026 

 150,000 
 – 
 $ 2.47 
 6/1/2027 

 67,500 
 22,500 (1) 
 $ 4.95 
 8/3/2028 

 45,000 
 45,000 (3) 
 $ 10.25 
 6/24/2029 

 Danny Bharwani 
 60,000 
 – 
 $ 3.48 
 5/9/2025 

 60,000 
 – 
 $ 3.53 
 8/8/2026 

 60,000 
 – 
 $ 2.47 
 6/1/2027 

 45,000 
 15,000 (1) 
 $ 4.95 
 8/3/2028 

 30,000 
 30,000 (3) 
 $ 10.25 
 6/24/2029 

 Teri L. Robinson 
 60,000 
 – 
 $ 3.48 
 5/9/2025 

 60,000 
 – 
 $ 3.53 
 8/8/2026 

 80,000 
 – 
 $ 2.47 
 6/1/2027 

 45,000 
 15,000 (1) 
 $ 4.95 
 8/3/2028 

 30,000 
 30,000 (3) 
 $ 10.25 
 6/24/2029 

 Christopher Terry 
 60,000 
 – 
 $ 3.48 
 5/9/2025 

 60,000 
 – 
 $ 3.53 
 8/8/2026 

 60,000 
 – 
 $ 2.47 
 6/1/2027 

 45,000 
 15,000 (1) 
 $ 4.95 
 8/3/2028 

 30,000 
 30,000 (3) 
 $ 10.25 
 6/24/2029 

 (1) 
 Becomes exercisable on August 3, 2025. 

 (2) 
 Becomes exercisable as to increments of one-half of the unexercisable portion on January 24, 2025 and 2026. 

 (3) 
 Becomes exercisable as to increments of one-half of the unexercisable portion on June 24, 2025 and 2026. 

 61 

 Option Exercises in Last Fiscal Year 

 All of the five named executive officers exercised
stock options during 2024. The table below shows the realized value and the number of options exercised for those individuals. None of
our officers hold stock awards; accordingly, no stock awards vested during 2024.

 Option Exercises and Stock Vested 

 Value realized on exercise (1) 
 Number of shares acquired on exercise 

 Mr. Bradley 
 $ 1,275,000 
 300,000 

 Mr. Lavin 
 382,500 
 90,000 

 Mr. Bharwani 
 255,000 
 60,000 

 Ms. Robinson 
 255,000 
 60,000 

 Mr. Terry 
 233,400 
 60,000 

 (1) 
 The value realized is the difference between the fair market value of the Company’s common
 stock on the date of exercise (the closing price reported by Nasdaq) and the exercise price of the option. 

 Executive Management Bonus Plan (Non-equity
Incentive Plan) 

 The salary and cash bonus of the named
executive officers are determined by the Compensation Committee. The compensation appearing in the Summary Compensation Table above
under the caption "Non-Equity Incentive Plan Compensation" is paid pursuant to an Executive Management Bonus Plan (the
“EMB Plan”). The EMB Plan is administered by the Compensation Committee. Among other things, the Compensation Committee
selects participants in the EMB Plan from among the Company’s executive officers and determines the performance goals, target
amounts and other terms and conditions of awards under the EMB Plan. With respect to officers other than the chief executive
officer, determinations of base salary and of criteria relating to the EMB Plan are based in part on evaluations of such officers
prepared by the Chief Executive Officer, which are furnished to and discussed with the Compensation Committee. 

 Pension Plans 

 The Company’s officers do not participate in any
pension or retirement plan, other than a tax-qualified defined contribution plan (commonly known as a 401(k) plan). 

 Potential Payments Upon Termination or Change
of Control 

 This section provides information regarding payments
and benefits to the named executive officers that would be triggered by termination of the officer’s employment (including resignation,
or voluntary termination; severance, or involuntary termination; and retirement) or a change of control of the Company.

 Each of the named executive officers is an at-will
employee and, as such, does not have an employment contract. In addition, if the officer’s employment terminates for any reason
other than a change of control of the Company, any unvested stock options are terminated, and vested options become subject to accelerated
expiration: ordinarily three months following separation from service, or twelve months in the case of disability, retirement or death.
Accordingly, there are no payments or benefits that are triggered by any termination event (including resignation and severance) other
than in connection with a change of control of the Company.

 62 

 Benefits Triggered by Change of Control or
Termination after Change of Control 

 Our stock option plans provide that each employee
of ours who holds outstanding unexpired options under our stock option may have the right to exercise such options following a change
of control of the Company, without regard to the date such option would first be exercisable. Each of the named executive officers holds
such options. The “acceleration” of options is mandatory following certain changes of control, and subject to the discretion
of the Compensation Committee following certain others. Acceleration is mandatory in the event of (i) the sale, or other disposition
of substantially all of the Company’s assets, or (ii) a merger or similar transaction in which shareholders of the Company hold
less than 50% of the shares of the surviving entity; provided, however, that acceleration following a merger or similar transaction is
mandatory only if the holder suffers a Qualifying Termination (defined below) within one year following the transaction, or if the surviving
entity does not provide the holder with an equivalent award. Acceleration is also mandatory if a holder suffers a Qualifying Termination
within one year following (iii) a change within a three-year period in the membership of a majority of the Board of Directors (excluding
changes recommended by the board), or (iv) a person’s acquisition of outstanding voting securities of the Company, other than directly
from the Company and without approval of the board, resulting in that person’s having beneficial ownership of greater than 25% of
the Company.

 Under our stock option plans, the Compensation
Committee may exercise its discretion to provide for acceleration under other circumstances than those described above with respect to
any particular stock option or class of stock options. The committee would expect to exercise its discretion with the intention of preserving
the value of the stock option award. To date, such discretion has not been exercised. A “Qualifying Termination” is a termination
of the holder’s employment by the Company other than for cause, disability or death, or by the holder for “good reason”
(principally relating to a material diminution in the holder’s authority, compensation or responsibilities, or a relocation of greater
than 50 miles). The preceding description applies to options held by officers and employees. Options issued to non-employee directors
accelerate without the exercise of discretion upon any of the four categories of change of control described above.

 As of December 31, 2024, each of the named executive
officers would realize a benefit if unvested stock options were to become immediately exercisable upon a change in control, based on
the value of the shares underlying such options at the closing market price on December 31, 2024, which was $10.86 per share. The respective
amounts of such possible benefit are set forth in the following table:

 Potential Value Upon Acceleration 

 Mr. Bradley 
 $ 737,250 

 Mr. Lavin 
 160,425 

 Mr. Bharwani 
 106,950 

 Ms. Robinson 
 106,950 

 Mr. Terry 
 106,950 

 Management Structure 

 The Board is responsible for overseeing the management
of the Company. Its oversight is aimed at seeing to it that the Company’s business is managed to meet our goals, and that the interests
of the shareholders are served.

 Charles E. Bradley, Jr. currently serves as both
the Chairman of the Board and our Chief Executive Officer, and is the only member of our Board who is not independent of the Company.
The Nominating Committee has determined that the remaining directors and director nominees are “independent” under applicable
independence standards of the Nasdaq Stock Market. Our Board has chosen not to designate any individual formally as the lead independent
director. Each director retains his full oversight responsibility.

 63 

 Our Board structure supports the independence
of our non-management directors. Our Audit Committee, Compensation Committee and Nominating Committee are each composed solely of independent
directors. Our bylaws provide that any two directors have the authority to call meetings of the Board of Directors, as do specified officers,
including the president and the secretary. To enhance the possible use of that authority by independent directors, the corporate secretary
is under standing instructions to call a meeting at the instance of any one director.

 The board believes that combining the Chairman
and Chief Executive Officer positions is currently the most effective leadership structure given Mr. Bradley’s in-depth knowledge
of our business and industry and his demonstrated ability to formulate and implement strategic initiatives. Mr. Bradley is continuously
involved in developing and implementing our strategies, working closely with the company’s other senior executives to seek continued
disciplined growth and excellence in operations. His close involvement in management places Mr. Bradley in the best position to decide
which business issues require consideration by the independent directors of the board. In addition, having a combined Chairman and Chief
Executive Officer enables us to speak with a unified voice to shareholders, customers and others concerned with our company. The Board
believes that combining the Chief Executive and Chairman roles, as part of a governance structure that includes oversight of management
responsibilities by independent directors, provides the preferred system for meeting the requirement that the Company be managed in the
best interest of our shareholders.

 Risk Oversight 

 The board’s overall responsibility for
directing the management of the Company includes risk oversight. The risk oversight function is performed at the board level, and by
the Audit and Compensation Committees.

 The Board of Directors as a whole in its regular
meetings discusses and considers the risk inherent in the existing business of the Company and in proposed initiatives. Because the Company’s
business consists of extending consumer credit to individuals believed to be of higher risk than others (sub-prime credit), the assessment
of the risk assumed in such extensions of credit is a primary consideration on the part of the board. Risk oversight is also a key function
of the Audit Committee and Compensation Committee.

 The principal risk management function performed
by the Audit Committee is the ongoing assessment of the credit estimates and allowances periodically recorded in the Company’s
books. The Audit Committee reviews that assessment regularly. Other risk assessments performed by the Audit Committee include assessments
of contingent liabilities, and of other reserves and allowances.

 The principal risk management functions performed
by the Compensation Committee are its setting and evaluation of objectives for the chief executive officer, in connection with its administration
of the Executive Management Bonus Plan. The Compensation Committee recognizes that the Company’s business of extending subprime
credit inherently includes a conflict between growing the business and managing the risk of credit losses: one means to increase the Company’s
business is to offer credit on terms that are priced too low for the risk assumed. The Compensation Committee manages that risk by insisting
that objectives to grow the business are qualified by a mandate that credit quality be maintained at appropriate levels. To some extent,
such risk management is shared with the Audit Committee, which performs the primary oversight of whether credit risk assumed is reflected
with adequate allowances in the Company’s financial statements. 

 64 

 Chief Executive Officer Pay Ratio 

 The Dodd-Frank Reform and Consumer Protection
Act includes a mandate that public companies disclose the ratio of the compensation of their chief executive officer to their median
employee (“CEO Pay Ratio”). The CEO Pay Ratio for 2024 is not calculable at this time because Mr. Bradley’s 2024 Non-Equity
Incentive Plan Compensation award has not yet been determined. The 2024 Non-Equity Incentive Plan Compensation award is expected to be
determined by the end of June 2025. Such amount, when finally determined, and the CEO Pay Ratio for 2024, will be disclosed in a filing
under Item 5.02(f) of Form 8-K.

 Director Compensation 

 Throughout 2024, we paid our non-employee directors a retainer of
$6,000 per month, with an additional fee of $700 per month for service on a board committee ($1,200 for a committee chairman). Non-employee
directors also received per diem fees of $1,000 for attendance in person at meetings of the Board of Directors, or $500 for attendance
by telephone. No per diem fees are paid for attendance at committee meetings. The following table summarizes compensation received
by our directors for the year 2024: 

 Name of Director 
 Fees Earned 
 or Paid in Cash (1) 
 
 Total 

 Charles E. Bradley, Jr. (2) 
 $ – 
 $ – 

 Stephen H. Deckoff 
 74,000 
 74,000 

 Louis M. Grasso 
 84,400 
 84,400 

 William W. Grounds 
 91,300 
 91,300 

 Brian J. Rayhill 
 106,700 
 106,700 

 William B. Roberts 
 81,900 
 81,900 

 James E. Walker III 
 74,500 
 74,500 

 Gregory S. Washer 
 98,800 
 98,800 

 Daniel S. Wood 
 107,200 
 107,200 

 (1) 
 This column reports cash compensation earned in 2024 for Board and committee service. 

 (2) 
 Mr. Bradley’s compensation as chief executive officer of the Company is described elsewhere in this report. He received no additional compensation for service on the Company’s Board of Directors. 

 Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters. 

 The table below sets forth the number and percentage
of shares of our common stock (our only class of voting securities) owned beneficially as of March 10, 2025 (the latest practicable date)
by (i) each person known to us to own beneficially more than 5% of the outstanding common stock, (ii) each director and each named executive
officer, and (iii) all of our directors and executive officers, as a group. Except as otherwise indicated, and subject to applicable community
property and similar laws, each of the persons named has sole voting and investment power with respect to the shares shown as beneficially
owned by such persons. Percent of class is calculated by reference to 21,443,198 shares outstanding on March 10, 2025. Except as otherwise
noted, each person named in the table has a mailing address at 3800 Howard Hughes Parkway, Suite 1400, Las Vegas, Nevada 89169.

 65 

 Name and Address of Beneficial Owner 
 Amount and Nature of Beneficial Ownership (1) 
 Percent of Class 

 Charles E. Bradley, Jr. 
 5,697,181 
 24.5% 

 Stephen H. Deckoff 
 5,127,165 (2) 
 23.9% 

 Louis M. Grasso 
 100,300 
 * 

 William W. Grounds 
 34,600 
 * 

 Brian J. Rayhill 
 368,236 
 1.7% 

 William B. Roberts 
 760,078 
 3.5% 

 James E. Walker III 
 0 
 * 

 Gregory S. Washer 
 521,803 
 2.4% 

 Daniel S. Wood 
 351,910 
 1.6% 

 Danny Bharwani 
 608,384 
 2.8% 

 Michael T. Lavin 
 847,834 
 3.9% 

 Teri L. Robinson 
 731,302 
 3.4% 

 Christopher Terry 
 458,985 
 2.1% 

 All directors and executive officers combined (21 persons) 
 17,081,795 (3) 
 65.6% 

 Black Diamond Capital Management, L.L.C. 2187 Atlantic Street, 9 th Floor, Stamford, CT 06902 
 5,127,165 (2) 
 23.9% 

 Dimensional Fund Advisors LP, Building One, 6300 Bee Cave Road, Austin, Texas, 78746 
 1,623,488 (4) 
 7.6% 

 *Less than 1%

 (1) 
 Includes certain shares that may be acquired within 60 days after
 March 10, 2025 from the Company upon exercise of options, as follows: Mr. Bradley, 1,777,500 shares; Mr. Grasso, 90,000 shares;
 Mr. Grounds, 30,000 shares; Mr. Rayhill, 165,000 shares; Mr. Roberts, 60,000 shares; Mr. Washer, 150,000 shares; Mr. Wood, 165,000
 shares; Mr. Bharwani, 255,000 shares; Mr. Lavin, 442,500 shares; Ms. Robinson, 275,000 shares; and Mr. Terry, 255,000 shares. Of Mr.
 Bradley’s shares, 1,685,878 are pledged to secure loan(s) to him. The calculation of beneficial ownership also includes, in
 the case of the executive officers, an approximate number of shares each executive officer could be deemed to hold through
 contributions made to the Company’s Employee 401(k) Plan (the "401(k) Plan"). The 401(k) Plan provides an option for all
 participating employees to purchase stock in the Company indirectly by buying units in a mutual fund. Each "unit" in the
 mutual fund represents an interest in Company stock, cash and cash equivalents. 

