SEC Filing | Consumer Portfolio Services, Inc.

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12

CONSUMER PORTFOLIO SERVICES, INC.
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.

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[ ] Fee paid previously with preliminary materials.

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Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF
CONSUMER PORTFOLIO SERVICES, INC.
2 Ada, Irvine, California 92618
Phone: 949-753-6800

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The annual meeting of the shareholders of Consumer Portfolio Services, Inc. (the
"Company") will be held at 10:00 a.m., local time, on Thursday, June 25, 1998 at
the Company's offices, 2 Ada, Irvine, California for the following purposes:

1. To elect the Company's entire Board of Directors for a one-year term.

2. To approve a performance-based compensation plan for the Company's executive
officers.

3. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending December 31, 1998.

4. To transact such other business as may properly come before the meeting.

Only shareholders of record at the close of business on May 22, 1998 are
entitled to notice of and to vote at the meeting.

WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE,
DATE, AND SIGN THE ENCLOSED PROXY EXACTLY AS YOUR NAME APPEARS THEREON AND
PROMPTLY RETURN IT IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES. PROXIES MAY BE REVOKED AT ANY TIME AND, IF YOU ATTEND THE
MEETING IN PERSON, YOUR EXECUTED PROXY WILL BE RETURNED TO YOU UPON REQUEST.

By Order of the Board of Directors

Jeffrey P. Fritz, Secretary
Dated: May 26, 1998

CONSUMER PORTFOLIO SERVICES, INC.
2 ADA
IRVINE, CALIFORNIA 92618
949-753-6800

PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 25, 1998
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INTRODUCTION

This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Consumer Portfolio Services, Inc. (the
"Company" or "CPS") for use at the annual meeting of the shareholders to be held
at 10:00 a.m., local time, on Thursday, June 25, 1998 at the Company's offices,
2 Ada, Irvine, California 92618, and at any adjournment thereof (the "Annual
Meeting").

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
May 22, 1998 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 15,214,242 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 May 26,
1998. Expenses incurred in connection with the solicitation of proxies will be
paid by the Company. 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.

PROPOSAL NO. 1

ELECTION OF DIRECTORS

NOMINATIONS

Each of the of the Company's six current directors has been nominated for
election as a director at the Annual Meeting, and each has agreed to serve as a
director if elected. Directors of the Company are elected annually to 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 set forth below is based upon information furnished
to the Company by them.

Name Age Position(s) with the Company
---- --- ----------------------------

Charles E. Bradley, Sr. 68 Chairman of the Board of Directors
Charles E. Bradley, Jr. 38 President, Chief Executive Officer, and Director
William B. Roberts 61 Director
John G. Poole 55 Vice Chairman of the Board of Directors
Robert A. Simms 59 Director
Thomas L. Chrystie 65 Director

CHARLES E. BRADLEY, SR. has been the Chairman of the Board of the Company
since its formation in March 1991. Mr. Bradley is one of the founders of
Stanwich Partners, Inc. ("Stanwich"), a Connecticut investment firm which
acquires controlling interests in companies in conjunction with the existing
operating management of such companies, and has been President, a director and a
shareholder of that company since its formation in 1982. He is also President,
Chief Executive Officer and a director of Reunion Industries, Inc., a publicly
held company which manufactures precision plastic products and provides
engineered plastics services. Mr. Bradley is currently Chairman of the Board and
Chief Executive Officer of DeVlieg-Bullard, Inc. and Chatwins Group, Inc., and a
director of Texon Energy Corp., General Housewares Corp., Zydeco Exploration,
Inc., Sanitas, Inc. and Audits and Surveys Worldwide. He is Chairman of the
Board and Chief Executive Officer of NAB Asset Corporation (38% of whose
outstanding shares of voting stock are held by the Company). Other than
Stanwich, all of the above corporations are publicly-held or are required to
file periodic reports under Section 13 or 15(d) of the Securities Exchange Act
of 1934. Mr. Bradley is the father of Charles E. Bradley, Jr.

CHARLES E. BRADLEY, JR. has been the President and a director of the Company
since its formation in March 1991. In January 1992, Mr. Bradley was appointed
Chief Executive Officer of the Company. From April 1989 to November 1990, he
served as Chief Operating Officer of Barnard and Company, a private investment
firm. From September 1987 to March 1989, Mr. Bradley, Jr. was an associate of
The Harding Group, a private investment banking firm. Mr. Bradley, Jr. is
currently serving as a director of NAB Asset Corporation, Chatwins Group, Inc.,
Texon Energy Corporation and Thomas Nix Distributor, Inc. Charles E. Bradley,
Sr. is his father.

WILLIAM B. ROBERTS has been a director of the Company since its formation in
March 1991. Since 1981, he has been the President of Monmouth Capital Corp., an
investment firm which specializes in management buyouts. Mr. Roberts serves on
the board of directors of Atlantic City Racing Association, a publicly-held
corporation, which owns and operates a race track.

JOHN G. POOLE has been a director of the Company since November 1993 and its
Vice Chairman since January 1996. He was a co-founder of Stanwich in 1982 and
has been a director, vice president and shareholder of that company since its
formation. Mr. Poole is a director of Reunion Industries, Inc., Sanitas, Inc.,
Chatwins Group, Inc., and DeVlieg-Bullard, Inc.

