What changed in this filing

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Item 1. Financial Statements

2025-05-12 compared with 2024-11-07 · 283 added, 351 removed, 642 unchanged (50% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30,

Cash and cash equivalents

23 unchanged sentences

authorized 75,000,000 shares;

21,405,198 and 21,174,856 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

21,503,198 and 21,432,698 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Retained earnings

10 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Interest income

18 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Other comprehensive income/(loss);

8 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

13 unchanged sentences

Purchases of finance receivables measured at fair value

( 1,195,886 )

Payments received on finance receivables at fair value

18 unchanged sentences

Cash paid during the period for:

Non-cash financing activities:

Right-of-use asset, net

Lease liability

Deferred office rent

See accompanying Notes to Unaudited Condensed

5 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Common Stock (Shares Outstanding)

18 unchanged sentences

Total Shareholders' Equity

See accompanying Notes to Unaudited Condensed

Consolidated Financial Statements.

See accompanying Notes to

Unaudited Condensed Consolidated Financial Statements.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(1) Summary of Significant Accounting Policies

20 unchanged sentences

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

Results for the nine-month period ended September 30, 2024 are not necessarily

Results for the three-month period ended March 31, 2025, are not necessarily

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

25 unchanged sentences

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

We re-evaluate the fair value of such receivables

14 unchanged sentences

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

The following

table presents the primary components of Other Income for the three-month and nine-month periods ending September 30, 2024 and 2023:

The following table presents the primary components

of Other Income for the three-month periods ending March 31, 2025, and 2024:

Schedule of other income

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Origination and servicing fees from third party receivables

12 unchanged sentences

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The following table presents

1 unchanged sentence

Schedule of supplemental balance sheet information related to leases

September 30,

(In thousands)

16 unchanged sentences

Year Ending December 31,

2024 (excluding the nine months ended September 30, 2024)

2025 (excluding the three months ended March 31, 2025)

Total undiscounted lease payments

3 unchanged sentences

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The following table presents

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Operating lease cost

5 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

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

(In thousands)

Operating cash flows from operating leases

5 unchanged sentences

Compensation”.

For the three and nine months ended September

30, 2024, we recorded stock-based compensation costs in the amount of $ 727,000 and $ 2.4 million, respectively.

These stock-based compensation

costs were $ 816,000 and $ 2.6 million for the three and nine months ended September 30, 2023.

As of September 30, 2024, unrecognized stock-based

compensation costs to be recognized over future periods equaled $ 3.7 million.

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

period of 1.3 years.

For the three months ended March 31, 2025, and

2024, we recorded stock-based compensation costs in the amount of $ 717,000 and $ 832,000 , respectively.

As of March 31, 2025, unrecognized

stock-based compensation costs to be recognized over future periods equaled $ 2.3 million.

This amount will be recognized as expense over

a weighted-average period of 0.8 years.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The following represents stock option activity

for the nine months ended September 30, 2024:

for the three months ended March 31, 2025:

Schedule of stock option activity

6 unchanged sentences

The following table presents the price distribution

of stock options outstanding and exercisable for the years ended September 30, 2024 and December 31, 2023:

of stock options outstanding and exercisable for the years ended March 31, 2025 and December 31, 2024:

Schedule of price distribution of stock options outstanding and exercisable

1 unchanged sentence

Number of shares as of

September 30, 2024

March 31, 2025

December 31, 2024

Range of exercise prices:

(In thousands)

Range of exercise prices:

$2.00 - $2.99

2 unchanged sentences

$10.00 - $10.99

At September 30, 2024 the aggregate intrinsic

value of options outstanding and exercisable was $ 25.9 million and $ 24.6 million, respectively.

There were 1.7 million options exercised

for the nine months ended September 30, 2024 compared to 2.8 million for the comparable period in 2023.

The total intrinsic value of options

exercised was $ 8 .0 million and $ 13.5 million for the nine-month periods ended September 30, 2024 and 2023.

There were 2,954,000 shares

available for future stock option grants under existing plans as of September 30, 2024.

At March 31, 2025, the aggregate intrinsic value

of options outstanding and exercisable was $ 22.2 million and $ 21.1 million, respectively.

There were 70,000 options exercised for the

three months ended March 31, 2025, compared to 180,000 for the comparable period in 2024.