 (2) 
 These shares are held directly by certain Black Diamond investment vehicles ("Black Diamond vehicles"). Black Diamond Capital Management, L.L.C. ("Black Diamond") exercises investment discretion on behalf of investment advisory affiliates that serve as investment advisers to the Black Diamond vehicles. Mr. Deckoff is the Managing Principal of Black Diamond. Mr. Deckoff disclaims beneficial ownership over the shares, except to the extent of his pecuniary interest therein. 

 (3) 
 Includes a total of 4,587,440 shares that are not outstanding as of the date
of this report, but which may be acquired within 60 days after March 10, 2025 upon exercise of options, and includes an estimate
of 401(k) Plan shares. 1,751 shares are pledged as security by an executive officer. 

 (4) 
 Based on a report on Schedule 13G/A filed by the named person on February 9, 2024. 

 66 

 Equity Compensation Plan Information 

 The table below presents inform a tion regarding
securities authorized for issuance under equity compensation plans, including the CPS 2006 Long-Term Equity Incentive Plan, as of December
31, 2024.

 Plan Category 
 Outstanding Options 
 Weighted average exercise price of Outstanding Options 
 Number of securities remaining available for future issuance under equity compensation plans 

 Plans approved by shareholders 
 6,097,440 
 $ 5.39 
 2,983,830 

 Plans not approved by shareholders 
 None 
 N/A 
 N/A 

 Total 
 6,097,440 
 $ 5.39 
 2,983,830 

 Item 13. Certain Relationships and Related
Transactions, and Director Independence 

 Subordinated Notes. The Company has offered
and sold its subordinated notes in a continuous public offering. Executive officer Teri L. Robinson has purchased such notes directly
from the Company in the offering, in each case on the same terms then offered to the public generally. The largest aggregate amount of
principal outstanding on Ms. Robinson’s notes in 2024 was $459,351. The amount of principal outstanding on Ms. Robinson’s
notes as of March 10, 2025 was $212,801. In 2024, the Company paid $496,663 of principal on Ms. Robinson’s notes, which includes
principal paid more than once due to the renewal of matured notes during the year. In 2024, the Company paid $23,125 of interest at rates
fixed at the time of purchase of each note. The interest rate on Ms. Robinson’s notes ranges from 4.9% to 8.9%.

 Executive officer Steve Schween purchased such
subordinated notes from the Company before he became an executive officer. The largest aggregate amount of principal outstanding on Mr.
Schween’s note in 2024 was $665,460. The amount of principal outstanding as of March 10, 2025 was $665,460. In 2024, the Company
paid $148,013 in interest at a rate fixed at the time of purchase of the note. The interest rate on the note is 12.25%.

 Employment . Ms. Noel Jackson, the Company’s
Vice President of Servicing, is the sister of Mr. Bradley, the Company’s chief executive officer and chairman of the board. For
fiscal year 2024, Ms. Jackson received annual compensation of a base salary of $181,000 and is also eligible for an award under the Executive
Management Bonus Plan described above. Ms. Jackson’s employment with the Company was authorized by the Board of Directors and her
base salary and Executive Management Bonus Plan award is reviewed and approved by the Compensation Committee on an annual basis.

 Other Transactions .. On June 14, 2024,
and as part of the Company’s stock repurchase program, the Company purchased directly from the Company’s chief executive officer,
Charles E. Bradley, Jr., 50,000 shares of CPS common stock at the previous day’s market closing price of $8.98. The dollar amount
involved in the transaction and Mr. Bradley’s interest in the transaction was $449,000. On September 10, 2024, the Company purchased
an additional 70,000 shares of CPS common stock at the market closing price of $9.85 per share from Mr. Bradley, and Mr. Bradley’s
interest in the transaction was $689,500.

 67 

 Policy on Related Party Transactions and Director
Independence. It is the Company’s policy that transactions with related parties having a control or fiduciary relationship with the
Company who personally benefit from such transactions may take place only if approved by the Audit Committee or by the members of the
Company’s Board of Directors who are disinterested with respect to the transaction, and independent in accordance with the standards for
director independence prescribed by Nasdaq. Such policy is maintained in writing in the charter of the Audit Committee. The Audit Committee
has given general approval to executive officer purchases of subordinated notes that are on terms and rates then available to the public,
including the purchases by Ms. Robinson. The transactions with Mr. Schween were not subject to approval because they were entered into
before Mr. Schween was an executive officer. The repurchases by the Company from Mr. Bradley were made pursuant to the Company’s stock
repurchase program but were not preapproved. The Audit Committee subsequently ratified the Company’s transactions with Mr. Bradley.

 The nine directors of the Company are Charles
E. Bradley, Jr., Stephen H. Deckoff, Louis M. Grasso, William W. Grounds, Brian J. Rayhill, William B. Roberts, James E. Walker III,
Gregory S. Washer, and Daniel S. Wood, of whom Messrs. Rayhill, Grasso, Washer, and Wood compose the Audit Committee. The Board of Directors
has concluded that other than Mr. Bradley (who is the Company’s chief executive officer), each of the other eight directors is independent
in accordance with the director independence standards prescribed by Nasdaq, and has determined that none of them has a material relationship
with the Company that would impair his independence from management or otherwise compromise his ability to act as an independent director.

 Item 14. Principal Accounting Fees and Services 

 Fees Paid to Auditors 

 The following table sets forth the fees accrued
or paid to the Company’s independent registered public accounting firms for the years ended December 31, 2024 and 2023. Crowe LLP
has served as the Company’s independent registered public accounting firm since February 2009, and has reported on the Company’s
financial statements for the years ended December 31, 2008 through 2024.

 Audit and Non-Audit Fees 
 2023 
 2024 

 Audit Fees (1) 
 $ 960,000 
 $ 1,000,000 

 Audit-Related Fees (2) 
 240,850 
 169,300 

 Tax Fees (3) 
 296,000 
 304,000 

 All Other Fees 
 – 
 – 

 TOTAL 
 $ 1,496,850 
 $ 1,473,300 

 (1) 
 Audit fees relate to professional services rendered in connection with the audit of the Company’s annual financial statements and
internal control over financial reporting, quarterly review of financial statements included in the Company’s Quarterly Reports
on Form 10-Q, and audit services provided in connection with other statutory and regulatory filings. 

 (2) 
 Audit-related fees comprise fees for professional services that are reasonably related to the performance of the audit or review of the
Company’s financial statements. 

 (3) 
 The 2023 and 2024 tax fees represent services rendered in connection with preparation of state and federal tax returns for the Company
and its subsidiaries. 

 68 

 Audit Committee Supervision of Principal Accountant 

 The Audit Committee acts pursuant to a written
charter adopted by the Board of Directors. Pursuant to the charter, the Audit Committee pre-approves the audit and permitted non-audit
fees to be paid to the independent auditor, and authorizes on behalf of the Company the payment of such fees, or refuses such authorization.
The Audit Committee is also empowered to delegate such authority to one or more of its members. The Audit Committee has delegated to its
chairman the authority to approve performance of services on an interim basis. In the fiscal years ended December 31, 2024 and December
31, 2023, all services for which audit fees or audit related fees were paid were preapproved by the Audit Committee as a whole, or pursuant
to such delegated authority.

 In the course of its meetings, the Audit Committee
has considered whether the provision of the non-audit fees outlined above is compatible with maintaining the independence of the audit
firm, and has concluded that such independence is not and was not impaired.

 69 

 PART IV

 Item
15. Exhibits, Financial Statement Schedules 

 The financial statements listed below under the
caption " Index to Financial Statements " 
are filed as a part of this report. No financial statement schedules are filed as the required information is inapplicable or the information
is presented in the Consolidated Financial Statements or the related notes. Separate financial statements of the Company have been omitted
as the Company is primarily an operating company and its subsidiaries are wholly owned and do not have minority equity interests held
by any person other than the Company in amounts that together exceed 5% of the total consolidated assets as shown by the most recent year-end
Consolidated Balance Sheet.

 The exhibits listed below are filed as part of
this report, whether filed herewith or incorporated by reference to an exhibit filed with the report identified in the parentheses following
the description of such exhibit. Unless otherwise indicated, each such identified report was filed by or with respect to the registrant.

 Exhibit Number 
 
 Description 
 (“**” indicates compensatory plan or agreement.) 
 
 3.1 
 
 Restated Articles of Incorporation (Exhibit 3.1 to Form 10-K filed
 March 31, 2009) 

 3.1.1 
 
 Certificate of Designation re Series B Preferred (Exhibit 3.1.1 to Form 8-K filed by the registrant on December 30, 2010) 

 3.2 
 
 Amended and Restated Bylaws (Exhibit 3.2 to Form 8-K filed December 3, 2021) 

 4. 
 
 Instruments defining the rights of holders of long-term debt of certain consolidated subsidiaries of the registrant are omitted pursuant to the exclusion set forth in subdivisions (b)(iv)(iii)(A) and (b)(v) of Item 601 of Regulation S-K (17 CFR 229.601). The registrant agrees to provide copies of such instruments to the United States Securities and Exchange Commission upon request. 

 4.1 
 
 Form of Indenture re Renewable Unsecured Subordinated Notes 
 (“RUS Notes”). (Exhibit 4.1 to Form S-1, no. 333-168976) 

 4.2 
 
 Form of RUS Notes (Exhibit 4.2 to Form S-1, no.
 333-168976) 

 4.3 
 
 Supplement No. 1 dated December 7, 2010 to Indenture re RUS Notes (Exhibit 4.3 to Form S-1, no. 333-168976) 

 4.4 
 
 Supplement No. 2 dated January 22, 2014 to Indenture re RUS Notes (Exhibit 4.4 to Form S-1, no. 333-190766) 

 4.5 
 
 Supplement No. 3 dated June 14, 2023 to Indenture re RUS Notes (Exhibit 4.5 to Form S-3, no. 333-272653) 

 10.2 
 
 1997 Long-Term Incentive Stock Plan (“1997 Plan”) (Exhibit 10.20 to Form S-2, no. 333-121913) ** 

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

 10.14 
 
 2006 Long-Term Equity Incentive Plan as amended May 18, 2015 (Incorporated by reference to pages A-1 through A-10 of the definitive proxy statement filed by the registrant on April 27, 2015)** 

 10.14.1 
 
 Form of Option Agreement under the 2006 Long-Term Equity Incentive Plan (Exhibit 10.14.1 to registrant’s Form 10-K filed March 9, 2007)** 

 10.14.2 
 
 Form of Option Agreement under the 2006 Long-Term Equity Incentive Plan (Exhibit 99.(D)(2) to registrant’s Schedule TO filed November 12, 2009)** 

 10.14.3 
 
 Form of Option Agreement under the 2006 Long-Term Equity Incentive Plan (Exhibit 99.(D)(3) to registrant’s Schedule TO filed November 12, 2009)** 

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

 19 
 
 Insider Trading Policy (filed herewith) 

 21 
 
 List of subsidiaries of the registrant (filed herewith) 

 23.1 
 
 Consent of Crowe LLP (filed herewith) 

 31.1 
 
 Rule 13a-14(a) certification by Chief Executive Officer (filed herewith) 

 31.2 
 
 Rule 13a-14(a) certification by Chief Financial Officer (filed herewith) 

 32 
 
 Section 1350 certification (filed herewith) 

 97 
 
 Policy Relating to Recovery of Erroneously Awarded Compensation (Exhibit 97 to Form 10-K filed March 15, 2024) 

 101.INS 
 
 Inline XBRL Instance Document 

 101.SCH 
 
 Inline XBRL Taxonomy Extension Schema Document 

 101.CAL 
 
 Inline XBRL Taxonomy Extension Calculation Linkbase Document 

 101.DEF 
 
 Inline XBRL Taxonomy Extension Definition Linkbase Document 

 101.LAB 
 
 Inline XBRL Taxonomy Extension Label Linkbase Document 

 101.PRE 
 
 Inline XBRL Taxonomy Extension Presentation Linkbase Document 

 104 
 
 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) 

 Item
16. Form 10-K Summary 

 None.

 70 

 SIGNATURES 

 Pursuant to the requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

 CONSUMER PORTFOLIO SERVICES, INC. (registrant) 

 March 12, 2025
 
 By:
 
 /s/ CHARLES E. BRADLEY, JR.
 
 Charles E. Bradley, Jr., Director and Chief Executive Officer 

 Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

 March 12, 2025
 
 /s/ CHARLES E. BRADLEY, JR.
 
