Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 189

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 1A
Chunk 189
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 may limit our ability to receive distributions in respect
of the residual interests from our securitization facilities, which may limit our ability to generate earnings.

Risks Related to Fair Value Accounting

Receivables we’ve
acquired since January 1, 2018 are accounted for based on the fair value method of accounting. The risks described below are risks related
to fair value accounting.

If Actual Results for Our Receivables Materially Deviate from
Our Estimates, We May Be Required to Reduce the Interest Income We Recognize for Some or All of the Receivables Measured at Fair Value.

We
recognize interest income on receivables accounted under fair value based on a level yield internal rate of return that we calculate based
the terms of the receivables and our estimates at the time of acquisition of the future performance of those receivables. Such estimates
include the timing and severity of future credit losses and the rates of amortization and of prepayments. If actual credit losses were
to exceed our estimates, or if the actual amortization and prepayments of the receivables were to be materially different from our estimates,
we might be required to change our estimates, which could result in a reduced interest income for those receivables in subsequent periods.

If Actual Results for Our Receivables Materially Deviate from
Our Estimates, We May Be Required to Reduce the Recorded Value for Some or All of the Receivables Measured at Fair Value.

We
re-evaluate the recorded value of receivables measured at fair value at the close of each quarter. If the re-evaluation were to yield
a value materially different from the previous recorded value, an adjustment would be required. If actual credit losses were to exceed
our estimates, or if the actual amortization and prepayments of the receivables were to be materially different from our estimates, we
might be required to adjust the recorded value of such receivables. A downward readjustment in recorded value would correspondingly reduce
our income and book value for and as of the end of the related quarter.

If Actual Market Conditions Indicate That the Amount a Market
Participant Would Pay for Our Receivables is Materially Lower Than Our Recorded Value, We May Be Required to Reduce the Recorded Value
for Some or All of the Receivables Measured at Fair Value.

The
fair value of an asset is, by definition, the exchange price in an orderly transaction between market participants. Receivables such as