All shares represented by properly executed proxies received in time will be voted at the Annual Meeting and, where the manner of voting is specified on the proxy, will be voted in accordance with such specifications. Any shareholder who executes and returns a proxy may revoke it at any time prior to the voting of the proxy by giving written notice to the Secretary of the Company, by executing a later-dated proxy, or by attending the meeting and giving oral notice of revocation to the Secretary of the Company.

The Board of Directors of the Company has fixed the close of business on February 20, 2013,April 8, 2014, as the record date for determining the holders of outstanding shares of the Company's Common Stock, without par value ("CPS Common Stock") entitled to notice of, and to vote at the Annual Meeting. On that date, there were 20,101,96324,799,656 shares of CPS Common Stock issued and outstanding.  Each such share of CPS Common Stock is entitled to one vote on all matters to be voted upon at the meeting, except that holders of CPS Common Stock have the right to cumulative voting in the election of directors, as described herein under the heading "Voting of Shares."

The notice of the Annual Meeting, this proxy statement and the form of proxy are first being mailed to shareholders of the Company on or about March 20, 2013.April 30, 2014.  The Company will pay the expenses incurred in connection with the solicitation of proxies.  The proxies are being solicited principally by mail. In addition, directors, officers and regular employees of the Company may solicit proxies personally or by telephone, for which they will receive no payment other than their regular compensation.  The Company will also request brokerage houses, nominees, custodians and fiduciaries to forward soliciting material to the beneficial owners of Common Stock of the Company and will reimburse such persons for their expenses so incurred.

The individuals named below have been nominated for election as directors of the Company at the Annual Meeting, and each has agreed to serve as a director if elected.  The entire board of directors of the Company is elected annually.  Directors serve until the next annual meeting of shareholders and until their successors are duly elected and qualified.

The names of the nominees, their principal occupations, and certain other information regarding them are set forth below. None of the nominees currently serves on the board of directors of any other publicly-traded companies.

The members of the Audit Committee are Mr. Wood (chairman), Mr. Rayhill and Mr. Washer.

The Audit Committee is empowered by the Board of Directors to review the financial books and records of the Company in consultation with the Company's accounting and auditing staff and its independent auditors

and to review with the accounting staff and independent auditors any questions that may arise with respect to accounting and auditing policy and procedure.

The Board of Directors has further determined that Mr. Wood has the qualifications and experience necessary to serve as an "audit committee financial expert" as such term is defined in Item 407 of Regulation S-K promulgated by the SEC.   Mr. Wood, as president of Carclo Technical Plastics, was responsible for the preparation and evaluation of the audited financial statements of that company.

The members of the Compensation Committee are Mr. Adams (chairman), Mr. Roberts, and Mr. Wood.   This Committee makes determinations as to general levels of compensation for all employees of the Company and the annual salary of each of the executive officers of the Company, and administers the Company's compensation plans.  Those plans include the Company's 1997 Long-Term Stock Incentive Plan, the Executive Management Bonus Plan, and the CPS 2006 Long-Term Equity Incentive Plan.

The members of the Nominating Committee are Mr. Rayhill (chairman), Mr. Adams and Mr. Washer. Nominations for board positions are made on behalf of the Board of Directors by the nominating committee.  Because neither the Board of Directors nor its nominating committee has received recommendations from shareholders as to nominees, the Board of Directors and the nominating committee believe that it is and remains appropriate to operate without a formal policy with regard to any director candidates who may in the future be recommended by shareholders.  The nominating committee would consider such recommendations if received.

When considering a potential nominee, the nominating committee considers the benefits to the Company of such nomination, based on the nominee's skills and experience related to managing a significant business, the willingness and ability of the nominee to serve, and the nominee's character and reputation. The Company does not have a policy regarding the consideration of diversity in identifying nominees for director.

Shareholders who wish to suggest individuals for possible future consideration for board positions, or to otherwise communicate with the Board of Directors, should direct written correspondence to the corporate secretary at the Company's principal executive offices, indicating whether the shareholder wishes to communicate with the nominating committee or with the Board of Directors as a whole.  The present policy of the Company is to forward all such correspondence to the designated members of the Board of Directors.  There have been no changes in the procedures regarding shareholder recommendations in the past year.

Directors, executive officers and holders of in excess of 10% of the Company's common stock are required to file reports concerning their transactions in and holdings of equity securities of the Company.  Based on a review of reports filed by each such person, and inquiry of each regarding holdings and transactions, the Company believes that all reports required with respect to the year 20122013 were timely filed.filed, except that a gift by Mr. Roberts, an option exercise by Mr. Adams and a transfer of shares to Mr. Bradley from a wholly-owned corporation each were reported late.

The Company has adopted a Code of Ethics for Senior Financial Officers, which applies to the Company's chief executive officer, chief financial officer, controller and others.  A copy of the Code of Ethics may be obtained at no charge by written request to the Corporate Secretary at the Company's principal executive offices.

The Board of Directors held four meetings and acted seven times by written consent during 2012.2013.  The Audit Committee met five times during 2012,2013, including at least one meeting per quarter to review the Company's financial statements, and acted once by written consent, while the Compensation Committee met four times during 20122013 and did not actacted once by written consent.  The Nominating Committee met once during 2012.2013.  Each nominee attended at least 75% of the meetings of the Board of Directors and its committees that such individual was eligible to attend in 2012, other than Mr. Roberts, who missed the 75% measure by one, attending five of the eight meetings he was eligible to attend.2013.  The Company does not have a policy of encouraging directors to attend or discouraging directors from attending its annual meetings of shareholders.  No directors attended last year’s annual meeting of shareholders.