 Charles E. Bradley, Jr., Director 

 and Chief Executive Officer 

 (Principal Executive Officer) 
 
 March 12, 2025
 
 /s/ STEPHEN H. DECKOFF
 
 Stephen H. Deckoff, Director 

 March 12, 2025 
 
 /s/ LOUIS M. GRASSO 

 Lou Grasso, Director 

 March 12, 2025 
 
 /s/ WILLIAM W. GROUNDS 

 William W. Grounds, Director 

 March 12, 2025 
 
 /s/ BRIAN J. RAYHILL 

 Brian J. Rayhill, Director 

 March 12, 2025
 
 /s/ WILLIAM B. ROBERTS
 
 William B. Roberts, Director 

 March 12, 2025 
 
 /s/ JAMES E. WALKER 

 James E. Walker, Director
 
 March 12, 2025
 
 /s/ GREGORY S. WASHER
 
 Gregory S. Washer, Director 

 March 12, 2025
 
 /s/ DANIEL S. WOOD
 
 Daniel S. Wood, Director 

 March 12, 2025
 
 /s/ DENESH BHARWANI
 
 Denesh Bharwani, Executive Vice President and Chief Financial
Officer 

 (Principal Accounting Officer) 
 
 71 

 INDEX TO FINANCIAL STATEMENTS

 Page 

 Reference 
 
 Report of Crowe LLP, Independent Registered Public Accounting Firm (PCAOB ID: 173 ) 
 F-2 

 Consolidated Balance Sheets as of December 31, 2024 and 2023 
 F-4 

 Consolidated Statements of Income for the years ended December 31, 2024, 2023 and 2022 
 F-5 

 Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, 2023 and 2022 
 F-6 

 Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2024, 2023 and 2022 
 F-7 

 Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022 
 F-8 

 Notes to Consolidated Financial Statements 
 F-9 

 F- 1 

 Crowe
 LLP 

 Independent
 Member Crowe Global 
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

 Shareholders and the Board of Directors of

 Consumer
Portfolio Services, Inc. and Subsidiaries

 Las Vegas, Nevada

 Opinions
on the Financial Statements and Internal Control over Financial Reporting 

 We have audited the accompanying consolidated
balance sheets of Consumer Portfolio Services, Inc. and Subsidiaries (the "Company") as of December 31, 2024 and 2023, the related
consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-
year period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). We also
have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal
Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”

 In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and
the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024 in conformity
with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control
– Integrated Framework: (2013) issued by COSO.

 Basis for Opinions 

 The Company’s management is
responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment
of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal
Controls over Financial Reporting. Our responsibility is to express an opinion on the Company’s financial statements and an opinion
on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.

 We conducted our audits in accordance
with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over
financial reporting was maintained in all material respects.

 Our audits of the financial statements
included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,
and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also
included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable
basis for our opinions.

 Definition and Limitations of Internal
Control Over Financial Reporting

 A company’s internal control
over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s
internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company’s assets that could have a material effect on the financial statements.

 F- 2 

 Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

 Critical Audit Matter

 The critical audit matter communicated
below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated
to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved
our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way
our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing
a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

 Accounting for Loans at Fair Value 

 As described in Notes 1 and 12 to
the consolidated financial statements, the Company carries all finance receivables acquired after 2017 at fair value on a recurring basis.
The Company had $3.3 billion in finance receivables that are carried at fair value, all of which are classified as level 3 fair values
as they contain one or more inputs which are unobservable and significant to the fair value measurement. With assistance from an outside
valuation expert, the Company used a level 3 fair value methodology for the fair value of finance receivables. The significant assumptions
used by the Company to calculate the fair value of these financial receivables include the magnitude and timing of net charge-offs and
the rate of amortization of the portfolio of finance receivables. These significant assumptions were based on the factors that market
participants use in pricing similar receivables and are based on the best information available in the circumstances.

 We identified the valuation of finance
receivables carried at fair value as a critical audit matter as this estimate requires subjective auditor judgment. Our principal considerations
in making this determination are (i) there was significant judgment and estimation by the Company in determining the assumptions to estimate
fair value, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures related to the fair
value of these finance receivables, and (ii) the audit effort involved professionals with specialized skill and knowledge to assist in
evaluating the audit evidence obtained from these procedures.

 Testing the design and operating effectiveness
of controls over the application of the assumptions used to support the estimate of loans at fair value included addressing:

 · 
 The
completeness and accuracy of data 

 · 
 Third-party
model review 

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

 Substantively testing management's process, including
evaluating management’s judgments and assumptions, for developing the estimate of loans at fair value included:

 · 
 Using
an auditor employed valuation specialist to assist in testing the Company’s estimate of fair value of the finance receivables. Testing
included evaluation of certain management significant assumptions and, evaluating the appropriateness of the methodology including a recalculation
of the model. 

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

 Crowe LLP 

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

 Dallas, Texas 

 March 12, 2025

 F- 3 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES

 CONSOLIDATED BALANCE SHEETS

 (In thousands, except share and per share data) 

 December 31, 
 December 31, 

 2024 
 2023 

 ASSETS 
 
 Cash and cash equivalents 
 $ 11,713 
 $ 6,174 

 Restricted cash and equivalents 
 125,684 
 119,257 

 Finance receivables measured at fair value 
 3,313,767 
 2,722,662 

 Finance receivables 
 5,420 
 27,553 

 Less: Allowance for finance credit losses 
 ( 433 ) 
 ( 2,869 ) 

 Finance receivables, net 
 4,987 
 24,684 

 Furniture and equipment, net 
 943 
 1,372 

 Deferred tax assets, net 
 1,010 
 3,736 

 Other assets 
 35,764 
 25,861 

 Total assets 
 $ 3,493,868 
 $ 2,903,746 

 LIABILITIES AND SHAREHOLDERS’ EQUITY 
 
 Liabilities 
 
 Accounts payable and accrued expenses 
 $ 70,151 
 $ 62,544 

 Warehouse lines of credit 
 410,898 
 234,025 

 Residual interest financing 
 99,176 
 49,875 

 Securitization trust debt 
 2,594,384 
 2,265,446 

 Subordinated renewable notes 
 26,489 
 17,188 

 Total liabilities 
 3,201,098 
 2,629,078 

 COMMITMENTS AND CONTINGENCIES 
 – 
 – 

 Shareholders’ Equity 
 
 Preferred stock, $ 1 par value; authorized 4,998,130 shares; none issued 
 – 
 – 

 Series A preferred stock, $ 1 par value; authorized 5,000,000 shares; none issued 
 – 
 – 

 Series B preferred stock, $ 1 par value; authorized 1,870 shares; none issued 
 – 
 – 

 Common stock, no par value; authorized 75,000,000 shares; 21,432,698 and 21,174,856 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively 
 25,720 
 28,678 

 Retained earnings 
 267,060 
 247,857 

 Accumulated other comprehensive loss 
 ( 10 ) 
 ( 1,867 ) 

 Total shareholders’ equity 
 292,770 
 274,668 

 Total liabilities and shareholders’ equity 
 $ 3,493,868 
 $ 2,903,746 

 See accompanying Notes to Consolidated Financial
Statements. 

 F- 4 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF INCOME

 (In thousands, except per share data) 

 Year Ended December 31, 

 2024 
 2023 
 2022 

 Revenues: 
 
 Interest income 
 $ 363,962 
 $ 329,219 
 $ 305,237 

 Mark to finance receivables measured at fair value 
 21,000 
 12,000 
 15,283 

 Other income 
 8,544 
 10,795 
 9,189 

 Total revenues 
 393,506 
 352,014 
 329,709 

 Expenses: 
 
 Employee costs 
 96,192 
 88,148 
 84,282 

 General and administrative 
 54,710 
 50,001 
 37,618 

 Interest 
 191,257 
 146,631 
 87,524 

 Provision for credit losses 
 ( 5,307 ) 
 ( 22,300 ) 
 ( 28,100 ) 

 Sales 
 22,752 
 21,216 
 23,039 

 Occupancy 
 5,609 
 6,374 
 7,535 

 Depreciation and amortization 
 862 
 847 
 1,618 

 Total operating expenses 
 366,075 
 290,917 
 213,516 

 Income before income tax expense (benefit) 
 27,431 
 61,097 
 116,193 

 Income tax expense (benefit) 
 8,228 
 15,754 
 30,210 

 Net income 
 $ 19,203 
 $ 45,343 
 $ 85,983 

 Earnings per share: 
 
 Basic 
 $ 0.90 
 $ 2.17 
 $ 4.10 

 Diluted 
 0.79 
 1.80 
 3.23 

 Number of shares used in computing earnings per share: 
 
 Basic 
 21,292 
 20,896 
 20,958 

 Diluted 
 24,325 
 25,218 
 26,589 

 See accompanying Notes to Consolidated Financial
Statements. 

 F- 5 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME

 (In thousands) 

 Year Ended December 31, 

 2024 
 2023 
 2022 

 Net income 
 $ 19,203 
 $ 45,343 
 $ 85,983 

 Other comprehensive income (loss); change in funded status of pension plan, net of $ 681 , $ 422 and $ 513 in tax for 2024, 2023 and 2022, respectively 
 1,857 
 1,164 
 ( 1,409 ) 

 Comprehensive income 
 $ 21,060 
 $ 46,507 
 $ 84,574 

 See accompanying Notes to Consolidated Financial
Statements. 

 F- 6 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF SHAREHOLDERS’
EQUITY

 (In thousands) 

 Accumulated 
 
 Other 
 
 Common Stock 
 Retained 
 Comprehensive 
 
 Shares 
 Amount 
 Earnings 
 Loss 
 Total 

 Balance at January 1, 2022 
 21,144 
 $ 55,298 
 $ 116,531 
 $ ( 1,622 ) 
 $ 170,207 

 Common stock issued upon exercise of options and warrants 
 3,127 
 15,277 
 – 
 – 
 15,277 

 Repurchase of common stock 
 ( 4,140 ) 
 ( 46,096 ) 
 – 
 – 
 ( 46,096 ) 

 Other comprehensive income (loss) 
 – 
 – 
 – 
 ( 1,409 ) 
 ( 1,409 ) 

 Stock-based compensation 
 – 
 4,427 
 – 
 – 
 4,427 

 Net income 
 – 
 – 
 85,983 
 – 
 85,983 

 Balance at December 31, 2022 
 20,131 
 $ 28,906 
 $ 202,514 
 $ ( 3,031 ) 
 $ 228,389 

 Common stock issued upon exercise of options and warrants 
 3,020 
 16,581 
 – 
 – 
 16,581 

 Repurchase of common stock 
 ( 1,976 ) 
 ( 20,273 ) 
 – 
 – 
 ( 20,273 ) 

 Other comprehensive income (loss) 
 – 
 – 
 – 
 1,164 
 1,164 

 Stock-based compensation 
 – 
 3,464 
 – 
 – 
 3,464 

 Net income 
 – 
 – 
 45,343 
 – 
 45,343 

 Balance at December 31, 2023 
 21,175 
 $ 28,678 
 $ 247,857 
 $ ( 1,867 ) 
 $ 274,668 

 Common stock issued upon exercise of options and warrants 
 1,728 
 6,913 
 – 
 – 
 6,913 

 Repurchase of common stock 
 ( 1,470 ) 
 ( 12,828 ) 
 – 
 – 
 ( 12,828 ) 

 Other comprehensive income (loss) 
 – 
 – 
 – 
 1,857 
 1,857 

 Stock-based compensation 
 – 
 2,957 
 – 
 – 
 2,957 

 Net income 
 – 
 – 
 19,203 
 – 
 19,203 

 Balance at December 31, 2024 
 21,433 
 $ 25,720 
 $ 267,060 
 $ ( 10 ) 
 $ 292,770 

 See accompanying Notes to Consolidated Financial
Statements. 

 F- 7 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF CASH FLOWS 

 (In thousands) 

 Year Ended December 31, 

 2024 
 2023 
 2022 

 Cash flows from operating activities: 
 
 Net income 
 $ 19,203 
 $ 45,343 
 $ 85,983 

 Adjustments to reconcile net income to net cash provided by operating activities: 
 
 Net interest income accretion on fair value receivables 
 224,304 
 193,541 
 135,147 

 Depreciation and amortization 
 862 
 847 
 1,618 

 Amortization of deferred financing costs 
 10,574 
 9,690 
 8,207 

 Mark to fair value of finance receivables measured at fair value 
 ( 21,000 ) 
 ( 12,000 ) 
 ( 15,283 ) 

 Provision for credit losses 
 ( 5,307 ) 
 ( 22,300 ) 
 ( 28,100 ) 

 Stock-based compensation expense 
 2,957 
 3,464 
 4,427 

 Changes in assets and liabilities: 
 
 Other assets 
 ( 10,028 ) 
 4,667 
 4,171 

 Deferred tax assets, net 
 2,726 
 6,441 
 9,398 

 Accounts payable and accrued expenses 
 9,464 
 8,287 
 10,364 

 Net cash provided by operating activities 
 233,755 
 237,980 
 215,932 

 Cash flows from investing activities: 
 
 Payments received on finance receivables held for investment 
 25,004 
 68,167 
 133,733 

 Purchases of finance receivables measured at fair value 
 ( 1,653,037 ) 
 ( 1,251,020 ) 
 ( 1,673,166 ) 

 Payments on receivables portfolio at fair value 
 858,628 
 823,434 
 825,783 

 Change in repossessions held in inventory 
 125 
 446 
 1,899 

 Purchase of furniture and equipment 
 ( 433 ) 
 ( 559 ) 
 ( 2,149 ) 

 Net cash (used in) investing activities 
 ( 769,713 ) 
 ( 359,532 ) 
 ( 713,900 ) 

 Cash flows from financing activities: 
 
 Proceeds from issuance of securitization trust debt 
 1,453,921 
 1,235,534 
 1,411,018 

 Proceeds from issuance of subordinated renewable notes 
 11,037 
 – 
 4,004 

 Payments on subordinated renewable notes 
 ( 1,736 ) 
 ( 8,075 ) 
 ( 5,200 ) 

 Net advances (repayments) of warehouse lines of credit 
 180,574 
 ( 53,253 ) 
 181,868 

 Net advances (repayments) of residual interest financing debt 
 50,000 
 – 
 ( 4,311 ) 

 Repayment of securitization trust debt 
 ( 1,124,088 ) 
 ( 1,078,432 ) 
 ( 1,060,052 ) 

 Payment of financing costs 
 ( 15,869 ) 
 ( 7,888 ) 
 ( 12,299 ) 

 Purchase of common stock 
 ( 12,828 ) 
 ( 20,273 ) 
 ( 46,096 ) 

 Exercise of options and warrants 
 6,913 
 16,581 
 15,277 

 Net cash provided by financing activities 
 547,924 
 84,194 
 484,209 

 Increase (decrease) in cash and cash equivalents 
 11,966 
 ( 37,358 ) 
 ( 13,759 ) 

 Cash and cash equivalents at beginning of year 
 125,431 
 162,789 
 176,548 

 Cash and cash equivalents at end of year 
 $ 137,397 
 $ 125,431 
 $ 162,789 

 Supplemental disclosure of cash flow information: 
 
 Cash paid during the period for: 
 
 Interest 
 $ 177,949 
 $ 135,203 
 $ 76,696 

 Income taxes 
 11,799 
 3,552 
 16,182 

 See accompanying Notes to Consolidated Financial Statements. 

