CONSUMER PORTFOLIO SERVICES, INC. 10-Q

Item 1. Financial Statements CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) March 31, December 31, 2026 2025 ASSETS Cash and cash equivalents $ 6,944 $ 6,322 Restricted cash and equivalents 178,469 165,885 Finance receivables measured at fair value 3,835,789 3,655,855 Furniture and equipment, net 1,342 771 Deferred tax assets, net 16 16 Other assets 30,239 29,344 Total assets $ 4,052,799 $ 3,858,193 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities Accounts payable and accrued expenses $ 70,261 $ 65,244 Warehouse lines of credit 467,138 324,871 Residual interest financing 181,383 142,982 Securitization trust debt 2,992,157 2,986,574 Subordinated renewable notes 27,508 28,986 Total liabilities 3,738,447 3,548,657 COMMITMENTS AND CONTINGENCIES – – Shareholders’ Equity Preferred stock, $ 1 par value;authorized 4,998,130 shares; none issued – – Series A preferred stock, $ 1 par value; authorized 5,000,000 shares; none issued – – Series B preferred stock, $ 1 par value; authorized 1,870 shares; none issued – – Common stock, no par value; authorized 75,000,000 shares; 21,695,835 and 21,842,457 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively 23,703 24,426 Retained earnings 291,924 286,385 Accumulated other comprehensive loss ( 1,275 ) ( 1,275 ) Total shareholders’ equity 314,352 309,536 Total liabilities and shareholders’ equity $ 4,052,799 $ 3,858,193 See accompanying Notes to Unaudited Condensed Consolidated Financial Statements. 3 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Ended March 31, 2026 2025 Revenues: Interest income $ 108,721 $ 101,933 Mark to finance receivables measured at fair value – 3,500 Other income 3,613 1,441 Total revenues 112,334 106,874 Expenses: Employee costs 23,046 25,033 General and administrative 12,908 12,563 Interest 60,061 54,918 Sales 6,552 5,911 Occupancy 1,514 1,398 Depreciation and amortization 225 249 Total expenses 104,306 100,072 Income before income tax expense 8,028 6,802 Income tax expense 2,489 2,108 Net income $ 5,539 $ 4,694 Earnings per share: Basic $ 0.25 $ 0.22 Diluted 0.24 0.19 Number of shares used in computing earnings per share: Basic 21,777 21,444 Diluted 23,534 24,325 See accompanying Notes to Unaudited Condensed Consolidated Financial Statements. 4 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Three Months Ended March 31, 2026 2025 Net income $ 5,539 $ 4,694 Other comprehensive income/(loss); change in funded status of pension plan – – Comprehensive income $ 5,539 $ 4,694 See accompanying Notes to Unaudited Condensed Consolidated Financial Statements. 5 CONSUMER PORTFOLIO SERVICES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Three Months Ended March 31, 2026 2025 Cash flows from operating activities: Net income $ 5,539 $ 4,694 Adjustments to reconcile net income to net cash provided by operating activities: Net interest income accretion on fair value receivables 69,947 64,907 Depreciation and amortization 225 249 Amortization of deferred financing costs 3,436 2,865 Mark to finance receivables measured at fair value – ( 3,500 ) Provision for credit losses – ( 979 ) Stock-based compensation expense 512 717 Changes in assets and liabilities: Deferred tax assets, net – 184 Other assets ( 895 ) ( 407 ) Accounts payable and accrued expenses 5,017 5,138 Net cash provided by operating activities 83,781 73,868 Cash flows from investing activities: Payments received on finance receivables held for investment – 3,106 Purchases of finance receivables measured at fair value ( 524,900 ) ( 449,602 ) Payments received on finance receivables at fair value 275,019 252,856 Purchase of furniture and equipment ( 796 ) ( 471 ) Net cash used in investing activities ( 250,677 ) ( 194,111 ) Cash flows from financing activities: Proceeds from issuance of securitization trust debt 345,610 442,420 Proceeds from issuance of subordinated renewable notes 270 1,603 Payments on subordinated renewable notes ( 1,748 ) ( 545 ) Net proceeds from (repayments of) warehouse lines of credit 141,499 ( 45,811 ) Proceeds from issuance of residual interest financing debt 50,000 65,000 Repayment of residual interest financing debt ( 11,015 ) – Repayment of securitization trust debt ( 340,193 ) ( 292,997 ) Payment of financing costs ( 3,086 ) ( 3,592 ) Purchase of common stock ( 1,235 ) – Exercise of options and warrants – 246 Net cash provided by financing activities 180,102 166,324 Increase in cash and cash equivalents 13,206 46,081 Cash and restricted cash at beginning of period 172,207 137,397 Cash and restricted cash at end of period $ 185,413 $ 183,478 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 56,777 $ 51,507 Income taxes $ 80 $ ( 75 ) See accompanying Notes to Unaudited Condensed Consolidated Financial Statements 6 CONSUMER PORTFOLIO SERVICES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (In thousands) March 31, 2026 2025 Common Stock (Shares Outstanding) Balance, beginning of period 21,842 21,433 Common stock issued upon exercise of options and warrants – 70 Repurchase of common stock ( 146 ) – Balance, end of period 21,696 21,503 Common Stock Balance, beginning of period $ 24,426 $ 25,720 Common stock issued upon exercise of options and warrants – 246 Repurchase of common stock ( 1,235 ) – Stock-based compensation 512 717 Balance, end of period $ 23,703 $ 26,683 Retained Earnings Balance, beginning of period $ 286,385 $ 267,060 Net income 5,539 4,694 Balance, end of period $ 291,924 $ 271,754 Accumulated Other Comprehensive Loss Balance, beginning of period $ ( 1,275 ) $ ( 10 ) Pension benefit obligation – – Balance, end of period $ ( 1,275 ) $ ( 10 ) Balance, beginning of period 309,536 – Pension benefit obligation – – Total Shareholders’ Equity $ 314,352 $ 298,427 See accompanying Notes to Unaudited Condensed Consolidated Financial Statements. 