The Audit Committee of the Board of Directors has appointed the accounting firm of Crowe Horwath LLP ("Crowe") to be the Company's independent auditors for the year ending December 31, 2013.2014.  Crowe also performed the audit of the Company's financial statements for the years ended December 31, 2008 through 2012.2013.

A proposal to ratify the Audit Committee’s appointment of Crowe will be presented to shareholders at the Annual Meeting.  If the shareholders do not ratify the selection of Crowe at the Annual Meeting, the Audit Committee will consider selecting another firm of independent public accountants.  Representatives of Crowe are expected to be present at the Annual Meeting. Such representatives will have an opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions from shareholders in attendance.

The following table sets forth the fees accrued or paid to the Company’s independent registered public accounting firms for the years ended December 31, 20122013 and 2011.2012. Crowe has served as the Company’s independent registered public accounting firm since February 2009, and reported on the Company’s financial statements for the years ended December 31, 2008 through 2012.2013.

The Audit Committee acts pursuant to a written charter adopted by the Board of Directors.  Pursuant to the charter, the Audit Committee pre-approves the audit and permitted non-audit fees to be paid to the independent auditor, and authorizes on behalf of the Company the payment of such fees, or refuses such authorization.  The Audit Committee has delegated to its chairman and its vice-chairman the authority to approve performance of services on an interim basis. In the fiscal years ended December 31, 20122013 and December 31, 2011,2012, all services for which audit fees or audit related fees were paid were preapproved by the Audit Committee as a whole, or pursuant to such delegated authority.

In the course of its meetings, the Audit Committee has considered whether the provision of the non-audit fees outlined above is compatible with maintaining the independence of the respective audit firms, and has concluded that such independence is not and was not impaired.

The say-on-pay vote is advisory, and therefore not binding on the Company, the Compensation Committee or the Board of Directors. The say-on-pay vote will, however, provide information to the board and the Compensation Committee regarding investor sentiment about our executive compensation philosophy, policies and practices, which the Compensation Committee will be able to consider when determining executive compensation for the remainder of the current fiscal year and beyond. The Board of Directors and its Compensation Committee value the opinions of the shareholders; accordingly, to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, the Compensation Committee will consider the shareholders’ concerns and evaluate whether any actions are necessary to address those concerns.

Following is a summary of some of the key points of our 20122013 executive compensation program:

We believe that the information provided above and within the Executive Compensation section of this proxy statement demonstrates that our executive compensation program was designed appropriately and is working to ensure management’s interests are aligned with our shareholders’ interests to support long-term value creation. We also believe the compensation paid to our executive officers during 20122013 was appropriate in light of our financial performance.

Accordingly, we ask that our shareholders vote “FOR” the following resolution, which will be presented at the Annual Meeting:

At the Annual Meeting, the Company’s shareholders will be requested to consider and act upon a proposal to approve the material terms of the updated Executive Management Bonus Plan (the “EMB Plan”), a copy of which is attached as Appendix B.A.

The EMB Plan is a formal statement of policies that have generally guided the Company’s criteria for award of annual bonus compensation to its officers for many years. The material terms of the existingCompany’s EMB Plan were approved by the shareholders in June 2008. Such shareholder approval is effective for2008, and were re-approved by the shareholders in 2013. Among the terms specifically approved by the shareholders was a periodlist of five years. Accordingly, the Boardobjective performance criteria to be used in evaluation of Directorsexecutive performance. The Compensation Committee has directeddetermined that the material termsit would be advantageous to be able to select from a larger set of such criteria, has amended the EMB Plan be submitted to include such an expanded set, and is submitting the Company’s shareholders to request approval at this 2013 Annual Meeting.amended EMB Plan for shareholder approval.

The purpose of the EMB Plan is to increase shareholder value by providing an incentive for the achievement of goals that support CPS strategic plan. Although noNo shareholder approval is required for the Company to enact and maintain a bonus plan for its executives, shareholder approval of the material terms of the EMB Plan is required to ensure tax deductibility by the Company of bonuses payable thereunder. Accordingly,executives; accordingly, the amendment to the EMB Plan will be effective whether or not the shareholders approve the material terms at the Annual Meeting.  Shareholder approval of the material terms of the EMB Plan is sought because tax deductibility by the Company of bonuses paid under the EMB Plan may not be available with respect to certain executive officers in the absence of such approval. If such approval is not given, and the Company in the future pays compensation thereunder in excess ofunder the limits containedEMB Plan beyond the authorization given in the pre-amendment EMB Plan, the Company's abilityCompany may not be able to treat such compensation as a deductible expense for tax purposes may be limited.purposes.  The Company, acting through its Compensation Committee, would take that fact into account in determining whether to exceed the pre-amendment limits.grant incentives on that basis.

Set forth below is a summary of the material terms of the EMB Plan that shareholders are being asked to approve.

      The EMB Plan has been designed to take into account certainstatutory limits on the ability of a public corporation to claim tax deductions for compensation paid to certain highly compensated executives. Section 162(m) of the Internal Revenue Code generally denies a corporate tax deduction for annual compensation exceeding $1 million paid to the chief executive officer and the four other most highly compensated officers of a public corporation.corporation (“named executive officers”), whose compensation is individually disclosed pursuant to the rules of the Securities and Exchange Commission.. However, “performance-based compensation” which that is compensation paid solely upon the achievement of Objective Performance Goals, where the material terms of which are approved by the shareholders of the paying corporation will still qualify for a corporate tax deduction. The shareholdersand other requirements are met, is exempted from the limitation of Section 162(m). To reduce the chance of the CompanyCompany’s being denied such a deduction, the shareholders are accordingly being asked to approve the material terms of the EMB Plan, as described above.

