FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES

6 Months Ended

Sep. 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	September 30, 2021		March 31, 2021
0 to 5 months	$	160,762,921	$	92,378,097
6 to 17 months	112,721,013		106,742,121
18 to 35 months	231,750,261		169,361,910
36 to 59 months	176,611,569		130,655,627
60+ months	712,329,556		597,292,495
Tax advance loans	651,816		8,316,011
Total gross loans	$	1,394,827,136	$	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 September 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	$	1,228,611,816	$	38,665,263	$	3,003,845	$	123,756	$	27,237	$	789	$	1,270,432,706
30 - 60 days past due	50,891,660		2,815,418		387,851		20,553		7,382		—		54,122,864
61 - 90 days past due	29,152,214		1,842,430		213,683		21,298		7,099		—		31,236,724
91 or more days past due	33,967,099		4,059,648		299,904		43,950		10,341		2,084		38,383,026
Total	$	1,342,622,789	$	47,382,759	$	3,905,283	$	209,557	$	52,059	$	2,873	$	1,394,175,320
	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	$	38,954	$	46	$	—	$	—	$	—	$	—	39,000
30 - 60 days past due	37,718		—		—		—		—		—		37,718
61 - 90 days past due	33,254		—		164		—		—		—		33,418
91 or more days past due	534,716		6,964		—		—		—		—		541,680
Total	$	644,642	$	7,010	$	164	$	—	$	—	$	—	$	651,816
Total gross loans													$	1,394,827,136

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 September 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	$	1,213,267,088	$	34,694,764	$	2,379,587	$	67,338	$	8,304	$	789	$	1,250,417,870
30 - 60 days past due	55,615,259		1,988,198		160,947		3,115		—		—		57,767,519
61 - 90 days past due	32,795,445		1,479,744		139,530		5,452		—		—		34,420,171
91 or more days past due	40,944,995		9,220,054		1,225,219		133,652		43,756		2,084		51,569,760
Total	$	1,342,622,787	$	47,382,760	$	3,905,283	$	209,557	$	52,060	$	2,873	$	1,394,175,320
	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	$	18,447	$	—	$	—	$	—	$	—	$	—	$	18,447
30 - 60 days past due	29,569		—		—		—		—		—		29,569
61 - 90 days past due	27,070		—		—		—		—		—		27,070
91 or more days past due	569,557		7,009		164		—		—		—		576,730
Total	$	644,643	$	7,009	$	164	$	—	$	—	$	—	$	651,816
Total gross loans													$	1,394,827,136

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 the three and six months ended September 30, 2021 and 2020:

	Three months ended September 30,				Six months ended September 30,
	2021		2020		2021		2020
Beginning balance	97,852,630		$	112,686,597	$	91,722,288	$	96,487,856
Impact of ASC 326 adoption	—		—		—		28,628,368
Provision for credit losses	42,043,526		26,090,367		72,309,337		51,751,027
Charge-offs	(29,849,610)		(33,793,503)		(59,866,550)		(77,625,445)
Recoveries	4,613,694		4,617,898		10,495,165		10,359,553
Net charge-offs	(25,235,916)		(29,175,605)		(49,371,385)		(67,265,892)
Ending Balance	$	114,660,240	$	109,601,359	$	114,660,240	$	109,601,359

The following table is an aging analysis on a recency basis at amortized cost of the Company’s gross loans receivable at September 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	$	130,841,492	$	11,360,208	$	8,223,747	$	10,337,474	$	29,921,429	$	160,762,921
6 to 17 months	95,146,387		6,583,447		4,574,435		6,416,744		17,574,626		112,721,013
18 to 35 months	209,934,364		9,798,948		5,441,891		6,575,058		21,815,897		231,750,261
36 to 59 months	164,431,451		5,847,505		2,881,394		3,451,219		12,180,118		176,611,569
60+ months	670,079,012		20,532,756		10,115,257		11,602,531		42,250,544		712,329,556
Tax advance loans	38,999		37,718		33,418		541,681		612,817		651,816
Total gross loans	1,270,471,705		54,160,582		31,270,142		38,924,707		124,355,431		1,394,827,136
Unearned interest, insurance and fees	(337,028,327)		(14,367,617)		(8,295,284)		(10,325,873)		(32,988,774)		(370,017,101)
Total net loans	$	933,443,378	$	39,792,965	$	22,974,858	$	28,598,834	$	91,366,657	$	1,024,810,035
Percentage of period-end gross loans receivable			3.9%		2.2%		2.8%		8.9%

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 September 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	$	129,295,224	$	11,569,048	$	8,382,893	$	11,515,755	$	31,467,696		$	160,762,920
6 to 17 months	93,069,152		6,780,420		4,840,146		8,031,296		19,651,862			112,721,014
18 to 35 months	206,576,798		10,391,728		6,019,523		8,762,211		25,173,462			231,750,260
36 to 59 months	161,763,230		6,386,089		3,383,798		5,078,453		14,848,340			176,611,570
60+ months	659,713,466		22,640,234		11,793,811		18,182,045		52,616,090			712,329,556
Tax advance loans	18,447		29,569		27,070		576,730		633,369			651,816
Total gross loans	1,250,436,317		57,797,088		34,447,241		52,146,490		144,390,819			1,394,827,136
Unearned interest, insurance and fees	(331,713,378)		(15,332,302)		(9,138,099)		(13,833,322)		(38,303,723)			(370,017,101)
Total net loans	$	918,722,939	$	42,464,786	$	25,309,142	$	38,313,168	$	106,087,096		$	1,024,810,035
Percentage of period-end gross loans receivable			4.1%		2.5%		3.7%		10.3		%

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 September 30, 2021, the Company reversed a total of $6.8 million of unpaid accrued interest against interest income. During the six months ended September 30, 2021, the Company reversed a total of $10.6 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 September 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 September 30, 2021		Interest Income Recognized
0 to 5 months	$	20,180,823	$	17,256,243	$	—	$	—	$	565,222
6 to 17 months	13,153,496		13,153,363		—		—		825,557
18 to 35 months	15,190,793		12,048,132		—		—		909,227
36 to 59 months	8,807,368		8,156,159		—		—		653,087
60+ months	31,343,442		31,947,750		—		—		2,588,262
Tax advance loans	654,037		46,269		—		—		—
Unearned interest, insurance and fees	(23,697,282)		(20,889,617)		—		—
Total	$	65,632,677	$	61,718,299	$	—	$	—	$	5,541,355