ROBERT A. SIMMS has been a director of the Company since April 1995. He has
been the Chairman and Chief Executive Officer of Simms Capital Management, Inc.
since 1984. He is a director of the National Football Foundation and Hall of
Fame. Mr. Simms also serves on the Board of Overseers of Rutgers University and
was formerly a partner in Bear Stearns & Co.

THOMAS L. CHRYSTIE has been a director of the Company since April 1995. He
has been self-employed as an investor, through Wycap Corporation, since 1988.
His previous experience includes 33 years at Merrill Lynch & Co. in various
capacities including heading Merrill Lynch's investment banking, capital markets
and merchant banking activities. In addition, he served as Merrill Lynch & Co.'s
Chief Financial Officer. Mr. Chrystie is also a director of Titanium Industries,
an 80%-owned subsidiary of Allegheny Teledyne.

The Board of Directors has established an Audit Committee and a
Compensation and Stock Option Committee. The members of the Audit Committee are
Thomas L. Chrystie (chairman), Robert A. Simms and William B. Roberts. The Audit
Committee is empowered by the Board of Directors to review the financial books
and records of the Company in consultation

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with the Company's accounting and auditing staff and its independent auditors
and to review with the accounting staff and independent auditors any questions
raised with respect to accounting and auditing policy and procedure.

The members of the Compensation and Stock Option Committee are Robert A.
Simms (chairman), Thomas L. Chrystie and William B. Roberts. This Committee
makes recommendations to the Board of Directors as to general levels of
compensation for all employees of the Company, the annual salary of each of the
executive officers of the Company, authorizes the grants of options to employees
under the Company's 1991 Stock Option Plan, and the 1997 Long-Term Incentive
Plan and reviews and approves compensation and benefit plans of the Company.

The Company does not have a Nominating Committee. Shareholders who wish to
suggest individuals for possible future consideration for board positions should
direct recommendations to the Board of Directors at the Company's principal
offices.

The Board of Directors held four regular meetings and three special
meetings in 1997. The Audit Committee and the Compensation Committee each met
twice during 1997.

The Board of Directors recommends a vote FOR each of the nominees above.

PROPOSAL NO. 2

PERFORMANCE-BASED COMPENSATION PLAN

During the past year, the Compensation Committee and senior management have
considered the factors by which to determine key executive cash bonuses. At its
meeting in January 1998, the Compensation Committee established a plan to set
maximum levels of bonus compensation for certain key executives. The plan sets
maximum bonuses for each executive, based on the Company and the executive
meeting a number of individual and shared objectives. The Board believes that
the plan adopted in January further aligns the incentives of senior management
with the interests of the shareholders. The plan will encourage the Company's
key executives to achieve a sustained high level of performance and will place a
significant portion of the executive's cash compensation at risk.

The 1998 Key Executive Bonus Plan (the "1998 Plan") is a short-term
incentive plan designed to meet corporate and shareholder objectives, as well as
to ensure that cash compensation remains deductible as performance-based
compensation under the Internal Revenue Code of 1986 (the "Code"). As the
Company's president is a participant in the 1998 Plan, and its other executive
officers are eligible to be participants in the 1998 Plan, such individuals have
a personal interest in approval of this proposal.

Key elements of the 1998 Plan are:

o Participants will be named each year by the Compensation Committee from
the members of the Company's senior management. Although each of the Company's
nine officers at a senior vice president level or higher is eligible to
participate in the 1998 Plan, the Compensation Committee chose to name only the
Company's president as a participant in the 1998 Plan for the current year.

o The maximum amount of the bonus pool for all participating executives will
be 6% of the Company's net income, before income taxes. The Compensation
Committee will determine what percentage of the bonus pool will be allocated to
each participating executive. This allocation must generally occur prior to
March 30 of each year, but no executive may be allocated more than 50% of the
bonus pool for any year. The sum of all allocated percentages shall not exceed
100% of the bonus pool. For the current year, the Compensation Committee
allocated 50% of the bonus pool to the Company's president, and made no
allocation to any other executive.

o The Compensation Committee may also set a maximum dollar limit on the
bonus pool for each year, but must do so by March 30 of each year. The
Compensation Committee has elected not to set such maximum dollar limit for the
current year.

o If the Company does not earn at least 50% of its budgeted earnings for the
year, then no bonus will be paid under the 1998 Plan. The Compensation Committee
is in no event required to award the entire bonus pool. In particular, as only
50% of the bonus pool was allocated for the current year, no more than 50% of
the maximum bonus pool will be awarded with respect to the current year.

o By March 30 of each year or as required by regulations under the Code, the
Company will establish an individual performance goal for each participant based
on earnings of the Company. If the Company's earnings meet or exceed the
participant's goal, the participant will receive his or her allocated percentage
of the bonus pool, unless the Compensation

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Committee reduces the bonus award based on corporate or individual performance,
business conditions or other circumstances.

o A participant's allocated percentage for any year cannot be increased
during that year. Any percentage of the pool that is not awarded to a
participant will not be distributed to any other participants.

o Shareholder approval is required in order for the 1998 Plan to be
effective and to comply with regulations under the Code regarding deductibility.
If the 1998 Plan or any similar plan is to be effective for more than five
years, such plan must be re-submitted to the shareholders for approval.