The following table summarizes all compensation earned during the twothree fiscal years ended December 31, 2012 and 20112013 by the Company's chief executive officer and the other two most highly compensated individuals (such three individuals, the "named executive officers") who were serving in such position or as executive officers at any time in 2012.2013. It lists their names, the principal positions in which they served in those years, and each component of compensation paid with respect to those years.

In the year ended December 31, 2012,2013, we did not grant any stock awards or stock appreciation rights to any of our named executive officers.  We granted options to substantially all of our management level employees on April 3February 5 and July 16, 2012, and to our chief executive officer and four others on November 8, 2012.May 7, 2013. The option grants noted in the tables above and below were awarded to the named executive officers as part of those grants.

In the April 2012February 2013 grant, the chief executive officer received an option to purchase 140,000250,000 shares of the Company's common stock at the market closing price ($1.206.86 per share) on the date of grant, with such right to purchase to become exercisable in increments of 20% on each of the first through fifth anniversaries of the grant date, and to expire on the tenth anniversary.  Each of the other executive officers of the Company received a grant at that time on the same terms.  Mr. Lavin and Mr. Riedl received such a grant with respect to 75,000 shares, and the other executive officers of the Company received such a grant with respect to 60,000 shares.

In the May 2013 grant, the chief executive officer received options to purchase 250,000 shares of the Company's common stock at the market closing price ($7.97 per share) on the date of grant, with such right to purchase to become exercisable in increments of 20% on each of the first through fifth anniversaries of the grant date, and to expire on the tenth anniversary. Each of the other executive officers of the Company (including the named executive officers) received a grant at that time on the same terms, with respect to 36,00060,000 shares.

The following table sets forth as of December 31, 20122013 the number of unexercised options held by each of the named executive officers, the number of shares subject to then exercisable and unexercisable options held by such persons and the exercise price and expiration date of each such option.  Each option referred to in the table was granted at an option price

OfEach of the named executive officers Messrs. Bradley and Lavin exercised stock options during 2012.2013.  Mr. Bradley realized value of $169,150$220,400 by exercising options to purchase 85,00040,000 shares, Mr. Riedl realized value of $593,600 by exercising options to purchase 95,000 shares, and Mr. Lavin realized value of $23,880$1,441,158 by exercising options to purchase 12,000 shares, in each case252,200 shares.  Mr. Bradley’s exercise was on July 23, 2012, which was the date15, 2013. Mr. Riedl exercised options with respect to 75,000 shares on which suchJanuary 30, 2013, and with respect to 20,000 shares on July 16, 2013. Mr. Lavin exercised options would otherwise have expired.with respect to 242,000 shares on August 13, 2013, and with respect to 10,000 shares on July 8, 2013. Subsequent to year-end, Mr. Riedl realized value of $336,750$624,800 by exercising options to purchase 75,00080,000 shares on January 30, 2013.2, 2014, and Mr. Bradley realized value of $1,356,000 by exercising options to purchase 240,000 shares on April 25, 2014.

The salary and cash bonus of the named executive officers are determined by the Compensation Committee. The compensation appearing in the Summary Compensation Table above under the caption "Non-Equity Incentive Plan Compensation" is paid pursuant to an executive management bonus plan (the “EMB Plan”).   The EMB Plan is administered by the Compensation Committee. Among other things, the Compensation Committee selects participants in the EMB Plan from among the Company’s executive officers and determines the performance goals, target amounts and other terms and conditions of awards under the EMB Plan. With respect to officers other than the chief executive officer, determinations of base salary and of criteria relating to the EMB Plan are based in part on evaluations of such officers prepared by the chief executive officer, which are furnished to and discussed with the Compensation Committee.

Secondary objectives, each valued at 10%20% unless otherwise indicated, were to open a new residual credit facility; to raise capital in an additionalequity offering at a price of no less than $7.00 per share; to cause such an equity offering to be executed at a price of no less than $8.00 per share; to open a new warehouse credit facility; to renew the Company’s existing warehouse credit facility with Goldman Sachs Bank; to put into place a program for independent dealers, to find an opportunity to purchase a portfolio (20%), to increaserenew or repay the applicable advance for our warehouse financing (20%), open a newCompany’s existing residual financing credit facility with affiliates of Citibank,to complete three securitizations (10% each),acquire a substantial new servicing portfolio, by acquisition or appointment (30%); and to increase the effective advance rate in our April 2010 delayed draw credit facility.settle a specified lawsuit.

The committee evaluated the chief executive’s performance in comparison to the goals.  ItWith respect to the major objectives, it determined that we increased our originations volumethe Company within 2013 raised its monthly purchases of retail installment contracts to a level in excess of $30$70 million, per month while maintaining credit quality,but below $75 million, representing creditable performance of the full target 40%. The committee’s global evaluation of our other officers’ performance was that the objective was 80% met. As applied to the chief executive’s target of 40%, this yielded creditable performance of 32%30%. The committee determined that the budget objective was met only inCompany that attracted coverage from two equity analysts who had not previously covered the first quartercompany, representing creditable performance of 2011, and credited the chief executive with 10% value out of the maximum target of 40%50%. The committee evaluated the total shareholder return from the end of 2012 through the end of 2013, and determined that the 99.8% increase in market price of the common stock (the company having distributed no dividends) represented creditable performance of 45%. Finally, the committee reviewed Company’s earnings for each quarter of 2013, noted that we extendedeach quarter’s earnings exceeded the maturity of our residual credit facility in May 2011 (40%), that we opened a second warehouse credit facility in February 2011 (10%),related objectives, and that we acquired a bulk portfolio of receivables in September 2011 (20%).  The committee determined that our new program for independent dealerssuch performance was creditable at 60% in place (10%), andthe aggregate.

