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Item 1. Financial Statements

2025-08-11 compared with 2025-05-12 · 271 added, 270 removed, 655 unchanged (45% of the section changed)

7 unchanged sentences

Finance receivables measured at fair value

Finance receivables

Allowance for finance credit losses

Finance receivables, net

Furniture and equipment, net

Deferred tax assets, net

LIABILITIES AND SHAREHOLDERS' EQUITY

15 unchanged sentences

authorized 75,000,000 shares;

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

22,224,186 and 21,432,698 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

Retained earnings

10 unchanged sentences

Three Months Ended

Six Months Ended

Interest income

18 unchanged sentences

Three Months Ended

Six Months Ended

Other comprehensive income/(loss);

3 unchanged sentences

Consolidated Financial Statements.

CONSUMER PORTFOLIO SERVICES, INC.

PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS

UNAUDITED CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

40 unchanged sentences

Three Months Ended

Six Months Ended

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 STATEMENTS

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

(1) Summary of Significant Accounting Policies

20 unchanged sentences

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

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.

Results for the six-month period ended June 30, 2025 are not necessarily indicative

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

Certain information and footnote disclosures normally

24 unchanged sentences

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

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 periods ending March 31, 2025, and 2024:

The following

table presents the primary components of Other Income for the three-month and six-month periods ending June 30, 2025 and 2024:

Schedule of other income

Three Months Ended

Six Months Ended

(In thousands)

Origination and servicing fees from third party receivables

12 unchanged sentences

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The following table presents

19 unchanged sentences

Year Ending December 31,

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

2025 (excluding the six months ended June 30, 2025)

Total undiscounted lease payments

3 unchanged sentences

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The following table presents

2 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

Operating lease cost

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Three Months Ended

Six Months Ended

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

(In thousands)

Operating cash flows from operating leases

5 unchanged sentences

Compensation”.

For the three months ended March 31, 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 STATEMENTS

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

For the three and six months ended June 30, 2025,

we recorded stock-based compensation costs in the amount of $ 645,000 and $ 1.4 million, respectively.

These stock-based compensation costs

were $ 809,000 and $ 1.6 million for the three and six months ended June 30, 2024.

As of June 30, 2025, unrecognized stock-based compensation

costs to be recognized over future periods equaled $ 1.6 million.

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

of 0.5 years.

The following represents stock option activity

for the three months ended March 31, 2025:

for the six months ended June 30, 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 March 31, 2025 and December 31, 2024:

of stock options outstanding and exercisable as of June 30, 2025 and December 31, 2024:

Schedule of price distribution of stock options outstanding and exercisable

1 unchanged sentence

Number of shares as of

March 31, 2025

June 30, 2025

December 31, 2024

6 unchanged sentences

$10.00 - $10.99

At March 31, 2025, the aggregate intrinsic value

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

At June 30, 2025, the aggregate intrinsic value

of options outstanding and exercisable was $ 19.8 million and $ 18.4 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.

There were $ 1.3 million options exercised for

the six months ended June 30, 2025, compared to $ 1.4 million 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.

was $ 8.2 million and $ 6.2 million for the six-month periods ended June 30, 2025, and 2024.

There were 2,931,000 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 STATEMENTS

stock option grants under existing plans as of June 30, 2025.

Purchases of Company Stock

The table below describes the purchase of our

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

Schedule of purchase of our common stock

Three Months Ended

March 31, 2025

March 31, 2024

common stock for the six months ended June 30, 2025, and 2024:

Schedule of purchase of our

Six Months Ended

June 30, 2025

June 30, 2024

Open market purchases

6 unchanged sentences

Financial Covenants

Certain of our securitization

transactions, our warehouse credit facilities and our residual interest financing contain various financial covenants requiring minimum

financial ratios and results.

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

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.

Certain of our securitization transactions, our

warehouse credit facilities and our residual interest financing contain various financial covenants requiring minimum financial ratios

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

As of June 30, 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

We are routinely involved

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

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

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

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

continuing and discontinued.

