What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-12 compared with 2024-03-15 · 680 added, 697 removed, 1792 unchanged (43% of the section changed)

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Other Information

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

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

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.

Disclosure Regarding Foreign Jurisdictions That Prevent

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

Chairman of the Board of Directors in July 2001.

Chairman of the Board in July 2001.

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

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

From September 1987

to March 1989, Mr.

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

Having been with the Company

since its inception, Mr.

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

Board and the Chairman position.

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,

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

Having been with the Company since its inception,

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

Deckoff , 59, has been a director

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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.

Deckoff was a Senior Vice President of Kidder, Peabody &

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

Prior to joining Kidder,

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

(“Bear Stearns”) Before

joining Bear Stearns, Mr.

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

and the Fixed Income Research

Department at Drexel Burnham Lambert.

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.

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

and the Fixed Income Research Department at Drexel Burnham Lambert.

In June 2023, Mr.

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

connectivity solutions to primarily maritime customers globally.

Deckoff brings to the Board his extensive financial experience and

Deckoff joined the Board of KVH Industries, Inc., a publicly traded company providing connectivity solutions to primarily

maritime customers globally.

Deckoff brings to the Board his extensive financial experience and expertise.

Grasso , 78, has been a director

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of the Company since December 2021.

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

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

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

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

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

wagering operator and iGaming provider, in December 2022.

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

private equity investment, development and construction entities.

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

companies, and skills in investment and general management.

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.

Grounds served on the board of MGM Resorts International,

a hospitality and entertainment company, from 2013 to 2021 and of Remark Holdings Inc., a technology company, from 2013 to 2019.

Grounds joined the Board of PointsBet Holdings Limited, an Australian sports wagering operator and iGaming provider, in December 2022.

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.

Grounds brings

to the Board experience as a director of publicly-traded companies, and skills in investment and general management.

Rayhill , 62, has been a director

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

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

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.

Rayhill brings legal knowledge and

perspective to the Company’s Board.

Roberts , 87, has been a director

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of the Company since August 2022.

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

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

investment management software product for the asset management industry.

Prior to starting Vinson Ventures, from June 2020 to August

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

From November 2017 to present,

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

as the lead independent director.

From 2018 to present, Mr.

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

investment firm.

From 2008 through 2017, Mr.

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

asset management firm.

Prior to joining Fir Tree, Mr.

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

alternative asset management firm.

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

In June 2023, Mr.

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

Walker has served as a director of Clarus Corporation,

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

Walker also became a member

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

Walker brings to the Board his extensive investment

management experience.

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,

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

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

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

Walker brings to the Board his extensive

investment management experience.

Washer , 63, has been a director

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

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

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.

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

management skills.

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

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

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

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

Bradley, the Company’s

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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,

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.

Executive Compensation.

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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.

The Company’s objectives with respect to compensation

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

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

designated Company objectives, and (iii) to include a significant component tied to the price of the common stock, so as to align management’s

incentives with shareholder interests.

The Compensation Committee ("Committee") of the Company’s Board of Directors

is charged with administering the Company’s compensation plans to meet those objectives.

To the extent that elements

of compensation would not advance such objectives, or would do so less effectively than would other elements, the Committee seeks to

avoid paying compensation in those forms.

Role of the Compensation

Committee and the Chief Executive Officer

Our Board of Directors has authorized the Compensation

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

of our compensation plans.

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:

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may approve, a larger increase.

The Company’s general approach in setting the

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

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.

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$995,000 in base salary.

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

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

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

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

The Committee increased the base rate for each

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

for 2024, and determined to increase the base rate for the President and Chief Financial Officer by 4%.

The Annual Incentive

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The Committee is expected to evaluate

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

of June 2024.

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 also awards incentive and non-qualified

The Committee may also award incentive and non-qualified

stock options under the Company’s stock option plans.

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value over the long term.

During the year ended December 31, 2023, the Committee

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

During the year ended December 31, 2024, the

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

Other Elements

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and Evaluation

In the first quarter

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

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

The chief executive officer proposed to the Compensation Committee

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

The Compensation

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

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

by the end of June 2024.

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 of stock options to

the Company’s officers in 2023.

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

respect to option grants generally.

The Committee did not award stock options to the

Company’s officers in 2024.

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.

not time the disclosure of material nonpublic information for the purpose of affecting the value of executive

compensation.