With respect to the secondary objectives, the committee noted that we executed three securitizationsthe Company in April 2013 sold $20 million of regular receivables (30%). Further, although we did not opennotes in a new residual credit facility, we were successful in raising the effective advance rates applicable

The aggregate valuation of creditable performance was 222%,245% of the executive’s base salary of $940,000, which would imply a bonus payment under our executive management bonus plan of $1,998,000.  In light of$2,303,000.  The compensation committee determined that our having incurred substantial lossesimproved earnings for the year, the committee electedyears 2012 and 2013 made it reasonable to payrefrain from a discretionary reduction in computed earned bonus, and approved payments to our chief executive of twenty percentage points less than the creditable percentage,a cash bonus in the amount of $1,814,107, representing 202% of our chief executive’s base salary.full implied amount.

Our compensation committee set separate objective and subjective goals for our other named executive officers, Michael Lavin (our corporategeneral counsel) and Robert Riedl (our(then our chief investment officer, now our chief operating officer).  Each such goal carried a target valuation, expressed as a percentage of the officer’s base salary, with a total maximum target of 100%150% of each such officer’s base salary.  Each of these officers was evaluated against common standards, as follows:

In addition, each of the two officers was tasked with three individual operational goals with an aggregate maximum value of 20%24% of base salary.

Our compensation committee evaluated each officer’s performance in relation to these standards and goals. As the corporation did not meetThe Company met its overall budget target, and each officer accordingly received zerofull credit with respect to that 20%10% target.

Regarding Mr. Lavin, the compensation committee, acting in part on the advice of our chief executive officer, determined that creditable performance for 20112013 was 19.8%15% with respect to individual performance, 20%36% with respect to departmental performance, and 20%24% with respect to operational goals. The compensation committee approved the chief executive’s recommendation of an additional 20%14% as discretionary performance credit. Total creditable performance for our corporategeneral counsel was thus computed as 79.8%99% of his $283,000$348,000 base salary, which would imply a bonus payment under our executive management bonus plan of $226,000.$345,000.

Regarding Mr. Riedl, the compensation committee, acting in part on the advice of our chief executive officer, determined that creditable performance for 20112013 was 18.6%13.6% with respect to individual performance, 20%34% with respect to departmental performance, and 18%24% with respect to operational goals.  The compensation committee approved the chief executive’s recommendation of an additional 20%14% as discretionary performance credit. Total creditable performance for our chief investment officer was thus computed as 76.6%

95.6% of his $340,000$385,000 base salary, which would imply a bonus payment under our executive management bonus plan of $260,000. In light of$368,000.

The compensation committee determined that our having incurred substantial lossesimproved earnings for the year, the committee electedyears 2012 and 2013 made it reasonable to pay to each of these two officersrefrain from a discretionary reduction in computed earned bonus, of less than the creditable percentage. In each case, the committee reduced the computed bonus amounts by 20%, resulting inand approved payments to our corporategeneral counsel and chief investment officers,officer, respectively, of $181,000$345,000 and $208,000.$368,000.

Secondary objectives, each valued at 20% unless otherwise indicated, were to open an additional warehouse credit facility, to extend or replace our residual credit facility, to increase the applicable advance for our warehouse financing, to complete the previous year’s audit with a clean opinion (10%), to settle certain long-outstanding litigation on favorable terms (10%), and to complete four securitizations (5% each).

The committee evaluated the chief executive’s performance in comparison to the goals.  It determined that we increased our originations volume to in excess of $50 million per month while maintaining credit quality, representing creditable performance in the amount of the full target of 40%. The committee’s global evaluation of our other officers’ performance was that the objective was 87% met. As applied to the chief executive’s target of 40%, this yielded creditable performance of 34%.  The committee determined that the budget objective was met in each quarter of 2012, and credited the chief executive with the full value of 40%.  The committee noted that we did not have the opportunity to purchase a portfolio or company on favorable terms, and assigned zero value to that objective.  Finally, the committee noted that our common stock had traded above all the targets from September 2012 onward, representing creditable performance of 40%.

Our compensation committee set separate objective and subjective goals for our other named executive officers, Michael Lavin (our corporate counsel) and Robert Riedl (our chief investment officer).  Each such goal carried a target valuation, expressed as a percentage of the officer’s base salary, with a total maximum target of 100% of each such officer’s base salary.  Each of these officers was evaluated against common standards, as follows:

In addition, each of the two officers was tasked with three individual operational goals with an aggregate maximum additional value of 24% of base salary.

Our compensation committee evaluated each officer’s performance in relation to these standards and goals. As the corporation succeeded in meeting its overall budget target, each officer received full credit with respect to that 10% target.

Regarding Mr. Riedl, the compensation committee, acting in part on the advice of our chief executive officer, determined that creditable performance for 2012 was 12.8% with respect to individual performance, 30% with respect to departmental performance, and 24% with respect to operational goals. The compensation committee approved the chief executive’s recommendation that no discretionary performance credit be allocated. Total creditable performance for our chief investment officer was thus computed as 76.8% of his $374,000 base salary, which yielded an indicated bonus payment under our executive management bonus plan of $287,000. The committee elected to pay to each of these two officers a bonus in the full indicated amount.

The Company's officers do not participate in any pension or retirement plan, other than a tax-qualified defined contribution plan (commonly known as a 401(k) plan). Each of the named executive officers is employed "at will" by the Company, and none has an employment contract.  The Compensation Committee has considered entering into agreements with one or more of the Company's officers that might pay additional compensation following a change in control, and may authorize such agreement(s) in the future, but no such agreements are in place as of the date of this report.