The amounts that will be paid under the 1998 Plan for the current year are
not determinable, because the maximum payment will depend on the Company's
earnings, and the actual payment will be subject to the discretion of the
Compensation Committee to reduce the amount paid below the maximum set by the
Plan. The amounts that would have been paid for the year ended December 31, 1997
are also not determinable, again because the Compensation Committee would have
had the discretion to reduce the bonus paid below the maximum. The maximum
amount of a bonus that would have been payable for 1997 under the 1998 Plan, had
the 1998 Plan been in effect at that time, would have been a bonus of $958,766
to the Company's President and chief executive officer, Charles E. Bradley, Jr.
Had the 1998 Plan been in effect for 1997 and had the same allocations been
made, no other person would have been eligible to receive any bonus under the
plan, although the Company could have paid bonuses outside the plan.

Although the Company's president is the only current participant in the
1998 Plan, the Company also anticipates paying bonuses to its other senior
executives outside of the 1998 Plan, if certain corporate and individual
objectives are met. The procedure for determining such bonuses is described in
the "Report of the Compensation Committee on Executive Compensation," included
below in this Proxy Statement.

The Board of Directors recommends a vote FOR the approval of the 1998 Key
Executive Bonus Plan.

PROPOSAL NO. 3

RATIFICATION OF
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors, on recommendation of the Audit Committee, has
appointed the accounting firm of KPMG Peat Marwick to be the Company's
independent auditors for the year ending December 31, 1998.

A proposal to ratify that appointment will be presented to shareholders at
the Annual Meeting. If the shareholders do not ratify the selection of KPMG Peat
Marwick another firm of independent public accountants will be selected by the
Board of Directors at the Annual Meeting. Representatives of KPMG Peat Marwick
will 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 Board of Directors recommends a vote FOR ratification of the selection
of KPMG Peat Marwick.

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INFORMATION REGARDING THE COMPANY

EXECUTIVE COMPENSATION

The following pages set forth information in tabular form regarding
compensation of the Company's executive officers.

Summary of Compensation

The following table summarizes all compensation earned during (i) the
fiscal year ended December 31, 1997, (ii) the fiscal year ended December 31,
1996, and (iii) the nine-month period ended December 31, 1995, by the Company's
Chief Executive Officer and by its four most highly compensated other executive
officers (such five individuals, the "named executive officers") who were
serving as executive officers at December 31, 1997. Information is presented for
those specified periods, rather than for three full years, because the Company
in 1995 changed the end of its fiscal year from March 31 to December 31.
COMPENSATION SHOWN FOR THE PERIOD ENDED DECEMBER 1995 IS FOR NINE MONTHS ONLY.

SUMMARY COMPENSATION TABLE

Long Term
Compensation for Compensation
period shown Awards
------------------------ ------------------
Name and Principal Position Period Ended Salary Bonus(1) Options/SARs(2)
------------------------------------- --------------- ----------- ---------- ------------------

CHARLES E. BRADLEY, JR. December 1997 $425,000 $575,000 0
Chief Executive Officer December 1996 381,250 372,500 200,000
December 1995 237,500 217,500 8,400
NICHOLAS P. BROCKMAN December 1997 127,000 62,000 0
Senior Vice President, Asset Recovery December 1996 117,039 59,500 12,600
December 1995 80,372 33,750 0
WILLIAM L. BRUMMUND, JR. December 1997 129,000 84,000 0
Senior Vice President, Systems December 1996 117,039 55,500 5,000
December 1995 80,372 33,750 7,600
JEFFREY P. FRITZ December 1997 175,000 96,000 0
Senior Vice President, Finance December 1996 154,938 78,250 5,000
December 1995 91,903 48,750 7,600
CURTIS K. POWELL December 1997 143,000 97,000 0
Senior Vice President, Marketing December 1996 124,500 51,000 75,000
December 1995 81,000 41,250 47,600

(1) Bonus for each period is the bonus paid to date with respect to that period.
Bonus compensation paid in May 1996 was awarded based on performance in the
twelve-month period ended March 1996, and is therefore allocated 25% to the year
ended December 1996 and 75% to the nine-month period ended December 1995. Bonus
compensation paid in 1997 and 1998 was based on performance in the nine-month
period and the year ended December 1996 and 1997, respectively and is therefore
allocated entirely to those respective periods.

(2) Number of shares that may be purchased upon exercise of options that were
granted in the period shown.

Option and SAR Grants

During the year ended December 31, 1997, the Company did not grant any
options or stock appreciation rights ("SARs") to any of the named executive
officers.

Aggregated Option Exercises and Fiscal Year End Option Value Table

The following table sets forth, as of December 31, 1997, 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 December 31, 1997 value of all unexercised options held by such
persons. Each option referred to in the table was granted under the Company's
1991 Stock Option Plan, or under the 1997 Long-Term Incentive Plan, at an option
price per share equal to the fair market value per share on the date of grant.