Our legal counsel has advised us on such matters where, based on information available at the time of this

report, there is an indication that it is both probable that a liability has been incurred and the amount of the loss can be reasonably

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Recent Accounting Pronouncements

6 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,

Our portfolio of finance receivables,

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

a portfolio basis according to delinquency status.

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

on a portfolio basis according to delinquency status.

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

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

average for the portfolio.

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

the average for the portfolio.

We report delinquency on a contractual basis.

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

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

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

In January 2018 the Company

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

Finance receivables measured at fair value are

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

We consider an automobile contract delinquent

when an obligor fails to make at least 90% of a contractually due payment by the following due date, which date may have been extended

within limits specified in the servicing agreements.

The period of delinquency is based on the number of days payments are contractually

past due, as extended where applicable.

Once a contract becomes greater than 90 days delinquent,

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

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

to principal reduction.

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

Finance receivables,

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

The following

table presents the components of Finance Receivables, net of allowance for finance credit losses:

Schedule of components of finance receivables

(In thousands)

Finance receivables

Allowance for finance credit losses

Finance receivables, net

We consider an automobile

contract delinquent when an obligor fails to make at least 90% of a contractually due payment by the following due date, which date may

have been extended within limits specified in the servicing agreements.

The period of delinquency is based on the number of days payments

are contractually past due, as extended where applicable.

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

circumstances we will grant obligors one-month payment extensions.

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

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

In certain limited cases, a two-month extension may

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

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

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

In certain limited cases, a two-month extension

may be granted.

There are no other concessions, such as a reduction in interest rate, forgiveness of principal or of accrued interest.

we consider such extensions to be insignificant delays in payments.

The following table summarizes the delinquency status of finance

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

Accordingly, we consider such extensions to be insignificant delays in payments.

The following table summarizes the delinquency status

of finance receivables as of June 30, 2025, and December 31, 2024:

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Schedule of delinquency status of finance receivables

1 unchanged sentence

(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 $ 104,000 and $ 271,000 at June 30, 2025, and December 31, 2024, respectively, have been placed on non-accrual status as a result

of their delinquency status.

Allowance for Credit Losses

4 unchanged sentences

Management estimates the allowance

using relevant available information, from internal and external sources, relating to past events, current conditions and, reasonable

and supportable forecasts.

using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and

supportable forecasts.

We believe our historical credit loss experience provides the best basis for the estimation of expected credit

1 unchanged sentence

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

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

We measure the weighted average

19 unchanged sentences

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 UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

In consideration of the depth

7 unchanged sentences

factors into our estimates.

The following table presents

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

The following table presents the amortized cost

basis of our finance receivables by annual vintage as of June 30, 2025, and December 31, 2024.

Schedule of finance receivables by annual vintage

2 unchanged sentences

2015 and prior

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:

The following table presents a summary of the

activity for the allowance for finance credit losses for the three-month and six-month periods ended June 30, 2025, and 2024:

Schedule of allowance for finance credit losses

Three Months Ended

Six Months Ended

(In thousands)

Balance at beginning of period

3 unchanged sentences

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:

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The following table presents the gross charge-offs

by year of origination of our finance receivables for the three-month and six-month periods ended June 30, 2025, and 2024:

Schedule of gross charge-off

Three Months Ended

(In thousands)

Six Months Ended

Annual Vintage Pool

(In thousands)

2014 and prior

1 unchanged sentence

(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

9 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 $ 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.

(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 $ 550.8 million in 2025, $ 921.8 million in 2026, $ 638.9 million in 2027, $ 391.5 million in 2028, $ 208.8 million in 2029, $ 93.3 million

in 2030, and $ 8.1 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 STATEMENTS

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Debt issuance costs of $ 16.3

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

million and $ 15.5 million as of June 30, 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

All the securitization trust

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

4 unchanged sentences

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 followed all such covenants as of June 30, 2025.

We are responsible for the administration

2 unchanged sentences

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

As of June 30, 2025, restricted

cash under the various agreements totaled approximately $ 144.4 million.