7 CONSUMER PORTFOLIO SERVICES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (1) Summary of Significant Accounting Policies Description of Business We were formed in California on March 8, 1991. We specialize in purchasing and servicing retail automobile installment sale contracts (“automobile contracts” or “finance receivables”) originated by licensed motor vehicle dealers located throughout the United States (“dealers”) in the sale of new and used automobiles, light trucks and passenger vans. Through our purchases, we provide indirect financing to dealer customers for borrowers with limited credit histories or past credit problems (“sub-prime customers”). We serve as an alternative source of financing for dealers, allowing sales to customers who otherwise might not be able to obtain financing. In addition to purchasing installment purchase contracts directly from dealers, we have also (i) lent money directly to consumers for loans secured by vehicles, (ii) purchased immaterial amounts of vehicle purchase money loans from non-affiliated lenders, and (iii) acquired installment purchase contracts in four merger and acquisition transactions. In this report, we refer to all of such contracts and loans as “automobile contracts.” Basis of Presentation Our Unaudited Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America, with the instructions to Form 10-Q and with Article 10 of Regulation S-X of the Securities and Exchange Commission, and include all adjustments that are, in management’s opinion, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are, in the opinion of management, of a normal recurring nature. Results for the three-month period ended March 31, 2026, are not necessarily indicative of the operating results to be expected for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from these Unaudited Condensed Consolidated Financial Statements. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods. Finance Receivables Measured at Fair Value Effective January 1, 2018, we adopted the fair value method of accounting for finance receivables acquired on or after that date. For each finance receivable acquired after 2017, we consider the price paid on the purchase date as the fair value for such receivable. We estimate the cash to be received in the future with respect to such receivables, based on our experience with similar receivables acquired in the past. We then compute the internal rate of return that results in the present value of those estimated cash receipts being equal to the purchase date fair value. Thereafter, we recognize interest income on such receivables on a level yield basis using that internal rate of return as the applicable interest rate. Cash received with respect to such receivables is applied first against such interest income, and then to reduce the recorded value of the receivables. We re-evaluate the fair value of such receivables at the close of each measurement period. If the reevaluation were to yield a value materially different from the recorded value, an adjustment would be required. 8 CONSUMER PORTFOLIO SERVICES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Anticipated credit losses are included in our estimation of cash to be received with respect to receivables. In accordance with the fair value accounting standards, credit losses are included in our computation of the appropriate level yield, therefore we do not thereafter make periodic provision for credit losses, as our best estimate of the lifetime aggregate of credit losses is included in that initial computation. Also, because we include anticipated credit losses in our computation of the level yield, the computed level yield is materially lower than the average contractual rate applicable to the receivables. Because our initial recorded value is fixed as the price we pay for the receivable, rather than 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. Other Income The following table presents the primary components of Other Income for the three-month periods ending March 31, 2026, and 2025: Schedule of other income Three Months Ended March 31, 2026 2025 (In thousands) Origination and servicing fees from third party receivables $ 1,287 $ 1,431 Dealer recoveries 2,319 – Other 7 10 Other income for the period $ 3,613 $ 1,441 Leases The Company has operating leases for corporate offices, equipment, software and hardware. The Company has entered into operating leases for the majority of its real estate locations, primarily office space. These leases are generally for periods of three to seven years with various renewal options. The depreciable life of leased assets is limited by the expected lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the lease term. The following table presents the supplemental balance sheet information