The total intrinsic value of options exercised

was $ 390,000 and $ 716,000 for the three-month periods ended March 31, 2025, and 2024.

There were 2,984,000 shares available for future

stock option grants under existing plans as of March 31, 2025.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Purchases of Company Stock

The table below describes the purchase of our

common stock for the nine-month ended September 30, 2024 and 2023:

common stock for the three months ended March 31, 2025, and 2024:

Schedule of purchase of our common stock

Nine Months Ended

September 30, 2024

September 30, 2023

Three Months Ended

March 31, 2025

March 31, 2024

Open market purchases

10 unchanged sentences

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

As of September 30, 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.

As of March 31, 2025, 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

4 unchanged sentences

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU No.

"Segment Reporting (Topic 280)," which is intended to enhance the disclosures on reportable segments.

This new standard will

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

The Company is currently evaluating

the impact of ASU 2023-07;

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

financial statements.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

In December 2023, the FASB issued ASU No.

5 unchanged sentences

have a material impact on its consolidated financial statements.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(2) Finance Receivables

26 unchanged sentences

The following table summarizes the delinquency status of finance

receivables as of September 30, 2024 and December 31, 2023:

receivables as of March 31, 2025, and December 31, 2024:

Schedule of delinquency status of finance receivables

September 30,

Delinquency Status

(In thousands)

Finance receivables totaling

$ 175,000 and $ 271,000 at March 31, 2025, and December 31, 2024, respectively, have been placed on non-accrual status as a result of their

delinquency status.

Finance receivables totaling $ 371,000 and $ 1.1

million at September 30, 2024 and December 31, 2023, respectively, have been placed on non-accrual status as a result of their delinquency

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Allowance for Credit Losses

9 unchanged sentences

of origination, to forecast expected losses for less seasoned quarterly vintage pools.

We measure the weighted average monthly

incremental change in cumulative net losses for the vintage pools in the relevant historical period.

For the pools in the relevant historical

period, we consider each pool’s performance from its inception through the end of the current period.

We then apply the results

of the historical analysis to less seasoned vintage pools beginning with each vintage pool’s most recent actual cumulative net

loss experience and extrapolating from that point based on the historical data.

We believe the pattern and magnitude of losses on older

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

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

We measure the weighted average

monthly incremental change in cumulative net losses for the vintage pools in the relevant historical period.

For the pools in the relevant

historical period, we consider each pool’s performance from its inception through the end of the current period.

We then apply the

results of the historical analysis to less seasoned vintage pools beginning with each vintage pool’s most recent actual cumulative

net loss experience and extrapolating from that point based on the historical data.

We believe the pattern and magnitude of losses on

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

Our contract purchase guidelines

19 unchanged sentences

factors into our estimates.

The following table presents the amortized cost

basis of our finance receivables by annual vintage as of September 30, 2024 and December 31, 2023.

The following table presents

the amortized cost basis of our finance receivables by annual vintage as of March 31, 2025, and December 31, 2024:

Schedule of finance receivables by annual vintage

September 30,

(In thousands)

1 unchanged sentence

2015 and prior

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The following table presents a summary of the

activity for the allowance for finance credit losses for the three-month and nine-month periods ended September 30, 2024 and 2023:

The following table presents

a summary of the activity for the allowance for finance credit losses for the three-month periods ended March 31, 2025, and 2024:

Schedule of allowance for finance credit losses

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Balance at beginning of period

1 unchanged sentence

Balance at end of period

The following table presents the gross charge-offs

by year of origination of our finance receivables for the three-month and nine-month ended September 30, 2024 and 2023:

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The following table presents

the gross charge-offs by year of origination of our finance receivables for the three-month periods ended March 31, 2025, and 2024:

Schedule of gross charge-off

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Annual Vintage Pool

1 unchanged sentence

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 in

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

Schedule of allowance for losses in repossessed inventory

September 30,

(In thousands)

Gross balance of repossessions in inventory

Allowance for losses on repossessed inventory

Net repossessed inventory included in other assets

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

(3) Securitization Trust Debt

We have completed many securitization transactions

that are structured as secured borrowings for financial accounting purposes.

The debt issued in these transactions is shown on our Unaudited

Condensed Consolidated Balance Sheets as “Securitization trust debt,” and the components of such debt are summarized in the

following table:

We have completed many

securitization transactions that are structured as secured borrowings for financial accounting purposes.