 F- 8 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 (1) Summary of Significant Accounting Policies 

 Description of Business

 Consumer Portfolio Services,
Inc. (“CPS”) was incorporated in California on March 8, 1991. CPS and its subsidiaries (collectively, the “Company”)
specialize in purchasing and servicing retail automobile installment sale contracts ("Contracts") originated by licensed motor
vehicle dealers (“Dealers”) located throughout the United States. Customers located in Texas, Ohio, California, Illinois, Florida,
and Georgia represented 7.8 %, 7.3 %, 6.0 %, 5.7 %, 5.4 %, and 4.5 %. respectively, of contracts purchased during 2024 compared with 7.1 %, 6.2 %,
 6.0 %, 6.9 %, 5.4 %, and 4.0 % respectively in 2023. No other state had a concentration in excess of 4.5% in 2024. We specialize in contracts
with vehicle purchasers who generally would not be expected to qualify for traditional financing provided by commercial banks or automobile
manufacturers’ captive finance companies.

 We are subject to various
regulations and laws as they relate to the extension of credit in consumer credit transactions. Failure to comply with such laws and regulations
could have a material adverse effect on the Company.

 Principles of Consolidation 

 The Consolidated Financial
Statements include the accounts of Consumer Portfolio Services, Inc. and its wholly-owned subsidiaries, certain of which are special
purpose subsidiaries (“SPS”), formed to accommodate the structures under which we purchase and securitize our contracts.
The Consolidated Financial Statements also include the accounts of CPS Leasing, Inc., an 80% owned subsidiary. All significant intercompany
balances and transactions have been eliminated in consolidation.

 Cash and Cash Equivalents 

 For purposes of the statements
of cash flows, we consider all highly liquid debt instruments with original maturities of three months or less to be cash equivalents.
Cash equivalents consist of cash on hand and due from banks and money market accounts. Substantially all of our cash is deposited at three
financial institutions. We maintain cash due from banks in excess of the banks’ insured deposit limits. We do not believe we are exposed
to any significant credit risk on these deposits. As part of certain financial covenants related to debt facilities, we are required to
maintain a minimum unrestricted cash balance. As of December 31, 2024, our unrestricted cash balance was $ 11.7 million, which exceeded
the minimum amounts required by our financial covenants.

 Finance Receivables 

 Finance receivables, which
we have the intent and ability to hold for the foreseeable future or until maturity or payoff, are presented at cost. All finance receivable
contracts are held for investment. Interest income is accrued on the unpaid principal balance. Origination fees, net of certain direct
origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments. Generally,
payments received on finance receivables are restricted to certain securitized pools, and the related contracts cannot be resold. Finance
receivables are charged off pursuant to the controlling documents of certain securitized pools, generally as described below under Charge
Off Policy. Management may authorize an extension of payment terms if collection appears likely during the next calendar month.

 F- 9 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Our portfolio of finance receivables
consists of small-balance homogeneous contracts that are collectively evaluated for impairment on a portfolio basis. 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 reduction.

 Finance Receivables Measured 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. 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.
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.

 We re-evaluate the fair value
of such receivables at the close of each measurement period. If the reevaluation were to yield a value materially different from the recorded
value, an adjustment would be required. For the twelve-month period ended December 31, 2024 include a $ 21 .0 million positive mark to the
carrying value of the portion of the receivables portfolio accounted for at fair value. The Company recorded a $ 12 .0 positive mark to
for the twelve-month period ended December 31, 2023.

 Anticipated credit losses
are included in our estimation of cash to be received with respect to receivables. In accordance with the fair value accounting standards,
credit losses are included in our computation of the appropriate level yield, therefore we do not thereafter make periodic provision for
credit losses, as our best estimate of the lifetime aggregate of credit losses is included in that initial computation. Also because we
include anticipated credit losses in our computation of the level yield, the computed level yield is materially lower than the average
contractual rate applicable to the receivables. Because our initial recorded value is fixed as the price we pay for the receivable, rather
than as the contractual principal balance, we do not record acquisition fees as an amortizing asset related to the receivables, nor do
we capitalize costs of acquiring the receivables. Rather we recognize the costs of acquisition as expenses in the period incurred.

 Allowance for Finance Credit Losses 

 In order to estimate an appropriate
allowance for losses likely incurred on finance receivables, we use a loss allowance methodology commonly referred to as “ static
pooling,” which stratifies the finance receivable portfolio into separately identified pools based on their period of origination,
then uses historical performance of seasoned pools to estimate future losses on current pools. Historical loss experience is adjusted
as necessary for current economic conditions. We consider our portfolio of finance receivables to be relatively homogenous and consequently
we analyze credit performance primarily in the aggregate rather than stratification by any particular credit quality indicator. Using
analytical and formula driven techniques, we estimate an allowance for finance credit losses, which we believe is adequate for current
expected credit losses that can be reasonably estimated in our portfolio of finance receivable contracts. Net losses incurred on finance
receivables are charged to the allowance. We evaluate the adequacy of the allowance by examining current delinquencies, the characteristics
of the portfolio, the value of the underlying collateral and historical loss trends. As conditions change, our level of provisioning
and/or allowance may change.

 F- 10 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Charge Off Policy 

 Delinquent contracts for which
the related financed vehicle has been repossessed are generally charged off at the earliest of (1) the month in which the proceeds from
the sale of the financed vehicle are received, (2) the month in which 90 days have passed from the date of repossession or (3) the month
in which the Contract becomes seven scheduled payments past due (see Repossessed and Other Assets below). The amount charged off is the
remaining principal balance of the Contract, after the application of the net proceeds from the liquidation of the financed vehicle. With
respect to delinquent contracts for which the related financed vehicle has not been repossessed, the remaining principal balance is generally
charged off no later than the end of the month that the Contract becomes five scheduled payments past due.

 Contract Acquisition Fees and Origination Costs 

 Upon purchase of a Contract
from a Dealer, we generally either charge or advance the Dealer an acquisition fee. Dealer acquisition fees and deferred origination costs
are applied to the recorded value of finance receivables and are accreted into earnings as an adjustment to the yield over the estimated
life of the Contract using the interest method. However, for receivables measured at fair value, 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.

 Repossessed and Other Assets 

 If a Contract obligor fails
to make or keep promises for payments, or if the obligor is uncooperative or attempts to evade contact or hide the vehicle, a supervisor
will review the collection activity relating to the account to determine if repossession of the vehicle is warranted. Generally, such
a decision is made between the 60th and 90th day past the obligor’s payment due date, but could occur sooner or later, depending
on the specific circumstances. At the time the vehicle is repossessed we stop accruing interest on the Contract, and reclassify the remaining
Contract balance to the line item "Other Assets" on our Consolidated Balance Sheet at its estimated fair value less costs to
sell.

 Treatment of Securitizations 

 Our term securitization structure has generally
been as follows:

 We sell contracts we acquire
to a wholly-owned SPS, which has been established for the limited purpose of buying and reselling our contracts. The SPS then transfers
the same contracts to another entity, typically a statutory trust ( " Trust " ).
The Trust issues interest-bearing asset-backed securities ( “ Notes”),
in a principal amount equal to or less than the aggregate principal balance of the contracts. We typically sell these contracts to the
Trust at face value and without recourse, except representations and warranties that we make to the Trust that are similar to those provided
to us by the Dealer. One or more investors (the “Noteholders”) purchase
the Notes issued by the Trust; the proceeds from the sale of the Notes are then used to purchase the contracts from us. We may retain
or sell subordinated Notes issued by the Trust. In addition, we have provided "Credit Enhancement" for the benefit of the Noteholders
in three forms: (1) an initial cash deposit to a bank account (a "Spread Account") held by the Trust, (2) overcollateralization
of the Notes, where the principal balance of the Notes issued is less than the principal balance of the contracts, and (3) in the form
of subordinated Notes. The agreements governing the securitization transactions (collectively referred to as the "Securitization
Agreements") require that the initial level of Credit Enhancement be supplemented by a portion of collections from the contracts
until the level of Credit Enhancement reaches specified levels, which are then maintained. The specified levels are generally computed
as a percentage of the principal amount remaining unpaid under the related contracts. The specified levels at which the Credit Enhancement
is to be maintained will vary depending on the performance of the portfolios of contracts held by the Trusts and on other conditions.
Such levels have increased and decreased from time to time based on performance of the various portfolios, and have also varied from
one Trust to another. 

 F- 11 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Our warehouse securitization
structures are similar to the above, except that (i) the SPS that purchases the contracts pledges the contracts to secure promissory notes
or loans that it issues, and (ii) no increase in the required amount of Credit Enhancement is contemplated. Upon each sale of contracts
in a securitization structured as a secured financing, we retain as assets on our Consolidated Balance Sheet the securitized contracts
and record as indebtedness the Notes issued in the transaction.

 We have the power to direct
the most significant activities of the SPS. In addition, we have the obligation to absorb losses and the rights to receive benefits from
the SPS, both of which could be potentially significant to the SPS. These types of securitization structures are treated as secured
financings, in which the receivables remain on our Consolidated Balance Sheet, and the debt issued by the SPS is shown as a securitization
trust debt on our Consolidated Balance Sheet.

 We receive periodic base servicing
fees for the servicing and collection of the contracts. In addition, we are entitled to the cash flows from the Trusts that represent
collections on the contracts in excess of the amounts required to pay principal and interest on the Notes, the base servicing fees, and
certain other fees (such as trustee and custodial fees). Required principal payments on the Notes are generally defined as the payments
sufficient to keep the principal balance of the Notes equal to the aggregate principal balance of the related contracts (excluding those
contracts that have been charged off), or a pre-determined percentage of such balance. Where that percentage is less than 100%, the related
Securitization Agreements require accelerated payment of principal until the principal balance of the Notes is reduced to the specified
percentage. Such accelerated principal payment is said to create " overcollateralization " 
of the Notes.

 If the amount of cash required
for payment of fees, interest and principal on the senior Notes exceeds the amount collected during the collection period, the shortfall
is generally withdrawn from the Spread Account, if any. If the cash collected during the period exceeds the amount necessary for the above
allocations plus required principal payments on the subordinated Notes, if any, and there is no shortfall in the related Spread Account
or other form of Credit Enhancement, the excess is released to us. If the total Credit Enhancement amount is not at the required level,
then the excess cash collected is retained in the Trust until the specified level is achieved. Cash in the Spread Accounts is restricted
from our use. Cash held in the various Spread Accounts is invested in high quality, liquid investment securities, as specified in the
Securitization Agreements. In all of our term securitizations we have transferred the receivables (through a subsidiary) to the securitization
Trust. We report the assets and liabilities of the securitization Trust on our Consolidated Balance Sheet. The Noteholders’ and
the related securitization Trusts’ recourse against us for failure of the contract obligors to make payments on a timely basis is
limited, in general, to our Finance Receivables, and Spread Accounts.

 Servicing 

 We consider the contractual
servicing fee received on our managed portfolio held by non-consolidated subsidiaries to be equal to adequate compensation. Additionally,
we consider that these fees would fairly compensate a substitute servicer, should one be required. As a result, no servicing asset or
liability has been recognized. Servicing fees received on the managed portfolio held by non-consolidated subsidiaries are reported as
income when earned. Servicing fees received on the managed portfolio held by consolidated subsidiaries are included in interest income
when earned. Servicing costs are charged to expense as incurred. Servicing fees receivable, which are included in Other Assets in the
accompanying Consolidated Balance Sheets, represent fees earned but not yet remitted to us by the trustee.

 F- 12 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Furniture and Equipment 

 Furniture and equipment are
stated at cost net of accumulated depreciation. We calculate depreciation using the straight-line method over the estimated useful lives
of the assets, which range from three to five years. Assets held under capital leases and leasehold improvements are amortized over the
lesser of the estimated useful lives of the assets or the related lease terms. Amortization expense on assets acquired under capital lease
is included with depreciation expense on owned assets.

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

 Long-lived assets and certain
identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an
asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to
be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of carrying amount or fair value less costs to sell.