related to leases: Schedule of supplemental balance sheet information related to leases 2026 2025 (In thousands) Operating Leases Operating lease right-of-use assets $ 53,225 $ 53,225 Less: Accumulated amortization right-of-use assets ( 37,461 ) ( 36,281 ) Operating lease right-of-use assets, net $ 15,764 $ 16,944 Operating lease liabilities $ ( 18,012 ) $ ( 19,236 ) Finance Leases Property and equipment, at cost $ 4,589 $ 4,097 Less: Accumulated depreciation ( 3,777 ) ( 3,684 ) Property and equipment, net $ 812 $ 413 Finance lease liabilities $ ( 832 ) $ ( 428 ) Weighted Average Discount Rate Operating lease 5.0 % 5.0 % Finance lease 6.6 % 6.4 % 9 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Maturities of lease liabilities were as follows: Schedule of maturities of lease liabilities (In thousands) Operating Finance Year Ending December 31, Lease Lease 2026 (excluding the three months ended March 31, 2026) $ 4,219 $ 310 2027 5,756 355 2028 5,937 234 2029 4,331 10 2030 1,171 – 2031. 719 – Thereafter 50 – Total undiscounted lease payments 22,183 909 Less amounts representing interest ( 4,171 ) ( 77 ) Lease Liability $ 18,012 $ 832 The following table presents the lease expense included in General and administrative and Occupancy expense on our Unaudited Condensed Consolidated Statement of Operations: Schedule of lease cost Three Months Ended March 31, 2026 2025 (In thousands) Operating lease cost $ 1,320 $ 1,311 Finance lease cost 104 55 Total lease cost $ 1,424 $ 1,366 The following table presents the supplemental cash flow information related to leases: Schedule of supplemental cash flow information related to leases Three Months Ended March 31, 2026 2025 Cash paid for amounts included in the measurement of lease liabilities: (In thousands) Operating cash flows from operating leases $ 1,320 $ 1,311 Operating cash flows from finance leases 88 47 Financing cash flows from finance leases 16 8 10 CONSUMER PORTFOLIO SERVICES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Stock-based Compensation We recognize compensation costs in the financial statements for all share-based payments based on the grant date fair value estimated in accordance with the provisions of ASC 718 “Stock Compensation”. For the three months ended March 31, 2026, and 2025 we recorded stock-based compensation costs in the amount of $ 512,000 and $ 717,000 , respectively. As of March 31, 2026, unrecognized stock-based compensation costs to be recognized over future periods equaled $ 4.8 million. This amount will be recognized as expense over a weighted-average period of 3.12 years. The following represents stock option activity for the three months ended March 31, 2026: Schedule of stock option activity Weighted Number of Weighted Average Shares Average Remaining (in thousands) Exercise Price Contractual Term Options outstanding at the beginning of period 6,123 $ 6.41 N/A Granted – – N/A Exercised – – N/A Forfeited – – N/A Options outstanding at the end of period 6,123 $ 6.41 2.97 years Options exercisable at the end of period 4,535 $ 5.71 1.86 years The following table presents the price distribution of stock options outstanding and exercisable as of March 31, 2026 and December 31, 2025: Schedule of price distribution of stock options outstanding and exercisable Number of shares as of Number of shares as of March 31, 2026 December 31, 2025 Outstanding Exercisable Outstanding Exercisable Range of exercise prices: (In thousands) (In thousands) $2.00 - $2.99 1,098 1,098 1,098 1,098 $3.00 - $3.99 897 897 897 897 $4.00 - $4.99 1,145 1,145 1,145 1,145 $8.00 - $8.99 1,430 – 1,430 – $10.00 - $10.99 1,553 1,395 1,613 1,253 Total shares 6,123 4,535 6,123 4,393 At March 31, 2026, the aggregate intrinsic value of options outstanding and exercisable was $ 12.7 million. There were no options exercised for the three months ended March 31, 2026, compared to 70,000 for the comparable period in 2025. The total intrinsic value of options exercised was $ 390,000 for the three-month periods ended March 31, 2025. There were 4,501,000 shares available for future stock option grants under existing plans as of March 31, 2026. 11 CONSUMER PORTFOLIO SERVICES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Purchases of Company Stock The table below describes the purchase of our common stock for the three-months ended March 31, 2026, and 2025: Schedule of purchase of our common stock Three Months Ended March 31, 2026 March 31, 2025 Shares Avg. Price Shares Avg. Price Open market purchases 126,622 $ 8.57 – – Shares redeemed upon net exercise of stock options – – – – Other 20,000 7.53 – – Total stock purchases 146,622 $ 8.43 – – Reclassifications Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on net income or shareholders’ equity. Financial Covenants Certain of our securitization transactions, our warehouse credit facilities and our residual interest financing contain various financial covenants requiring minimum financial ratios and results. Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage levels. As of March 31, 2026, we were in compliance with all such covenants. In addition, certain of our debt agreements other than our term securitizations contain cross-default provisions. Such cross-default provisions would allow the respective creditors to declare a default if an event of default occurred with respect to other indebtedness of ours, but only if such other event of default were to be accompanied by acceleration of such other indebtedness. Provision for Contingent Liabilities We are routinely involved in various legal proceedings resulting from our consumer finance activities and practices, both continuing and discontinued. Our legal counsel has advised us on such matters where, based on information available at the time of this report, there is an indication that it is both probable that a liability has been incurred and the amount of the loss can be reasonably determined. This is described further in footnote 8. Recent Accounting Pronouncements We do not believe that any accounting pronouncements issued, but not yet effective, are applicable or would have a material impact on our consolidated financial statements or disclosures, if adopted. (2) Finance receivables measured at fair value Our portfolio of finance receivables consists of small-balance homogeneous contracts comprising a single segment. Our contract purchase guidelines are designed to produce a homogenous portfolio. For key terms such as interest rate, length of contract, monthly payment and amount financed, there is relatively little variation from the average for the portfolio. We have elected to use the fair value method to value our portfolio of finance receivables acquired. The accounting treatment follows the fair value hierarchy outlined in ASC 820, “Fair Value Measurements”, and the inputs and assumptions are level 3. This is described further in footnote 9. 12 CONSUMER PORTFOLIO SERVICES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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, 2026, the Company evaluated the appropriate fair value and future earnings rate of existing receivables compared to recently acquired receivables and did not record a mark up or down to the 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 March 31, 2026 2025 (In thousands) Balance at beginning of period $ 3,655,855 $ 3,313,767 Finance receivables at fair value acquired during period 524,900 449,602 Payments received on finance receivables at fair value ( 275,019 ) ( 252,856 ) Net interest income accretion on fair value receivables ( 69,947 ) ( 64,907 ) Mark to fair value – 3,500 Balance at end of period $ 3,835,789 $ 3,449,106 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 March 31, 2026 December 31, 2025 Contractual Fair Contractual Fair Balance Value Balance Value (In thousands) Finance receivables measured at fair value $ 3,941,948 $ 3,835,789 $ 3,778,127 $ 3,655,855 The following table provides certain qualitative information about our level 3 fair value measurements: Schedule of level 3 fair value measurements Financial Instrument Fair Values as of Weight Avg. Inputs as of March 31, December 31, March 31, December 31, 2026 2025 Unobservable 2026 2025 (In thousands) Assets: Finance receivables measured at fair value $ 3,835,789 $ 3,655,855 Discount rate 11.07% 11.07% Cumulative net losses 16.21% 16.02% 13 CONSUMER PORTFOLIO SERVICES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS We report delinquency on a contractual basis. The following table summarizes the delinquency status of these finance receivables measured at fair value as of March 31, 2026, and December 31, 2025: Schedule of delinquency status of finance receivables measured at fair value March 31, December 31, 2026 2025 (In thousands) Delinquency Status Current $ 3,485,649 $ 3,220,198 31 - 60 days 217,632 272,421 61 - 90 days 86,227 118,201 91 + days 48,911 56,203 Repo 103,529 111,104 $ 3,941,948 $ 3,778,127 (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: Schedule of securitization trust debt Weighted Average Final Scheduled Payment Receivables Pledged at March 31, Initial Outstanding Principal at March 31, Outstanding Principal at December 31, Contractual Debt Interest Rate at March 31, Series Date (1) 2026 (2) Principal 2026 2025 2026 (Dollars in thousands) CPS 2021-B June 2028 $ – $ 240,000 $ – $ 15,832 – CPS 2021-C September 2028 26,532 291,000 20,877 25,889 3.21 % CPS 2021-D December 2028 38,630 349,202 32,336 39,625 4.06 % CPS 2022-A April 2029 44,831 316,800 35,580 42,241 4.35 % CPS 2022-B October 2029 73,489 395,600 60,999 72,820 6.91 % CPS 2022-C April 2030 90,856 391,600 65,899 77,073 7.84 % CPS 2022-D June 2030 88,079 307,018 77,684 86,973 10.05 % CPS 2023-A August 2030 110,909 324,768 72,286 83,896 8.09 % CPS 2023-B November 2030 123,672 332,885 96,290 107,035 7.92 % CPS 2023-C February 2031 120,818 291,732 98,403 110,281 7.53 % CPS 2023-D May 2031 126,518 286,149 107,460 121,208 8.28 % CPS 2024-A August 2031 133,029 280,924 112,509 128,466 6.64 % CPS 2024-B November 2031 173,674 319,871 152,694 171,992 6.74 % CPS 2024-C March 2032 254,942 436,310 226,459 254,043 6.45 % CPS 2024-D June 2032 268,918 416,816 240,262 269,169 5.35 % CPS 2025-A August 2032 319,783 442,420 291,983 324,242 5.64 % CPS 2025-B March 2033 341,428 419,950 313,883 341,383 5.54 % CPS 2025-C May 2033 360,778 418,330 337,260 364,711 5.15 % CPS 2025-D May 2033 352,083 384,600 335,664 366,313 5.18 % CPS 2026-A August 2033 339,580 345,610 330,081 – 4.74 % $ 3,388,549 $ 6,991,585 $ 3,008,609 $ 3,003,192 ________________ (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 $915.9 million in 2026, $914.6 million in 2027, $563.5 million in 2028, $337.9 million in 2029, $182.1 million in 2030, $65.9 million in 2031, and $12.3 million in 2032. (2) Includes repossessed assets that are included in other assets on our Unaudited Condensed Consolidated Balance Sheet. 