The table below sets forth the number and percentage of shares of the our Common Stock (our only class of voting securities) owned beneficially as of the February 20, 2013,April 8, 2014, the record date, by (i) each person known to us to own beneficially more than 5% of the outstanding Common Stock, (ii) each nominee for election as director orand each named executive officer, and (iii) all of our director nominees and executive officers, as a group. Except as otherwise indicated, and subject to applicable community property and similar laws, each of the persons named has sole voting and investment power with respect to the shares shown as beneficially owned by such persons.  Except as otherwise noted, each person named in the table has a mailing address at 19500 Jamboree Road, Irvine, California 926123800 Howard Hughes Parkway, Suite 1400, Las Vegas, Nevada 89169.

Under the original facility, CPS sold eligible residual interests in securitizations to the borrower, which in turn pledged the residuals as collateral for floating rate borrowings from the note purchaser. The amount available for borrowing was computed by the administrative agent using a valuation methodology of the residuals, and was subject to an overall maximum principal amount of $120 million. The indebtedness of the borrower was represented by (i) a $60 million Class A-1 Variable Funding Note, and (ii) a $60 million Class A-2 Term Note. The facility's revolving feature was to expire by its terms on July 10, 2008, and the Class A-1 Note was to be due at that time. The Class A-2 Note was to be due on July 10, 2009.

With the amendments to this facility, CPS prepaid a portion of the outstanding notes, reducing the outstanding principal balance to $70 million, and the notes were re-designated as (i) a $10 million Class A-1 Term Note, and (ii) a $60 million Class A-2 Term Note. Approximately $4 million of the principal prepayment represented the agreed value of a warrant to purchase (for nominal consideration) 2,500,000 shares of Company common stock, which warrant was issued to an affiliate of CGFP, and was subsequently transferred to CGFP. Upon issuance of such warrant, CGFP became a person with beneficial ownership of greater than 5% of the Company’s common stock. The Class A-1 Term Note and Class A-2 Term Note provide for minimum required levels of amortization, and were due in June 2009. However, the Company also received an option, if certain conditions were met, to extend the maturity for an additional year to June 2010. The maturity was so extended in 2009. On May 27, 2010, the Company and CGFP agreed to further amendments, which (i) extended the maturity date from June 15, 2010 to May 26, 2011, and (ii) increased the interest rate by 2.00%, to a floating rate equal to 30 day LIBOR plus 12.875%. The Company also paid an extension fee of $400,000, and agreed to change the priority of

The maximum principal amount of such indebtedness to CGFP during 20122013 was $21.9$13.8 million, and during 2011 was $39.4 million.  During 2012,2013, the Company paid $8.1$13.8 million of principal and $2.2$1.3 million of interest on the debt. During 2011, the Company paid $17.5 million of principal and $4.0 million of interest on the debt. The principal amount outstanding as of February 28, 20132014 is $13.8$0.0 million.  Interest on such indebtedness accrued throughout 20112012 and 20122013 at a floating rate computed as 30-day LIBOR plus 12.875%.

On March 10, 2010, the Company repurchased a portion of the warrant, representing 500,000 of the 2,500,000 shares available for purchase upon exercise of such warrant.  The aggregate purchase price of $979,995 paid to CGFP represented a per-share price of $1.96 per share, which was the closing price of the Company’s common stock for March 9, 2010, less the nominal exercise price of that portion of the warrant.

On September 26, 2008, the Company sold approximately $198.7 million in adjusted principal amount of automobile purchase receivables to its wholly-owned subsidiary CALT SPE, LLC, which then transferred those receivables to Auto Loan Trust, a Delaware statutory trust (the “2008-B Trust”).  Those receivables are substantially all of the assets of the 2008-B Trust.  The purchase price was funded by the 2008-B Trust’s issuance and sale of structured notes.  An affiliate of CGFP purchased 95% of the notes, and the Company purchased the remaining 5%.  CGFP and the Company held the residual interests in the 2008-B Trust.

On September 27, 2010, the Company purchased from the 2008-B Trust the receivables that it had sold in the September 26, 2008 transaction, causing the outstanding notes issued by the 2008-B Trust to be repaid (in the aggregate principal amount of $62.4 million).  On the same date, the Company sold those purchased receivables to its wholly-owned subsidiary CPS Receivables Four LLC, which then transferred the receivables to CPS Auto Receivables Trust 2010-A, a Delaware statutory trust (the “2010-A Trust”).  Those receivables are substantially all of the assets of the 2010-A Trust.  The purchase price was funded by the 2010-A Trust’s issuance and sale of three classes of structured notes.

On August 26, 2011, another affiliate of Citigroup (Citigroup Global Markets, Inc. or “CGMI”) agreed to purchase certain below investment grade notes to be issued not later than August 25, 20122013 by securitization trusts sponsored by CPS.   In September 2011, December 2011 and March 2012,quarterly thereafter, CGMI acted as a placement agent of asset-backed notes issued by securitization trusts sponsored by CPS.  The issuances of investment-grade and below investment-grade notes, the amounts of below investment-grade notes purchased by CGMI, the role of CGMI in these transactions, and the placement compensation to CGMI, are set forth in the following table:

On May 11, 2012, the Company entered into a one-year revolving credit agreement (the "Citi Warehouse Agreement") and related agreements with affiliates of Citigroup and others, under which the lenders have agreed to lend up to a maximum of $100 million, to be secured by automobile receivables. In connection with the Citi Warehouse Agreement, the Company paid a closing fee of $1,000,000. The Company first incurred indebtedness under the Citi Warehouse Agreement in the