 Other Income 

 The following table presents the primary components
of Other Income:

 Schedule of other income 
 
 Year Ended December 31, 

 2024 
 2023 
 2022 

 (In thousands) 

 Third-party portfolio 
 $ 7,324 
 $ 9,350 
 $ 6,814 

 Direct mail revenues 
 – 
 – 
 774 

 Sales tax refunds 
 1,093 
 1,078 
 737 

 Other 
 127 
 367 
 864 

 Other income for the period 
 $ 8,544 
 $ 10,795 
 $ 9,189 

 F- 13 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Earnings Per Share 

 Earnings per share were calculated
using the weighted average number of shares outstanding for the related period. The following table illustrates the computation of basic
and diluted earnings per share:

 Schedule of computation of earnings per share 
 
 Year Ended December 31, 

 2024 
 2023 
 2022 

 (In thousands, except per share data) 

 Numerator: 
 
 Numerator for basic and diluted earnings per share 
 $ 19,203 
 $ 45,343 
 $ 85,983 

 Denominator: 
 
 Denominator for basic earnings per share - weighted average number of common shares outstanding during the year 
 21,292 
 20,896 
 20,958 

 Incremental common shares attributable to exercise of outstanding options and warrants 
 3,033 
 4,322 
 3,218 

 Denominator for diluted earnings per share 
 24,325 
 25,218 
 26,589 

 Basic earnings per share 
 $ 0.90 
 $ 2.17 
 $ 4.10 

 Diluted earnings per share 
 $ 0.79 
 $ 1.80 
 $ 3.23 

 Incremental shares of 1.7 
million, 1.7 million and 1.2 million related to stock options and warrants have been excluded from the diluted earnings per share calculation
for the years ended December 31, 2024, 2023 and 2022, respectively, because the effect is anti-dilutive.

 Deferral and Amortization of Debt Issuance Costs 

 Costs related to the issuance
of debt are deferred and amortized using the interest method over the contractual or expected term of the related debt. Unamortized debt
issuance costs are presented as a direct deduction to the carrying amount of the related debt on our Consolidated Balance Sheets.

 Income Taxes 

 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. We estimate a valuation allowance against that portion of the deferred tax asset
whose utilization in future periods is not more than likely.

 F- 14 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Purchases of Company Stock 

 We record purchases of our own common stock at
cost and treat the shares as retired.

 Stock Option Plan 

 The Company accounts for stock-based compensation
in accordance with FASB ASC Topic 718, Compensation—Stock Compensation , that generally requires entities to recognize the
cost of employee services received in exchange for awards of stock options, restricted stock or other equity instruments, based on the
grant date fair value of those awards. Compensation cost is recognized for awards issued to employees based on the fair value of these
awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options. This cost is recognized over
the period which an employee is required to provide services in exchange for the award, generally the vesting period.

 Use of Estimates 

 The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates
and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the
reported amounts of income and expenses during the reported periods. These are material estimates that could be susceptible to changes
in the near term and, accordingly, actual results could differ from those estimates.

 Reclassification 

 Certain amounts for the prior
year have been reclassified to conform to the current year’s presentation with no effect on previously reported earnings or shareholders’
equity.

 Financial Covenants 

 Certain of our securitization
transactions, our warehouse credit facilities and our residual interest financing contain various financial covenants requiring minimum
financial ratios and results. Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage
levels. As of December 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 Liabilities 
 
 We are routinely involved
in various legal proceedings resulting from our consumer finance activities and practices, both continuing and discontinued. Our legal
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.

 F- 15 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 We have recorded a liability
as of December 31, 2024, which represents our estimate of the immaterial aggregate probable incurred losses for legal contingencies. The
amount of losses that may ultimately be incurred, over and above such losses as are probable, cannot be estimated with certainty.

 Accounting Pronouncements Recently Adopted 

 In November of 2023, the
FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in
this ASU became effective for the Company beginning with this Annual Report on Form 10-K for the year ended December 31, 2024, and we
have adopted using the retrospective transition method. The adoption did not have a material impact on the Company’s consolidated
financial statements. See Note 13 for additional information on the adoption of ASU 2023-07.

 (2) Restricted Cash 

 Restricted cash consists of
cash and cash equivalent accounts relating to our outstanding securitization trusts and credit facilities. The amount of restricted cash
on our Consolidated Balance Sheets was $ 125.7 million and $ 119.3 million as of December 31, 2024 and 2023, respectively.

 Our securitization transactions
and one of our warehouse credit facilities require that we establish cash reserves, or spread accounts, as additional credit enhancement.
These cash reserves, which are included in restricted cash, were $ 62.3 million and $ 59 .0 million as of December 31, 2024 and 2023, respectively.

 (3) 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 portfolio. 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
reduction.

 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.

 The following table presents the components of
finance receivables, net of unearned interest:

 Schedule of finance receivables 
 
 December 31, 

 2024 
 2023 

 Finance receivables 
 (In thousands) 

 Automobile finance receivables, net of unearned interest 
 $ 5,420 
 $ 27,553 

 Unearned acquisition fees, discounts and deferred origination costs, net 
 – 
 – 

 Finance receivables 
 $ 5,420 
 $ 27,553 

 F- 16 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 We consider an automobile
contract delinquent when an obligor fails to make at least 90% of a contractually due payment by the following due date, which date may
have been extended within limits specified in the servicing agreements. The period of delinquency is based on the number of days payments
are contractually past due, as extended where applicable. 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 December 31, 2024 and 2023:

 Schedule of delinquency status
of finance receivables 
 
 December 31, 

 2024 
 2023 

 Delinquency Status 
 (In thousands) 

 Current 
 $ 2,994 
 $ 17,771 

 31-60 days 
 1,184 
 5,626 

 61-90 days 
 971 
 3,087 

 91 + days 
 271 
 1,069 

 $ 5,420 
 $ 27,553 

 Finance receivables totaling
$ 271,000 and $ 1.1 million at December 31, 2024 and 2023, respectively, have been placed on non-accrual status as a result of their delinquency
status.

 Allowance for Credit Losses
– Finance Receivables 

 The allowance for credit losses
is a valuation account that is deducted from the amortized cost basis of finance receivables to present the net amount expected to be
collected. Charge offs are deducted from the allowance when management believes that collectability is unlikely.

 Management estimates the allowance
using relevant available information, from internal and external sources, relating to past events, current conditions and, reasonable
and supportable forecasts. We believe our historical credit loss experience provides the best basis for the estimation of expected credit
losses. Consequently, we use historical loss experience for older receivables, aggregated into vintage pools based on their calendar quarter
of origination, to forecast expected losses for less seasoned quarterly vintage pools.

 We measure the weighted average
monthly incremental change in cumulative net losses for the vintage pools in the relevant historical period. For the pools in the relevant
historical period, we consider each pool’s performance from its inception through the end of the current period. We then apply the
results of the historical analysis to less seasoned vintage pools beginning with each vintage pool’s most recent actual cumulative
net loss experience and extrapolating from that point based on the historical data. We believe the pattern and magnitude of losses on
older vintages allows us to establish a reasonable and supportable forecast of less seasoned vintages.

 F- 17 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Our contract purchase guidelines
are designed to produce a homogenous portfolio. For key credit characteristics of individual contracts such as obligor credit history,
job stability, residence stability and ability to pay, there is relatively little variation from the average for the portfolio. Similarly,
for key structural characteristics such as loan-to-value, length of contract, monthly payment and amount financed, there is relatively
little variation from the average for the portfolio. Consequently, we do not believe there are significant differences in risk characteristics
between various segments of our portfolio.

 Our methodology incorporates
historical pools that are sufficiently seasoned to capture the magnitude and trends of losses within those vintage pools. Furthermore,
the historical period encompasses a substantial volume of receivables over periods that include fluctuations in the competitive landscape,
the Company’s rates of growth, size of our managed portfolio and fluctuations in economic growth and unemployment.

 In consideration of the depth
and breadth of the historical period, and the homogeneity of our portfolio, we generally do not adjust historical loss information for
differences in risk characteristics such as credit or structural composition of segments of the portfolio or for changes in environmental
conditions such as changes in unemployment rates, collateral values or other factors. 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 December 31, 2024 and 2023:

 Schedule of amortized cost basis of finance receivables 
 
 December 31, 

 2024 
 2023 

 Annual Vintage Pool 
 (In thousands) 

 2015 and prior 
 $ 294 
 $ 2,158 

 2016 
 1,336 
 7,673 

 2017 
 3,790 
 17,722 

 $ 5,420 
 $ 27,553 

 For our receivables originated prior to January
2018, we maintain an allowance for credit losses on automobile contracts held on our balance sheet, which reflects our estimates of probable
credit losses that can be reasonably estimated. The Company recorded a reduction to provision for credit losses on finance receivables
in the amount of $ 5.3 million, $ 22.3 million, and $ 28.1 million for the years ended December 31, 2024, 2023, and 2022, respectively. The
reserve decrease was primarily due to a decrease in lifetime expected credit losses resulting from better than expected credit performance
for these receivables.

 F- 18 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 The following table presents
a summary of the activity for the allowance for finance credit losses, for the years ended December 31, 2024, 2023 and 2022:

 Schedule of allowance for finance credit losses 
 
 December 31, 

 2024 
 2023 
 2022 

 (In thousands) 

 Balance at beginning of period 
 $ 2,869 
 $ 21,753 
 $ 56,206 

 Provision for credit losses on finance receivables 
 ( 5,307 ) 
 ( 22,300 ) 
 ( 28,100 ) 

 Charge-offs 
 ( 1,846 ) 
 ( 8,064 ) 
 ( 18,319 ) 

 Recoveries 
 4,717 
 11,480 
 11,966 

 Balance at end of period 
 $ 433 
 $ 2,869 
 $ 21,753 

 The following table presents
the gross charge-offs by year of origination of our finance receivables for the year ended December 31, 2024, 2023, and 2022:

 Schedule of charge-offs for financed receivables 
 
 December 31, 

 2024 
 2023 
 2022 

 Annual Vintage Pool 
 (In thousands) 

 2014 and prior 
 $ 353 
 $ 325 
 $ 963 

 2015 
 285 
 1,031 
 3,047 

 2016 
 703 
 3,266 
 6,586 

 2017 
 976 
 4,294 
 8,271 

 Applied against repos in inventory (net) 
 ( 471 ) 
 ( 852 ) 
 ( 548 ) 

 $ 1,846 
 $ 8,064 
 $ 18,319 

 (4) Furniture and Equipment 

 The following table presents the components of
furniture and equipment:

 Schedule of furniture and equipment 
 
 December 31, 

 2024 
 2023 

 (In thousands) 

 Furniture and fixtures 
 $ 2,083 
 $ 1,936 

 Computer and telephone equipment 
 6,942 
 6,823 

 Leasehold improvements 
 1,638 
 1,570 

 10,663 
 10,329 

 Less: accumulated depreciation and amortization 
 ( 9,720 ) 
 ( 8,957 ) 

 $ 943 
 $ 1,372 

 F- 19 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Depreciation expense totaled $ 862,000 , $ 847,000 ,
and $ 1,618,000 for the years ended December 31, 2024, 2023 and 2022, respectively.

 (5) Securitization Trust Debt 

 We have completed numerous
term securitization transactions that are structured as secured borrowings for financial accounting purposes. The debt issued in these
transactions is shown on our Consolidated Balance Sheets as “Securitization trust debt,” and the components of such debt
are summarized in the following table:

 Schedule of securitization trust debt 
 
 Weighted 

 Average 

 Final 
 Receivables 
 
 Outstanding 
 Outstanding 
 Contractual Debt 

 Scheduled 
 Pledged at 
 
 Principal at 
 Principal at 
 Interest Rate at 

 Payment 
 December 31, 
 Initial 
 December 31, 
 December 31, 
 December 31, 

 Series 
 Date (1) 
 2024 (2) 
 Principal 
 2024 
 2023 
 2024 

 (Dollars in thousands) 
 
 CPS 2019-B 
 June 2026 
 $ – 
 $ 228,275 
 $ – 
 $ 15,742 
 – 

 CPS 2019-C 
 September 2026 
 – 
 243,513 
 – 
 19,725 
 – 

 CPS 2019-D 
 December 2026 
 – 
 274,313 
 – 
 27,445 
 – 

 CPS 2020-A 
 March 2027 
 – 
 260,000 
 – 
 26,382 
 – 

 CPS 2020-B 
 June 2027 
 – 
 202,343 
 – 
 24,197 
 – 

 CPS 2020-C 
 November 2027 
 27,353 
 252,200 
 22,453 
 43,487 
 4.79 % 

 CPS 2021-A 
 March 2028 
 31,368 
 230,545 
 22,396 
 39,039 
 2.30 % 

 CPS 2021-B 
 June 2028 
 41,023 
 240,000 
 31,903 
 55,684 
 3.30 % 

 CPS 2021-C 
 September 2028 
 63,518 
 291,000 
 49,739 
 85,563 
 2.43 % 

 CPS 2021-D 
 December
 2028 
 86,594 
 349,202 
 72,090 
 126,059 
 3.25 % 

 CPS 2022-A 
 April 2029 
 98,550 
 316,800 
 77,872 
 137,479 
 3.40 % 

 CPS 2022-B 
 October 2029 
 156,093 
 395,600 
 132,002 
 213,779 
 5.64 % 

 CPS 2022-C 
 April 2030 
 185,160 
 391,600 
 141,176 
 230,273 
 6.55 % 

 CPS 2022-D 
 June 2030 
 157,127 
 307,018 
 135,857 
 205,583 
 8.84 % 

 CPS 2023-A 
 August 2030 
 188,215 
 324,768 
 146,020 
 231,906 
 6.79 % 

 CPS 2023-B 
 November 2030 
 207,630 
 332,885 
 172,154 
 268,172 
 6.97 % 

 CPS 2023-C 
 February 2031 
 199,594 
 291,732 
 175,219 
 257,568 
 6.89 % 

 CPS 2023-D 
 May 2031 
 214,416 
 286,149 
 191,621 
 271,939 
 7.57 % 

 CPS 2024-A 
 August 2031 
 228,617 
 280,924 
 206,348 
 – 
 6.20 % 

 CPS 2024-B 
 November 2031 
 283,802 
 319,871 
 262,768 
 – 
 6.36 % 

 CPS 2024-C 
 March 2032 
 408,423 
 436,310 
 379,254 
 – 
 6.21 % 

 CPS 2024-D 
 June 2032 
 415,560 
 416,816 
 390,983 
 – 
 5.18 % 

 – 
 $ 2,993,044 
 $ 6,671,864 
 $ 2,609,855 
 $ 2,280,022 
 
 _________________________

 (1) The Final Scheduled Payment Date represents final legal maturity of the securitization trust debt.
Securitization trust debt is expected to become due and to be paid prior to those dates, based on amortization of the finance receivables
pledged to the Trusts. Expected payments, which will depend on the performance of such receivables, as to which there can be no assurance,
are $ 987.8 million in 2025, $ 696.4 million in 2026, $ 470.5 million in 2027, $ 275.1 million in 2028, $ 126.6 million in 2029, and $ 38 .0
million in 2030. 

