Finance Receivables, Credit Quality Information, and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2024

Receivables [Abstract]

Finance Receivables, Credit Quality Information, and Allowance for Credit Losses

Note 3. Finance Receivables, Credit Quality Information, and Allowance for Credit Losses

Net finance receivables for the periods indicated consisted of the following:

Dollars in thousands	June 30, 2024		December 31, 2023
Large loans	$	1,266,032	$	1,274,137
Small loans		505,640		493,473
Retail loans		2,071		3,800
Net finance receivables	$	1,773,743	$	1,771,410

Net finance receivables included net deferred origination fees and costs of $14.2 million and $15.1 million as of June 30, 2024 and December 31, 2023, respectively.

The credit quality of the Company’s finance receivable portfolio is dependent on the Company’s ability to enforce sound underwriting standards, maintain diligent servicing of the portfolio, and respond to changing economic conditions as it manages and grows its portfolio. The allowance for credit losses uses FICO scores and delinquency as key data points in estimating the allowance. The Company uses six FICO band categories to assess FICO scores. The first three FICO band categories include subprime FICO scores below 620. The fourth and fifth FICO band categories include near-prime FICO scores ranging from 620 to 659. The sixth FICO band category includes prime FICO scores of 660 or higher.

Net finance receivables by product, FICO band at origination, and origination year as of June 30, 2024 are as follows:

	Net Finance Receivables by Origination Year
Dollars in thousands	2024		2023		2022		2021		2020		Prior		Total Net Finance Receivables
Large Loans:
FICO Band
1	$	47,762	$	58,131	$	18,964	$	6,212	$	1,431	$	665	$	133,165
2		29,083		31,972		10,225		3,083		454		191		75,008
3		47,051		58,352		27,902		8,357		946		158		142,766
4		65,416		83,193		41,088		11,697		1,618		230		203,242
5		69,913		90,889		45,146		14,545		1,906		134		222,533
6		148,723		211,954		96,478		28,250		3,752		161		489,318
Total large loans	$	407,948	$	534,491	$	239,803	$	72,144	$	10,107	$	1,539	$	1,266,032
Small Loans:
FICO Band
1	$	42,607	$	29,277	$	4,291	$	656	$	86	$	41	$	76,958
2		19,202		14,657		2,078		209		9		10		36,165
3		30,526		24,420		2,688		206		9		4		57,853
4		40,140		32,666		3,170		186		6		7		76,175
5		44,373		39,626		4,648		166		4		4		88,821
6		89,227		71,556		8,648		227		5		5		169,668
Total small loans	$	266,075	$	212,202	$	25,523	$	1,650	$	119	$	71	$	505,640
Retail Loans:
FICO Band
1	$	—	$	1	$	1	$	—	$	1	$	2	$	5
2		—		—		119		10		—		1		130
3		—		—		355		84		—		1		440
4		—		—		411		155		7		5		578
5		—		—		302		126		3		4		435
6		—		—		330		147		5		1		483
Total retail loans	$	—	$	1	$	1,518	$	522	$	16	$	14	$	2,071
Total Loans:
FICO Band
1	$	90,369	$	87,409	$	23,256	$	6,868	$	1,518	$	708	$	210,128
2		48,285		46,629		12,422		3,302		463		202		111,303
3		77,577		82,772		30,945		8,647		955		163		201,059
4		105,556		115,859		44,669		12,038		1,631		242		279,995
5		114,286		130,515		50,096		14,837		1,913		142		311,789
6		237,950		283,510		105,456		28,624		3,762		167		659,469
Total loans	$	674,023	$	746,694	$	266,844	$	74,316	$	10,242	$	1,624	$	1,773,743

Net finance receivables by product, FICO band at origination, and origination year as of December 31, 2023 are as follows:

