Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 340

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 1B
Chunk 340
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financing of our contracts. In addition, we have accessed other sources, such as residual financings and subordinated debt in order to
finance our continuing operations.

The acquisition of automobile
contracts for subsequent financing in securitization transactions, and the need to fund spread accounts and initial overcollateralization,
if any, and increase credit enhancement levels when those transactions take place, results in a continuing need for capital. The amount
of capital required is most heavily dependent on the rate of our automobile contract purchases, the required level of initial credit enhancement
in securitizations, and the extent to which the previously established trusts and their related spread accounts either release cash to
us or capture cash from collections on securitized automobile contracts. Of those, the factor most subject to our control is the rate
at which we purchase automobile contracts.

 45 

We are and may in the future
be limited in our ability to purchase automobile contracts due to limits on our capital. As of December 31, 2024, we had unrestricted
cash of $11.7 million and $124.1 million aggregate available borrowings under our two warehouse credit facilities (assuming the availability
of sufficient eligible collateral). As of December 31, 2024, we had approximately $23.0 million of such eligible collateral. During 2024,
we completed four securitizations aggregating $1,453.9 million of notes sold. In January 2025, we completed another securitization with
$442.4 million of notes sold. Cash proceeds from this securitization were used to pay down the outstanding balance on our two warehouse
credit facilities thus increasing the amounts available for borrowing under these facilities. Our plans to manage our liquidity include
maintaining our rate of automobile contract purchases at a level that matches our available capital, and, as appropriate, minimizing our
operating costs. If we are unable to complete such securitizations, we may be unable to increase our rate of automobile contract purchases,
in which case our interest income and other portfolio related income could decrease.

Our liquidity will also be
affected by releases of cash from the trusts established with our securitizations. While the specific terms and mechanics of each spread
account vary among transactions, our securitization agreements generally provide that we will receive excess cash flows, if any, only
if the amount of credit enhancement has reached specified levels and the delinquency or net losses related to the automobile contracts