Company: CPSS
Filing Date: 2025-08-11
Form Type: 10-Q
Source: 0001683168-25-005901
Chunk: 23

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-08-11
Form: 10-Q
Item: Part I, Item 8
Chunk 23
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 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.

For the
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.

     24 

CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

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 

    June 30,  
    June 30, 

    2025  
    2024  
    202