What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-11-10 compared with 2025-08-11 · 316 added, 292 removed, 634 unchanged (49% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30,

Cash and cash equivalents

20 unchanged sentences

authorized 75,000,000 shares;

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

22,143,708 and 21,432,698 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Retained earnings

10 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Interest income

18 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Other comprehensive income/(loss);

3 unchanged sentences

Consolidated Financial Statements.

PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED

STATEMENTS OF CASH FLOWS

CONSUMER PORTFOLIO SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

13 unchanged sentences

Purchases of finance receivables measured at fair value

( 1,275,701 )

( 1,195,886 )

Payments received on finance receivables at fair value

25 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Common Stock (Shares Outstanding)

21 unchanged sentences

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

21 unchanged sentences

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

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.

Results for the nine-month period ended September 30, 2025 are not necessarily

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

Certain information and footnote disclosures normally

9 unchanged sentences

reported amounts of income and expenses during the reported periods.

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Finance Receivables Measured

11 unchanged sentences

of the receivables.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

We re-evaluate the fair value of such receivables

10 unchanged sentences

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.

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

balance, we do not record acquisition fees as an amortizing asset related to the receivables, nor do we capitalize costs of acquiring

the receivables.

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

The following

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

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

Schedule of other income

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

3 unchanged sentences

Other income for the period

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The Company has operating leases for corporate

7 unchanged sentences

sheet and the related lease expense is recognized on a straight-line basis over the lease term.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The following table presents

1 unchanged sentence

Schedule of supplemental balance sheet information related to leases

September 30,

(In thousands)

12 unchanged sentences

Finance lease

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Maturities of lease liabilities were as follows:

2 unchanged sentences

Year Ending December 31,

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

2025 (excluding the nine months ended September 30, 2025)

Total undiscounted lease payments

1 unchanged sentence

Lease Liability

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The following table presents

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

3 unchanged sentences

Total lease cost

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The following table presents the supplemental

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

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

8 unchanged sentences

Compensation”.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

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

For the three and nine months ended September

30, 2025, we recorded stock-based compensation costs in the amount of $ 500,000 and $ 1.9 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.

These stock-based compensation

costs were $ 727,000 and $ 2.4 million for the three and nine months ended September 30, 2024.

As of September 30, 2025, unrecognized stock-based

compensation costs to be recognized over future periods equaled $ 6 .0 million.

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

period of 3.47 years.

The following represents stock option activity

for the six months ended June 30, 2025:

for the nine months ended September 30, 2025:

Schedule of stock option activity

5 unchanged sentences

Options exercisable at the end of period

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The following table presents the price distribution

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

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

Schedule of price distribution of stock options outstanding and exercisable

1 unchanged sentence

Number of shares as of

June 30, 2025

September 30, 2025

December 31, 2024

6 unchanged sentences

$8.00 - $8.99

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 $ 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 $ 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 June 30, 2025.

$10.00 - $10.99

At September 30, 2025, the aggregate intrinsic

value of options outstanding and exercisable was $ 12.3 million.

There were 1.4 million options exercised for the nine months ended September

30, 2025, compared to 1.7 million for the comparable period in 2024.

The total intrinsic value of options exercised was $ 8.4 million and

$ 8 .0 million for the nine-month periods ended September 30, 2025, and 2024.

There were 1,501,000 shares available for future stock option

grants under existing plans as of September 30, 2025.

Purchases of Company Stock

The table below describes the purchase of our

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

common stock for the nine-months ended September 30, 2025, and 2024:

Schedule of purchase of our

Six Months Ended

June 30, 2025

June 30, 2024

Nine Months Ended

September 30, 2025

September 30, 2024

Open market purchases

1 unchanged sentence

Total stock purchases

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Reclassifications

3 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

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.

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 September 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.

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

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.

Recent Accounting Pronouncements

18 unchanged sentences

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:

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

In 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

September 30,

(In thousands)

2 unchanged sentences

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.

We consider an automobile contract

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

extended within limits specified in the servicing agreements.

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

past due, as extended where applicable.

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

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

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

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

In certain limited cases, a two-month extension

may be granted.

