Consumer Portfolio Services, Inc. Reports 2004 Third Quarter Results

IRVINE, CA – Consumer Portfolio Services, Inc. (Nasdaq: CPSS) today announced results for its third quarter ended September 30, 2004. For the three months ended September 30, 2004 total revenues increased approximately $6.2 million, or 24%, to $32.3 million, compared to $26.0 million for the three months ended September 30, 2003. Pretax loss for the third quarter of 2004 was $2.1 million, compared to pretax loss of $2.9 million for the comparable 2003 period. Expenses for the third quarter of 2004 included a $7.6 million provision for credit losses vs. $4.2 million during the third quarter of 2003. Net loss for the quarter ended September 30, 2004 was $2.1 million, or $(0.10) per diluted share, compared to net loss of $2.9 million, or $(0.14) per diluted share, for the quarter ended September 30, 2003. Diluted shares outstanding were 21.3 million and 20.2 million for the quarters ended September 30, 2004 and 2003, respectively.

Revenues for the nine months ended September 30, 2004 totaled $92.5 million, an increase of $19.2 million, or 26%, compared to $73.3 million in the 2003 period. For the nine months ended September 30, 2004 pretax loss was $3.6 million. For the nine months ended September 30, 2003 pretax income was $2.6 million. Net loss for the nine months ended September 30, 2004 was $3.6 million, or $(0.17) per diluted share, compared to net income of $6.1 million, or $0.28 per diluted share, for the nine months ended September 30, 2003. Net income during the 2003 period included a net tax benefit of $3.4 million. The income tax benefit in the prior period was primarily the result of the resolution of certain IRS examinations of tax returns filed by MFN Financial Corporation prior to its having been acquired in 2002 by CPS. The resulting tax benefit of $4.9 million was offset in part by an income tax provision of $1.5 million. Diluted shares outstanding were 21.0 million and 21.7 million for the nine-month periods ended September 30, 2004 and 2003, respectively.

“While revenues during the quarter remained essentially flat from last quarter, we are pleased with our continued operational progress,” said Charles E. Bradley, President and Chief Executive Officer of Consumer Portfolio Services. “Purchases of new receivables for the quarter were the highest they have been in more than two years. Subsequent to the end of the quarter, we have retained a new external auditor, McGladrey & Pullen, LLP, to begin with the year-end audit. While we continue to have a good working relationship with our current auditors, KPMG LLP, we felt McGladrey’s focus on middle market companies would be more cost-efficient going forward.”

During the third quarter of 2004, the Company purchased $119.3 million of contracts from dealers and completed two securitization financings. The two securitizations were the sale of $87.7 million of AAA/Aaa rated asset backed notes issued by CPS Auto Receivables Trust 2004-B and the sale of $91.0 million of AAA/Aaa asset backed notes issued by CPS Auto Receivables Trust 2004-C. Both transactions were securitizations of receivables originated under CPS’s programs. As of September 30, 2004, Consumer Portfolio Services’ managed receivables totaled $898.3 million.

As previously reported, in order to increase transparency of the Company’s financial reports, in the third quarter of 2003 Consumer Portfolio Services began structuring its securitization transactions as secured financings, with receivables and associated debt remaining on the balance sheet, and without recognition of a gain on sale. Accordingly, net earnings will be recognized over the life of the receivables as interest income and fee income, less related funding costs and a provision for losses. Such loan loss provisions are recorded upon acquisition and during the life of the receivables. The effect is to accelerate recognition of expenses and defer recognition of revenue. As a result, reported earnings initially were less than what they would have been had the Company continued to structure its securitizations to record a gain on sale.

Conference Call
Consumer Portfolio Services announced that it will hold a conference call Tuesday, November 16, 2004, at 1:30 p.m. EST to discuss its quarterly results. Those wishing to participate by telephone may dial in at 973-409-9261 approximately 10 minutes prior to the scheduled time.

A replay will be available between November 16, 2004 and November 23, 2004, beginning one hour after conclusion of the call, by dialing 877-519-4471, reservation number is 5405114. A broadcast of the conference call will also be available live and for 30 days after the call via the Company’s web site at www.consumerportfolio.com and at www.streetevents.com.

About Consumer Portfolio Services, Inc.
Consumer Portfolio Services, Inc. is a consumer finance company that specializes in purchasing, selling and servicing retail automobile installment sale contracts originated by automobile dealers located throughout the United States. The Company is currently active in 38 states. Through its purchase of contracts, the Company provides indirect financing to car dealer customers with limited credit histories, low incomes or past credit problems, who generally would not be expected to qualify for financing provided by banks or by automobile manufacturers’ captive finance companies.

Forward-looking statements in this news release include the Company’s recorded revenue, expense, gain on sale revenue and provision for credit losses because these items are dependent on the Company’s estimates of future losses. The accuracy of such estimates may be adversely affected by various factors, which include (in addition to risks relating to the economy generally) the following: possible increased delinquencies; repossessions and losses on retail installment contracts; incorrect prepayment speed and/or discount rate assumptions; possible unavailability of qualified personnel, which could adversely affect the Company’s ability to service its portfolio; possible increases in the rate of consumer bankruptcy filings or changes in bankruptcy law, which could adversely affect the Company’s rights to collect payments from its portfolio; other changes in government regulations affecting consumer credit; possible declines in the market price for used vehicles, which could adversely affect the Company’s realization upon repossessed vehicles; and economic conditions in geographic areas in which the Company’s business is concentrated.

The statements concerning the intended structure of future securitizations and the effects of such structures on financial items are forward-looking statements. If the Company were to change the structure of future transactions, that could cause such forward-looking statements not to be accurate.

Any implication that the results of the most recently completed quarter are indicative of future results is disclaimed, and the reader should draw no such inference. Factors such as those identified above in relation to gain on sale and provision for credit losses may affect future performance.