Interest expense on the securitization trust debt is composed

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

Additional costs of borrowing include facility fees,

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

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

Accordingly, the

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

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

6 unchanged sentences

for the related debt.

All such transactions, treated as secured financings for accounting and tax purposes, are treated as sales for all

All such transactions, treated as secured financing for accounting and tax purposes, are treated as sales for all

other purposes, including legal and bankruptcy purposes.

2 unchanged sentences

AND SUBSIDIARIES

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:

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

and amounts of our other debt outstanding at June 30, 2025, and December 31, 2024, are summarized below:

Schedule of debt outstanding

2 unchanged sentences

Interest Rate

Subordinate Lender

Interest Rate

Subordinate Lender Interest Rate

Warehouse lines of credit

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

2.85% over CP yield rate (Minimum 3.75%) 7.28% and 7.52% at June 30, 2025 and December 31 2024, respectively

6.40% over SOFR yield rate (Minimum 7.15%) 10.97% and 11.09% at June 30, 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

4.50% over a commercial paper rate (Minimum 7.50%) 8.81% and 8.90% at June 30 2025, and December 31 2024, respectively

Residual interest financing

2 unchanged sentences

Subordinated renewable notes

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

Weighted average rate of 8.94 % and 9.24 % at June 30, 2025 and December 31, 2024, respectively

Weighted average maturity of July 2027 and December 2026 at June 30, 2025 and December 31, 2024,

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

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

5 unchanged sentences

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.

At June 30, 2025, there was $ 65 .0 million outstanding under this facility.

On December 19, 2024, we increased the capacity

8 unchanged sentences

There was $ 273.3 million outstanding

under this facility at March 31, 2025.

under this facility at June 30, 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 $ 89 .0 million outstanding

under this facility at March 31, 2025.

There was $ 125.3 million

outstanding under this facility at June 30, 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 March 31, 2025, there was $ 50 .0 million outstanding under this facility.

At June 30, 2025, there was $ 50 .0 million outstanding under this facility.

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

5 unchanged sentences

of a single class with a coupon of 7.86%.

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

At June 30, 2025, there was $ 41.8 million outstanding under this facility.

Unamortized debt issuance costs of $ 1.7 million

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

and $ 824,000 as of June 30, 2025, and December 31, 2024, respectively, have been excluded from the amount reported above for residual

interest financing.

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

Similarly, unamortized debt issuance costs of $ 3 .0 million and $ 4.3 million as of June 30, 2025, and December 31,

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

3 unchanged sentences

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

(5) Interest Income and Interest Expense

2 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

Interest on finance receivables

(In thousands)

Interest on finance receivables at fair value

Interest on finance receivables

Other interest income

4 unchanged sentences

Three Months Ended

Six Months Ended

(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 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:

per share for the three-month and six-month periods ended June 30, 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 and six-month periods ended June 30, 2025, and 2024:

Schedule of earnings per share

Three Months Ended

Six Months Ended

(In thousands)

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

1 unchanged sentence

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

If the anti-dilutive

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

months ended March 31, 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

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 six-month

period ended June 30, 2025, would have included an additional 1.6 million shares attributable to the exercise of outstanding options and

For the three-month and six-month periods ended June 30, 2024, 1.7 million shares, would be included in the diluted earnings

per share calculation.

(7) Income Taxes

3 unchanged sentences

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

As of March 31, 2025, and

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

We do not anticipate that total unrecognized tax benefits

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

As of June 30, 2025, and December

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

We do not anticipate that total unrecognized tax benefits will

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

The Company and its subsidiaries

7 unchanged sentences

income in the period that includes the enactment date.

Deferred tax assets are recognized

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

A valuation allowance is recognized for a deferred tax

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

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

Although realization

is not assured, we believe that the realization of the recognized net deferred tax asset of $ 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.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Deferred tax assets and liabilities

are recognized for the future tax consequences of events that have been recognized in the financial statements.