	Net Finance Receivables by Origination Year
Dollars in thousands	2023		2022		2021		2020		2019		Prior		Total Net Finance Receivables
Large Loans:
FICO Band
1	$	83,107	$	28,068	$	9,542	$	2,510	$	980	$	347	$	124,554
2		46,855		16,964		5,342		1,077		309		83		70,630
3		86,191		45,778		14,999		2,201		316		66		149,551
4		120,054		65,753		20,712		3,481		592		55		210,647
5		128,901		69,706		23,779		4,043		496		22		226,947
6		291,795		144,663		46,630		7,936		732		52		491,808
Total large loans	$	756,903	$	370,932	$	121,004	$	21,248	$	3,425	$	625	$	1,274,137
Small Loans:
FICO Band
1	$	64,664	$	10,459	$	1,625	$	172	$	68	$	18	$	77,006
2		31,289		5,886		724		36		11		9		37,955
3		51,222		8,099		717		31		6		1		60,076
4		65,743		10,074		679		19		10		3		76,528
5		74,207		13,838		632		14		4		1		88,696
6		126,400		25,679		1,111		15		5		2		153,212
Total small loans	$	413,525	$	74,035	$	5,488	$	287	$	104	$	34	$	493,473
Retail Loans:
FICO Band
1	$	1	$	—	$	2	$	1	$	1	$	5	$	10
2		—		213		30		—		—		—		243
3		—		634		211		3		1		1		850
4		—		650		352		36		—		4		1,042
5		—		508		278		24		—		4		814
6		—		524		286		28		2		1		841
Total retail loans	$	1	$	2,529	$	1,159	$	92	$	4	$	15	$	3,800
Total Loans:
FICO Band
1	$	147,772	$	38,527	$	11,169	$	2,683	$	1,049	$	370	$	201,570
2		78,144		23,063		6,096		1,113		320		92		108,828
3		137,413		54,511		15,927		2,235		323		68		210,477
4		185,797		76,477		21,743		3,536		602		62		288,217
5		203,108		84,052		24,689		4,081		500		27		316,457
6		418,195		170,866		48,027		7,979		739		55		645,861
Total loans	$	1,170,429	$	447,496	$	127,651	$	21,627	$	3,533	$	674	$	1,771,410

Credit losses by product and origination year for the six months ended June 30, 2024 and 2023, respectively, are as follows:

	Credit Losses by Origination Year
Dollars in thousands	2024		2023		2022		2021		2020		Prior		Total Credit Losses
Large loans	$	280	$	33,165	$	25,664	$	7,228	$	1,012	$	319	$	67,668
Small loans		364		30,172		8,416		674		34		18		39,678
Retail loans		—		—		291		154		11		4		460
Total loans	$	644	$	63,337	$	34,371	$	8,056	$	1,057	$	341	$	107,806

	Credit Losses by Origination Year
Dollars in thousands	2023		2022		2021		2020		2019		Prior		Total Credit Losses
Large loans	$	243	$	35,477	$	21,693	$	3,207	$	970	$	168	$	61,758
Small loans		196		31,402		7,711		475		41		3		39,828
Retail loans		—		328		233		47		22		2		632
Total loans	$	439	$	67,207	$	29,637	$	3,729	$	1,033	$	173	$	102,218

The contractual delinquency of the net finance receivables portfolio by product and aging for the periods indicated are as follows:

	June 30, 2024
	Large					Small					Retail					Total
Dollars in thousands	$		%			$		%			$		%			$		%
Current	$	1,081,617		85.5	%	$	414,192		81.9	%	$	1,410		68.0	%	$	1,497,219		84.4	%
1 to 29 days past due		107,983		8.5	%		45,433		9.0	%		372		18.0	%		153,788		8.7	%
Delinquent accounts
30 to 59 days		22,025		1.7	%		12,822		2.6	%		77		3.7	%		34,924		1.9	%
60 to 89 days		17,373		1.4	%		10,261		2.0	%		55		2.7	%		27,689		1.6	%
90 to 119 days		13,407		1.1	%		8,135		1.6	%		65		3.1	%		21,607		1.2	%
120 to 149 days		11,825		0.9	%		7,471		1.5	%		37		1.8	%		19,333		1.1	%
150 to 179 days		11,802		0.9	%		7,326		1.4	%		55		2.7	%		19,183		1.1	%
Total delinquency	$	76,432		6.0	%	$	46,015		9.1	%	$	289		14.0	%	$	122,736		6.9	%
Total net finance receivables	$	1,266,032		100.0	%	$	505,640		100.0	%	$	2,071		100.0	%	$	1,773,743		100.0	%
Net finance receivables in nonaccrual status	$	40,509		3.2	%	$	24,557		4.9	%	$	183		8.8	%	$	65,249		3.7	%

