FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES

3 Months Ended

Jun. 30, 2021

Receivables [Abstract]

FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES

FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES

The following is a summary of gross loans receivable by Customer Tenure as of:

Customer Tenure	June 30, 2021		March 31, 2021
0 to 5 months	$	103,852,785	$	92,378,097
6 to 17 months	111,290,093		106,742,121
18 to 35 months	210,101,533		169,361,910
36 to 59 months	151,521,634		130,655,627
60+ months	643,882,305		597,292,495
Tax advance loans	2,490,337		8,316,011
Total gross loans	$	1,223,138,687	$	1,104,746,261

During the first quarter of fiscal 2021, we adopted ASU 2016-13, which replaces the incurred loss methodology for determining our provision for credit losses and allowance for credit losses with an expected loss methodology that is referred to as the CECL model, using the modified retrospective approach. Upon adoption, the total allowance for credit losses increased by $28.6 million, with no impact to the consolidated statement of operations.

Based on the Company’s loan products, the purpose and the term, current payment performance is used to assess the capability of the borrower to repay contractual obligations of the loan agreements as scheduled. Current payment performance is monitored by management on a daily basis. On an as needed basis, qualitative information may be taken into consideration if new information arises related to the customer’s ability to repay the loan. The Company’s payment performance buckets are as follows: current, 30-60 days past due, 61-90 days past due, 91 days or more past due.

The following table provides a breakdown of the Company’s gross loans receivable by current payment performance on a recency basis and year of origination at June 30, 2021:

	Term Loans By Origination
Loans	Up to 1 Year Ago		Between 1 and 2 Years Ago		Between 2 and 3 Years Ago		Between 3 and 4 Years Ago		Between 4 and 5 Years Ago		More than 5 Years Ago		Total
Current	$	1,102,178,309	$	35,689,779	$	2,793,918	$	149,895	$	15,651	$	831	$	1,140,828,383
30 - 60 days past due	30,238,330		2,370,042		277,064		35,120		8,822		—		32,929,378
61 - 90 days past due	16,701,091		1,649,920		185,245		16,323		4,028		—		18,556,607
91 or more days past due	25,036,701		3,022,261		255,079		14,422		5,087		432		28,333,982
Total	$	1,174,154,431	$	42,732,002	$	3,511,306	$	215,760	$	33,588	$	1,263	$	1,220,648,350
	Term Loans By Origination
Tax advance loans	Up to 1 Year Ago		Between 1 and 2 Years Ago		Between 2 and 3 Years Ago		Between 3 and 4 Years Ago		Between 4 and 5 Years Ago		More than 5 Years Ago		Total
Current	$	168,692	$	831	$	—	$	—	$	—	$	—	169,523
30 - 60 days past due	335,358		945		—		—		—		—		336,303
61 - 90 days past due	563,613		1,413		—		—		—		—		565,026
91 or more days past due	1,409,785		9,379		321		—		—		—		1,419,485
Total	$	2,477,448	$	12,568	$	321	$	—	$	—	$	—	$	2,490,337
Total gross loans													$	1,223,138,687

The following table provides a breakdown of the Company’s gross loans receivable by current payment performance on a recency basis and year of origination at March 31, 2021:

	Term Loans By Origination
Loans	Up to 1 Year Ago		Between 1 and 2 Years Ago		Between 2 and 3 Years Ago		Between 3 and 4 Years Ago		Between 4 and 5 Years Ago		More than 5 Years Ago		Total
Current	$	970,526,682	$	45,769,052	$	2,102,732	$	154,890	$	14,444	$	831	$	1,018,568,631
30 - 60 days past due	21,862,634		2,011,261		153,417		21,426		3,500		2,069		24,054,307
61 - 90 days past due	18,039,010		1,208,936		88,119		11,800		571		—		19,348,436
91 or more days past due	31,126,328		3,120,210		183,434		14,028		14,708		168		34,458,876
Total	$	1,041,554,654	$	52,109,459	$	2,527,702	$	202,144	$	33,223	$	3,068	$	1,096,430,250
	Term Loans By Origination
Tax advance loans	Up to 1 Year Ago		Between 1 and 2 Years Ago		Between 2 and 3 Years Ago		Between 3 and 4 Years Ago		Between 4 and 5 Years Ago		More than 5 Years Ago		Total
Current	$	7,583,075	$	9,360	$	—	$	—	$	—	$	—	7,592,435
30 - 60 days past due	686,667		1,423		—		—		—		—		688,090
61 - 90 days past due	—		—		321		—		—		—		321
91 or more days past due	—		34,509		656		—		—		—		35,165
Total	$	8,269,742	$	45,292	$	977	$	—	$	—	$	—	$	8,316,011
Total gross loans													$	1,104,746,261