14 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Debt issuance costs of $ 16.5 million and $ 16.6 million as of March 31, 2026, and December 31, 2025, respectively, have been excluded from the table above. These debt issuance costs are presented as a direct deduction to the carrying amount of the Securitization trust debt on our Consolidated Balance Sheets. All the securitization trust debt was sold in private placement transactions to qualified institutional buyers. The debt was issued through our wholly owned bankruptcy remote subsidiaries and is secured by the assets of such subsidiaries, but not by our other assets. The terms of the various securitization agreements related to the issuance of the securitization trust debt require that certain delinquency and credit loss criteria be met with respect to the collateral pool and require that we maintain minimum levels of liquidity and net worth and not exceed maximum leverage levels. We are in compliance with all such covenants as of March 31, 2026. We are responsible for the administration and collection of the contracts. The securitization agreements also require certain funds be held in restricted cash accounts to provide additional credit enhancement for the Notes or to be applied to make payments on the securitization trust debt. As of March 31, 2026, restricted cash under the various agreements totaled approximately $ 178.5 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 issuance. Deferred financing costs related to the securitization trust debt are amortized using the interest method. Accordingly, the effective cost of borrowing of the securitization trust debt is greater than the stated rate of interest. Our wholly owned, bankruptcy remote subsidiaries were formed to facilitate the above asset-backed financing transactions. Similar bankruptcy remote subsidiaries issue the debt outstanding under our warehouse line of credit. Bankruptcy remote refers to a legal structure in which it is expected that the applicable entity would not be included in any bankruptcy filing by its parent or affiliates. All of the assets of these subsidiaries have been pledged as collateral for the related debt. All such transactions, treated as secured financing for accounting and tax purposes, are treated as sales for all other purposes, including legal and bankruptcy purposes. None of the assets of these subsidiaries are available to pay any of our other creditors. 15 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (4) Debt The terms and amounts of our other debt outstanding at March 31, 2026, and December 31, 2025, are summarized below: Schedule of debt outstanding Amount Outstanding at March 31, December 31, 2026 2025 (In thousands) Description Interest Rate Subordinate Lender Interest Rate Maturity Warehouse line of credit 2.85% over CP yield rate (Minimum 3.60%) 6.68% and 6.80% at March 31, 2026 and December 31 2025, respectively 6.40% over SOFR yield rate (Minimum 7.15%) 10.33% and 10.40% at March 31, 2026 and December 31, 2025, respectively July 2026 $ 301,207 $ 197,107 Warehouse line of credit 4.50% over a commercial paper rate (Minimum 7.50%) 8.18% and 8.25% at March 31, 2026, and December 31 2025, respectively April 2026 – 11,778 Warehouse line of credit 2.75% over SOFR yield rate (Minimum 3.00%) 6.42% and 6.50% at March 31, 2026 and December 31, 2025, respectively 6.40% over SOFR yield rate (Minimum 6.65%) 10.07% and 10.27% at March 31, 2026 and December 31, 2025, respectively October 2027 167,500 118,323 Residual interest financing 7.86 % December 2028 21,030 31,163 Residual interest financing 11.50 % March 2029 49,652 49,820 Residual interest financing 11.00 % June 2032 62,810 63,524 Residual interest financing 8.75 % May 2033 50,000 – Subordinated renewable notes Weighted average rate of 8.81 % and 8.98 % at March 31, 2026 and December 31, 2025, respectively Weighted average maturity of January 2028 and November 2027 at March 31, 2026 and December 31, 2025, respectively 27,508 28,986 $ 679,707 $ 500,701 16 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS On March 4, 2026, we completed a $ 50 million securitization of residual interests from previously issued securitizations. In the transaction, a qualified institutional buyer purchased $ 50 .0 million of asset-backed notes secured by an 80% interest in a CPS affiliate that owns the residual interests in four CPS securitizations issued from January 2025 through October 2025. The sold notes (“2025-1 Notes”), issued by CPS Auto Securitization Trust 2026-1, consist of a single class with a coupon of 8.75%. At March 31, 2026, there was $ 50 .0 million outstanding under this facility. On October 17, 2025, we entered into a $ 167.5 million two-year warehouse credit line with Capital One, N.A as the Class A Lender and Oaktree Asset-Backed Income Private Placement Fund Inc., as the Class B Lenders. The facility is structured to allow us to fund a portion of the purchase price of automobile contracts by borrowing from a credit facility to our consolidated subsidiary Page Eleven