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

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

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

The following table summarizes the delinquency status

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

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

we consider such extensions to be insignificant delays in payments.

The following table summarizes the delinquency status of finance

receivables as of September 30, 2025, and December 31, 2024:

Schedule of delinquency status of finance receivables

September 30,

Delinquency Status

(In thousands)

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.

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Finance receivables totaling

$ 40,000 and $ 271,000 at September 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

18 unchanged sentences

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

Our contract purchase guidelines

are designed to produce a homogenous portfolio.

For key credit characteristics of individual contracts such as obligor credit history,

job stability, residence stability and ability to pay, there is relatively little variation from the average for the portfolio.

for key structural characteristics such as loan-to-value, length of contract, monthly payment and amount financed, there is relatively

little variation from the average for the portfolio.

Consequently, we do not believe there are significant differences in risk characteristics

between various segments of our portfolio.

Our methodology incorporates

historical pools that are sufficiently seasoned to capture the magnitude and trends of losses within those vintage pools.

the historical period encompasses a substantial volume of receivables over periods that include fluctuations in the competitive landscape,

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

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

In consideration of the depth

and breadth of the historical period, and the homogeneity of our portfolio, we generally do not adjust historical loss information for

differences in risk characteristics such as credit or structural composition of segments of the portfolio or for changes in environmental

conditions such as changes in unemployment rates, collateral values or other factors.

Throughout our history we have observed how events

such as extreme weather, political unrest, and other qualitative factors have influenced the performance of our portfolio.

Consequently,

we have considered how such qualitative factors may affect future credit losses and have incorporated our judgement of the effect of those

factors into our estimates.

The following table presents the amortized cost

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

Schedule of finance receivables by annual vintage

(In thousands)

Annual Vintage Pool

2015 and prior

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:

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

Schedule of allowance for finance credit losses

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

4 unchanged sentences

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

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

Six Months Ended

Annual Vintage Pool

(In thousands)

2014 and prior

Applied against repos in inventory (net)

(3) Securitization Trust Debt

7 unchanged sentences

Interest Rate at

September 30,

(Dollars in thousands)

15 unchanged sentences

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Debt issuance costs of $ 16.5

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

million and $ 15.5 million as of September 30, 2025, and December 31, 2024, 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

All the securitization trust

5 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 followed all such covenants as of June 30, 2025.

We followed all such covenants as of September 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 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.

As of September 30, 2025,

restricted cash under the various agreements totaled approximately $ 142.5 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.

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

10 unchanged sentences

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

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

The terms and amounts of our

other debt outstanding at September 30, 2025, and December 31, 2024, are summarized below:

Schedule of debt outstanding

Amount Outstanding at

September 30,

(In thousands)

2 unchanged sentences

Warehouse lines of credit

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

2.85% over CP yield rate (Minimum 3.75%) 7.18% and 7.52% at September 30, 2025 and December 31 2024, respectively

6.40% over SOFR yield rate (Minimum 7.15%) 10.78% and 11.09% at September 30, 2025 and December 31, 2024, respectively

Warehouse lines of credit

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

4.50% over a commercial paper rate (Minimum 7.50%) 8.65% and 8.90% at September 30 2025, and December 31 2024, respectively

Residual interest financing

2 unchanged sentences

Subordinated renewable notes

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,

Weighted average rate of 8.99 % and 9.24 % at September 30, 2025 and December 31, 2024, respectively

Weighted average maturity of October 2027 and December 2026 at September 30, 2025 and December 31, 2024, respectively

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

6 unchanged sentences

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

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

At September 30, 2025, there was $ 64 .6 million outstanding under this facility.

On December 19, 2024, we increased the capacity

8 unchanged sentences

There was $ 291.2 million outstanding

under this facility at June 30, 2025.

under this facility at September 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 $ 125.3 million

outstanding under this facility at June 30, 2025.

There was $ 51.7 million outstanding

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

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

At September 30, 2025, there was $ 36.5 million outstanding under this facility.

Unamortized debt issuance costs of $ 1.6 million

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

and $ 824,000 as of September 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 .0 million and $ 4.3 million as of June 30, 2025, and December 31,

Similarly, unamortized debt issuance costs of $ 2.3 million and $ 4.3 million as of September 30, 2025, and December

31, 2024, respectively, have been excluded from the warehouse lines of credit amounts in the table above.