The debt issued in these transactions

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

debt are summarized in the following table:

Schedule of securitization trust debt

1 unchanged sentence

Interest Rate at

September 30,

(Dollars in thousands)

September 2026

December 2026

November 2027

5 unchanged sentences

_________________

(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 $ 262.7 million in 2024, $ 1,003.5 million in 2025, $ 686.9 million in 2026, $ 460.9 million in 2027, $ 288.5 million in 2028, $ 134.8 million

in 2029, and $ 38.5 million in 2030.

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

Balance Sheet.

(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 $ 810.2 million in 2025, $ 810.4

million in 2026, $ 548.7 million in 2027, $ 329.7 million in 2028, $ 171.8 million in 2029, $ 70.7

million in 2030, and $ 1.7 million in 2031.

(2) Includes repossessed assets that are included in Other

assets on our Unaudited Condensed Consolidated Balance Sheet.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Debt issuance costs of $ 16 .0

million and $ 14.6 million as of September 30, 2024 and December 31, 2023, respectively, have been excluded from the table above.

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

million and $ 15.5 million as of March 31, 2025, and December 31, 2024, respectively, have been excluded from the table above.

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

All of the securitization trust

2 unchanged sentences

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

The terms of the securitization

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

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

of liquidity and not exceed maximum leverage levels.

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

The terms of the various securitization

agreements related to the issuance of the securitization trust debt require that certain delinquency and credit loss criteria be met with

respect to the collateral pool, and require that we maintain minimum levels of liquidity and net worth and not exceed maximum leverage

We were in compliance with all such covenants as of March 31, 2025.

We are responsible for the administration

and collection of the automobile contracts.

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

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

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

As of September 30, 2024, restricted cash under the

various agreements totaled approximately $271.0 million.

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

of interest plus amortization of additional costs of borrowing.

Additional costs of borrowing include facility fees, amortization of deferred

financing costs and discounts on notes sold.

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

debt are amortized using a level yield method.

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

rate of interest disclosed above.

and collection of the contracts.

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

additional credit enhancement for the Notes or to be applied to make payments on the securitization trust debt.

As of March 31, 2025,

restricted cash under the various agreements totaled approximately $ 153.6 million.

Interest expense on the securitization trust debt is

composed of the stated rate of interest plus amortization of additional costs of borrowing.

Additional costs of borrowing include facility

fees, insurance premiums, amortization of deferred financing costs, and amortization of discounts required on the notes at the time of

Deferred financing costs related to the securitization trust debt are amortized using the interest method.

Accordingly, the

effective cost of borrowing of the securitization trust debt is greater than the stated rate of interest.

Our wholly-owned, bankruptcy remote subsidiaries

1 unchanged sentence

Similar bankruptcy remote subsidiaries issue the debt outstanding

under our credit facilities.

Bankruptcy remote refers to a legal structure in which it is expected that the applicable entity would not

be included in any bankruptcy filing by its parent or affiliates.

under our warehouse line of credit.

Bankruptcy remote refers to a legal structure in which it is expected that the applicable entity would

not be included in any bankruptcy filing by its parent or affiliates.

All of the assets of these subsidiaries have been pledged as collateral

2 unchanged sentences

other purposes, including legal and bankruptcy purposes.

None of the assets of these subsidiaries are available to pay other creditors.

None of the assets of these subsidiaries are available to pay any of our other

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The terms and amounts of our other debt outstanding

at September 30, 2024 and December 31, 2023 are summarized below:

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The terms and amounts of

our other debt outstanding at March 31, 2025, and December 31, 2024, are summarized below:

Schedule of debt outstanding

Amount Outstanding at

September 30,

(In thousands)

Interest Rate

Subordinate Lender

Interest Rate

Warehouse lines of credit

3.00% over CP yield rate (Minimum 3.75%) 8.27% and 8.58% at September 30, 2024 and December 31 2023, respectively

4.50% over a commercial paper rate (Minimum 7.50%) 9.60% and 9.63% at September 30 2024, and December 31 2023, respectively

3.00% over CP yield rate (Minimum 3.75%) 7.38% and 7.52% at March 31, 2025 and December 31 2024, respectively

6.40% over SOFR yield rate (Minimum 7.15%) 10.95% and 11.09% at March 31, 2025 and December 31, 2024, respectively

Warehouse lines of credit

4.50% over a commercial paper rate (Minimum 7.50%) 8.82% and 8.90% at March 31 2025, and December 31 2024, respectively

Residual interest financing

Subordinated renewable notes

Weighted average rate of 9.22 % and 8.45 % at September 30, 2024 and December 31, 2023, respectively

Weighted average maturity of October 2026 and February 2026 at September 30, 2024 and December 31,

2023, respectively

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

million revolving credit agreement with Citibank, N.A.