Stock Ownership, Hedging and Pledging

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As part of our comprehensive compliance policy,

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

We also prohibit company

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

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

We prohibit such “hedging” transactions

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

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

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”

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

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Name and Principal Position (1)

Incentive Plan Compensation (2)

All Other Compensation (4)

Incentive Plan

Compensation (2)

Chief Executive Officer

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- Sales & Originations

Christopher Terry

Executive Vice President

Bharwani was appointed chief financial officer of the Company

in September 2022.

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

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

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

Represents the dollar value accrued for financial accounting purposes

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

Codification Topic 718 and SFAS 123R.

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

For the options granted

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

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

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

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

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

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

No option awards were granted in 2023.

Amounts in this column represent premiums paid by the Company for

group life insurance.

- Risk, Systems & IT

Terry qualified as a named executive officer pursuant to Item 402 of Regulation S-K beginning for the year 2024.

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.

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%.

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.

Grants of Plan-Based Awards in Last Fiscal

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

of such individuals holds a stock award;

None of such individuals holds a stock award;

accordingly, only information concerning option awards is presented.

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Danny Bharwani

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

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

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

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

Christopher Terry

Becomes exercisable on August 3, 2025.

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

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

Option Exercises in Last Fiscal Year

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Number of shares acquired on exercise

The value realized is the difference between the fair market value

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

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 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

The EMB Plan is administered by the Compensation Committee.

Among other things, the Compensation Committee selects participants in the

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

of awards under the EMB Plan.

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

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

to and discussed with the Compensation Committee.

Director Compensation

Throughout 2023, we paid our non-employee directors

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

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

$500 for attendance by telephone.

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

Name of Director

Earned or Paid in Cash (1)

This column reports cash compensation earned in 2023 for Board and

committee service.

Bradley’s compensation as chief executive officer of the

Company is described elsewhere in this report.

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

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

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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 30, 2023, which was $9.37 per share.

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

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Management Structure

The board of directors is responsible for overseeing

the management of the Company.

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

and that the interests of the shareholders are served.

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.

currently serves as both

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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’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

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The principal risk management function performed

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

The committee reviews that assessment regularly.

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

liabilities, and of other reserves and allowances.

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

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

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of the Executive Management Bonus Plan.

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

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

one means to increase the company’s business

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

The Compensation Committee manages that risk by insisting that

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

To some extent, such

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

adequate allowances in the Company’s financial statements.

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.

Chief Executive Officer Pay Ratio

The Dodd-Frank Reform and Consumer Protection

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

(“CEO Pay Ratio”).

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 2023 Non-Equity Incentive

Plan Compensation award has not yet been determined.

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

by the end of June 2024.

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

5.02(f) of Form 8-K.

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).

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

or Paid in Cash (1)

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

Bradley’s compensation as chief executive officer of the Company is described elsewhere in this report.

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

Security Ownership of Certain Beneficial

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Danny Bharwani

Christopher Terry

All directors and executive officers combined (21 persons)

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Washer, 150,000 shares;

Wood, 195,000 shares;

Wood, 165,000

Bharwani, 255,000 shares;

1 unchanged sentence

Robinson, 275,000 shares;

Straten, 285,000 shares.

Terry, 255,000 shares.

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

The calculation of beneficial ownership also includes,

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

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

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

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

Each “unit” in the mutual fund

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

These shares are held directly by certain Black Diamond investment

vehicles (“Black Diamond vehicles”).

The calculation of beneficial ownership also includes, in

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

contributions made to the Company’s Employee 401(k) Plan (the "401(k) Plan").

The 401(k) Plan provides an option for all

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

Each "unit" in the

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

These shares are held directly by certain Black Diamond investment vehicles ("Black Diamond vehicles").

Black Diamond Capital Management, L.L.C.

(“Black Diamond”) exercises

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

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

Deckoff is the Managing Principal of Black Diamond.

Deckoff disclaims beneficial ownership over the shares, except to the

extent of his pecuniary interest therein.

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

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

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

February 9, 2024.

Deckoff disclaims beneficial ownership over the shares, except to the extent of his pecuniary interest therein.

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.

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

Equity Compensation Plan Information

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Robinson’s notes in 2024 was $459,351.

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

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

of matured notes during the year.

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

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

The amount of principal outstanding on Ms.

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

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fiscal year 2024, Ms.