A valuation allowance

is recognized to reduce a deferred tax asset if, based on the weight of all available evidence, it is more likely than not that some or

all of the deferred tax asset will not be realized.

When making this judgment, both positive and negative evidence is considered, with

the most weight given to evidence that can be objectively verified.

The recognition of deferred tax liabilities, however, does not require

a similar more likely than not test for realization.

They are recognized with the expectation that they will be settled in future periods

when the related taxable temporary differences reverse.

As of June 30, 2025, we have a net deferred tax liabilities of $ 90,000 .

deferred tax liabilities of $ 90,000 consists of approximately $ 378,000 of net U.S.

federal deferred tax liabilities and $ 288,000 of net

state deferred tax assets.

Income tax expense was $ 2.2

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.

million for the three months and $ 4.3 million six months ended June 30, 2025, representing effective income tax rates of 31 %, compared

to income tax expense of $ 2 .0 million and 4 .0 million for the three months and six months ended June 30, 2024, and representing effective

income tax rates of 30 % respectively.

(8) Legal Proceedings

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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 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 March 31, 2025, our best estimate of probable incurred losses for legal contingencies, including

at each measurement date, most recently as of June 30, 2025, our best estimate of probable incurred losses for legal contingencies, including

the matters identified above.

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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 face, including those described or identified above, as of June 30, 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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other factors, the size of the loss or liability imposed and the level of our income for that period.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

(9) Fair Value Measurements

ASC 820, “Fair Value

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

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

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

ASC 820 defines fair value,

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

and enhances disclosure requirements for fair value measurements.

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

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

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

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

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

The three levels are defined as follows:

level 1 - inputs to the valuation

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

level 2 – inputs to the valuation

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

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

and level 3 – inputs to the

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

Effective January 2018 we

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

Our valuation policies and

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

valuation experts.

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

for valuation, internal reporting, calibration and back testing.

Our periodic review of valuations includes an analysis of changes in

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

There is little available third-party information such as broker

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

Our level 3, unobservable

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

best information available in the circumstances.

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

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

Significant changes in any of those

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

For the quarter ended March

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

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

and did not record a mark down to that portfolio.

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

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

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

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

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

Our valuation

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

with outside valuation experts.

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

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

Our periodic review of valuations includes an

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

There is little available third-party

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

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

are based on the best information available in the circumstances.

They include such inputs as estimates for the magnitude and timing

of net charge-offs and the rate of amortization of the portfolio of finance receivable.

Significant changes

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

quarter ended June 30, 2025, the Company evaluated the appropriate fair value and future earnings rate of existing receivables compared

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

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

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:

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

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

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

Three Months Ended

Six Months Ended

(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:

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

March 31, 2025

June 30, 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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(In thousands)

Finance receivables measured at fair value

Discount rate

Finance receivables measured at fair value

Cumulative net losses

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AND SUBSIDIARIES

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:

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The following

table summarizes the delinquency status of these finance receivables measured at fair value as of June 30, 2025, and December 31, 2024:

Schedule of delinquency status of finance receivables measured at fair value

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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 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:

or out of level 1, level 2 or level 3 assets and liabilities for the three months ended June 30, 2025, and 2024.

The estimated

fair values of financial assets and liabilities at June 30, 2025, and December 31, 2024, were as follows:

Schedule of fair values of financial assets and liabilities

As of March 31, 2025

As of June 30, 2025

Financial Instrument

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AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

As of December 31, 2024

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(11) Subsequent Events

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.

On July 28, 2025, we executed

our third securitization of 2025.

In the transaction, qualified institutional buyers purchased $418.33 million of asset-backed notes secured

by $433.50 million in automobile receivables originated by CPS.

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

five classes.

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

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on the notes is approximately 5.43%.

Cautionary Note Regarding

Forward-Looking Statements

Note Regarding Forward-Looking Statements

Discussions of certain matters

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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.

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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our ability to generate sufficient operating and financing cash flows;

· competition;

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

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

We undertake no obligation to

publicly update any forward-looking information.

We undertake no obligation

to publicly update any forward-looking information.

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

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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