The maximum principal amount of indebtedness under the Citi Warehouse Agreement during 20122013 was $53.1$85.0 million.  During 2012,2013, the Company paid $172.4$365.8 million of principal and $1.1$2.0 million of interest on such debt. As of February 28, 2013,2014, the principal amount owed was $42.1$23.1 million. The Company intends to incur additional indebtedness under the Citi Warehouse Agreement from time to time as it purchases motor vehicle receivables from dealers

In connection with the Securities Purchase Agreement, the Company paid to LLCP a closing fee of $1.1 million and issued to LLCP (i) 1,225,000 shares of the Company’s common stock, (ii) a warrant that

represented the right to purchase, at the time of issuance, 275,000 shares of the Company’s common stock, at a nominal exercise price (the "N Warrant"), and (iii) a warrant that represented the right to purchase, at the time of issuance, 1,500,000 shares of the Company’s common stock, at an exercise price of $2.573 per share (the "FMV Warrant").  The number of shares subject to each warrant and the exercise price of each warrant are subject to certain adjustments contained in the warrants.  Exercise of the warrants was contingent upon the Company’s obtaining the approval of its shareholders, which was obtained on September 16, 2008.

Under the Securities Purchase Agreement, subject to the satisfaction of certain terms and conditions, LLCP also agreed to purchase an additional $15 million note to be issued by the Company. That obligation was subject to a number of conditions being satisfied, including, without limitation, a successful amendment and restatement of the Company’s indebtedness to CGFP, described above. Those conditions were satisfied and the additional note was issued on July 10, 2008. The additional note hashad substantially the same terms as the $10 million note.

In connection with the Securities Purchase Agreement, the Company entered into an Investor Rights Agreement with LLCP that granted LLCP certain monitoring and other rights, including the right to cause an individual designated by LLCP to be nominated and elected to the Company’s board of directors.  In addition, the Investor Rights Agreement granted to LLCP rights of first refusal with respect to future issuances of equity securities by the Company and contains restrictions on the Company’s ability (and the ability of the Company’s subsidiaries) to issue equity securities.  Such restrictions made it necessary to seek the consent of LLCP with respect to the option exchange program approved by the Company’s shareholders in 2009.  LLCP consented to the transactions composing such option exchange program, provided that the antidilution terms of its FMV Warrant were modified upon completion of the option exchange program to provide for a decrease in the exercise price, but not an increase in the number of underlying shares, of the FMV Warrant.  The exercise price of the FMV Warrant was accordingly reduced, in December 2009, from $2.4672 per share to $1.44 per share.  Upon such adjustment, the Company recorded expense in an amount computed by reference to the fair value of the modified FMV Warrant.  That additional expense was $78,216.

Pursuant to the anti-dilution provisions of the LLCP warrants, other transactions have also resulted in adjustments to such warrants’ terms. Those other transactions are the Company’s July 10, 2009, transactions with CGFP, described above, its issuance of a stock purchase warrant in the Fortress Investment Group transaction, described below, and the Company’s subsequent issuance of another warrant in a financing transaction on March 26, 2010. The resulting adjustments are that the number of shares issuable upon exercise of the N Warrant isbecame 285,781, and upon exercise of the FMV Warrant isbecame 1,611,114.  The exercise price of the FMV Warrant haswas also been adjusted, to $1.39818 per share.  All of the LLCP warrants were exercised on a net basis on November 5, 2013 (a portion of the shares issuable are deemed surrendered as payment of the warrant exercise price), resulting in the net issuance of 1,570,090 shares.  The 326,805 shares deemed surrendered were valued at $6.89 per share, computed pursuant to the terms of the warrants as the average reported closing price of such shares over the preceding 20 trading days.

On November 13, 2009, the Company issued and sold a further $5 million note to LLCP, paying a closing fee of $250,000.  The indebtedness represented by the additional note was originally due May 31, 2010, and was successively extended until it was included in the December 23, 2010 transactions described below.

On December 23, 2010, the Company received an additional investment of $20 million from LLCP.  The new debt bearsbore interest at 16% per annum, and iswas due December 31, 2013.  In addition, the maturity of the existing $30 million of indebtedness of the Company owed to LLCP was extended to December 31, 2013.  In these transactions, the Company issued to LLCP (i) amended and restated notes in the total principal amount of $52,750,000, of which $2,750,000 was a discount representing compensation to LLCP as note purchaser, $20 million represented a new investment, and $30 million represented the three notes previously issued and outstanding, (ii) 880,000 shares of common stock, and (iii) 1,870 shares of a newly-created series of preferred shares (the “Series B Preferred”).  The Company sought and obtained, effective June 15, 2011, shareholder approval to convert the shares of the Series B Preferred into 1,870,000 shares of common stock, which were then so converted. 

On March 31, 2011, the Company issued and sold to LLCP a new “Term E” $5 million note due February 29, 2012.  The Company also purchased from LLCP a portion of an outstanding subordinated note issued by our CPS Cayman Residual Trust 2008-A, and financed that purchase by issuing to LLCP a new “Term D” note in the amount of $3,000,000, due June

on November 21, 2011 a “Term F Note” in the amount of $5,000,000, due eleven months after issuance.  In February 2012 the maturity of the Term E note was extended, to March 23, 2012.  The Company repaid the Term E Note on that date, repaid the Term D Note on June 30, 2012 and repaid the Term F Note on October 1, 2012. The Term D, Term E and Term F notes bore interest at 14% per annum while outstanding. 

Affiliates of LLCP havehad purchased other senior secured debt securities from the Company, and havehad held as much as 4.5 million shares of the Company's common stock, at various times prior to any of the transactions described above. No such prior debt securities issued to affiliates of LLCP had been outstanding since July 2007, and no such shares had been held by such affiliates of LLCP since December 2007. LLCP or its affiliates may in the future provide the Company with financial advisory or other services, for which it or they may receive compensation in such amounts and forms as may be determined by negotiation.