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

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

Jackson’s employment with the Company was authorized

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

on an annual basis.

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.

Jackson’s employment with the Company was authorized by the Board of Directors and her

base salary and Executive Management Bonus Plan award is reviewed and approved by the Compensation Committee on an annual basis.

Other Transactions ..

In October 2022, before

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

Schween is a member entered into a one-year contract

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

The initial approximate dollar amount involved in the transaction and

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

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

in the transaction and Mr.

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

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,

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.

interest in the transaction was $689,500.

Policy on Related Party Transactions and Director

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including the purchases by Ms.

Robinson The transactions with Mr.

Schween described above were not subject to approval because they were

entered into before Mr.

The transactions with Mr.

Schween were not subject to approval because they were entered into

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.

The nine directors of the Company are Charles

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Roberts, James E.

Walker III, Gregory

Washer, and Daniel S.

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

The Board of Directors has

concluded that other than Mr.

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

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All Other Fees

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

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

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

regulatory filings.

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

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

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

federal tax returns for the Company and its subsidiaries.

Audit fees relate to professional services rendered in connection with the audit of the Company’s annual financial statements and

internal control over financial reporting, quarterly review of financial statements included in the Company’s Quarterly Reports

on Form 10-Q, and audit services provided in connection with other statutory and regulatory filings.

Audit-related fees comprise fees for professional services that are reasonably related to the performance of the audit or review of the

Company’s financial statements.

The 2023 and 2024 tax fees represent services rendered in connection with preparation of state and federal tax returns for the Company

and its subsidiaries.

Audit Committee Supervision of Principal Accountant

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Exhibit Number

Description (“**”

(“**” indicates compensatory plan or agreement.)

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

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

Insider Trading Policy (filed herewith)

List of subsidiaries of the registrant (filed herewith)

Consent of Crowe LLP (filed herewith)

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Section 1350 certification (filed herewith)

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

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

Inline XBRL Instance Document

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Wood, Director

March 12, 2025

/s/ DENESH BHARWANI

Denesh Bharwani, Executive Vice President and Chief Financial

(Principal Accounting Officer)

INDEX TO FINANCIAL STATEMENTS

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Notes to Consolidated Financial Statements

Member Crowe Global

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

Shareholders and the Board of Directors of

Consumer Portfolio Services, Inc.

Portfolio Services, Inc.

and Subsidiaries

Las Vegas, Nevada

Opinions on the Financial Statements and Internal Control over Financial

on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated

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

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

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").

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, 2023 and 2022, and the results

of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023 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, 2023, based on criteria established in Internal Control –

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:

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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

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

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.

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 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

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.

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 Matters

The critical audit matters communicated below

are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to

the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our

especially challenging, subjective, or complex judgments.

The communication of critical audit matters 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 matters below, providing separate opinions

on the critical audit matters or on the accounts or disclosures to which they relate.

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.

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.

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.

had $2.7 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

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

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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

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:

completeness and accuracy of data

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

an auditor employed valuation specialist to assist in testing the Company’s estimate of fair value of the finance receivables.

included evaluation of certain management significant assumptions and, evaluating the appropriateness of the methodology including a recalculation

of the model.

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

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

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Accumulated other comprehensive loss

Total stockholders' equity

Total liabilities and stockholders' equity

Total shareholders’ equity

Total liabilities and shareholders’ equity

See accompanying Notes to Consolidated Financial

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE

(In thousands)

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Adjustments to reconcile net income to net cash provided by operating activities:

Accretion of deferred acquisition fees and origination costs

Net interest income accretion on fair value receivables

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Exercise of options and warrants

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Increase (decrease) in cash and cash equivalents

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Cash paid during the period for:

See accompanying Notes

to Consolidated Financial Statements.

See accompanying Notes to Consolidated Financial Statements.

CONSUMER PORTFOLIO SERVICES, INC.

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

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

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

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 %,

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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 specialize in contracts

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

manufacturers’ captive finance companies.

We are subject to various

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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.

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

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

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our portfolio of finance receivables

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

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Finance Receivables Measured at Fair Value

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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.

Anticipated credit losses

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

In accordance with the fair value accounting standards,

credit losses are included in our computation of the appropriate level yield, therefore we do not thereafter make periodic provision for

credit losses, as our best estimate of the lifetime aggregate of credit losses is included in that initial computation.