The following table provides a breakdown of the Company’s gross loans receivable by current payment performance on a contractual basis and year of origination at June 30, 2021:

	Term Loans By Origination
Loans	Up to 1 Year Ago		Between 1 and 2 Years Ago		Between 2 and 3 Years Ago		Between 3 and 4 Years Ago		Between 4 and 5 Years Ago		More than 5 Years Ago		Total
Current	$	1,090,473,262	$	31,698,268	$	2,169,389	$	77,983	$	3,061	$	831	$	1,124,422,794
30 - 60 days past due	32,347,248		1,643,999		131,190		—		—		—		34,122,437
61 - 90 days past due	17,594,353		1,175,151		93,413		7,662		—		—		18,870,579
91 or more days past due	33,739,567		8,214,583		1,117,315		130,116		30,527		432		43,232,540
Total	$	1,174,154,430	$	42,732,001	$	3,511,307	$	215,761	$	33,588	$	1,263	$	1,220,648,350
	Term Loans By Origination
Tax advance loans	Up to 1 Year Ago		Between 1 and 2 Years Ago		Between 2 and 3 Years Ago		Between 3 and 4 Years Ago		Between 4 and 5 Years Ago		More than 5 Years Ago		Total
Current	$	136,117	$	—	$	—	$	—	$	—	$	—	$	136,117
30 - 60 days past due	330,547		—		—		—		—		—		330,547
61 - 90 days past due	596,653		—		—		—		—		—		596,653
91 or more days past due	1,414,131		12,568		321		—		—		—		1,427,020
Total	$	2,477,448	$	12,568	$	321	$	—	$	—	$	—	$	2,490,337
Total gross loans													$	1,223,138,687

The following table provides a breakdown of the Company’s gross loans receivable by current payment performance on a contractual basis and year of origination at March 31, 2021:

	Term Loans By Origination
Loans	Up to 1 Year Ago		Between 1 and 2 Years Ago		Between 2 and 3 Years Ago		Between 3 and 4 Years Ago		Between 4 and 5 Years Ago		More than 5 Years Ago		Total
Current	$	948,353,853	$	39,661,944	$	1,522,148	$	83,073	$	1,790	$	831	$	989,623,639
30 - 60 days past due	29,300,148		1,872,816		72,187		1,322		—		—		31,246,473
61 - 90 days past due	23,075,264		1,363,196		75,343		567		—		—		24,514,370
91 or more days past due	40,825,388		9,211,503		858,024		117,183		31,433		2,237		51,045,768
Total	$	1,041,554,653	$	52,109,459	$	2,527,702	$	202,145	$	33,223	$	3,068	$	1,096,430,250
	Term Loans By Origination
Tax advance loans	Up to 1 Year Ago		Between 1 and 2 Years Ago		Between 2 and 3 Years Ago		Between 3 and 4 Years Ago		Between 4 and 5 Years Ago		More than 5 Years Ago		Total
Current	$	7,583,075	$	—	$	—	$	—	$	—	$	—	$	7,583,075
30 - 60 days past due	686,667		—		—		—		—		—		686,667
61 - 90 days past due	—		—		—		—		—		—		—
91 or more days past due	—		45,292		977		—		—		—		46,269
Total	$	8,269,742	$	45,292	$	977	$	—	$	—	$	—	$	8,316,011
Total gross loans													$	1,104,746,261

The allowance for credit losses is applied to amortized cost, which is defined as the amount at which a financing receivable is originated, and net of deferred fees and costs, collection of cash, and charge-offs. Amortized cost also includes interest earned but not collected.

Credit Risk is inherent in the business of extending loans to borrowers and is continuously monitored by management and reflected within the allowance for credit losses for loans. The allowance for credit losses is an estimate of expected losses inherent within the Company’s gross loans receivable portfolio. In estimating the allowance for credit losses, loans with similar risk characteristics are aggregated into pools and collectively assessed. The Company’s loan products have generally the same terms therefore the Company looked to borrower characteristics as a way to disaggregate loans into pools sharing similar risks.

In determining the allowance for credit losses, the Company examined four borrower risk metrics as noted below.

1.Borrower type

2.Active months

3.Prior loan performance

4.Customer Tenure

To determine how well each metric predicts default risk the Company uses loss rate data over an observation period of twelve months at the loan level.

The information value was then calculated for each metric. From this analysis management determined the metric that had the strongest predictor of default risk was Customer Tenure. The Customer Tenure buckets used in the allowance for credit loss calculation are:

1.0 to 5 months

2.6 to 17 months

3.18 to 35 months

4.36 to 59 months

5.60+ months

Management will continue to monitor this credit metric on a quarterly basis.