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

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

Weighted average rate of 9.18 % and 9.24 % at March 31, 2025 and December 31, 2024, respectively

Weighted average maturity of April 2027 and December 2026 at March 31, 2025 and December 31, 2024, respectively

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

On March 20, 2025, we completed a $ 65 million

securitization of residual interests from previously issued securitizations.

In the transaction, a qualified institutional buyer purchased

$ 65 .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 October 2023 through September 2024.

The sold notes (“2025-1 Notes”), issued by CPS Auto Securitization Trust

2025-1, consist of a single class with a coupon of 11.00%.

At March 31, 2025, there was $ 65 .0 million outstanding under this facility.

On December 19, 2024, we increased the capacity

of our revolving credit agreement with Citibank, N.A., to $ 335 million.

This follows the November 2024 closing of a revolving credit agreement

with Oaktree Capital Management, which is subordinate to our credit agreement with Citibank, N.A.

The facility provides effective advances

up to 10.00% of eligible finance receivables, effectively increasing the advance rate up to 95% across the facility for eligible receivables.

The revolving credit agreement with Citibank, N.A.

was last renewed in July 2024, extending the maturity date to July 2026 followed by

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

There was $ 280.4 million outstanding

under this facility at September 30, 2024.

under this facility at March 31, 2025.

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

2 unchanged sentences

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

There was no amount outstanding

under this facility at September 30, 2024.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

There was $ 89 .0 million outstanding

under this facility at March 31, 2025.

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

5 unchanged sentences

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

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

Unamortized debt issuance costs of $ 873,000 and

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

At March 31, 2025, there was $ 50 .0 million outstanding under this facility.

On June 30, 2021, we completed a $ 50 million securitization

of residual interests from previously issued securitizations.

In this residual interest financing transaction, qualified institutional

buyers purchased $ 50 .0 million of asset-backed notes secured by residual interests in eleven CPS securitizations consecutively issued

from January 2018 and September 2020.

The sold notes (“2021-1 Notes”), issued by CPS Auto Securitization Trust 2021-1, consist

of a single class with a coupon of 7.86%.

At March 31, 2025, there was $ 50 .0 million outstanding under this facility

Unamortized debt issuance costs of $ 1.6 million

and $ 824,000 as of March 31, 2025, and December 31, 2024, respectively, have been excluded from the amount reported above for residual

interest financing.

Similarly, unamortized debt issuance costs of $ 3.3 million and $ 599,000 as of September 30, 2024 and December 31,

Similarly, unamortized debt issuance costs of $ 3.7 million and $ 4.3 million as of March 31, 2025, and December 31,

2024, respectively, have been excluded from the Warehouse lines of credit amounts in the table above.

1 unchanged sentence

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

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(5) Interest Income and Interest Expense

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Interest on finance receivables

6 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Securitization trust debt

3 unchanged sentences

Interest expense

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

(6) Earnings Per Share

Earnings per share for the three-month and nine-month

periods ended September 30, 2024 and 2023 were calculated using the weighted average number of shares outstanding for the related period.

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

and nine-month periods ended September 30, 2024 and 2023:

Earnings per share for

the three-month periods ended March 31, 2025, and 2024 were calculated using the weighted average number of shares outstanding

for the related period.

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

per share for the three-month periods ended March 31, 2025, and 2024:

Schedule of earnings per share

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

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

1 unchanged sentence

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

If the anti-dilutive effects

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

periods ended September 30, 2024 would have included an additional 1.6 million and 1.7 million shares, respectively, attributable to the

exercise of outstanding options and warrants.

For the three-month and nine-month periods ended September 30, 2023, 1.5 million shares,

would be included in the diluted earnings per share calculation.

If the anti-dilutive

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

months ended March 31, 2025, would have included an additional 1.4

million shares attributable to the exercise of outstanding options and warrants.