	December 31, 2023
	Large					Small					Retail					Total
Dollars in thousands	$		%			$		%			$		%			$		%
Current	$	1,084,518		85.1	%	$	406,203		82.4	%	$	2,620		69.0	%	$	1,493,341		84.3	%
1 to 29 days past due		109,483		8.6	%		45,119		9.1	%		594		15.6	%		155,196		8.8	%
Delinquent accounts
30 to 59 days		22,587		1.7	%		12,053		2.4	%		116		3.1	%		34,756		1.9	%
60 to 89 days		19,844		1.6	%		11,253		2.3	%		115		3.0	%		31,212		1.8	%
90 to 119 days		16,951		1.3	%		10,030		2.0	%		126		3.2	%		27,107		1.5	%
120 to 149 days		10,938		0.9	%		4,247		0.9	%		132		3.5	%		15,317		0.9	%
150 to 179 days		9,816		0.8	%		4,568		0.9	%		97		2.6	%		14,481		0.8	%
Total delinquency	$	80,136		6.3	%	$	42,151		8.5	%	$	586		15.4	%	$	122,873		6.9	%
Total net finance receivables	$	1,274,137		100.0	%	$	493,473		100.0	%	$	3,800		100.0	%	$	1,771,410		100.0	%
Net finance receivables in nonaccrual status	$	44,627		3.5	%	$	21,850		4.4	%	$	394		10.4	%	$	66,871		3.8	%

The accrual of interest income on finance receivables is suspended when an account becomes 90 days delinquent. If a loan is charged off, the accrued interest is reversed as a reduction of interest and fee income. During the three months ended June 30, 2024 and 2023, the Company reversed $6.5 million and $6.4 million of accrued interest as reductions of interest and fee income,

respectively. The Company reversed $11.6 million and $11.1 million of accrued interest as reductions of interest and fee income for the six months ended June 30, 2024 and 2023, respectively.

The following are reconciliations of the allowance for credit losses by product for the three and six months ended June 30, 2024 and 2023:

Dollars in thousands	Large			Small			Retail			Total
Beginning balance at April 1, 2024	$	126,528		$	60,142		$	430		$	187,100
Provision for credit losses		31,493			22,271			38			53,802
Credit losses		(35,957	)		(22,490	)		(166	)		(58,613	)
Recoveries		1,914			1,175			22			3,111
Ending balance at June 30, 2024	$	123,978		$	61,098		$	324		$	185,400
Net finance receivables at June 30, 2024	$	1,266,032		$	505,640		$	2,071		$	1,773,743
Allowance as percentage of net finance receivables at June 30, 2024		9.8	%		12.1	%		15.6	%		10.5	%

Dollars in thousands	Large			Small			Retail			Total
Beginning balance at April 1, 2023	$	120,382		$	62,112		$	1,306		$	183,800
Provision for credit losses		33,556			18,759			236			52,551
Credit losses		(33,661	)		(23,448	)		(500	)		(57,609	)
Recoveries		1,596			1,045			17			2,658
Ending balance at June 30, 2023	$	121,873		$	58,468		$	1,059		$	181,400
Net finance receivables at June 30, 2023	$	1,238,031		$	444,590		$	6,316		$	1,688,937
Allowance as percentage of net finance receivables at June 30, 2023		9.8	%		13.2	%		16.8	%		10.7	%

Dollars in thousands	Large			Small			Retail			Total
Beginning balance at January 1, 2024	$	127,992		$	58,736		$	672		$	187,400
Provision for credit losses		60,148			40,000			77			100,225
Credit losses		(67,668	)		(39,678	)		(460	)		(107,806	)
Recoveries		3,506			2,040			35			5,581
Ending balance at June 30, 2024	$	123,978		$	61,098		$	324		$	185,400
Net finance receivables at June 30, 2024	$	1,266,032		$	505,640		$	2,071		$	1,773,743
Allowance as percentage of net finance receivables at June 30, 2024		9.8	%		12.1	%		15.6	%		10.5	%