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Name Number of Value Number of Unexercised Value of Unexercised
Shares Realized Options at In-the-Money Options
Acquired on December 31, 1997 at December 31, 1997(1)
Exercise Exercisable/Unexercisable Exercisable/Unexercisable
-------- -------- ------------------------- -------------------------

Charles E. Bradley, Jr. 20,000 $103,750 247,640 / 112,600 $357,415 / $462,800
Nicholas P. Brockman 36,600 550,125 0 / 63,000 0 / 273,100
William L. Brummund, Jr. 20,000 297,500 29,600 / 63,000 207,450 / 267,400
Jeffrey P. Fritz 20,000 107,500 50,600 / 63,000 357,075 / 267,400
Curtis K. Powell 14,600 106,725 19,350 / 118,650 29,706 / 188,669

(1) Valuation is based on the last sales price on December 31, 1997 of $9.625
per share, as reported by Nasdaq.

Bonus Plan

The named executive officers and other officers participate in a management
bonus plan, pursuant to which such employees are entitled to earn cash bonuses,
if the Company achieves certain net income levels or goals established by the
Board of Directors. The amount of bonus payable to each officer is determined by
the Board of Directors upon recommendation of the Compensation Committee.

DIRECTOR COMPENSATION

During the year ended December 31, 1997, the Company paid director
compensation of $125,000 to Mr. Bradley, Sr., for his service as Chairman of the
Board of Directors, and $75,000 to Mr. Poole for his service as Vice-Chairman of
the Board of Directors. Mr. Bradley, Jr., President of the Company, received no
additional compensation for his service as a director. The remaining directors,
Messrs. Chrystie, Roberts and Simms, received a retainer of $1,000 per month and
an additional fee of $500 per diem for attendance at meetings.

REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

Compensation Policies in General

As to base salary, the Company's objective is to establish base salaries at
levels competitive with those in its industry. Annual adjustments in base
salaries of officers other than the chief executive officer are approved by the
Compensation Committee, acting on the recommendation of the chief executive
officer.

The Company has made a practice of paying annual bonuses to encourage
executive officers and key management personnel to exercise their best efforts
and management skills toward achieving the Company's objectives. Under the
Company's bonus plan as applied to the year ended December 1997, executive
officers of the Company other than its chief executive officer were eligible to
receive a cash bonus of up to 100% of their base salaries. The amount of such
bonus is determined by the Compensation Committee, acting on the recommendation
of the chief executive officer. The principal determining factor in the amount
of bonus is whether the Company as a whole has met its earnings objectives. Such
objectives are set by the board of directors at its spring meeting of the prior
year. Other factors in determining the amount of bonus are whether the executive
has met individual objectives set by the chief executive officer and a
subjective evaluation of the officer's performance. The Compensation Committee
also considers whether the level of compensation proposed would be fully
deductible to the Company for federal income tax purposes.

Applying the above principles, the Compensation Committee in 1998 approved
bonus compensation to each of the named executive officers, other than the chief
executive officer, of approximately 49% to 68% of his base salary for the year
ended December 31, 1997.

The Company's long-term incentive plan has consisted of awards of incentive
and non-qualified stock options designed to promote the identity of long-term
interests between the Company's executives and its shareholders and to assist in
the retention of key executives and management personnel. No stock options were
granted to any of the named executive officers in 1997, although certain options
in prior years continued to vest, and certain additional options were granted in
January 1998. Since the full benefit of stock option compensation cannot be
realized unless stock appreciation occurs over a

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number of years, stock option grants are designed to provide an incentive to
create shareholder value over a sustained period of time.

In exercising its discretion as to the level of executive compensation and
its components, the Compensation Committee considers a number of factors.
Financial factors considered include growth in the Company's revenue, income and
earnings per share; the extent of appreciation in its stock price; and return on
equity. Operational factors considered include the Company's cost of funds;
indicators of the credit quality of the Company's servicing portfolio, including
levels of delinquencies and charge-offs; and indicators of successful management
of personnel, including the number of employees hired and employee stability.

The Company also maintains certain broad-based employee benefit plans in
which executive officers are permitted to participate on the same terms as
non-executive personnel who meet applicable eligibility criteria, subject to any
legal limitations on the amounts that may be contributed or the benefits that
may be payable under the plans.

Compensation of the Company's Chief Executive Officer

The Company's general approach in setting the annual compensation of its
chief executive officer is to seek to be competitive with financial services
companies similar to the Company, but to have a large percentage of his target
compensation be dependent upon the Company's financial performance. During the
year ended December 1997, the Company's chief executive officer, Charles E.
Bradley, Jr., received $425,000 in base salary, which was an increase from a
rate of $400,000 per year applicable to 1996. In setting that rate, the
Compensation Committee considered primarily the levels of chief executive
officer compensation prevailing among fast-growing financial services companies.
The Committee also took note of the growth in the Company's revenues and
earnings in deciding to approve an increase in base salary.

The Company's policy regarding cash bonuses paid to its chief executive
officer has been similar to its policy regarding cash bonuses for other
executive officers, except that the Compensation Committee exercises a greater
degree of discretion with respect to award of a bonus to the chief executive
officer than it exercises with respect to bonuses paid to other executive
officers. If Proposal 2 is approved, the maximum for the current and future
years would be a bonus of 3% of the Company's pre-tax earnings.

