Company: CPSS
Filing Date: 2025-08-11
Form Type: 10-Q
Source: 0001683168-25-005901
Chunk: 9

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-08-11
Form: 10-Q
Item: Part I, Item 8
Chunk 9
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     971 
  
    91 + days 
     104  
     271 

    $1,816  
    $5,420 

Finance receivables
totaling $104,000 and $271,000 at June 30, 2025, and December 31, 2024, respectively, have been placed on non-accrual status as a result
of their delinquency status.

Allowance for Credit Losses
– Finance Receivables 

The allowance for credit losses
is a valuation account that is deducted from the amortized cost basis of finance receivables to present the net amount expected to be
collected. Charge offs are deducted from the allowance when management believes that collectability is unlikely.

Management estimates the allowance
using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and
supportable forecasts. We believe our historical credit loss experience provides the best basis for the estimation of expected credit
losses. Consequently, we use historical loss experience for older receivables, aggregated into vintage pools based on their calendar quarter
of origination, to forecast expected losses for less seasoned quarterly vintage pools.

We measure the weighted average
monthly incremental change in cumulative net losses for the vintage pools in the relevant historical period. For the pools in the relevant
historical period, we consider each pool’s performance from its inception through the end of the current period. We then apply the
results of the historical analysis to less seasoned vintage pools beginning with each vintage pool’s most recent actual cumulative
net loss experience and extrapolating from that point based on the historical data. We believe the pattern and magnitude of losses on
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. Similarly,
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. Furthermore,
the historical period encompasses a substantial volume of receiv