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

 F- 20 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Debt issuance costs of $ 15.5 
million and $ 14.6 million as of December 31, 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.

 All of the securitization
trust debt was issued in private placement transactions to qualified institutional investors. The debt was issued by our wholly-owned,
bankruptcy remote subsidiaries and is secured by the assets of such subsidiaries, but not by any of our other assets.

 The terms of the various securitization
agreements related to the issuance of the securitization trust debt require that certain delinquency and credit loss criteria be met with
respect to the collateral pool, and require that we maintain minimum levels of liquidity and net worth and not exceed maximum leverage
levels. We were in compliance with all such covenants as of December 31, 2024.

 We are responsible for the
administration and collection of the contracts. The securitization agreements also require certain funds be held in restricted cash accounts
to provide additional credit enhancement for the Notes or to be applied to make payments on the securitization trust debt. As of December
31, 2024, restricted cash under the various agreements totaled approximately $ 125.7 million. Interest expense on the securitization trust
debt is composed of the stated rate of interest plus amortization of additional costs of borrowing. Additional costs of borrowing include
facility fees, insurance premiums, amortization of deferred financing costs, and amortization of discounts required on the notes at the
time of issuance. Deferred financing costs related to the securitization trust debt are amortized using the interest method. Accordingly,
the effective cost of borrowing of the securitization trust debt is greater than the stated rate of interest.

 Our wholly-owned, bankruptcy
remote subsidiaries were formed to facilitate the above asset-backed financing transactions. Similar bankruptcy remote subsidiaries issue
the debt outstanding under our warehouse line of credit. Bankruptcy remote refers to a legal structure in which it is expected that the
applicable entity would not be included in any bankruptcy filing by its parent or affiliates. All of the assets of these subsidiaries
have been pledged as collateral for the related debt. All such transactions, treated as secured financings for accounting and tax purposes,
are treated as sales for all other purposes, including legal and bankruptcy purposes. None of the assets of these subsidiaries are available
to pay any of our other creditors.

 F- 21 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 (6) Debt 

 The terms of our debt outstanding at December
31, 2024 and 2023 are summarized below:

 Schedule of debt outstanding 
 
 Amount Outstanding at 

 December 31, 
 December 31, 

 2024 
 2023 

 Subordinate Lender 
 
 (In thousands) 

 Description 
 Interest Rate 
 Interest Rate 
 Maturity 
 
 Warehouse line of

 credit
 
 2.85% over CP yield rate (Minimum 3.60%) 7.52% and 8.58% at December 31, 2024 and December 31 2023, respectively 
 6.40% over SOFR yield rate (Minimum 7.15%) 11.09% at December 31, 2024 
 July 2026 
 $ 269,602 
 $ 165,628 

 Warehouse line of

 credit
 
 4.50% over a commercial paper rate (Minimum 7.50%) 8.90% and 9.63% at December 31 2024, and December 31 2023, respectively 
 
 March 2026 
 145,597 
 68,997 

 Residual interest

 financing
 
 7.86 % 
 
 June 2026 
 50,000 
 50,000 

 Residual interest

 financing
 
 11.50 % 
 
 March 2029 
 50,000 
 – 

 Subordinated renewable

 notes
 
 Weighted average rate of 9.24 % and 8.45 % at December 31, 2024 and December 31, 2023, respectively 
 
 Weighted average maturity of December 2026 and February 2026 at
 December 31, 2024 and December 31, 2023, respectively 
 26,489 
 17,188 

 $ 541,688 
 $ 301,813 

 F- 22 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Debt issuance costs of $ 4.3 
million and $ 599,000 as of December 31, 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 Warehouse lines of credit and residual interest financing
on our Consolidated Balance Sheets.

 On May 11, 2012, we entered
into a $ 100 million one-year warehouse credit line with Citibank, N.A. The facility is structured to allow us to fund a portion of the
purchase price of automobile contracts by borrowing from a credit facility to our consolidated subsidiary Page Eight Funding, LLC. 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 facility is structured to allow us to fund a portion of the purchase price of automobile contracts by borrowing from a credit
facility to our consolidated subsidiary Page Eight Funding, LLC. The facility provides for effective advances up to 95.00% of eligible
finance receivables. The Class A loans under the facility generally accrue interest during the revolving period at a per annum rate equal
to the CP Cost of Funds Rate plus 2.85% per annum, with a minimum rate of 3.60% per annum and during the amortization period at a per
annum rate equal to the CP Cost of Funds Rate plus 3.85% per annum, with a minimum rate of 4.60% per annum. In July 2024, this facility
was amended to extend the revolving period to July 2026 and to include an amortization period through July 2027 for any receivables pledged
to the facility at the end of the revolving period. In November 2024, we closed a revolving credit agreement with Oaktree Capital Management,
which was subordinate to our credit agreement with Citibank, N.A., and with a $25 million credit capacity. The facility provides effective
advances up to 10.00% of eligible finance receivables. The Class B loans under the facility generally accrue interest during the revolving
period at a per annum rate equal to the Adjusted Term SOFR plus 6.40% per annum, with a minimum rate of 7.15% per annum and during the
amortization period at a per annum rate equal to the Adjusted Term SOFR plus 7.40% per annum, with a minimum rate of 8.15% per annum.
In December 2024, we increased the capacity to $ 335 million. At December 31, 2024 there was $ 269.6 million outstanding under this facility.

 On February 2, 2022, we renewed
our two-year revolving credit agreement with Ares Agent Services, L.P. The facility is structured to allow us to fund a portion of the
purchase price of automobile contracts by borrowing from a credit facility to our consolidated subsidiary Page Nine Funding, LLC. The
facility provides for effective advances up to 85.25% of eligible finance receivables. The loans under the facility accrue interest at
a commercial paper rate plus 4.50% per annum, with a minimum rate of 7.50% per annum. In June 2022, we increased the capacity of our credit
agreement with Ares Agent Services, L.P. from $100 million to $200 million. This facility was most recently renewed in March 2024, extending
the revolving period to March 2026 followed by an amortization period through March 2028 for any receivables pledged to the facility at
the end of the revolving period. At December 31, 2024 there was $ 145.6 million outstanding under this facility.

 The total outstanding debt
on our two warehouse lines of credit was $ 415.2 million as of December 31, 2024, compared to $ 234.6 million outstanding as of December
31, 2023.

 On June 30, 2021, we completed
a $ 50 million securitization of residual interests from previously issued securitizations. In this residual interest financing transaction,
qualified institutional buyers purchased $ 50 .0 million of asset-backed notes secured by residual interests in eleven CPS securitizations
consecutively issued from January 2018 and September 2020. The sold notes (“2021-1 Notes”), issued by CPS Auto Securitization
Trust 2021-1, consist of a single class with a coupon of 7.86%. At December 31, 2024 there was $ 50 .0 million outstanding under this facility.

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

 F- 23 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 The agreed valuation of the
collateral for the 2021-1 and 2024-1 Notes are the sum of the amounts on deposit in the underlying spread accounts for each related securitization
and the over-collateralization of each related securitization, which is the difference between the outstanding principal balances of the
related receivables less the principal balance of the outstanding notes issued in the related securitization. On each monthly payment
date, the 2021-1 and 2024-1 Notes are entitled to interest at the coupon rate and, if necessary, a principal payment necessary to maintain
a specified minimum collateral ratio.

 Unamortized debt issuance
costs of $ 824,000 and $ 125,000 as of December 31, 2024 and December 31, 2023, respectively, have been excluded from the amount reported
above for residual interest financing. These debt issuance costs are presented as a direct deduction to the carrying amount of the debt
on our Consolidated Balance Sheets.

 We must comply with certain
affirmative and negative covenants related to debt facilities, which require, among other things, that we maintain certain financial ratios
related to liquidity, net worth and capitalization. Further covenants include matters relating to investments, acquisitions, restricted
payments and certain dividend restrictions. See the discussion of financial covenants in Note 1.

 The following table summarizes the contractual
and expected maturity amounts of our outstanding subordinated renewable notes as of December 31, 2024:

 Schedule of contractual
and expected maturity amounts of our outstanding subordinated renewable 
 
 Subordinated 

 Contractual maturity 
 renewable 

 date 
 notes 

 (In thousands) 

 2025 
 $ 8,444 

 2026 
 5,284 

 2027 
 6,911 

 2028 
 4,648 

 2029 
 88 

 Thereafter 
 1,114 

 Total 
 $ 26,489 

 (7) Shareholders’ Equity 

 Common Stock

 Holders of common stock are
entitled to such dividends as our board of directors, in its discretion, may declare out of funds available, subject to the terms of any
outstanding shares of preferred stock and other restrictions. In the event of liquidation of the Company, holders of common stock are
entitled to receive, pro rata , all of the assets of the Company available for distribution, after payment of any liquidation preference
to the holders of outstanding shares of preferred stock. Holders of the shares of common stock have no conversion or preemptive or other
subscription rights and there are no redemption or sinking fund provisions applicable to the common stock.

 F- 24 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Stock Purchases

 For the year ending December
31, 2024, we purchased 1,469,658 
 shares of our common stock at an average price of $ 8.73 .
In April 2024 our board of directors authorized the repurchase of an additional $ 10 
 million of our common stock. There is approximately $ 6.3 
million of board authorization remaining under such plans, which have no expiration date. The table below describes the purchase
of our common stock for the twelve-month period ended December 31, 2024 and 2023:

 Schedule of stock purchases 
 
 Twelve Months Ended 

 December 31, 2024 
 December 31, 2023 

 Shares 
 Avg. Price 
 Shares 
 Avg. Price 

 Open market purchases 
 473,202 
 $ 8.67 
 670,968 
 $ 10.20 

 Shares redeemed upon net exercise of stock options 
 876,456 
 8.66 
 1,305,388 
 10.29 

 Other 
 120,000 
 9.49 
 – 
 – 

 Total stock purchases 
 1,469,658 
 $ 8.73 
 1,976,356 
 $ 10.26 

 Options and Warrants

 In 2006, the Company adopted
and its shareholders approved the CPS 2006 Long-Term Equity Incentive Plan (the “2006 Plan”) pursuant to which our Board of
Directors, or a duly-authorized committee thereof, may grant stock options, restricted stock, restricted stock units and stock appreciation
rights to our employees or employees of our subsidiaries, to directors of the Company, and to individuals acting as consultants to the
Company or its subsidiaries. In June 2008, May 2012, April 2013, May 2015, July 2018 and again in November 2021, the shareholders of the
Company approved an amendment to the 2006 Plan to increase the maximum number of shares that may be subject to awards under the 2006 Plan
to 5,000,000, 7,200,000, 12,200,000, 17,200,000, 19,200,000 and 22,200,000 , respectively, in each case plus shares authorized under prior
plans and not issued. Options that have been granted under the 2006 Plan and a previous plan approved in 1997 have been granted at an
exercise price equal to (or greater than) the stock’s fair value at the date of the grant, with terms generally of 7-10 years and
vesting generally over 4-5 years.

 There were no stock options
granted during the years ended December 31, 2024 and 2023. The per share weighted-average fair value of stock options granted during the
year ended December 31 2022 was $ 5.42 .
That fair value was estimated using a binomial option pricing model using the weighted average assumptions noted in the following table.
We use historical data to estimate the expected term of each option. The volatility estimate is based on the historical and implied volatility
of our stock over the period that equals the expected life of the option. Volatility assumptions ranged from 75 %
to 80 %
for 2022. The risk-free interest rate is based on the yield on a U.S. Treasury bond with a maturity comparable to the expected life of
the option. The dividend yield is estimated to be zero based on our intention not to issue dividends for the foreseeable future.

 Schedule of assumptions for stock options 
 
 Year Ended 

 December
 31, 
 
 2022 

 Expected life (years) 
 4.00 

 Risk-free interest rate 
 2.38 % 

 Volatility 
 76 % 

 Expected dividend yield 
 – 

 F- 25 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 For the years ended December
31, 2024, 2023 and 2022, we recorded stock-based compensation costs in the amount of $ 3 .0 million, $ 3.5 million and $ 4.4 million, respectively.
As of December 31, 2024, the unrecognized stock-based compensation costs to be recognized over future periods was equal to $ 3 .0 million.
This amount will be recognized as expense over a weighted-average period of 1.1 years.

 At December 31, 2024 and
2023, options outstanding had intrinsic values of $ 33.3 
million and $ 36.1 
million , respectively. At December 31, 2024 and 2023, options exercisable had intrinsic values of $ 31.2 
million and $ 31.2 
million , respectively. The total intrinsic value of options exercised was $ 8.2 
million and $ 14.5 
million for the years ended December 31, 2024 and 2023, respectively. New shares were issued for all options exercised during
the year ended December 2024 for a total price of $ 6.9 
million . At December 31, 2024, there were a total of 2,984,000 
additional shares available for grant under the 2006 Plan.