In connection with the Fortress Warehouse Credit Agreement, the Company paid a closing fee of $750,000 and issued to an affiliate of Fortress a warrant (the “Fortress Warrant”) to purchase 1,158,087 shares of common stock (which was in excess of 5% of the Company’s shares outstanding), at an exercise price of $0.879 per share.  The warrant may be exercisedwas exercisable at any time on or before September 25, 2019. The exercise price of $0.879

$0.879 per share is equal to the average of the closing prices of the common stock reported by the Nasdaq Stock Market for the twenty trading days ended September 24, 2009.  The warrant containscontained anti-dilution provisions and other customary provisions. On March 30, 2012, the Company entered into agreements with the holders of such warrants, which eliminated the terms of such warrants that called for adjustment upon sales or deemed sales of CPS equity securities at less than the exercise price of the warrants. The Company paid an affiliate of Fortress a fee of $150,000 in consideration of the amendments.  The Company has agreed to registerIn April 2013 the holder of the Fortress Warrant exercised it in full, on a net basis in which 101,690 of the shares issuable upon exerciseunder the warrant were withheld in payment of the warrant.

On December 23, 2010, the Company entered into a two-year revolving credit agreement (the "Goldman/Fortress Credit Agreement") and related agreements with Fortress, with Goldman Sachs Bank USA (“Goldman”), and with others. The agreements were amended on March 5, 2013 to extend the revolving period through March 2015. At the conclusion of the two-year revolving period, the loans are to amortize for an additional two years, and then become due in full. Loans under the Goldman/Fortress Credit Agreement bear interest at a floating rate equal to one-month LIBOR plus 5.73%, but in all events no less than 6.73% per year. The Company paid a feeloans are subject to acceleration upon the occurrence of

The Company first incurred indebtedness under the Goldman/Fortress Warehouse Credit Agreement in the amount of $5.1 million on January 6, 2011. The Company used the proceeds of that draw for working capital. The maximum principal amount of indebtedness under the Goldman/Fortress Credit Agreement during 20122013 was $78.5 million, and during 2011 was $69.2$65.3 million. During 2012,2013, the Company paid $219.7$283.8 million of principal and $2.1$1.8 million of interest on such debt, and during 2011, the Company paid $43.8 million of principal and $2.5 million of interest.debt. As of March 5, 2013 (the date of the renewal and amendment),February 28, 2014, the principal amount owed was $42.5$30.2 million. The Company intends to incur additional indebtedness under the Goldman/Fortress Warehouse Credit Agreement from time to time as it purchases motor vehicle receivables from dealers.

On September 14, 2011, the Company purchased of a portfolio of performing subprime automotive receivables from Fireside Bank, a wholly owned subsidiary of Kemper Corporation (formerly known as Unitrin, Inc.).  Our wholly-owned subsidiary CPS Fender Receivables LLC acquired the portfolio for cash, in the amount of 94% of the $237 million principal amount outstanding as of July 31, 2011, reduced by collections on the portfolio subsequent to that date.  The Company obtained the funds used in the acquisition from our subsidiary’s issuance of notes to affiliates of Fortress and Goldman.  The Company first incurred such indebtedness (the maximum amount at any point outstanding) in the amount of $197.3 million on September 14, 2011, and paid a fee in the amount of $789,200 to affiliates of Fortress and Goldman. The maximum principal amount of such indebtedness outstanding during 2013 was $41.4 million, on January 1, 2013. During 2011,2013, the Company paid $59.0$41.4 million of principal and $4.6 million of interest on such debt. During 2012, the Company paid $121.4 million of principal and $8.1$1.2 million of interest on such debt. As of February 28, 2014, no principal remained outstanding.

the Company and PL, with reference to indications of interest from unrelated parties with respect to the performing receivables, and to the Company’s past experience in selling charge-offs to unrelated parties. Before deciding to sell the receivables to PL, the Company solicited arms’-length indications of interest in the receivables to be sold, from unrelated entities.  Although one such indication of interest specified a price of approximately 80% with respect to the performing receivables, none of the prospective purchasers was $29.7 million.willing to retain the Company to service the sold receivables. The Company has executed sales of charge-offs to unrelated third parties at various times. Its sales of comparable charged off receivables were at prices generally under 1.0% of the nominal outstanding balance, and were outright sales, in which the Company would receive no portion of amounts realized from such receivables. On the basis of (i) the retained servicing and related fees, and (ii) greater confidence that PL would complete the purchase, as compared to the other potential purchasers, the Board of Directors unanimously (Mr. Washer abstaining) approved the sale to PL.

The Board of Directors recommends that an affirmative vote be cast in favor of each of the nominees and proposals listed on the proxy card. The Board of Directors knows of no other matters that may be brought before the meeting which require submission to a vote of the shareholders.  If any other matters are properly brought before the meeting, however, the persons named in the enclosed proxy or their substitutes will vote in accordance with their best judgment on such matters.

You are entitled to one vote per share on each matter other than election of directors.  As to election of directors, you may cumulate votes and give any nominee an aggregate number of votes equal to the number of directors to be elected (six) times the number of your shares, or distribute that number of votes among as many nominees as you see fit.  However, no one will be entitled to cumulate votes for any nominee unless the nominee's name has been placed in nomination prior to the voting and the shareholder wishing

to cumulate votes has given notice at the Annual Meeting prior to the voting of his intention to cumulate votes.  If anyone has given such notice, all shareholders may cumulate their votes for nominees.  We are seeking discretionary authority to cumulate votes of shares represented by proxies. The six persons properly placed in nomination at the meeting and receiving the most affirmative votes will be elected as directors.

