Company: CPSS
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001683168-25-003436
Chunk: 81

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-05-12
Form: 10-Q
Item: Part I, Item 2
Chunk 81
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 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.

We are and may in the future
be limited in our ability to purchase automobile contracts due to limits on our capital. As of March 31, 2025, we had unrestricted cash
of $29.8 million and $153.6 million aggregate available borrowings under our two warehouse credit facilities (assuming the availability
of sufficient eligible collateral). As of March 31, 2025, we had approximately $23.5 million of such eligible collateral. 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. During the three-month period ended March 31, 2025, we completed one securitization aggregating
$442.4 million of notes sold.

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 net losses related to the automobile contracts in the pool are
below certain predetermined levels. In the event delinquencies or net losses on the automobile contracts exceed such levels, the terms
of the securitization may require increased credit enhancement to be accumulated for the particular pool. There can be no assurance that
collections from the related trusts will continue to generate sufficient cash.

Our warehouse credit facilities
contain various financial covenants requiring certain minimum financial ratios and results. Such covenants include maintaining minimum
levels of liquidity and net worth and not exceeding maximum leverage levels. 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