Applying the existing policy, the Compensation Committee in 1998 approved
bonus compensation to the chief executive officer of approximately 135% of his
base salary for the year ended December 31, 1997. In determining bonus
compensation to be paid, the Compensation Committee considered that the Company
had exceeded its earnings target, had arranged for substantial increases in its
financing facilities at reduced costs, had successfully issued $35 million of
subordinated debt, and had successfully managed substantial increases in its
personnel. The Compensation Committee also sought to have the combined salary
and bonus be competitive with cash compensation paid to chief executive officers
at comparable firms.

THE COMPENSATION COMMITTEE
Robert A. Simms
William B. Roberts
Thomas L. Chrystie

Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that might incorporate by reference future filings, including this Proxy
Statement, in whole or in part, the preceding report and the following
Performance Graph shall not be incorporated by reference into any such filings.

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PERFORMANCE GRAPH

The following graph compares the yearly change in the Company's cumulative
total shareholder return on its common stock from March 31, 1993 through
December 31, 1997, with (i) the cumulative total return of the Center for
Research in Security Prices ("CRSP") Index for the Nasdaq Stock Market (U.S.
Companies), and (ii) the cumulative total return of the CRSP Index for Nasdaq
Financial Stocks. The graph assumes $100 was invested on March 31, 1993 in the
Company's common stock, and in each of the two indices shown, and that all
dividends were reinvested. Data are presented for the last trading day in each
of the Company's fiscal years. As noted above, the Company's fiscal year ended
on March 31 until 1995, when the Company changed its fiscal year-end to December
31.

COMPARISON OF CUMULATIVE TOTAL RETURN AMONG CONSUMER PORTFOLIO SERVICES, INC.,
NASDAQ STOCK MARKET (U.S. COMPANIES) AND NASDAQ FINANCIAL STOCKS.

[a line graph representing the data in the following table appears at this point
in the printed proxy statement. the following table appears immediately below
said graph:]

MAR 1993 MAR 1994 MAR 1995 DEC 1995 DEC 1996 DEC 1997
-------- -------- -------- -------- -------- --------

Consumer Portfolio Services, Inc. $100.0 $191.1 $288.9 $324.4 $400.0 $342.2
Nasdaq Stock Market (U.S.) $100.0 $107.9 $120.1 $155.8 $191.6 $235.2
Nasdaq Financial Stocks (U.S. & $100.0 $104.2 $116.7 $154.5 $198.0 $302.6
Foreign)

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the number and percentage of shares of CPS
Common Stock (its only class of voting securities) owned beneficially as of
April 27, 1998 (i) by each person known to the Company to own beneficially more
than 5% of the outstanding Common Stock, (ii) by each director or named
executive officer of the Company, and (iii) by all directors and executive
officers of the Company 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. The address of Messrs. Bradley, Jr.,
Brockman, Fritz, Brummund and Powell is c/o Consumer Portfolio Services, Inc., 2
Ada, Irvine, CA 92618.

Amount & Nature of Percent of
Name & Address of Beneficial Owner Beneficial Ownership (1) Class
---------------------------------- ------------------------ ----------

Charles E. Bradley, Sr.................................................. 2,995,137(2) 19.7%
Stanwich Partners, Inc., 62 Southfield Avenue, Stamford, CT 06902

William B. Roberts...................................................... 1,043,982 6.9%
Monmouth Capital Corp., 126 East 56th Street, New York, NY10022

John G. Poole........................................................... 320,860(3) 2.1%
Stanwich Partners, Inc., 62 Southfield Avenue, Stamford, CT 06902

Thomas L. Chrystie...................................................... 120,000(4) 0.8%
P.O. Box 640, Wilson, WY 83014

Robert A. Simms......................................................... 247,144(5) 1.6%
55 Railroad Ave., Plaza Suite, Greenwich, CT 06830

Charles E. Bradley, Jr.................................................. 1,654,914(6) 10.9%

Nicholas P. Brockman.................................................... 92,500 0.6%

William L. Brummund, Jr................................................. 91,418 0.6%

Jeffrey P. Fritz........................................................ 97,000 0.6%

Curtis K. Powell........................................................ 44,000 0.3%

All officers and directors as a group (fourteen persons)................ 6,226,861 39.3%

Robert T. Gilhuly and Kimball J. Bradley, Trustees...................... 1,058,818(7) 7.0%
c/o Cummings & Lockwood
Two Greenwich Plaza, Box 2505, Greenwich, CT 06830

- ------------------

(1) Includes the following shares which are not currently outstanding but
which the named individuals have the right to acquire currently or
within 60 days of April 27, 1998 upon exercise of options: Mr. Roberts
- 10,000 shares; Mr. Poole - 10,000 shares; Mr. Chrystie - 30,000
shares; Mr. Simms - 30,000 shares; Mr. Bradley, Jr. - 266,240 shares;
Mr. Brockman - 18,400 shares; Mr. Brummund, Jr. - 48,000 shares; Mr.
Fritz - 69,000 shares; Mr. Powell - 44,000 shares; and all directors
and executive officers as a group (14 persons) - 642,840 shares. The
shares described in this note are deemed to be outstanding for the
purpose of computing the percentage of outstanding Common Stock owned
by such persons individually and by the group, but are not deemed to be
outstanding for the purpose of computing the percentage of ownership of
any other person.

