IRVINE, Calif. — As Consumer Portfolio Services continues to
buy more contracts, the company believes it's in a good personnel position to
handle more originations while the subprime auto finance segment gains steam.

CPS recently reported that it purchased $203.8 million of
new contracts during the second quarter, up from $180.1 million during the
first quarter of 2013 and $137.9 million during the year-ago period.

The growing originations left the company's managed
receivables at $1.067 billion as of June 30, an increase from $968.5 million as
of March 31 and $806.1 million as of June 30 of last year.

While the recession and credit crisis forced CPS to slash
its workforce, chairman and chief executive officer Charles E. Bradley Jr. highlighted
during a conference call after sharing the Q2 performance about how the finance
company again has the manpower to handle paper coming from active dealers.

"In terms of originations, we've done a very good job of
increasing our staffing to accommodate the growth and probably as best as we've
ever done it in the past when we've grown something that's probably true with
many companies," Bradley said according to a transcript of the call posted at
SeekingAlpha.com.

"As you get a big growth surge, it's very hard for the
originations folks to keep up. In this new sort of growth time or this cycle,
we've done an excellent job of having almost no hiccups whatsoever in terms of
originations folks being able to handle the growth coming in," he continued.

"It's very noteworthy for us because that's always been a
problem in the past. Again, I think we're almost staffed to where we could
usually handle, over the next year, $100 million to $125 million in
originations per month. And today, we currently sit right around $70 million compared
to the second quarter of 2012," Bradley went on to say.

Overall Q2 Performance

With originations on the way up, CPS reported that its
second-quarter earnings came in at $4.8 million or $0.15 per diluted share,
marking a jump from the company's net income of $1.3 million or $0.05 per
diluted share during the year-ago period.

Earnings for the first six months of this year came in at
$8.6 million or $0.27 per diluted share as compared to earnings of $1.9
million, or $0.08 per diluted share for the first half of last year.

CPS' revenues for the second quarter soared to $70.5
million, an increase of $26.3 million or 60 percent compared to $44.2 million
for Q2 of 2012.

The company's total operating expenses for the second
quarter also rose, coming in at $61.9 million an increase of $19.1 million or
45 percent. A year earlier, total operation expenses were $42.8 million.

Looking at revenue and expenses for first six months of the
year, the company tabulated that revenue jumped 41 percent from $88.7 million
to $125.1 million while expenses moved 27 percent higher from $86.8 million to $110.0
million.

"The second quarter of 2013 was another good quarter for CPS,"
Bradley said. "Our managed portfolio continues to grow as we purchase new
contracts with attractive yields and credit demographics.

"Asset performance metrics, while higher year-over-year, are
well within our expectations as credit trends ‘normalize' after the very tight
lending period following the financial crisis," he continued.

As Bradley referenced, the company reported that its annualized
net charge-offs for Q2 settled at 4.03 percent of the average owned portfolio
as compared to 3.16 percent a year earlier.

CPS' delinquencies greater than 30 days (including
repossession inventory) represented 5.16 percent of the total owned portfolio
as of June 30 as compared to 3.81 percent as of the same date last year.

"In addition, we extended the revolving period of our second
credit facility in June for two years and added a one-year amortization period
thereafter," Bradley said. "As a result, both of our credit facilities now have
multi-year revolving periods plus amortization periods. These features give us
considerably more financial flexibility across a variety of capital markets
environments."

As previously reported in June, CPS closed its second term
securitization transaction of the year and the ninth transaction since April of
2011.

In the senior subordinate structure, the company explained a
special purpose subsidiary sold five tranches of asset-backed notes totaling
$205.0 million. The notes are secured by automobile receivables purchased by
CPS and have a weighted average effective coupon of approximately 2.34 percent.
The transaction has initial credit enhancement consisting of a cash deposit
equal to 1.00 percent of the original receivable pool balance.

The company added that the final enhancement level requires
accelerated payment of principal on the notes to reach overcollateralization of
11.50 percent of the then-outstanding receivable pool balance.

Importance of Cash

CPS' second-quarter report showed that total cash and cash
equivalents stood at $141.45 million as of June 30, up from $117.41 million at
the close of last year. Bradley explained why he wants the company to have that
balance sheet metric at that level or higher.

"Certainly as everybody knows, we got caught a little bit
over-leveraged in the last recession. Our major goal in life is to make sure
that doesn't happen again," Bradley said according to the SeekingAlpha.com
transcript.

"And so as much as we are sitting on a lot of cash, our goal
going forward is to retire corporate debt as it comes due and get in a position
within the next year where we have no corporate debt. And so some of the cash
we used for that. I think having a lot of liquidity is a strong position to be
in," he continued.

Besides getting out of debt, Bradley touched on another
potential purpose for that cash.

"One of the things I did mention earlier in the call was
that we're always looking for acquisitions," Bradley said. "Acquisitions appear
to be sort of far and few between. There's a lot of competition out there on
Wall Street for people look for places to put money. And so we haven't really
had any opportunities along those lines, but to the extent we did, that would
be handy to have the cash.

"But predominantly, our positioning on the cash is to use
the cash, reduce our corporate debt, as it comes due and to have lots of cash
to the extent we might need it for a rainy day or a corporate opportunity or
any such event," he went on to say.

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