Funding, LLC. The facility provides for effective advances up to 95.50% of eligible finance receivables. The Class A loans under the facility generally accrue interest during the revolving period at a per annum rate equal to the Term SOFR plus 2.75% per annum, with a minimum rate of 3.00% per annum and during the amortization period at a per annum rate equal to the Term SOFR plus 3.75% per annum, with a minimum rate of 4.00% per annum. The Class B loans under the facility generally accrue interest during the revolving period at a per annum rate equal to the Term SOFR plus 6.40% per annum, with a minimum rate of 6.65% per annum and during the amortization period at a per annum rate equal to the Term SOFR plus 7.40% per annum, with a minimum rate of 7.65% per annum. At March 31, 2026, there was $ 167.5 million outstanding under this facility. On March 20, 2025, we completed a $ 65 million securitization of residual interests from previously issued securitizations. In the transaction, a qualified institutional buyer purchased $ 65 .0 million of asset-backed notes secured by an 80% interest in a CPS affiliate that owns the residual interests in five CPS securitizations issued from October 2023 through September 2024. The sold notes (“2025-1 Notes”), issued by CPS Auto Securitization Trust 2025-1, consist of a single class with a coupon of 11.00%. At March 31, 2026, there was $ 62.8 million outstanding under this facility. On December 19, 2024, we increased the capacity of our revolving credit agreement with Citibank, N.A., to $ 335 million. This follows the November 2024 closing of a revolving credit agreement with Oaktree Capital Management, which is subordinate to our credit agreement with Citibank, N.A. The facility provides effective advances up to 10.00% of eligible finance receivables, effectively increasing the advance rate up to 95% across the facility for eligible receivables. The revolving credit agreement with Citibank, N.A. was last renewed in July 2024, extending the maturity date to July 2026 followed by an amortization period through July 2027 for any receivables pledged at the end of the revolving period. There was $ 301.2 million outstanding under this facility at March 31, 2026. On March 29, 2024, we renewed our two-year $ 200 million revolving credit agreement with Ares Agent Services, L.P. The revolving period for this facility was extended to March 2026 followed by an amortization period through March 2028 for any receivables pledged at the end of the revolving period. In March 2026, the revolving period was extended to April 2026. There was nothing outstanding under this facility at March 31, 2026. On March 22, 2024, we completed a $ 50 million securitization of residual interests from previously issued securitizations. In the transaction, a qualified institutional buyer purchased $ 50 .0 million of asset-backed notes secured by an 80% interest in a CPS affiliate that owns the residual interests in five CPS securitizations issued from January 2022 through January 2023. The sold notes (“2024-1 Notes”), issued by CPS Auto Securitization Trust 2024-1, consist of a single class with a coupon of 11.50%. At March 31, 2026, there was $ 49.7 million outstanding under this facility. On June 30, 2021, we completed a $ 50 million securitization of residual interests from previously issued securitizations. In this residual interest financing transaction, qualified institutional buyers purchased $ 50 .0 million of asset-backed notes secured by residual interests in eleven CPS securitizations consecutively issued from January 2018 and September 2020. The sold notes (“2021-1 Notes”), issued by CPS Auto Securitization Trust 2021-1, consist of a single class with a coupon of 7.86%. At March 31, 2026, there was $ 21 .0 million outstanding under this facility. Unamortized debt issuance costs of $ 2.1 million and $ 1.5 million as of March 31, 2026, and December 31, 2025, respectively, have been excluded from the amount reported above for residual interest financing. These debt issuance costs are presented as a direct deduction to the carrying amount of the debt on our Unaudited Condensed Consolidated Balance Sheets. 17 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (5) Interest Income and Interest Expense The following table presents the components of interest income: Schedule of interest income Three Months Ended March 31, 2026 2025 (In thousands) Interest on finance receivables at fair value $ 106,331 $ 99,567 Other interest income 2,390 2,366 Interest income $ 108,721 $ 101,933 The following table presents the components of interest expense: Schedule of interest expense Three Months Ended March 31, 2026 2025 (In thousands) Securitization trust debt $ 48,756 $ 45,044 Warehouse lines of credit 6,465 6,513 Residual interest financing 4,155 2,715 Subordinated renewable notes 685 646 Interest expense $ 60,061 $ 54,918 (6) Earnings Per Share Earnings per share for the three-month periods ended March 31, 2026, and 2025 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, 2026, and 2025: Schedule of earnings per share Three Months Ended March 31, 2026 2025 (In thousands) Weighted average number of common shares outstanding during the period used to compute basic earnings per share 21,777 21,444 Incremental common shares attributable to exercise of outstanding options and warrants 1,757 2,881 Weighted average number of common shares used to compute diluted earnings per share 23,534 24,325 If the anti-dilutive effects of common stock equivalents were considered, shares included in the diluted earnings per share calculation for the three-month period ended March 31, 2026, would have included an additional 3 .0 million shares attributable to the exercise of outstanding options and warrants. For the three month ended March 31, 2025, 1.4 million shares, would be included in the diluted earnings per share calculation. 