(2) Includes 207,490 shares owned by the named person's spouse as to which
he has no voting or investment power, and 100,000 shares owned by
Stanwich Financial Services Corp., a corporation wholly-owned by NAB
Asset Corp. of which the named person is president and director.

(3) Includes 12,000 shares held by Mr. Poole as custodian for his children.

(4) Includes 90,000 shares held by the Thomas L. Chrystie Living Trust.

(5) Includes 16,944 shares owned by Mr. Simms' spouse as to which he has no
voting or investment power.

(6) Includes 211,738 shares held by a trust of which Mr. Bradley is the
beneficiary, as to which he has no voting or investment power. Also
includes, in addition to the 266,240 shares referred to in footnote 1,
600,000 shares that Mr. Bradley, Jr. has the presently exercisable
right to acquire from Mr. Bradley, Sr.

(7) These shares are held in trusts of which the beneficiaries are Charles
E. Bradley, Sr.'s adult children, including, among others, Charles E.
Bradley, Jr., (as to 211,738 shares) and Kimball J. Bradley (as to
211,802 shares).

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COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

The Company's directors, certain officers, and persons holding more than ten
percent of the Company's common stock are required to report, within certain
periods, their initial ownership of and any subsequent transactions in any of
the Company's equity securities. Based solely upon reports furnished to the
Company and written representations and information provided to the Company by
the persons required to make such filings, all such individuals have satisfied
such filing requirements in full with respect to the year 1997, except that
certain acquisitions by corporations of equity securities of the Company were
not reported timely, notwithstanding that such corporations' ownership might
properly be attributed to certain directors of the Company. Specifically, a
corporation of which Mr. Bradley, Sr. is president and director filed late one
report of one transaction, and a corporation of which Mr. Bradley, Jr. is the
sole shareholder filed late one report of four transactions. Mr. Bradley, Jr.
also filed late one report of one option exercise in his individual capacity.

CERTAIN TRANSACTIONS

From January 1, 1992 through December 31, 1995 the Company retained
Stanwich (a corporation of which Charles E. Bradley, Sr. and John G. Poole are
principal shareholders) to provide consulting services for compensation at the
rate of $350,000 per year. Effective January 1, 1996, upon expiration of the
prior agreement, the Company and Stanwich agreed to continue the consulting
arrangement for an additional three-year period, at a reduced rate of
compensation of $75,000 per year. The current rate was arrived at by negotiation
between Stanwich and the independent directors of the Company. Such negotiations
took into account the prior rate of compensation, the services performed by
Stanwich in the past, the Company's decision to begin compensating Mr. Bradley
and Mr. Poole for their services as Chairman and Vice Chairman of the Board of
Directors, and the expectation that a reduced level of consulting service would
be required as the Company matured. Under both the current and prior agreements,
Stanwich agreed to provide such level of consulting services relating to
strategic business and tax planning and investment analysis as the Company
reasonably may request. No fixed, minimum or maximum number of hours of service
is or was specified.

In January 1997, the Company acquired 80% of the outstanding shares of the
capital stock of CPS Leasing, Inc. (then known as Stanwich Leasing, Inc.) for an
aggregate purchase price of $100,000. The selling shareholders included Charles
E. Bradley, Sr. and John G. Poole, each of whom is an officer, director and
shareholder of the Company and who received, respectively, $45,000 and $15,000
of the purchase price. Messrs. Bradley, Sr. and Poole, the founders of CPS
Leasing, Inc. purchased their shares in 1996 for $450 and $150, respectively.
CPS Leasing, Inc. ("CPSL") is in the business of leasing equipment and
containers to others. The purchase price for CPSL was determined by negotiation
between the Company and CPSL's selling shareholders. The transaction was
approved by the Company's disinterested directors, consisting of Messrs.
Chrystie, Roberts and Simms. The remaining 20% of CPSL not acquired by the
Company is held by Charles E. Bradley, Jr., who is the President and a director
of the Company.

The purpose of acquiring CPSL was to enter into the equipment leasing
business. CPSL finances its purchases of the equipment that it leases to others
through either of two lines of credit. Amounts borrowed by CPSL under one of
those two lines of credit have been guaranteed by the Company. As of March 31,
1998 the total amount outstanding under the two lines of credit was
approximately $1,681,253, of which the Company had guarantied approximately
$1,153,516. The Company has also financed the operations of CPSL by making
operating advances and by advancing to CPSL the fraction of the purchase prices
of its leased equipment that CPSL does not borrow under its lines of credit. The
aggregate amount of advances made by the Company to CPSL as of March 31, 1998,
is $2,166,319. The advances related to operations bear interest at the rate of
8.5% per annum. The advances related to the fraction of the purchase price of
leased equipment is not interest bearing.

In order to obtain long-term subordinated debt financing on the terms
described below, the Company in May 1997 assisted Stanwich Holdings, Inc.
("Holdings") in its acquisition of a company now known as Stanwich Financial
Services Corp. ("Financial Services"). Charles E. Bradley, Sr., Charles E.
Bradley, Jr. and John G. Poole, who are officers and directors of the Company,
at that time collectively owned 92.5% of the common stock of Holdings, and Mr.
Bradley, Sr. is the president and the sole director of Holdings.