Votes cast in person or by proxy at the Annual Meeting will be tabulated by the Inspector of Elections with the assistance of the Company's transfer agent.  The Inspector of Elections will also determine whether or not a quorum is present.  In general, California law provides that a quorum consists of a majority of the shares entitled to vote, represented either in person or by proxy, that is, a minimum of 10,050,98212,399,829 shares of the 20,101,96324,799,656 shares outstanding at the record date.  

Approval of each of the other proposals requires the affirmative vote of a majority of those shares voting on the proposal, provided that such affirmative votes are at least a majority of the required quorum, that is, the affirmative votes must be greater than the negative votes, and must be no less than 5,025,492.6,199,915. Provided that at least the minimum number of affirmative votes are cast in favor of such proposals, an abstention will have no effect on the outcome; however, if less than 5,025,4926,199,915 affirmative votes are cast in favor of such proposals, then each abstention will have an effect equivalent to that of a negative vote.

The Inspector of Elections will treat abstentions as shares that are present and entitled to vote for purposes of determining the presence of a quorum, but as not voting for purposes of determining the approval of any matter submitted to the shareholders for a vote.  Any proxy that is returned using the form of proxy enclosed and that is not marked as to a particular item will be voted FOR the director nominees named in this proxy statement, FOR ratification of Crowe Horwath LLP as the Company’s auditors for the year 2013,2014, FOR the approval, by non-binding vote, of executive compensation, for ONE YEAR as the recommended frequency of non-binding votes on executive compensation, FOR the amendment increasing the number of shares issuable under the 2006 Incentive Plan, FOR approval of revised material terms of the Company’s Executive Management Bonus Plan, and will be deemed to grant discretionary authority to vote upon any other matters properly coming before the Meeting, including procedural matters such as a recess or adjournment. We believe that brokers holding shares for their customers in general will not be permitted to vote without instruction from their customers on any proposal other than ratification of the selection of independent auditors.  If a broker indicates on the enclosed proxy or its substitute that it does not have discretionary authority as to certain shares to vote on a particular matter (“broker non-votes”), those shares will be considered as abstentions with respect to that matter, and will have the effect of abstentions as described above.  While there is no definitive specific statutory or case law authority in California concerning the proper treatment of abstentions and broker non-votes, the Company believes that the tabulation procedures to be followed by the Inspector of Elections are consistent with the general statutory requirements in California concerning voting of shares and determination of a quorum.

We plan to hold our year 20142015 Annual Meeting of Shareholders on May 15, 2014.13, 2015.  In order to be considered for inclusion in our proxy statement and form of proxy for the 20142015 Annual Meeting, any proposals by shareholders intended to be presented at such meeting must be received by the Secretary of the Company at 19500 Jamboree Road, Irvine, California 926123800 Howard Hughes Parkway, Las Vegas, Nevada 89169 no later than November 30, 2013.January 1, 2015. In addition, any such proposals will need to comply with Rule 14a-8 adopted under the Securities Exchange Act of 1934, which lists the requirements for the inclusion of shareholder proposals in company-sponsored proxy materials. Notice of any director nomination or other proposal that you intend to present at the 20142015 annual meeting of shareholders, but do not intend to have included in the proxy statement and form of proxy relating to the 20142015 annual meeting of shareholders, must be delivered to the Company’s Secretary by mail at the address given above, a reasonable time before we send our proxy materials for that meeting. The proxy we solicit for the 20142015 annual meeting of shareholders will confer discretionary authority on the Company’s proxies to vote on any proposal presented by a shareholder at that meeting for which we have not been provided with such notice.

 

The undersigned shareholder of CONSUMER PORTFOLIO SERVICES, INC., a CaliforniaNevada corporation, hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement with respect to the Annual Meeting of Shareholders of Consumer Portfolio Services, Inc. to be held at the offices of said corporation at 19500 Jamboree Road, Irvine, CA 926123763 Howard Hughes Parkway, Las Vegas, NV 89169 on April 18, 2013,May 30, 2014, at 10:00 a.m., and hereby appoints Charles E. Bradley, Jr. and Jeffrey P. Fritz, and each of them, proxies and attorneys-in-fact, each with power of substitution and revocation, and each with all powers that the undersigned would possess if personally present, to vote the Consumer Portfolio Services,  Inc. Common Stock of the undersigned at such meeting and any postponements or adjournments of such meeting, as set forth below, and in their discretion upon any other business that may properly come before the meeting (and any such postponements or adjournments).

 

 

  

Signature of Shareholder __________________________________  Date____________ Signature of Shareholder  ________________________________  Date ____________

 

The undersigned shareholder of CONSUMER PORTFOLIO SERVICES, INC., a CaliforniaNevada corporation, hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement with respect to the Annual Meeting of Shareholders of Consumer Portfolio Services, Inc. to be held at the offices of said corporation at 19500 Jamboree Road, Irvine, CA 926123763 Howard Hughes Parkway, Las Vegas, NV 89169 on April 18, 2013,May 30, 2014, at 10:00 a.m., and hereby appoints Charles E. Bradley, Jr. and Jeffrey P. Fritz, and each of them, proxies and attorneys-in-fact, each with power of substitution and revocation, and each with all powers that the undersigned would possess if personally present, to vote the Consumer Portfolio Services,  Inc. Common Stock of the undersigned at such meeting and any postponements or adjournments of such meeting, as set forth below, and in their discretion upon any other business that may properly come before the meeting (and any such postponements or adjournments).

 

 

 

Signature of Shareholder ________________________________  Date________ Signature of Shareholder  __________________________________  Date ________