 Stock option activity for
the year ended December 31, 2024 for stock options under the 2006 and 1997 plans is as follows:

 Schedule of option activity 
 
 Weighted 

 Number of 
 Weighted 
 Average 

 Shares 
 Average 
 Remaining 

 (in thousands) 
 Exercise Price 
 Contractual Term 

 Options outstanding at the beginning of period 
 8,125 
 $ 5.11 
 3.14 years 

 Granted 
 – 
 – 
 N/A 

 Exercised 
 ( 1,728 ) 
 4.00 
 N/A 

 Forfeited/Expired 
 ( 300 ) 
 5.80 
 N/A 

 Options outstanding at the end of period 
 6,097 
 $ 5.39 
 2.68 years 

 Options exercisable at the end of period 
 5,087 
 $ 4.73 
 2.40 years 

 The following table presents
the price distribution of stock options outstanding and exercisable for the years ended December 31, 2024 and 2023:

 Schedule of options outstanding and exercisable 
 
 Number of shares as of 
 Number of shares as of 

 December 31, 2024 
 December 31, 2023 

 Outstanding 
 Exercisable 
 Outstanding 
 Exercisable 

 Range of exercise prices: 
 (In thousands) 
 (In thousands) 

 $2.00 - $2.99 
 1,197 
 1,197 
 1,410 
 1,082 

 $3.00 - $3.99 
 2,026 
 2,026 
 2,473 
 2,473 

 $4.00 - $4.99 
 1,262 
 972 
 2,539 
 1,929 

 $10.00 - $10.99 
 1,612 
 892 
 1,703 
 578 

 Total shares 
 6,097 
 5,087 
 8,125 
 6,062 

 We did not issue any stock options with an exercise
price above or below the market price of the stock on the grant date for the years ended December 31, 2024, 2023 and 2022.

 F- 26 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 (8) Interest Income and Interest Expense 

 The following table presents the components of
interest income:

 Schedule of interest income 
 
 Year Ended December 31, 

 2024 
 2023 
 2022 

 (In thousands) 

 Interest on finance receivables 
 $ 6,948 
 $ 15,567 
 $ 35,091 

 Interest on finance receivables at fair value 
 350,729 
 307,543 
 268,621 

 Other interest income 
 6,285 
 6,109 
 1,525 

 Interest income 
 $ 363,962 
 $ 329,219 
 $ 305,237 

 The following table presents the components of
interest expense:

 Schedule of interest expense 
 
 Year Ended December 31, 

 2024 
 2023 
 2022 

 (In thousands) 

 Securitization trust debt 
 $ 161,014 
 $ 121,409 
 $ 70,627 

 Warehouse lines of credit 
 19,292 
 19,192 
 10,310 

 Residual interest financing 
 8,702 
 4,199 
 4,243 

 Subordinated renewable notes 
 2,249 
 1,831 
 2,344 

 Interest expense 
 $ 191,257 
 $ 146,631 
 $ 87,524 

 (9) Income Taxes 

 Income taxes consist of the following:

 Schedule of income taxes expenses 
 
 Year Ended December 31, 

 2024 
 2023 
 2022 

 (In thousands) 

 Current federal tax expense 
 $ 4,376 
 $ 7,122 
 $ 16,946 

 Current state tax expense 
 1,807 
 2,613 
 3,352 

 Deferred federal tax expense 
 1,382 
 4,307 
 5,573 

 Deferred state tax expense 
 663 
 1,712 
 4,339 

 Income tax expense 
 $ 8,228 
 $ 15,754 
 $ 30,210 

 F- 27 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Income tax expense for the
years ended December 31, 2024, 2023 and 2022 differs from the amount determined by applying the statutory federal rate to income before
income taxes as follows:

 Schedule of reconciliation of income taxes 
 
 Year Ended December 31, 

 2024 
 2023 
 2022 

 (In thousands) 

 Expense at federal tax rate 
 $ 5,760 
 $ 12,830 
 $ 24,401 

 State taxes, net of federal income tax effect 
 1,863 
 3,716 
 6,462 

 Stock-based compensation 
 ( 958 ) 
 ( 1,184 ) 
 ( 2,611 ) 

 Non-deductible expenses 
 1,612 
 1,629 
 1,056 

 Net operating loss carryback 
 – 
 – 
 – 

 Effect of change in tax rate 
 – 
 – 
 – 

 Accounting method change 
 – 
 – 
 – 

 Other 
 ( 49 ) 
 ( 1,237 ) 
 902 

 Income tax expense 
 $ 8,228 
 $ 15,754 
 $ 30,210 

 The tax effected cumulative
temporary differences that give rise to deferred tax assets and liabilities as of December 31, 2024 and 2023 are as follows:

 Schedule of deferred tax assets and liabilities 
 
 December 31, 

 2024 
 2023 

 (In thousands) 

 Deferred Tax Assets: 
 
 Finance receivables 
 $ 77 
 $ 895 

 Accrued liabilities 
 703 
 1,423 

 NOL carryforwards 
 256 
 400 

 Built in losses 
 753 
 1,383 

 Stock compensation 
 755 
 1,131 

 Lease liability 
 5,846 
 883 

 Other 
 185 
 – 

 Total deferred tax assets 
 $ 8,575 
 $ 6,115 

 Deferred Tax Liabilities: 
 
 Pension accrual 
 $ ( 2,015 ) 
 $ ( 1,217 ) 

 Lease right-of-use assets 
 ( 5,301 ) 
 ( 803 ) 

 Furniture and equipment and other 
 ( 249 ) 
 ( 359 ) 

 Total deferred tax liabilities 
 ( 7,565 ) 
 ( 2,379 ) 

 Net deferred tax asset 
 $ 1,010 
 $ 3,736 

 F- 28 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 We acquired certain net operating
losses and built-in loss assets as part of our acquisitions of MFN Financial Corp. (“MFN”) in 2002 and TFC Enterprises, Inc.
(“TFC”) in 2003. Moreover, both MFN and TFC have undergone an ownership change for purposes of Internal Revenue Code (“IRC”)
Section 382. In general, IRC Section 382 imposes an annual limitation on the ability of a loss corporation (that is, a corporation with
a net operating loss (“NOL”) carryforward, credit carryforward, or certain built-in losses (“BILs”)) to utilize
its pre-change NOL carryforwards or BILs to offset taxable income arising after an ownership change.

 In determining the possible
future realization of deferred tax assets, we have considered future taxable income from the following sources: (a) reversal of taxable
temporary differences; and (b) tax planning strategies that, if necessary, would be implemented to accelerate taxable income into years
in which net operating losses might otherwise expire.

 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
be realized. In making such judgements, 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 $ 1 .0 million as of December 31, 2024 is more
likely than not based on forecasted future net earnings. Our net deferred tax asset of $1.0 million consists of approximately $ 479,000 
of net U.S. federal deferred tax assets and $ 530,000 of net state deferred tax assets.

 As of December 31, 2024, we
had net operating loss carryforwards for state income tax purposes of $ 4.1 million . These state net operating losses begin to expire in
2025.

 We recognize a tax position
as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax
examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being
realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. We recognize
potential interest and penalties related to unrecognized tax benefits as income tax expense. At December 31, 2024, we had no unrecognized
tax benefits for uncertain tax positions.

 We are subject to taxation
in the US and various state jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state, or local examinations
by tax authorities for years before 2020.

 (10) Commitments and Contingencies 

 Leases

 The Company has operating
leases for corporate offices, equipment, software and hardware. The Company has entered into operating leases for the majority of its
real estate locations, primarily office space. These leases are generally for periods of three to seven years with various renewal options.
The depreciable life of leased assets is limited by the expected lease term. Leases with an initial term of 12 months or less are not
recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the lease term.

 We determine if a contract
contains a lease at contract inception. Right-of-use assets and liabilities are recognized based on the present value of lease payments
over the lease term. In determining the present value of lease payments, we use the Company’s incremental borrowing rate. Right-of-use
assets are included in other assets and lease liabilities are included in accounts payable and accrued expenses in our Condensed Consolidated
Balance Sheet.

 F- 29 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 The following table presents the supplemental balance
sheet information related to leases:

 Schedule of balance
sheet information related to leases 
 
 December 31, 
 December 31, 

 2024 
 2023 

 (In thousands) 

 Operating Leases 
 
 Operating lease right-of-use assets 
 $ 51,093 
 $ 29,575 

 Less: Accumulated amortization right-of-use assets 
 ( 31,644 ) 
 ( 26,651 ) 

 Operating lease right-of-use assets, net 
 $ 19,449 
 $ 2,924 

 Operating lease liabilities 
 $ ( 21,471 ) 
 $ ( 3,220 ) 

 Finance Leases 
 
 Property and equipment, at cost 
 $ 3,794 
 $ 3,474 

 Less: Accumulated depreciation 
 ( 3,488 ) 
 ( 3,385 ) 

 Property and equipment, net 
 $ 306 
 $ 89 

 Finance lease liabilities 
 $ ( 315 ) 
 $ ( 93 ) 

 Weighted Average Discount Rate 
 
 Operating lease 
 5.0 % 
 5.0 % 

 Finance lease 
 6.5 % 
 6.5 % 

 Maturities of lease liabilities were as
follows:

 Schedule of maturities of lease 
 
 (In thousands) 
 Operating 
 Finance 
 
 Year Ending December 31, 
 Lease 
 Lease 
 
 2025 
 $ 5,233 
 $ 128 
 
 2026 
 5,084 
 118 
 
 2027 
 5,242 
 61 
 
 2028 
 5,408 
 30 
 
 2029 
 3,761 
 10 
 
 Thereafter 
 985 
 – 
 
 Total undiscounted lease payments 
 25,713 
 347 
 
 Less amounts representing interest 
 ( 4,242 ) 
 ( 32 ) 
 
 Lease Liability 
 $ 21,471 
 $ 315 
 
 F- 30 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 The following table presents the leases expense
included in Occupancy, General and administrative on our Condensed Consolidated Statement of Operations:

 Schedule of lease cost 
 
 Year Ended December 31, 

 2024 
 2023 
 2022 

 (In thousands) 

 Operating lease cost 
 $ 3,582 
 $ 5,547 
 $ 6,650 

 Finance lease cost 
 115 
 158 
 987 

 Total lease cost 
 $ 3,697 
 $ 5,705 
 $ 7,637 

 The following table presents the supplemental cash
flow information related to leases:

 Schedule of supplemental cash
flow information related to leases 
 
 Year Ended December 31, 

 2024 
 2023 
 2022 

 (In thousands) 

 Cash paid for amounts included in the measurement of lease liabilities: 
 
 Operating cash flows from operating leases 
 $ 5,308 
 $ 5,547 
 $ 7,056 

 Operating cash flows from finance leases 
 97 
 152 
 948 

 Financing cash flows from finance leases 
 18 
 6 
 40 

 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 2024, a motion for certification of a class was filed. Prior to the motion being ruled upon, summary judgment
was granted in our favor, disposing of the claims against CPS. An appeal of the summary judgment ruling was filed on October 25, 2024
and a cross appeal of the denial of the motion to compel arbitration was filed on October 31, 2024. 

 In General .
There can be no assurance as to the outcomes of the matters described or referenced above. We record at each measurement date, most recently
as of December 31, 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 range of reasonably possible losses for the legal proceedings and contingencies we face, including those described
or identified above, as of December 31, 2024 does not exceed $ 3.2 million. 

 F- 31 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Accordingly, 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.

 (11) Employee Benefits 

 We sponsor a pretax savings
and profit sharing plan (the “401(k) Plan”) qualified under Section 401(k) of the Internal Revenue Code. Under the 401(k)
Plan, eligible employees are able to contribute up to the maximum allowed under the law. We may, at our discretion, match 100% of employees’
contributions up to $ 2,000 per employee per calendar year. Our matching contributions to the 401(k) Plan were $ 1.5 million , $ 1.4 million ,
and $ 1.3 million respectively, for the years ended December 31, 2024, 2023 and 2022.

 We also sponsor a defined
benefit plan, the MFN Financial Corporation Pension Plan (the “Plan”). The Plan benefits were frozen on June 30, 2001.

 The following tables represents
a reconciliation of the change in the plan’s benefit obligations, fair value of plan assets, and funded status at December 31,
2024 and 2023:

 Schedule of reconciliation of the change in the plan’s benefit obligations 
 
 December 31, 

 2024 
 2023 

 (In thousands) 

 Change in Projected Benefit Obligation 
 
 Projected benefit obligation, beginning of year 
 $ 15,477 
 $ 15,952 

 Interest cost 
 695 
 753 

 Assumption changes 
 ( 564 ) 
 ( 3 ) 

 Actuarial (gain) loss 
 ( 223 ) 
 ( 271 ) 

 Settlements 
 – 
 – 

 Benefits paid 
 ( 1,113 ) 
 ( 954 ) 

 Projected benefit obligation, end of year 
 $ 14,272 
 $ 15,477 

 Change in Plan Assets 
 
 Fair value of plan assets, beginning of year 
 $ 20,048 
 $ 18,768 

 Return on assets 
 2,967 
 2,347 

 Employer contribution 
 – 
 – 

 Expenses 
 ( 122 ) 
 ( 113 ) 

 Settlements 
 – 
 – 

 Benefits paid 
 ( 1,113 ) 
 ( 954 ) 

 Fair value of plan assets, end of year 
 $ 21,780 
 $ 20,048 

 Funded Status at end of year 
 $ 7,508 
 $ 4,571 

 F- 32 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Additional Information 

 Weighted average assumptions used to determine
benefit obligations and cost at December 31, 2024 and 2023 were as follows:

 Schedule of weighted average assumptions used to determine
benefit obligations 
 
 December, 31 

 2024 
 2023 

 Weighted average assumptions used to determine benefit obligations 
 
 Discount rate 
 5.32 % 
 4.68 % 

 Weighted average assumptions used to determine net periodic benefit cost 
 
 Discount rate 
 4.68 % 
 4.87 % 

 Expected return on plan assets 
 6.75 % 
 7.00 % 

 Our overall expected long-term
rate of return on assets is 6.75 %
per annum as of December 31, 2024. The expected long-term rate of return is based on the weighted average of historical returns on individual
asset categories, which are described in more detail below.