On May 20, 1997 the Company purchased $14,500,000 of preferred stock of
Holdings. Holdings used the proceeds of the Company's investment, together with
other funds, to acquire all of the capital stock of Financial Services, which is
engaged in the structured settlement business. Dividends on the Holdings
preferred stock held by the Company were cumulative at the rate of 9% per annum.
The preferred stock was redeemed in August 1997 at an aggregate price of $14.9
million, including accrued dividends.

As an additional consideration to the Company for making the preferred
stock investment in Holdings, Holdings made a commitment (the "Loan Commitment")
to cause Financial Services to make the following loans to the Company:

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13

o A 60-day loan of $14,500,000 bearing interest at 8% per annum. This loan
was funded on May 21, 1997, and was repaid in its entirety in August
1997.

o An unsecured loan (the "Additional Loan") of $15,000,000. This loan has
a maturity of seven years and bears interest at the rate of 9% per
annum. The Additional Loan may be pre-paid without penalty at any time
after three years. Financial Services has the option to convert 20% of
the principal into shares of common stock of the Company at a price of
$11.55 per share, which is 130% of the closing price of such stock on
the Nasdaq Stock Market on the date of the Loan Commitment.

o An unsecured loan (the "Second Additional Loan") in an amount (up to
$15,000,000) to be determined by the Company, and on the same terms as
the Additional Loan. The Company chose not to draw on this loan
commitment.

The terms of the Additional Loan are the same as the terms applicable to the
$20 million of partially convertible debt securities ("Participating Equity
Notes" or "PENs") issued by the Company in its underwritten public debt offering
completed in April 1997 (the "PENs Financing"), except that the terms of the
Additional Loan are more favorable to the Company than the terms of the PENs
Financing in three respects. First, the interest rate under the Additional Loan
is 150 basis points lower than the interest rate under the PENs Financing.
Second, only 20% of the principal of the Additional Loan is convertible into
common stock of the Company, as compared to 25% under the PENs Financing. Third,
the conversion price per share is $11.55 per share (determined as 130% of the
market price per share on the date of Loan Commitment), as compared to $10.15
per share (determined as 125% of the market price per share on the effective
date of the public offering of debt) in the PENs Financing.

As further consideration for the preferred stock investment by the Company,
the shareholders of Holdings granted to the Company the option to acquire 100%
of the outstanding common stock of Holdings from them at a price equal to 80% of
the fair market value of such stock at the time of option exercise, as
determined by an independent appraisal. The option was to be exercisable from
May 22, 2000 through May 21, 2003. The Company subsequently agreed to release
that option in connection with the March 1998 purchase of Holdings by NAB Asset
Corporation, discussed below.

In the acquisition of Financial Services by Holdings, the Company as a
preferred shareholder of Holdings agreed to indemnify the former owners of
Financial Services (who are not affiliates of the Company) if claims are made
against them by creditors of Financial Services relating to certain matters
occurring on or after the closing date of the acquisition.

In August 1997, the Company entered into a short-term line of credit
agreement with Financial Services ("Short-Term Line"), to supplement its working
capital resources. Under the Short-Term Line, Financial Services agreed to lend
up to $25 million to the Company from time to time upon request, through
December 19, 1997. Any amount outstanding at December 31, 1997 would be due at
that time. Borrowings under the Short-Term Line bore interest at the rate of 10%
per annum, and the Company paid a $250,000 (one percent) commitment fee to
Financial Services in connection with opening the line of credit. The Company
drew the full amount of the line at its inception, none of which remained
outstanding at December 31, 1997.

In the ordinary course of its business operations, the Company from time to
time purchases retail automobile installment contracts from an automobile
dealer, Cars USA, which is owned by a corporation of which Mr. Bradley, Sr. and
Mr. Bradley, Jr. are the principal shareholders. During the year ended December
31, 1997, the Company purchased 183 such contracts, with an aggregate principal
balance of $2,405,100. The Company paid an aggregate of $2,325,700 for such
contracts. All such purchases were on the Company's normal business terms.

The Company has provided inventory financing ("flooring") and has lent
additional monies to Cars USA. As of December 31, 1997, the total amount owed to
the Company was $1,350,954, of which $790,000 represented flooring. The largest
aggregate amount of indebtedness outstanding under the flooring line at any time
since the beginning of the last fiscal year was $1,024,000, as of March 31,
1998. The flooring financing is a revolving line of credit, bearing interest at
10% per year, with a maximum advance depending upon the value of used car
inventory, and with an overall maximum of $1,500,000. Other borrowings in the
aggregate amount of $250,000 do not bear interest. The remainder of the amount
owed to the Company represents fees for services performed for the dealer by the
Company.

On March 2, 1998 the shareholders of Holdings sold all outstanding shares of
the capital stock of Holdings to NAB Asset Corp. ("NAB"). In connection with
that transaction, the Company agreed to extinguish its option to acquire all of
the outstanding common stock of Holdings. The extinguished option had been
exercisable during the three-year period beginning May 21, 2000, at a price
equal to 80% of the appraised value (at the time of exercise) of the Holdings
shares. In exchange for termination of the option, NAB issued to the Company a
promissory note in the principal amount of $530,835, which bears interest at the
rate of 7% per annum, and matures on March 2, 2003. The amount payable under
that note is contingent on the earnings of Financial Services, which is the
wholly-owned subsidiary of Holdings. If cumulative pre-tax income of Financial
Services over the period from May 21, 1997 through January 31, 2003 is less than
$21 million, the

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14

principal amount payable under the note is reduced, at the rate of $.1435 for
each dollar of shortfall. In no event, however, will the principal amount
payable under that note be reduced to less than $134,000. As a result of this
transaction, the Company now holds, indirectly through NAB, a 38% ownership
interest in Holdings.