Also because we

include anticipated credit losses in our computation of the level yield, the computed level yield is materially lower than the average

contractual rate applicable to the receivables.

Because our initial recorded value is fixed as the price we pay for the receivable, rather

than as the contractual principal balance, we do not record acquisition fees as an amortizing asset related to the receivables, nor do

we capitalize costs of acquiring the receivables.

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

Allowance for Finance Credit Losses

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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

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

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.

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.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Charge Off Policy

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

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Contract Acquisition Fees and Origination Costs

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Contract balance to the line item "Other Assets" on our Consolidated Balance Sheet at its estimated fair value less costs to

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

December 31, 2023 and 2022, respectively.

Treatment of Securitizations

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to us by the Dealer.

One or more investors (the “ Noteholders ” )

purchase the Notes issued by the Trust;

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.

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:

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.

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.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our warehouse securitization

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and record as indebtedness the Notes issued in the transaction.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

We have the power to direct

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accompanying Consolidated Balance Sheets, represent fees earned but not yet remitted to us by the trustee.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Furniture and Equipment

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is included with depreciation expense on owned assets.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

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

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

The following table presents

the primary components of Other Income:

The following table presents the primary components

of Other Income:

Schedule of other income

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Other income for the period

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Earnings Per Share

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Diluted earnings per share

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Incremental shares of 1.7

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whose utilization in future periods is not more than likely.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Purchases of Company Stock

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

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Financial Covenants

Certain of our securitization

transactions, our residual interest financing 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, 2023 we were in compliance

with all such financial covenants.

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

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

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

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We have recorded a liability

1 unchanged sentence

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

Recent Accounting Pronouncements

In March 2022,

FASB issued ASU No.

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

Troubled Debt Restructurings and Vintage Disclosures.

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

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

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

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

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

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

at Amortized Cost.

The Company adopted ASU No.

2022-02 effective January 1, 2023.

Aside from the changes to the disclosures required by

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

In November 2023, the FASB issued ASU No.

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

This new standard

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

The Company is currently

evaluating the impact of ASU 2023-07;

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

on its consolidated financial statements.

In December 2023, the FASB issued ASU No.

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

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

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

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

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

have a material impact on its consolidated financial statements.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

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

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

The following table presents

the components of finance receivables, net of unearned interest:

The following table presents the components of

finance receivables, net of unearned interest:

Schedule of finance receivables

4 unchanged sentences

Finance receivables

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We consider an automobile

13 unchanged sentences

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

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Schedule of delinquency status

3 unchanged sentences

Finance receivables totaling

$ 1.1 million and $ 2 .0 million at December 31, 2023 and 2022, respectively, have been placed on non-accrual status as a result of their

delinquency status.

$ 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

Allowance for Credit Losses

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older vintages allows us to establish a reasonable and supportable forecast of less seasoned vintages.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our contract purchase guidelines

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

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

In consideration of the depth

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2015 and prior

At the adoption of CECL in 2020, the Company recorded

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

In accordance with the rules for adopting CECL, the offset to

the addition to the allowance for finance credit losses was a tax affected reduction to retained earnings using the modified retrospective

The Company recorded a reduction to provision

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

31, 2023, 2022, and 2021, respectively.

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

from better than expected credit performance for these receivables.

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.

reserve decrease was primarily due to a decrease in lifetime expected credit losses resulting from better than expected credit performance

for these receivables.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents

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Balance at end of period

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

The following table presents

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Applied against repos in inventory (net)

Excluded from finance receivables

are contracts that were previously classified as finance receivables but were reclassified as other assets because we have repossessed

the vehicle securing the Contract.

The following table presents a summary of such repossessed inventory together with the allowance for

losses on repossessed inventory:

Schedule of allowance for losses on repossessed inventory

(In thousands)

Gross balance of repossessions in inventory

Allowance for losses on repossessed inventory

Net repossessed inventory included in other assets

(4) Furniture and Equipment

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Depreciation expense totaled $ 862,000 , $ 847,000 ,

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(Dollars in thousands)

December 2024

September 2026

December 2026

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September 2028

December 2028

November 2030

February 2031

November 2031

_________________________

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

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

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

Expected payments,

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

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

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

(2) Includes repossessed assets

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

(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.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Debt issuance costs of $ 15.5

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to pay any of our other creditors.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The terms of our debt outstanding at December