Management estimates an allowance for each Customer Tenure bucket by performing a historical migration analysis of loans in that bucket for the twelve most recent historical twelve-month migration periods, adjusted for seasonality. All loans that are greater than 90 days past due on a recency basis and not written off as of the reporting date are reserved for at 100% of the outstanding balance, net of a calculated Rehab Rate. Management considers whether current credit conditions might suggest a change is needed to the allowance for credit losses by monitoring trends in 60-day delinquencies, FICO scores and average loan size as compared to metrics in the historical migration period. Due to the short term nature of the loan portfolio, forecasted changes in macroeconomic variables such as unemployment do not have a significant impact on loans outstanding at the end of a particular reporting period. Therefore, management develops a reasonable and supportable forecast of losses by comparing the most recent 6-month loss curves as compared to historical loss curves to see if there are significant changes in borrower behavior that may indicate the historical migration rates should be adjusted. If an adjustment is made as a result of the forecast, then the Company has elected to immediately revert back to historical experience past the forecast period.

The following table presents a roll forward of the allowance for credit losses on our gross loans receivable for three months ended June 30, 2021 and 2020.

	Three months ended June 30,
	2021		2020
Beginning balance	$	91,722,288	$	96,487,856
Impact of ASC 326 adoption	—		28,628,369
Provision for credit losses	30,265,811		25,660,660
Charge-offs	(30,016,940)		(43,831,942)
Recoveries	5,881,471		5,741,654
Net charge-offs	(24,135,469)		(38,090,288)
Ending Balance	$	97,852,630	$	112,686,597

The following table is an aging analysis on a recency basis at amortized cost of the Company’s gross loans receivable at June 30, 2021:

			Days Past Due - Recency Basis
Customer Tenure	Current		30 - 60		61 - 90		Over 90		Total Past Due		Total Loans
0 to 5 months	$	85,496,091	$	5,646,646	$	4,107,098	$	8,602,948	$	18,356,692	$	103,852,783
6 to 17 months	99,626,709		4,650,359		2,758,248		4,254,777		11,663,384		111,290,093
18 to 35 months	197,298,693		5,725,542		3,055,374		4,021,925		12,802,841		210,101,534
36 to 59 months	143,356,588		3,720,599		1,874,128		2,570,320		8,165,047		151,521,635
60+ months	615,050,300		13,186,232		6,761,761		8,884,012		28,832,005		643,882,305
Tax advance loans	169,522		336,303		565,026		1,419,486		$	2,320,815	2,490,337
Total gross loans	1,140,997,903		33,265,681		19,121,635		29,753,468		82,140,784		1,223,138,687
Unearned interest, insurance and fees	(301,078,657)		(8,777,918)		(5,045,686)		(7,851,140)		(21,674,744)		(322,753,401)
Total net loans	$	839,919,246	$	24,487,763	$	14,075,949	$	21,902,328	$	60,466,040	$	900,385,286
Percentage of period-end gross loans receivable			2.7%		1.6%		2.4%		6.7%

The following table is an aging analysis on a recency basis at amortized cost of the Company’s gross loans receivable at March 31, 2021:

			Days Past Due - Recency Basis
Customer Tenure	Current		30 - 60		61 - 90		Over 90		Total Past Due		Total Loans
0 to 5 months	$	72,702,970	$	4,799,102	$	5,680,380	$	9,195,642	$	19,675,124	$	92,378,094
6 to 17 months	94,466,209		3,187,347		2,798,411		6,290,155		12,275,913		106,742,122
18 to 35 months	158,217,605		3,570,696		2,592,402		4,981,208		11,144,306		169,361,911
36 to 59 months	123,542,346		2,432,489		1,753,291		2,927,501		7,113,281		130,655,627
60+ months	569,639,500		10,064,674		6,523,952		11,064,370		27,652,996		597,292,496
Tax advance loans	7,592,435		688,090		321		35,165		$	723,576	8,316,011
Total gross loans	1,026,161,065		24,742,398		19,348,757		34,494,041		78,585,196		1,104,746,261
Unearned interest, insurance and fees	(259,492,219)		(6,256,776)		(4,892,850)		(8,722,739)		(19,872,365)		(279,364,584)
Total net loans	$	766,668,846	$	18,485,622	$	14,455,907	$	25,771,302	$	58,712,831	$	825,381,677
Percentage of period-end gross loans receivable			2.2%		1.8%		3.1%		7.1%