For the three

months ended March 31, 2024, 1.7

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

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(7) Income Taxes

3 unchanged sentences

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

As of September 30, 2024 and

As of March 31, 2025, and

December 31, 2024, we had no unrecognized tax benefits for uncertain tax positions.

1 unchanged sentence

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

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The Company and its subsidiaries

13 unchanged sentences

Although realization

is not assured, we believe that the realization of the recognized net deferred tax asset of $ 1.6 million as of September 30, 2024 is more

likely than not based on forecasted future net earnings.

Our net deferred tax asset of $ 1.6 million consists of approximately $ 667,000

is not assured, we believe that the realization of the recognized net deferred tax asset of $ 826,000 as of March 31, 2025, is more likely

than not based on forecasted future net earnings.

Our net deferred tax asset of $ 826,000 consists of approximately $ 338,000 of net U.S.

federal deferred tax assets and $ 488,000 of net state deferred tax assets.

Income tax expense was $ 2.1

million and $ 6 .0 million for the three months and nine months ended September 30, 2024, representing effective income tax rates of 30 %,

compared to income tax expense of $ 3.8 million and $ 13.1 million for the three months and nine months ended September 30, 2023, and representing

effective income tax rates of 27 % and 26 % respectively.

million for the three months ended March 31, 2025, representing effective income tax rates of 31 %, compared to income tax expense of $ 2 .0

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

(8) Legal Proceedings

1 unchanged sentence

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.

the most part, we have legal and factual defenses to consumer claims, which we routinely contest or settle (for immaterial amounts) depending

Consumers can and do initiate lawsuits against us alleging violations of law

applicable to collection of receivables, and such lawsuits sometimes allege that resolution as a class action is appropriate.

most part, we have legal and factual defenses to consumer claims, which we routinely contest or settle (for immaterial amounts) depending

on the particular circumstances of each case.

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without opinion.

In April 2024, a motion for certification of a class was filed but has not been ruled upon.

It is reasonable to expect

that resolution of these claims will be on a class basis.

and Hour Claim .

On September 24, 2018, a former employee filed a lawsuit against us in the Superior Court

of Orange County, California, alleging that we incorrectly classified our sales representatives as outside salespersons exempt from overtime

wages, mandatory break periods and certain other employee protective provisions of California and federal law.

The complaint seeks injunctive

relief, an award of unpaid wages, liquidated damages, and attorney fees and interest.

The plaintiff purports to act on behalf of a class

of similarly situated employees and ex-employees.

We believe that our compensation practices with respect to our sales representatives

are compliant with applicable law.

In August 2023, the parties settled by agreement the claims of the plaintiff and a California settlement

class for $1.1 million.

The settlement was approved by the court on October 9, 2024.

Under the settlement, the Company paid, after September

30, 2024, $ 1.1 million to the settlement administrator.

In 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 we filed a cross appeal of the denial of the motion to compel arbitration on October 31, 2024.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

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

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

including the matters identified above.

at each measurement date, most recently as of March 31, 2025, 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.

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

30, 2024 is $ 2.3 million, and that the range of reasonably possible losses for the legal proceedings and contingencies we face, including

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

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 March 31, 2025, does not exceed $ 3.2 million.

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

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

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

For the quarter ended September

For the quarter ended March

31, 2025, the Company evaluated the appropriate fair value and future earnings rate of existing receivables compared to recently acquired

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and did not record a mark down to that portfolio.

The table below presents a reconciliation of

the finance receivables measured at fair value on a recurring basis using significant unobservable inputs:

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The table below presents

a reconciliation of the finance receivables measured at fair value on a recurring basis using significant unobservable inputs:

Schedule of reconciliation of the finance receivables measured at fair value on a recurring basis

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Balance at beginning of period

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Balance at end of period

The table below compares the fair values of these

finance receivables to their contractual balances for the periods shown:

The table below compares

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

Schedule of finance receivables to their contractual balances

September 30, 2024

March 31, 2025

December 31, 2024

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Finance receivables measured at fair value

The following

table provides certain qualitative information about our level 3 fair value measurements:

The following table provides

certain qualitative information about our level 3 fair value measurements:

Schedule of level 3 fair value measurements

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Fair Values as of

Weighted Avg.