18 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (7) Income Taxes We file numerous consolidated and separate income tax returns with the United States and with many states. With few exceptions, we are no longer subject to U.S. federal, state, or local examinations by tax authorities for years before 2015. As of March 31, 2026 and December 31, 2025, 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 file a consolidated federal income tax return and combined or stand-alone state franchise tax returns for certain states. We utilize the asset and liability method of accounting for income taxes, under which deferred income taxes are recognized for the future tax consequences attributable to the differences between the financial statement values of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. 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 March 31, 2026 we have a net deferred tax asset of $ 16,000 . Our net deferred tax asset of $16,000 consists of approximately $ 270,000 of net U.S. federal deferred tax liabilities and $ 286,000 of net state deferred tax assets. Income tax expense was $ 2.5 million for the three months ended on March 31, 2026, compared to income tax expense of $ 2.1 million for the three months ended March 31, 2025, representing an effective income tax rate of 31 % in both periods. (8) Legal Proceedings Consumer Litigation. We are routinely involved in various legal proceedings resulting from our consumer finance activities and practices, both continuing and discontinued. Consumers can and do initiate lawsuits against us alleging violations of law applicable to collection of receivables, and such lawsuits sometimes allege that resolution as a class action is appropriate. For the most part, we have legal and factual defenses to consumer claims, which we routinely contest or settle (for immaterial amounts) depending on the particular circumstances of each case. In general, there can be no assurance as to the outcomes of the matters described above. We record at each measurement date our best estimate of probable incurred losses for legal contingencies, if any. The amount of losses that may ultimately be incurred cannot be estimated with certainty. However, based on such information as is available to us, the Company is not currently a party to any such material proceedings. Accordingly, we believe that the ultimate resolution of legal proceedings should not have a material adverse effect on our consolidated financial condition. We note, however, that in light of the uncertainties inherent in contested proceedings there can be no assurance that the ultimate resolution of these matters will not be material to our operating results for a particular period, depending on, among other factors, the size of the loss or liability imposed and the level of our income for that period. 19 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (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. Under 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: 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. 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, 2026, and 2025. The estimated fair values of financial assets and liabilities, excluding assets carried at fair value, on March 31, 2026 and December 31, 2025, were as follows: Schedule of fair values of financial assets and liabilities As of March 31, 2026 Financial Instrument (In thousands) Carrying Fair Value Measurements Using: Value Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 6,944 $ 6,944 $ – $ – $ 6,944 Restricted cash and equivalents 178,469 178,469 – – 178,469 Liabilities: Warehouse lines of credit $ 467,138 $ – $ – $ 467,138 $ 467,138 Accrued interest payable 11,842 – – 11,842 11,842 Residual interest financing 181,383 – – 192,294 192,294 Securitization trust debt 2,992,157 – – 3,013,756 3,013,756 Subordinated renewable notes 27,508 – – 27,508 27,508 As of December 31, 2025 Financial Instrument (In thousands) Carrying Fair Value Measurements Using: Value Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 6,322 $ 6,322 $ – $ – $ 6,322 Restricted cash and equivalents 165,885 165,885 – – 165,885 Liabilities: Warehouse lines of credit $ 324,871 $ – $ – $ 324,871 $ 324,871 Accrued interest payable 11,994 – – 11,994 11,994 Residual interest financing 142,982 – – 152,607 152,607 Securitization trust debt 2,986,574 – – 2,985,961 2,985,961 Subordinated renewable notes 28,986 – – 28,986 28,986 20 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (10) Business Segment Information The company has one reportable segment. This determination is made by our Chief Executive Officer, who acts as the chief operating decision-maker (“CODM”), in assessing performance and making decisions regarding resource