The following table is an aging analysis on a contractual basis at amortized cost of the Company’s gross loans receivable at June 30, 2021:

			Days Past Due - Contractual Basis
Customer Tenure	Current		30 - 60		61 - 90		Over 90		Total Past Due			Total Loans
0 to 5 months	$	84,288,878	$	5,594,534	$	3,942,595	$	10,026,778	$	19,563,907		$	103,852,785
6 to 17 months	97,816,652		4,635,619		2,608,969		6,228,853		13,473,441			111,290,093
18 to 35 months	194,896,422		5,844,466		3,113,896		6,246,749		15,205,111			210,101,533
36 to 59 months	141,381,446		3,850,933		1,952,425		4,336,830		10,140,188			151,521,634
60+ months	606,039,397		14,196,885		7,252,694		16,393,329		37,842,908			643,882,305
Tax advance loans	136,117		330,547		596,653		1,427,020		$	2,354,220		2,490,337
Total gross loans	1,124,558,912		34,452,984		19,467,232		44,659,559		98,579,775			1,223,138,687
Unearned interest, insurance and fees	(296,740,850)		(9,091,216)		(5,136,879)		(11,784,456)		(26,012,551)			(322,753,401)
Total net loans	$	827,818,062	$	25,361,768	$	14,330,353	$	32,875,103	$	72,567,224		$	900,385,286
Percentage of period-end gross loans receivable			2.8%		1.6%		3.7%		8.1		%

The following table is an aging analysis on a contractual basis at amortized cost of the Company’s gross loans receivable at March 31, 2021:

			Days Past Due - Contractual Basis
Customer Tenure	Current		30 - 60		61 - 90		Over 90		Total Past Due			Total Loans
0 to 5 months	$	70,532,439	$	5,245,878	$	6,019,264	$	10,580,514	$	21,845,656		$	92,378,095
6 to 17 months	90,679,304		3,936,937		3,267,446		8,858,434		16,062,817			106,742,121
18 to 35 months	153,922,334		4,471,202		3,488,629		7,479,745		15,439,576			169,361,910
36 to 59 months	120,168,698		3,229,253		2,337,625		4,920,052		10,486,930			130,655,628
60+ months	554,320,865		14,363,203		9,401,406		19,207,022		42,971,631			597,292,496
Tax advance loans	7,583,075		686,667		—		46,269		$	732,936		8,316,011
Total gross loans	997,206,715		31,933,140		24,514,370		51,092,036		107,539,546			1,104,746,261
Unearned interest, insurance and fees	(252,170,339)		(8,075,147)		(6,199,113)		(12,919,985)		(27,194,245)			(279,364,584)
Total net loans	$	745,036,376	$	23,857,993	$	18,315,257	$	38,172,051	$	80,345,301		$	825,381,677
Percentage of period-end gross loans receivable			2.9%		2.2%		4.6%		9.7		%

The Company elected not to record an allowance for credit losses for accrued interest as outlined in ASC 326-20-30-5A. Loans are placed on nonaccrual status when management determines that the full payment of principal and collection of interest according to contractual terms is no longer likely. The accrual of interest is discontinued when a loan is 61 days or more past the contractual due date. When the interest accrual is discontinued, all unpaid accrued interest is reversed against interest income. While a loan is on nonaccrual status, interest revenue is recognized only when a payment is received. Once a loan moves to nonaccrual status, it remains in nonaccrual status until it is paid out, charged off or refinanced. During the three months ended June 30, 2021, the Company reversed a total of $3.8 million of unpaid accrued interest against interest income.

The following table presents the amortized cost basis of loans on nonaccrual status as of the beginning of the reporting period and the end of the reporting period and the amortized cost basis of nonaccrual loans without related expected credit loss. It also shows year-to-date interest income recognized on nonaccrual loans:

	Nonaccrual Financial Assets
Customer Tenure	As of June 30, 2021		As of March 31, 2021		Financial Assets 61 Days or More Past Due, Not on Nonaccrual Status		Nonaccrual Financial Assets With No Allowance as of June 30, 2021		Interest Income Recognized
0 to 5 months	$	14,337,987	$	17,256,243	$	—	$	—	$	337,672
6 to 17 months	9,313,814		13,153,363		—		—		517,569
18 to 35 months	9,973,520		12,048,132		—		—		528,420
36 to 59 months	6,778,869		8,156,159		—		—		383,805
60+ months	25,567,236		31,947,750		—		—		1,508,141
Tax advance loans	2,032,883		46,269		—		—		—
Unearned interest, insurance and fees	(17,944,508)		(20,889,617)		—		—
Total	$	50,059,801	$	61,718,299	$	—	$	—	$	3,275,607