CONSUMER PORTFOLIO SERVICES, INC. (NASDAQ:CPSS) Files An 8-K Entry into a Material Definitive Agreement

ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

The information contained in Item 2.03 of this report is hereby
incorporated by reference into this Item 1.01. The registrant
disclaims any implication that the agreements relating to the
transactions described in this report are other than agreements
entered into in the ordinary course of its business.

On January 18, 2017, the registrant Consumer Portfolio Services,
Inc. (CPS) and its wholly owned subsidiary CPS Receivables Five
LLC (Subsidiary) entered into a series of agreements under which
Subsidiary purchased from CPS, and sold to CPS Auto Receivables
Trust 2017-A (the Trust), approximately $131.5 million of
subprime automotive receivables (the Initial Receivables).
Subsidiary also committed to purchase and to sell to the Trust,
and CPS committed to sell to Subsidiary, an additional $78.5
million of similar automotive receivables (the Subsequent
Receivables and together with the Initial Receivables, the
Receivables).

ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR
AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A
REGISTRANT.

CPS, Subsidiary, the Trust and others on January 18, 2017,
entered into a series of agreements that, among other things,
created long-term obligations that are material to CPS,
Subsidiary and the Trust. Under these agreements (i) CPS sold the
Initial Receivables to Subsidiary, and committed to sell the
Subsequent Receivables to Subsidiary not later than March 4,
2017, (ii) Subsidiary sold the Initial Receivables to the Trust,
and committed to sell the Subsequent Receivables to the Trust,
(iii) the Trust deposited the Initial Receivables, and committed
to deposit the Subsequent Receivables, with Wells Fargo Bank,
N.A. (Wells Fargo), as trustee of a grantor trust, receiving in
return a certificate of beneficial interest (CBI) representing
beneficial ownership of the Receivables, (iv) the Trust pledged
the CBI to Wells Fargo as indenture trustee for benefit of the
holders of the Notes (as defined below), (v) the Trust issued and
sold $206,320,000 of asset-backed Notes, in five classes (such
Notes collectively, the Notes), (vi) a portion of the proceeds
from the sale of the Notes was pledged to Wells Fargo as trustee
for benefit of the holders of the Notes, to be used to fund the
purchase price of the Subsequent Receivables, and (vii) a cash
deposit (the Reserve Account) in the amount of 1.00% of the
aggregate balance of the Initial Receivables was pledged for the
benefit of the holders of the Notes.

Security for the repayment of the Notes consists of the Initial
Receivables and, when and if sold, the Subsequent Receivables,
and the rights to payments relating to the Receivables. The
Receivables were purchased by CPS from automobile dealers, and
CPS will act as the servicer of the Receivables. Credit
enhancement for the Notes consists of over-collateralization and
the Reserve Account. Wells Fargo will act as collateral agent and
trustee on behalf of the secured parties, and is the backup
servicer.

The Notes are obligations only of the Trust, and not of
Subsidiary nor of CPS. Nevertheless, the Notes are properly
treated as long-term debt obligations of CPS. The sale and
issuance of the Notes, treated as secured financings for
accounting and tax purposes, are treated as sales for all other
purposes, including legal and bankruptcy purposes. None of the
assets of the Trust or Subsidiary are available to pay other
creditors of CPS or its affiliates.

Upon completion of the anticipated February or March 2017 sale of
the Subsequent Receivables to the Trust, the Trust will hold a
fixed pool of amortizing assets. The Trust is obligated to pay
principal and interest on the Notes on a monthly basis. Interest
is payable at fixed rates on the outstanding principal balance of
each of the five classes of the Notes, and principal is payable
by reference to the aggregate principal balance of the
Receivables (adjusted for chargeoffs and prepayments, among other
things) and agreed required over-collateralization. The following
table sets forth the interest rates and initial principal amounts
of the five classes of Notes:

The 2017-A transaction has initial credit enhancement consisting
of a cash deposit equal to 1.00% of the original receivable pool
balance and over-collateralization of 1.75%. The final
enhancement level requires accelerated payment of principal on
the Notes to reach overcollateralization of 5.15% of the
then-outstanding receivable pool balance.

If an event of default were to occur under the agreements, the
Trustee would have the right to accelerate the maturity of the
Notes, in which event the cash proceeds of the Receivables that
otherwise would be released to Subsidiary would instead be
directed entirely toward repayment of the Notes. Events of
default include such events as failure to make required payments
on the Notes, breaches of warranties, representations or
covenants under any of the agreements or specified
bankruptcy-related events. In addition, if the Receivables
(pledged as security for the Notes) were to experience net loss
ratios that are higher than specified levels, the existence of
such a trigger event would also require that the cash proceeds of
the Receivables that otherwise would be released to Subsidiary
would instead be directed to payment of principal on the Notes,
until specified increased levels of overcollateralization were
achieved.

At such time as the aggregate outstanding principal balance of
the Receivables is less than 10% of the intended initial
aggregate balance of $210.0 million, CPS will have the option to
purchase the Trust estate at fair market value, provided that
such purchase price is sufficient to cause the Notes to be
redeemed and paid in full, and to cause other obligations of the
Trust to be met.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits

One exhibit is included with this report:

About CONSUMER PORTFOLIO SERVICES, INC. (NASDAQ:CPSS)

Consumer Portfolio Services, Inc. is a specialty finance company. The Company’s business is to purchase and service retail automobile contracts originated primarily by franchised automobile dealers and by select independent dealers in the United States in the sale of new and used automobiles, light trucks and passenger vans. Through its automobile contract purchases, the Company provides indirect financing to the customers of dealers having limited credit histories, low incomes or past credit problems, who it refers to as sub-prime customers. It serves as an alternative source of financing for dealers, facilitating sales to customers. The Company offers approximately eight financing programs to its dealership customers and prices each program according to the relative credit risk. Its financing programs are Bravo, First Time Buyer, Mercury/Delta, Standard, Alpha, Alpha Plus, Super Alpha and Preferred.

CONSUMER PORTFOLIO SERVICES, INC. (NASDAQ:CPSS) Recent Trading Information

CONSUMER PORTFOLIO SERVICES, INC. (NASDAQ:CPSS) closed its last trading session up +0.09 at 5.00 with 22,552 shares trading hands.