Dollars in thousands	Large			Small			Retail			Total
Beginning balance at January 1, 2023	$	119,592		$	57,915		$	1,293		$	178,800
Provision for credit losses		61,265			38,578			376			100,219
Credit losses		(61,758	)		(39,828	)		(632	)		(102,218	)
Recoveries		2,774			1,803			22			4,599
Ending balance at June 30, 2023	$	121,873		$	58,468		$	1,059		$	181,400
Net finance receivables at June 30, 2023	$	1,238,031		$	444,590		$	6,316		$	1,688,937
Allowance as percentage of net finance receivables at June 30, 2023		9.8	%		13.2	%		16.8	%		10.7	%

The Company uses certain loan modification programs for borrowers experiencing financial difficulties as a loss mitigation strategy to improve collectability of the loans and assist customers through financial setbacks. The programs consist of offering payment deferrals, interest rate reductions, term extensions, and, in limited instances, settlements. Customers may also pursue financial assistance through external sources, such as filing for bankruptcy protection. Modification programs available to our customers are described in more detail below:

•Customers with temporary hardships may be offered payment deferrals related to past due payments. Such deferrals extend the customer’s maturity date and are generally considered insignificant delays. During the second quarter of 2023, the Company enhanced its policy for determining an insignificant delay in payment. The Company’s previous policy for an insignificant delay in payment was two or fewer deferrals in a rolling twelve-month period, which was

updated to be three or fewer deferrals in a rolling twelve-month period. The rolling twelve-month period for the prior-year disclosures begins on or after January 1, 2023 (the date of adoption). The change had no material impact to the Company's disclosures.

•Customers with delinquent loans who meet certain criteria are eligible to receive a reduced interest rate and/or term extension, making the monthly payments more affordable.

•The Company may also agree to settle a past-due loan by accepting less than the full principal balance owed in certain limited cases once it is determined that collection of the entire outstanding balance is unlikely.

•Customers who receive bankruptcy protection may receive principal forgiveness, interest rate reductions, and/or term extensions.

The information relating to modifications made to borrowers experiencing financial difficulty for the periods indicated are as follows:

	As of and for the Three Months Ended June 30, 2024
	Large					Small					Total
Dollars in thousands	$		%			$		%			$		%
Interest rate reduction & term extension	$	2,635		0.2	%	$	461		0.1	%	$	3,096		0.2	%
Term extension		2,117		0.2	%		438		0.1	%		2,555		0.1	%
Interest rate reduction		651		0.1	%		179		—			830		—
Principal forgiveness, interest rate reduction, & term extension		162		—			7		—			169		—
Total	$	5,565		0.4	%	$	1,085		0.2	%	$	6,650		0.4	%

	As of and for the Three Months Ended June 30, 2023
	Large					Small					Total
Dollars in thousands	$		%			$		%			$		%
Interest rate reduction & term extension	$	3,162		0.3	%		678		0.2	%	$	3,840		0.2	%
Principal forgiveness, interest rate reduction, & term extension		109		—			16		—			125		—
Total	$	3,271		0.3	%	$	694		0.2	%	$	3,965		0.2	%

	As of and for the Six Months Ended June 30, 2024
	Large					Small					Total
Dollars in thousands	$		%			$		%			$		%
Interest rate reduction & term extension	$	6,111		0.5	%	$	1,051		0.2	%	$	7,162		0.4	%
Term extension		2,496		0.2	%		538		0.1	%		3,034		0.2	%
Interest rate reduction		699		0.1	%		181		—			880		—
Principal forgiveness, interest rate reduction, & term extension		287		—			19		—			306		—
Total	$	9,593		0.8	%	$	1,789		0.4	%	$	11,382		0.6	%

	As of and for the Six Months Ended June 30, 2023
	Large					Small					Total
Dollars in thousands	$		%			$		%			$		%
Interest rate reduction & term extension	$	7,706		0.6	%		1,568		0.4	%	$	9,274		0.5	%
Principal forgiveness, interest rate reduction, & term extension		131		—			19		—			150		—
Total	$	7,837		0.6	%	$	1,587		0.4	%	$	9,424		0.6	%

The financial effects of the modifications made to borrowers experiencing financial difficulty for the periods indicated are as follows:

	Three Months Ended June 30, 2024
Loan Modification	Product	Financial Effect
Principal forgiveness	Large loans	Reduced the amortized cost basis of the loans by $0.3 million.
	Small loans	Reduced the amortized cost basis of the loans by $0.1 million.
Interest rate reduction	Large loans	Reduced the weighted-average contractual interest rate by 9.6%.
	Small loans	Reduced the weighted-average contractual interest rate by 17.6%.
Term extension	Large loans	Added a weighted-average 1.1 years to the life of loans.
	Small loans	Added a weighted-average 1.0 years to the life of loans.

