Company: CPSS
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001683168-25-003436
Chunk: 43

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-05-12
Form: 10-Q
Item: Part I, Item 1
Chunk 43
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 140  
     147  
     (7)

     12,950  
     10,808  
     2,142 

    Net interest income/spread 
    $4,695  
    $5,944  
    $(1,249)

Our evaluation of the allowance for credit losses indicated that the reserves against future
losses are adequate as of March 31, 2025. The allowance applies only to our finance receivables originated through December 2017, which
we refer to as our legacy portfolio. Finance receivables that we have originated since January 2018
are accounted for at fair value. Under the fair value method of accounting, we recognize interest income net of expected credit losses.
Thus, no provision for credit loss expense is recorded for finance receivables measured at fair value. 

For the three months ended March
31, 2025, we recorded a reduction to provision for credit losses on finance receivables in the amount of $979,000. The reserve decrease
was primarily due to better than expected recovery rates and a decrease in lifetime expected credit losses resulting from improved credit
performance as our previous estimates for future losses exceeded actual incurred losses. This compares to $1.6 million in reductions to
provision for credit losses for the three months ended March 31, 2024.

Sales expenses consist primarily
of commission-based compensation paid to our employee sales representatives. Our sales representatives earn a salary plus commissions
based on volume of contract purchases. Sales expense increased to $5.9 million during the three months ended March 31, 2025, from $4.9
million for the same quarter in 2024. We purchased $451.2 million of new contracts during the three months ended March 31, 2025, compared
to $346.3 million in the prior year period.

Occupancy expenses was $1.4
million for the three months ending March 31, 2025, which is down from the $1.6 million in the first quarter of 2024.

Depreciation and amortization
expenses increased to $249,000 compared to $215,000 in the previous year.

For the three months ended March 31, 2025, we
recorded income tax expense of $2.1 million, representing a 31% effective tax rate. In the prior period, our income tax expense was $2.0
million, representing a