September 30,

Unobservable Inputs

(In thousands)

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AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The following table summarizes the delinquency

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

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The following table summarizes

the delinquency status of these finance receivables measured at fair value as of March 31, 2025 and December 31, 2024:

Schedule of delinquency status of finance receivables measured at fair value

September 30,

(In thousands)

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There were no transfers in

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

The estimated fair values of financial assets

and liabilities at September 30, 2024 and December 31, 2023, were as follows:

or out of level 1, level 2 or level 3 assets and liabilities for the three months ended March 31, 2025, and 2024.

The estimated fair values

of financial assets and liabilities at March 31, 2025, and December 31, 2024, were as follows:

Schedule of fair values of financial assets and liabilities

As of September 30, 2024

As of March 31, 2025

Financial Instrument

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AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

As of December 31, 2024

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Subordinated renewable notes

10) Business Segment

The company has one reportable

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.

Within the Company’s one

reportable segment, it provides indirect vehicle financing to motor vehicle dealer’s less credit- worthy borrowers.

The Company’s

revenue primarily consists of interest income and is derived from the interest recorded on contracts the Company has purchased, The revenue

generated from any individual borrower is deemed to be immaterial.

(11) Subsequent Events

On November 1, 2024, we amended

our revolving credit agreement with Citibank, N.A., to add a subordinate third party lender that increases the rate at which we receive

advances secured by automobile contracts pledged to this credit facility.

The amendment allows us to advance up to 96% of the purchase

price of the automobile contracts.

This amendment also increases the capacity for this facility from $200 million to $225 million.

On May 12, 2025, we executed

our second securitization of 2025.

In the transaction, qualified institutional buyers purchased $419.95 million of asset-backed notes

secured by $439.29 million in automobile receivables originated by CPS.

The sold notes, issued by CPS Auto Receivables Trust 2025-B, consist

of five classes.

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

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

The weighted average yield

on the notes is approximately 5.96%.

Cautionary Note Regarding

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· charge-offs and recovery rates;

the willingness

or ability of obligors to pay pursuant to contractual terms;

our ability to enforce

rights under contracts;

our ability to and

rates at which we plan to acquire automobile contracts;

the anticipated

levels of recoveries upon sale of repossessed vehicles;

· the willingness or ability of obligors to pay pursuant to contractual terms;

· our ability to enforce rights under contracts;

· our ability to and rates at which we plan to acquire automobile contracts;

· the anticipated levels of recoveries upon sale of repossessed vehicles;

· revenues or expenses;

provisions for credit

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

expected industry

and general economic trends;

accrued losses for

legal contingencies;

anticipated deferred

estimates of taxable

our ability to service

and repay our debt;

the structuring

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

the effect of the

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

securitization structure.

· provisions for credit losses;

· expected industry and general economic trends;

· accrued losses for legal contingencies;

· anticipated deferred tax assets;

· estimates of taxable income;

· our ability to service and repay our debt;

· the structuring of securitization transactions as secured financings and the effects of such structures

on financial items and future profitability;

· the effect of the change in structure on our profitability and the duration of the period in which our

profitability would be affected by the change in securitization structure.

Our actual results, performance

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

unexpected exogenous

events, such as a widespread public health emergency;

mandates imposed

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

changes in general

economic conditions;

changes in performance

of our automobile contracts;

increases in interest

our ability to generate

sufficient operating and financing cash flows;

the level of losses

incurred on contracts in our managed portfolio;

adverse decisions

by courts or regulators;

regulatory changes

with respect to consumer finance;

changes in the market

for used vehicles;

levels of cash releases

from existing pools of contracts;

the terms on which

we are able to finance contract purchases;

the willingness

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

the terms on which

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

any breach in the

security of our systems;

such other factors

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

· unexpected exogenous events, such as a widespread public health emergency;

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

· changes in general economic conditions;

· changes in performance of our automobile contracts;

· increases in interest rates;

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

· competition;

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

· adverse decisions by courts or regulators;

· regulatory changes with respect to consumer finance;

· changes in the market for used vehicles;

· levels of cash releases from existing pools of contracts;

· the terms on which we are able to finance contract purchases;

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

· the terms on which we are able to complete term securitizations once contracts are acquired;

· any breach in the security of our systems;

· such other factors as discussed through the “Risk Factors” section of this report.

Forward-looking statements

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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-Q

Item 1. Financial Statements