	Three Months Ended June 30, 2023
Loan Modification	Product	Financial Effect
Principal forgiveness	Large loans	Reduced the amortized cost basis of the loans by $0.3 million.
	Small loans	Reduced the amortized cost basis of the loans by $0.2 million.
Interest rate reduction	Large loans	Reduced the weighted-average contractual interest rate by 10.0%.
	Small loans	Reduced the weighted-average contractual interest rate by 14.6%.
Term extension	Large loans	Added a weighted-average 1.4 years to the life of loans.
	Small loans	Added a weighted-average 1.3 years to the life of loans.

	Six Months Ended June 30, 2024
Loan Modification	Product	Financial Effect
Principal forgiveness	Large loans	Reduced the amortized cost basis of the loans by $0.6 million.
	Small loans	Reduced the amortized cost basis of the loans by $0.3 million.
Interest rate reduction	Large loans	Reduced the weighted-average contractual interest rate by 8.4%.
	Small loans	Reduced the weighted-average contractual interest rate by 15.5%.
Term extension	Large loans	Added a weighted-average 1.3 years to the life of loans.
	Small loans	Added a weighted-average 1.2 years to the life of loans.

	Six Months Ended June 30, 2023
Loan Modification	Product	Financial Effect
Principal forgiveness	Large loans	Reduced the amortized cost basis of the loans by $0.5 million.
	Small loans	Reduced the amortized cost basis of the loans by $0.3 million.
Interest rate reduction	Large loans	Reduced the weighted-average contractual interest rate by 11.3%.
	Small loans	Reduced the weighted-average contractual interest rate by 13.5%.
Term extension	Large loans	Added a weighted-average 1.4 years to the life of loans.
	Small loans	Added a weighted-average 1.3 years to the life of loans.

The following table provides the amortized cost basis for modifications made to borrowers experiencing financial difficulty within the previous twelve months that subsequently defaulted. The Company defines payment default as 90 days past due for this disclosure. The respective amounts for each modification for the periods indicated are as follows:

	As of and for the Three Months Ended June 30, 2024
Dollars in thousands	Large		Small		Total
Interest rate reduction & term extension	$	1,141	$	235	$	1,376
Term extension		45		15		60
Principal forgiveness, interest rate reduction, & term extension		26		—		26
Total	$	1,212	$	250	$	1,462

	As of and for the Three Months Ended June 30, 2023
Dollars in thousands	Large		Small		Total
Interest rate reduction & term extension	$	301	$	70	$	371
Total	$	301	$	70	$	371

	As of and for the Six Months Ended June 30, 2024
Dollars in thousands	Large		Small		Total
Interest rate reduction & term extension	$	1,453	$	278	$	1,731
Term extension		53		16		69
Principal forgiveness, interest rate reduction, & term extension		27		4		31
Total	$	1,533	$	298	$	1,831

	As of and for the Six Months Ended June 30, 2023
Dollars in thousands	Large		Small		Total
Interest rate reduction & term extension	$	301	$	70	$	371
Total	$	301	$	70	$	371

The contractual delinquencies of loans that were modified to borrowers experiencing financial difficulty within the previous twelve months for the period indicated are as follows:

	June 30, 2024
Dollars in thousands	Large		Small		Total
Current	$	12,113	$	2,071	$	14,184
30 - 89 days past due		2,000		387		2,387
90+ days past due		1,066		253		1,319
Total (1)	$	15,179	$	2,711	$	17,890

(1) Excludes modified finance receivables that subsequently charged off of $1.5 million and $0.3 million in large and small loans, respectively.

The contractual delinquencies of loans that were modified to borrowers experiencing financial difficulty on or after January 1, 2023 for the period indicated are as follows:

	June 30, 2023
Dollars in thousands	Large		Small		Total
Current	$	6,819	$	1,314	$	8,133
30 - 89 days past due		817		229		1,046
90+ days past due		201		44		245
Total (1)	$	7,837	$	1,587	$	9,424

(1) Excludes modified finance receivables that subsequently charged off of $39 thousand and $5 thousand in large and small loans, respectively.