On December 30, 1997, the Company lent an aggregate of $9,500,000 to NAB on
an unsecured basis, represented by two promissory notes in the amounts of $5.5
million and $4.0 million. Each such note bears interest at 13% per annum,
payable quarterly, and is due June 30, 1998. A loan fee in the amount of $65,000
is also due at that time. On December 31, 1997, Financial Services purchased the
$4.0 million note from the Company, at par. Of the $5.5 million remaining, NAB
paid the Company $2.0 million in March 1998. Messrs. Bradley, Sr. and Bradley,
Jr. are directors of NAB, and Mr. Bradley, Sr., is its chief executive officer.
The Company owns approximately 38% of the outstanding shares of NAB, and the
remaining shares of NAB are publicly held.

The agreements and transactions described above were not entered into
between parties negotiating or dealing on an arm's length basis, but were
entered into by the Company with the parties who personally benefited from such
transactions and who had a control or fiduciary relationship with the Company.
In each case such agreements and transactions have been reviewed and approved by
the members of the Company's Board of Directors who are disinterested with
respect thereto.

VOTING OF SHARES

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.

Holders of CPS Common Stock are entitled to one vote per share on each
matter other than election of directors. As to election of directors, each
holder of CPS Common Stock may cumulate such holder's votes and give any nominee
an aggregate number of votes equal to the number of directors to be elected
multiplied by the number of shares of CPS Common Stock held of record by such
holder as of the record date, or distribute such aggregate number of votes among
as many nominees as the holder thinks fit. However, no such holder shall be
entitled to cumulate votes for any nominee unless such nominee's name has been
placed in nomination prior to the voting and the holder has given notice at the
annual meeting prior to the voting of the holder's intention to cumulate votes.
If any one holder has given such notice, all holders may cumulate their votes
for nominees. Discretionary authority is sought hereby to cumulate votes of
shares represented by proxies.

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. The affirmative vote of a majority of shares represented and voting at
a duly held meeting at which a quorum is present is required for approval of
Proposal No. 2 (Performance-Based Compensation Plan) and Proposal No. 3
(Selection of Independent Auditors). 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. 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 which is
returned using the form of proxy enclosed and which is not marked as to a
particular item will be voted FOR the election of nominees for director named
herein; FOR the approval of the Performance-Based Compensation Plan; and FOR the
ratification of the appointment of KPMG Peat Marwick as the Company's
independent auditors for the year ending December 31, 1998; and will be deemed
to grant discretionary authority to vote upon any other matters properly coming
before the meeting. 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. 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.

SHAREHOLDER PROPOSALS

The Company expects to hold its 1999 Annual Meeting of Shareholders on
Wednesday, May 26, 1999. In order to be considered for inclusion in the
Company's proxy statement and form of proxy for the 1999 Annual Meeting, any
proposals by shareholders intended to be presented at such meeting must be
received by the Secretary of the Company at 2 Ada, Irvine, California 92618 by
no later than January 26, 1999.

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FORM OF PROXY

CONSUMER PORTFOLIO SERVICES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 25, 1998

The undersigned shareholder of CONSUMER PORTFOLIO SERVICES, INC., a
California 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 2 Ada, Irvine, California 92618 on Thursday, June 25,
1998, 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).

THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED, FOR
THE ELECTION OF THE NOMINEES, FOR PROPOSALS 2 AND 3, AND AS SAID PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY
POSTPONEMENTS OR ADJOURNMENTS THEREOF.

(IMPORTANT - TO BE SIGNED AND DATED ON REVERSE SIDE)

/ SEE REVERSE SIDE /
16

[X] Please mark
votes as in
this example PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THIS CARD

FOR AGAINST ABSTAIN

1. Election of Directors Nominees: 2. To approve a performance-based [ ] [ ] [ ]
Charles E. Bradley, Sr., Charles E. Bradley, Jr., compensation plan for the Company's
John G. Poole, Robert A. Simms, William B. Roberts executive officers.
and Thomas L. Chrystie

FOR ALL WITHHELD
NOMINEES FROM ALL
NOMINEES
[ ] [ ] MARK HERE FOR [ ] 3. To ratify the appointment of KPMG [ ] [ ] [ ]
ADDRESS CHANGE Peat Marwick LLP as independent
For all nominees except as noted below AND NOTE AT LEFT auditors of the Company for the
year ending December 31, 1998.

---------------------------------- 4. To transact such other business as
may properly come before the meeting
or any adjournment(s) thereof.

This proxy should be signed by the
shareholder(s) exactly as his or her name(s)
appear(s) hereon, dated and returned
promptly in the enclosed envelope. Persons
signing in a fiduciary capacity should so
indicate. If shares are held by joint
tenants or as community property, both
persons should sign.

Signature:_____________________________ Date:_________________ Signature:_____________________________ Date:________________