 Schedule of components of net periodic benefit cost 
 
 December 31, 

 2024 
 2023 
 2022 

 (In thousands) 

 Amounts recognized on Consolidated Balance Sheet 
 
 Other assets 
 $ 7,508 
 $ 4,571 
 $ 2,816 

 Other liabilities 
 – 
 – 
 – 

 Net amount recognized 
 $ 7,508 
 $ 4,571 
 $ 2,816 

 Amounts recognized in accumulated other comprehensive loss consists of: 
 
 Net loss 
 $ 1,593 
 $ 4,130 
 $ 5,716 

 Unrecognized transition asset 
 – 
 – 
 – 

 Net amount recognized 
 $ 1,593 
 $ 4,130 
 $ 5,716 

 Components of net periodic benefit cost 
 
 Interest cost 
 $ 695 
 $ 753 
 $ 579 

 Expected return on assets 
 ( 1,311 ) 
 ( 1,280 ) 
 ( 1,860 ) 

 Amortization of transition asset 
 – 
 – 
 – 

 Amortization of net loss 
 216 
 358 
 105 

 Net periodic benefit cost 
 ( 400 ) 
 ( 169 ) 
 ( 1,176 ) 

 Settlement (gain)/loss 
 – 
 – 
 256 

 Total 
 $ ( 400 ) 
 $ ( 169 ) 
 $ ( 920 ) 

 Benefit Obligation Recognized in Other Comprehensive Loss (Income) 
 
 Net loss (gain) 
 $ ( 2,937 ) 
 $ ( 1,755 ) 
 $ 1,003 

 Prior service cost (credit) 
 – 
 – 
 – 

 Amortization of prior service cost 
 – 
 – 
 – 

 Net amount recognized in other comprehensive loss (income) 
 $ ( 2,937 ) 
 $ ( 1,755 ) 
 $ 1,003 

 F- 33 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 The estimated net gain
that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2025 is $ 703,000 .

 The weighted average asset allocation of our pension
benefits at December 31, 2024 and 2023 were as follows:

 Schedule of weighted average asset allocation of our pension
benefits 
 
 December 31, 

 2024 
 2023 

 Weighted Average Asset Allocation at Year-End 
 
 Asset Category 
 
 Equity securities 
 87 % 
 87 % 

 Debt securities 
 13 % 
 13 % 

 Cash and cash equivalents 
 0 % 
 0 % 

 Total 
 100 % 
 100 % 

 Our investment policies and
strategies for the pension benefits plan utilize a target allocation of 75% equity securities and 25% fixed income securities (excluding
Company stock). Our investment goals are to maximize returns subject to specific risk management policies. We address risk management
and diversification by the use of a professional investment advisor and several sub-advisors which invest in domestic and international
equity securities and domestic fixed income securities. Each sub-advisor focuses its investments within a specific sector of the equity
or fixed income market. For the sub-advisors focused on the equity markets, the sectors are differentiated by the market capitalization,
the relative valuation and the location of the underlying issuer. For the sub-advisors focused on the fixed income markets, the sectors
are differentiated by the credit quality and the maturity of the underlying fixed income investment. The investments made by the sub-advisors
are readily marketable and can be sold to fund benefit payment obligations as they become payable.

 Schedule of estimated future benefit payments 
 
 Cash Flows 
 
 Estimated Future Benefit Payments (In thousands) 
 
 2025 
 $ 1,206 

 2026 
 1,324 

 2027 
 1,240 

 2028 
 1,129 

 2029 
 942 

 Years 2030 - 2034 
 5,954 

 Anticipated Contributions in 2025 
 $ – 

 F- 34 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 The fair value
of plan assets at December 31, 2024 and 2023, by asset category, is as follows: 

 Schedule of fair value
of plan assets 
 
 December 31, 2024 

 Level 1 (1) 
 Level 2 (2) 
 Level 3 (3) 
 Total 

 Investment Name: 
 (in thousands) 

 Company Common Stock 
 $ 9,617 
 $ – 
 $ – 
 $ 9,617 

 Large Cap Value 
 – 
 2,198 
 – 
 2,198 

 Mid Cap Index 
 – 
 625 
 – 
 625 

 Small Cap Growth 
 – 
 631 
 – 
 631 

 Small Cap Value 
 – 
 599 
 – 
 599 

 Large Cap Blend 
 – 
 722 
 – 
 722 

 Growth 
 – 
 2,713 
 – 
 2,713 

 International Growth 
 – 
 2,249 
 – 
 2,249 

 Core Bond 
 – 
 1,656 
 – 
 1,656 

 High Yield 
 – 
 348 
 – 
 348 

 Inflation Protected Bond 
 – 
 407 
 – 
 407 

 Money Market 
 – 
 15 
 – 
 15 

 Total 
 $ 9,617 
 $ 12,163 
 $ – 
 $ 21,780 

 December 31, 2023 

 Level 1 (1) 
 Level 2 (2) 
 Level 3 (3) 
 Total 

 Investment Name: 
 (in thousands) 

 Company Common Stock 
 $ 8,308 
 $ 
 $ – 
 $ 8,308 

 Large Cap Value 
 – 
 2,121 
 – 
 2,121 

 Mid Cap Index 
 – 
 606 
 – 
 606 

 Small Cap Growth 
 – 
 604 
 – 
 604 

 Small Cap Value 
 – 
 596 
 – 
 596 

 Large Cap Blend 
 – 
 638 
 – 
 638 

 Growth 
 – 
 2,278 
 – 
 2,278 

 International Growth 
 – 
 2,330 
 – 
 2,330 

 Core Bond 
 – 
 1,763 
 – 
 1,763 

 High Yield 
 – 
 351 
 – 
 351 

 Inflation Protected Bond 
 – 
 437 
 – 
 437 

 Money Market 
 – 
 16 
 – 
 16 

 Total 
 $ 8,308 
 $ 11,740 
 $ – 
 $ 20,048 

 ________________________ 

 (1) Company common stock is classified as level 1 and valued using quoted prices in active markets for identical assets. 

 (2) All other plan assets in stock, bond and money market funds are classified as level 2 and valued using significant observable inputs. 

 (3) There are no plan assets classified as level 3 in the fair value hierarchy as a result of having significant unobservable inputs.
 
 F- 35 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 (12) 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. Under
the standard, fair value measurements are 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. 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 impact on our fair value measurement.

 The table below presents
a reconciliation of the finance receivables measured at fair value on a recurring basis using significant unobservable inputs:

 Schedule of reconciliation of the finance receivables measured at fair value on a recurring basis 
 
 Twelve Months Ended 

 December 31, 

 2024 
 2023 

 (In thousands) 

 Balance at beginning of period 
 $ 2,722,662 
 $ 2,476,617 

 Finance receivables at fair value acquired during period 
 1,653,037 
 1,251,020 

 Payments received on finance receivables at fair value 
 ( 858,628 ) 
 ( 823,434 ) 

 Net interest income accretion on fair value receivables 
 ( 224,304 ) 
 ( 193,541 ) 

 Mark to fair value 
 21,000 
 12,000 

 Balance at end of period 
 $ 3,313,767 
 $ 2,722,662 

 F- 36 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 The table below compares the fair values of these
finance receivables to their contractual balances for the periods shown:

 Schedule of finance receivables to their contractual balances 
 
 December 31, 2024 
 December 31, 2023 

 Contractual 
 Fair 
 Contractual 
 Fair 

 Balance 
 Value 
 Balance 
 Value 

 (In thousands) 

 Finance receivables measured at fair value. 
 $ 3,485,540 
 $ 3,313,767 
 $ 2,941,915 
 $ 2,722,662 

 The following table provides certain qualitative
information about our level 3 fair value measurements:

 Schedule of level 3 fair value measurements 
 
 Financial Instrument 
 Fair Values as of 
 
 Weight Avg. Inputs as of 

 December 31, 
 
 December 31, 

 2024 
 2023 
 Unobservable Inputs 
 2024 
 2023 

 (In thousands) 
 
 Assets: 
 
 Discount rate 
 11.37% 
 11.35% 

 Finance receivables measured at fair value 
 $ 3,313,767 
 $ 2,722,662 
 Cumulative net losses 
 15.47% 
 15.25% 

 Results for the years ended
December 31, 2024 and 2023 include marks of $ 21 .0 and $ 12 .0 million, respectively, to the carrying value of the finance receivables accounted
for at fair value. The marks are estimates based on our evaluation of the appropriate fair value and future earnings rate of existing
receivables compared to recently acquired receivables and increases or decreases in our estimates of future net losses. Our re-evaluation
of the fair values of these receivables resulted in a mark up for certain older receivables and a mark down to the fair values of newer
receivables. The fair value mark up on the older receivables exceeded the mark down to the newer receivables resulting in a net mark up
of $ 21 .0 million and $ 12 .0 million for the years ended December 31, 2024 and 2023, respectively.

 The following table summarizes
the delinquency status using the contractual balance of these finance receivables measured at fair value as of December 31, 2024 and
December 31, 2023:

 Schedule of delinquency
status of finance receivables measured at fair value 
 
 December 31, 
 December 31, 

 2024 
 2023 

 (In thousands) 

 Delinquency Status 
 
 Current 
 $ 2,969,864 
 $ 2,520,158 

 31 - 60 days 
 241,883 
 204,574 

 61 - 90 days 
 113,662 
 101,057 

 91 + days 
 64,810 
 49,541 

 Repo 
 95,321 
 66,585 

 $ 3,485,540 
 $ 2,941,915 

 F- 37 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 There were no transfers in
or out of level 1 or level 2 assets and liabilities for 2024 and 2023. We have no level 3 assets or liabilities that are measured at fair
value on a non-recurring basis.

 The estimated fair values of financial assets
and liabilities at December 31, 2024 and 2023, were as follows:

 Schedule of fair values of financial assets and
liabilities 
 
 As of December 31, 2024 

 Financial Instrument 
 (In thousands) 

 Carrying 
 Fair Value Measurements Using: 
 
 Value 
 Level 1 
 Level 2 
 Level 3 
 Total 

 Assets: 
 
 Cash and cash equivalents 
 $ 11,713 
 $ 11,713 
 $ – 
 $ – 
 $ 11,713 

 Restricted cash and equivalents 
 125,684 
 125,684 
 – 
 – 
 125,684 

 Finance receivables, net 
 4,987 
 – 
 – 
 3,996 
 3,996 

 Accrued interest receivable 
 65 
 – 
 – 
 65 
 65 

 Liabilities: 
 
 Warehouse lines of credit 
 $ 410,898 
 $ – 
 $ – 
 $ 410,898 
 $ 410,898 

 Accrued interest payable 
 10,663 
 – 
 – 
 10,663 
 10,663 

 Securitization trust debt 
 2,594,384 
 – 
 – 
 2,614,352 
 2,614,352 

 Subordinated renewable notes 
 26,489 
 – 
 – 
 26,489 
 26,489 

 As of December 31, 2023 

 Financial Instrument 
 (In thousands) 

 Carrying 
 Fair Value Measurements Using: 
 
 Value 
 Level 1 
 Level 2 
 Level 3 
 Total 

 Assets: 
 
 Cash and cash equivalents 
 $ 6,174 
 $ 6,174 
 $ – 
 $ – 
 $ 6,174 

 Restricted cash and equivalents 
 119,257 
 119,257 
 – 
 – 
 119,257 

 Finance receivables, net 
 24,684 
 – 
 – 
 20,848 
 20,848 

 Accrued interest receivable 
 292 
 – 
 – 
 292 
 292 

 Liabilities: 
 
 Warehouse lines of credit 
 $ 234,025 
 $ – 
 $ – 
 $ 234,025 
 $ 234,025 

 Accrued interest payable 
 7,928 
 – 
 – 
 7,928 
 7,928 

 Securitization trust debt 
 2,265,446 
 – 
 – 
 2,183,331 
 2,183,331 

 Subordinated renewable notes 
 17,188 
 – 
 – 
 17,188 
 17,188 

 F- 38 

 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 13) Business Segment Information 

 The company has identified
one reportable segment. This determination is made by our Chief Executive Officer, who acts as the chief operating decision-maker (“CODM”),
in assessing performance and making decisions regarding resource allocation. The CODM assesses performance by reviewing the consolidated
financial statements, which reflect the financial results of our one reportable operating segment.

 Although the Company operates
as one reportable segment, it serves a diverse network of 8,600 dealerships across 47 states, in which we provide financing to the dealer’s
less credit- worthy borrowers. During the year ended December 31, 2024, no dealer accounted for as much as 2 % of the total number of automobile
contracts we purchased, and revenue generated from any individual borrower is deemed to be immaterial.

 14) Subsequent Events 

 On January 22, 2025 we executed
our first securitization of 2025. In the transaction, qualified institutional buyers purchased $442.4 million of asset-backed notes secured
by $462.5 million in automobile receivables originated by CPS. The sold notes, issued by CPS Auto Receivables Trust 2025-A, consist of
five classes. Ratings 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 coupon
on the notes is approximately 5.88%.

 The 2025-A transaction has
initial credit enhancement consisting of a cash deposit equal to 1.00% of the original receivable pool balance and overcollateralization
of 4.35%. The transaction agreements require accelerated payment of principal on the notes to reach overcollateralization of the lesser
of 8.50% of the original receivable pool balance, or 23.00% 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.

 F- 39