Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 550

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 1C
Chunk 550
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 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 impact on our fair value measurement.

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 

    Twelve Months Ended 

    December 31, 

    2024  
    2023 

    (In thousands) 
  
    Balance at beginning of period 
    $2,722,662 
    $2,476,617 
  
    Finance receivables at fair value acquired during period 
     1,653,037  
     1,251,020 
  
    Payments received on finance receivables at fair value 
     (858,628) 
     (823,434)
  
    Net interest income accretion on fair value receivables 
     (224,304) 
     (193,541)
  
    Mark to fair value 
     21,000  
     12,000 
  
    Balance at end of period