These debt issuance costs are presented

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

These debt issuance costs are

presented 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

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

6 unchanged sentences

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

(6) Earnings Per Share

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:

Earnings per share for the

three-month and nine-month periods ended September 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 nine-month periods ended September 30, 2025, and 2024:

Schedule of earnings per share

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

4 unchanged sentences

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.

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

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

and warrants.

For the three-month and nine-month periods ended September 30, 2024, 1.6 million and 1.7 million shares, respectively, 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 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.

As of September 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.

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The Company and its subsidiaries

7 unchanged sentences

income in the period that includes the enactment date.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

Deferred tax assets and liabilities

9 unchanged sentences

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.

As of September 2025, we have a net deferred tax liabilities of $ 674,000 .

net deferred tax liabilities of $ 674,000 consists of approximately $ 847,000 of net U.S.

federal deferred tax liabilities and $ 173,000

of net state deferred tax assets.

Income tax expense was $ 2.2

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.

million for the three months and $ 6.4 million nine months ended September 30, 2025, representing effective income tax rates of 31 %, compared

to income tax expense of $ 2.1 million and 6 .0 million for the three months and nine months ended September 30, 2024, and representing

effective income tax rates of 30 % respectively.

(8) Legal Proceedings

19 unchanged sentences

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

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

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

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.

at each measurement date, most recently as of September 30, 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.

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 June 30, 2025, does not exceed $ 3.2 million.

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 September 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

3 unchanged sentences

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

“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.

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.

The three levels are defined as follows:

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.

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.

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

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

For the quarter ended September

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.

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

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

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Balance at end of period

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

June 30, 2025

September 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:

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

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

September 30,

(In thousands)

Discount rate

Finance receivables measured at fair value

Discount rate

Cumulative net losses

CONSUMER PORTFOLIO SERVICES, INC.

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 June 30, 2025, and December 31, 2024:

The following table summarizes

the delinquency status of these finance receivables measured at fair value as of September 30, 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 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:

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

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

The estimated fair values of financial assets and liabilities, excluding

assets carried at fair value, on September 30, 2025, and December 31, 2024, were as follows:

Schedule of fair values of financial assets and liabilities

As of June 30, 2025

As of September 30, 2025

Financial Instrument

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Subordinated renewable notes

CONSUMER PORTFOLIO SERVICES, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

As of December 31, 2024

10 unchanged sentences

Subordinated renewable notes

CONSUMER PORTFOLIO SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

(10) Business Segment

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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.

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

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

generated from any individual borrower is deemed to be immaterial.

(11) Subsequent Events

On July 28, 2025, we executed

our third securitization of 2025.

On October 17, 2025, we closed

a new two-year $167.5 million revolving credit agreement with Capital One, N.A.

The credit facility includes a subordinate lender, in

which it will provide effective advances up to 10% of eligible finance receivables, effectively increasing the advance rate up to 95.5%

across the facility.

The revolving period for this facility will extend to October 2027 followed by an amortization period through April

2028 for any receivables pledged at the end of the revolving period.

On October 23, 2025, we executed

our fourth securitization of 2025.

In the transaction, qualified institutional buyers purchased $384.6 million of asset-backed notes secured

by $392.5 million in automobile receivables originated by CPS.

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

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

five classes.

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on the notes is approximately 5.72%.

Note Regarding Forward-Looking Statements

Cautionary Note Regarding

Forward-Looking Statements

Discussions of certain matters

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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 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.

provisions for credit

expected industry

and general economic trends;

accrued losses for

legal contingencies;

anticipated deferred

estimates of taxable

our ability to service

and repay our debt;

the structuring

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

the effect of the

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

securitization structure.

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 rates;

our ability to generate sufficient operating and financing cash flows;

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

adverse decisions by courts or regulators;

regulatory changes with respect to consumer finance;

changes in the market for used vehicles;

levels of cash releases from existing pools of contracts;

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

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

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

any breach in the security of our systems;

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

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.

Forward-looking statements

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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