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Amount Outstanding at

Subordinate Lender

(In thousands)

Interest Rate

Warehouse lines of credit

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

at December 31, 2023 and December 31 2022, respectively

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

Interest Rate

Warehouse line of

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

Warehouse line of

4.50% over a commercial paper rate (Minimum 7.50%) 8.90% and 9.63% at December 31 2024, and December 31 2023, respectively

Residual interest

Subordinated renewable

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

Residual interest financing

Subordinated renewable notes

Weighted average rate of 8.45 % and 7.82 % at December

31, 2023 and December 31, 2022, respectively

Weighted average maturity of February 2026 and October

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

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Debt issuance costs of $ 4.3

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

These debt issuance

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

Consolidated Balance Sheets.

million and $ 599,000 as of December 31, 2024 and December 31, 2023, respectively, have been excluded from the table above.

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

on our Consolidated Balance Sheets.

On May 11, 2012, we entered

2 unchanged sentences

purchase price of automobile contracts by borrowing from a credit facility to our consolidated subsidiary Page Eight Funding, LLC.

facility provides for effective advances up to 86.0% 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 one-month SOFR plus 3.00% per annum, with a minimum rate of 3.75% per

annum and during the amortization period at a per annum rate equal to one-month SOFR plus 4.00% per annum, with a minimum rate of 4.75%

The Class B loans under the facility generally accrue interest during the revolving period at a per annum rate equal to 8.50%

per annum and during the amortization period at a per annum rate equal to 9.50% per annum.

In July 2022, we renewed our two-year revolving

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

This facility was amended to extend

the revolving period to July 2024 and to include an amortization period through July 2025 for any receivables pledged to the facility

at the end of the revolving period.

July 15, 2022, we renewed our two-year revolving credit agreement with Citibank, N.A., and doubled the capacity from $100 million to $200

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.

9 unchanged sentences

from $100 million to $200 million.

This facility was amended to extend the revolving period to

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

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

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

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

8 unchanged sentences

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.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The agreed valuation of the

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

collateral for the 2021-1 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

1 unchanged sentence

On each monthly payment

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

minimum collateral ratio.

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

3 unchanged sentences

on our Consolidated Balance Sheets.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

We must comply with certain

19 unchanged sentences

subscription rights and there are no redemption or sinking fund provisions applicable to the common stock.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock Purchases

2 unchanged sentences

shares of our common stock at an average price of $ 8.73 .

In January, March, and July 2022 our board of directors authorized the repurchase of up to $ 35 .0

In April 2024 our board of directors authorized the repurchase of an additional $ 10

million of our common stock.

10 unchanged sentences

Total stock purchases

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Options and Warrants

11 unchanged sentences

vesting generally over 4-5 years.

There were no stock

options granted during the year ended December 31, 2023.

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

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

respectively.

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

the following table.

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 %

for 2022, and 79 %

The volatility estimate is based on the historical and implied volatility

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

Volatility assumptions ranged from 75 %

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

Treasury bond with a maturity comparable to the expected life of

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

Schedule of assumptions for stock options

Year Ended December 31,

Expected life (years)

1 unchanged sentence

Expected dividend yield

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December

3 unchanged sentences

At December 31, 2024 and

options outstanding had intrinsic values of $ 8.1 million and $ 11.2 million , respectively.

At December 31, 2023 and 2022, options exercisable

had intrinsic values of $ 6.1 million and $ 7.8 million , respectively.

The total intrinsic value of options exercised was $ 14.5 million

and $ 23.4 million for the years ended December 31, 2023 and 2022, respectively.

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 2023 and cash of $ 16.6 million was received.

At December 31, 2023, there were a total of 2,684,000 additional

shares available for grant under the 2006 Plan.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

the year ended December 2024 for a total price of $ 6.9

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

22 unchanged sentences

$10.00 - $10.99

$7.00 - $7.99

$10.00 - $10.99

We did not issue any stock options with an exercise

price above or below the market price of the stock on the grant date for the years ended December 31, 2024, 2023 and 2022.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8) Interest Income and Interest Expense

8 unchanged sentences

Interest income

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

The following table presents the components of

18 unchanged sentences

Income tax expense

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income tax expense for the

12 unchanged sentences

Income tax expense

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

The tax effected cumulative

7 unchanged sentences

Built in losses

Pension accrual

Stock compensation

2 unchanged sentences

Deferred Tax Liabilities:

Finance receivables

Deferred loan costs

Pension accrual

3 unchanged sentences

Net deferred tax asset

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We acquired certain net operating

12 unchanged sentences

in which net operating losses might otherwise expire.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Deferred tax assets are recognized

6 unchanged sentences

likely than not based on forecasted future net earnings.