allocation. The CODM assesses performance by reviewing the consolidated financial statements, which reflect the financial results of our one reportable operating segment. Within the Company’s one reportable segment, it provides indirect vehicle financing to motor vehicle dealer’s less credit- worthy borrowers. The Company’s revenue primarily consists of interest income and is derived from the interest recorded on contracts the Company has purchased. The revenue generated from any individual borrower is deemed to be immaterial. (11) Subsequent Events On April 6, 2026, we amended our two-year revolving credit agreement with Capital One, N.A. to increase the capacity of the facility. The amendment applies to both Capital One, N.A. and the subordinate lender, and increases the capacity of the facility from $167.5 million to $390 million. The revolving period for this facility will extend to October 2027 after which CPS will have the option to repay the outstanding loans in full or to allow them to amortize for an eighteen-month period. On April 22, 2026, we completed our second securitization of 2026. In the transaction, qualified institutional buyers purchased $514.07 million of asset-backed notes secured by $526.17 million in automobile receivables originated by CPS. The sold notes, issued by CPS Auto Receivables Trust 2026-B, consist of five classes. Ratings of the notes were provided by Moody’s and DBRS Morningstar, and were based on the structure of the transaction, the historical performance of similar receivables and CPS’s experience as a servicer. The weighted average interest rate on the notes is approximately 5.51%. 21 Cautionary Note Regarding Forward-Looking Statements Discussions of certain matters contained in this report may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act, and as such, may involve risks and uncertainties. You can generally identify forward-looking statements as statements containing the words “will,” “would,” “believe,” “may,” “could,” “expect,” “anticipate,” “intend,” “estimate,” “judgment,” “assume,” “plans,” “goals, “strategy,” “future,” “likely,” “should” or other similar expressions. Examples of forward-looking statements include, among others, statements we make regarding: · charge-offs and recovery rates; · the willingness or ability of obligors to pay pursuant to contractual terms; · our ability to enforce rights under contracts; · our ability to and rates at which we plan to acquire automobile contracts; · the anticipated levels of recoveries upon sale of repossessed vehicles; · revenues or expenses; · provisions for credit losses; · expected industry and general economic trends; · accrued losses for legal contingencies; · anticipated deferred tax assets; · estimates of taxable income; · our ability to service and repay our debt; · the structuring of securitization transactions as secured financings and the effects of such structures on financial items and future profitability; or · the effect of the change in structure on our profitability and the duration of the period in which our profitability would be affected by the change in securitization structure. Our actual results, performance and achievements may differ materially from the results, performance and achievements expressed or implied in such forward-looking statements. Some of the factors that might cause such a difference include, but are not limited to, the following: · unexpected exogenous events, such as a widespread public health emergency; · mandates imposed in reaction to such events, such as prohibitions of otherwise permissible activity; · changes in general economic conditions; · changes in performance of our automobile contracts; · increases in interest rates; · our ability to generate sufficient operating and financing cash flows; · competition; · the level of losses incurred on contracts in our managed portfolio; · adverse decisions by courts or regulators; · regulatory changes with respect to consumer finance; · changes in the market for used vehicles; · levels of cash releases from existing pools of contracts; · the terms on which we are able to finance contract purchases; · the willingness or ability of dealers to assign contracts to us on acceptable terms; · the terms on which we are able to complete term securitizations once contracts are acquired; · any breach in the security of our systems; and · such other factors as discussed through the “Risk Factors” section of this report. 22 Forward-looking statements are neither historical facts nor guarantees of performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, plans and strategies, projections, anticipated events and trends, the economy and other uncertain conditions. Because forward-looking statements relate to the future, they involve risks, uncertainties and assumptions. Actual results may differ from expectations due to many factors beyond our ability to control or predict, including those described herein, and in any documents incorporated by reference in this report. Therefore, you should not rely on any of these forward-looking statements. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. We undertake no obligation to publicly update any forward-looking information. You are advised to consult any additional disclosure we make in our periodic reports filed with the SEC. 23