Our net deferred tax asset of $3.7 million consists of approximately $ 2.3 million

federal deferred tax assets and $ 1.4 million of net state deferred tax assets.

Our net deferred tax asset of $1.0 million consists of approximately $ 479,000

federal deferred tax assets and $ 530,000 of net state deferred tax assets.

As of December 31, 2024, we

33 unchanged sentences

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

The following table presents

the supplemental balance sheet information related to leases:

Supplemental balance sheet information related to leases

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

(In thousands)

12 unchanged sentences

Finance lease

Maturities of lease liabilities were as follows:

schedule of maturities of leases

Maturities of lease liabilities were as

Schedule of maturities of lease

(In thousands)

5 unchanged sentences

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

The following table presents

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

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

4 unchanged sentences

Total lease cost

The following table presents

the supplemental cash flow information related to leases:

Schedule of supplemental cash flow information

related to leases

The following table presents the supplemental cash

flow information related to leases:

Schedule of supplemental cash

flow information related to leases

Year Ended December 31,

5 unchanged sentences

Legal Proceedings

Consumer Litigation.

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

discontinued.

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

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

For the most part, we have legal and factual defenses

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

Following our filing of a

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

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

obligors whose vehicles we had repossessed.

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

and attorney fees and interest.

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

on an individual basis, not a class basis.

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

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

It is reasonable to expect that resolution

of these claims will be on a class basis.

Wage and Hour Claim.

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

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

other employee protective provisions of California and federal law.

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

damages, and attorney fees and interest.

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

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

In August 2023,

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

subject to final court approval.

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.

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.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Massachusetts Civil Investigative

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

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

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

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

noncompliance with Massachusetts law.

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

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

of investigation.

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

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

We record at each measurement date, most recently as

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

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

However, based on such information as is available

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

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accordingly, we believe that

15 unchanged sentences

The Plan benefits were frozen on June 30, 2001.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

The following tables represents

17 unchanged sentences

Funded Status at end of year

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Additional Information

1 unchanged sentence

benefit obligations and cost at December 31, 2024 and 2023 were as follows:

Schedule of weighted average assumptions used to determine pension benefit obligations

Schedule of weighted average assumptions used to determine

benefit obligations

Weighted average assumptions used to determine benefit obligations

3 unchanged sentences

Expected return on plan assets

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Our overall expected long-term rate of return

on assets is 7.00 %

Our overall expected long-term

rate of return on assets is 6.75 %

per annum as of December 31, 2024.

21 unchanged sentences

Net amount recognized in other comprehensive loss (income)

The estimated net gain that

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

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

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

Schedule of weighted average asset allocation of our pension

Weighted Average Asset Allocation at Year-End

3 unchanged sentences

Cash and cash equivalents

Our investment policies

and strategies for the pension benefits plan utilize a target allocation of 75% equity securities and 25% fixed income securities (excluding

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).

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

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

Schedule of fair value of plan assets

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

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(12) Fair Value Measurements

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The table below compares the fair values of these

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(In thousands)

Finance receivables measured at fair value

Discount rate

Finance receivables measured at fair value

Cumulative net losses

The following table summarizes the delinquency

status using the contractual balance of these finance receivables measured at fair value as of December 31, 2023 and December 31, 2022:

Schedule of delinquency status of finance receivables measured at fair value

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

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

(In thousands)

2 unchanged sentences

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Repossessed vehicle inventory,

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

actual loss experience on sale of repossessed vehicles.

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

in inventory totaled $ 597,000 .

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

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

The fair value and carrying amount of the

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

There were no transfers in

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and liabilities at December 31, 2024 and 2023, were as follows:

Schedule of fair values of financial assets and liabilities

Schedule of fair values of financial assets and

As of December 31, 2024

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Subordinated renewable notes

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

As of December 31, 2023

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Subordinated renewable notes

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

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

The weighted average yield

The weighted average coupon

on the notes is approximately 5.88%.

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

What changed 10-K

Item 9A. Controls and Procedures