XML 45 R9.htm IDEA: XBRL DOCUMENT v2.4.1.9
Finance Receivables, Allowance for Credit Losses, and Credit Quality Information
12 Months Ended
Dec. 31, 2014
Receivables [Abstract]  
Finance Receivables, Allowance for Credit Losses, and Credit Quality Information

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

Finance receivables at December 31, 2014 and 2013 consisted of the following:

 

     2014      2013  

Branch small loans

   $ 128,217       $ 109,776   

Convenience checks

     191,316         179,203   

Large loans

     46,147         43,311   

Automobile loans

     154,382         181,126   

Retail loans

     26,130         31,268   
  

 

 

    

 

 

 

Finance receivables

   $ 546,192       $ 544,684   
  

 

 

    

 

 

 

Changes in the allowance for credit losses for the years ended December 31, 2014, 2013, and 2012 are as follows:

 

     2014      2013      2012  

Balance at beginning of year

   $ 30,089       $ 23,616       $ 19,300   

Provision for credit losses

     69,057         39,192         27,765   

Charge-offs

     (58,236      (33,750      (24,275

Charge-offs (180+ policy change)

     (2,106      —          —    

Recoveries

     1,707         1,031         826   
  

 

 

    

 

 

    

 

 

 

Balance at end of year

   $ 40,511       $ 30,089       $ 23,616   
  

 

 

    

 

 

    

 

 

 

During the three months ended December 31, 2013, the Company changed its estimate for the allowance for credit losses based on analysis of the effective lives for all finance receivable portfolios. The methodology for estimating the allowance for credit losses changed from the trailing eight to trailing six month losses on branch small loans and convenience checks, trailing twelve to trailing ten month losses on large loans, and trailing twelve to trailing eleven month losses on retail loans. As a result, the Company decreased the allowance for credit losses by $3,901, which increased net income for the year ended December 31, 2013 by $2,428, or $0.19 diluted earnings per share. The Company recorded an offsetting $3,700 pre-tax increase to the allowance for credit losses for qualitative factors on finance receivable growth and delinquency and loss trends, which decreased net income for the year ended December 31, 2013 by $2,303, or $0.18 diluted earnings per share.

In September 2014, the Company changed the time-based element of the charge-off policy from 365 days contractually delinquent to 180 days. The updated policy improves consistency and creates better alignment with industry practice. The policy change generated a one-time charge-off of $2,106 as of September 2014.

The allowance for credit losses consists of general and specific components. Prior to the charge-off policy change in September 2014, the specific component included a full valuation allowance for finance receivables that were contractually delinquent 180 days or over. The $2,106 in charge-offs from the policy change were charged against this allowance as of September 2014 and, therefore, did not impact the provision for loan losses.

The general component of the allowance estimates credit losses for groups of finance receivables on a collective basis and is based on historic loss rates (adjusted for qualitative factors). The charge-off policy change modifies this historic loss rate and the resulting general reserve. In addition, the Company converted bankrupt accounts with confirmed plans from the bankruptcy court from delinquent to current status. The bankrupt accounts continue to be accounted for as troubled debt restructurings and considered impaired finance receivables. As a net result of these changes, the Company increased the provision for credit losses by $318 during the three months ended September 30, 2014, which decreased net income for the year ended December 31, 2014 by $199, or $0.02 diluted earnings per share.

 

The following is a reconciliation of the allowance for credit losses by product for the years ended December 31, 2014, 2013, and 2012:

 

    Balance
January 1,
2014
    Provision     Charge-
offs
    Charge-offs
(180+
Policy
Change)
    Recoveries     Balance
December 31,
2014
    Finance
Receivables
December 31,
2014
    Allowance
as
Percentage

of Finance
Receivable
December 31,

2014
 

Branch small loans

  $ 5,166      $ 13,760      $ (11,915   $ (505   $ 454      $ 6,960      $ 128,217        5.4

Convenience checks

    10,204        36,995        (28,782     (627     530        18,320        191,316        9.6

Large loans

    2,233        1,985        (2,334     (203     299        1,980        46,147        4.3

Automobile loans

    10,827        14,259        (12,939     (688     317        11,776        154,382        7.6

Retail loans

    1,659        2,058        (2,266     (83     107        1,475        26,130        5.6
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 30,089      $ 69,057      $ (58,236   $ (2,106   $ 1,707      $ 40,511      $ 546,192        7.4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The Company disaggregated “small loans” into “branch small loans” and “convenience checks” during the three months ended December 31, 2014 due to a change in the risk characteristics of the convenience check portfolio in that period.

 

     Balance
January 1,
2013
     Provision      Charge-
offs
    Recoveries      Balance
December 31,
2013
     Finance
Receivables
December 31,
2013
     Allowance
as
Percentage

of Finance
Receivable
December 31,

2013
 

Small loans

   $ 11,369       $ 22,620       $ (19,108   $ 489       $ 15,370       $ 288,979         5.3

Large loans

     2,753         1,788         (2,630     322         2,233         43,311         5.2

Automobile loans

     8,424         12,094         (9,875     184         10,827         181,126         6.0

Retail loans

     1,070         2,690         (2,137     36         1,659         31,268         5.3
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 23,616       $ 39,192       $ (33,750   $ 1,031       $ 30,089       $ 544,684         5.5
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

 

     Balance
January 1,
2012
     Provision      Charge-
offs
    Recoveries      Balance
December 31,
2012
     Finance
Receivables
December 31,
2012
     Allowance
as
Percentage

of Finance
Receivable
December 31,
2012
 

Small loans

   $ 8,838       $ 15,225       $ (13,125   $ 431       $ 11,369       $ 188,562         6.0

Large loans

     2,448         3,288         (3,252     269         2,753         52,001         5.3

Automobile loans

     7,618         7,888         (7,202     120         8,424         168,604         5.0

Retail loans

     396         1,364         (696     6         1,070         30,307         3.5
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 19,300       $ 27,765       $ (24,275   $ 826       $ 23,616       $ 439,474         5.4
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

 

Finance receivables associated with customers in bankruptcy as a percentage of total finance receivables were 1.1% and 1.3% for the years ended December 31, 2014 and 2013, respectively. The following is a summary of the finance receivables associated with customers in bankruptcy as of December 31, 2014 and 2013:

 

     2014      2013  

Branch small loans

   $ 582       $ 714   

Convenience checks

     544         784   

Large loans

     1,260         1,677   

Automobile loans

     3,698         3,706   

Retail loans

     119         143   
  

 

 

    

 

 

 

Total

   $ 6,203       $ 7,024   
  

 

 

    

 

 

 

The contractual delinquency of the finance receivable portfolio by component at December 31, 2014 and 2013 was:

 

    December 31, 2014  
    Branch Small     Convenience Check     Large     Automobile     Retail     Total  
    $     %     $     %     $     %     $     %     $     %     $     %  

Current

  $ 104,003        81.1   $ 154,833        80.9   $ 36,658        79.4   $ 105,424        68.3   $ 21,424        82.0   $ 422,342        77.4

1 to 29 days delinquent

    13,967        10.9     19,318        10.1     7,383        16.0     38,656        25.0     3,390        13.0     82,714        15.1
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Delinquent accounts

                       

30 to 59 days

    3,647        2.8     5,134        2.7     1,036        2.3     5,651        3.7     483        1.8     15,951        2.9

60 to 89 days

    2,275        1.8     4,442        2.3     483        1.0     2,114        1.4     310        1.2     9,624        1.8

90 to 119 days

    1,857        1.4     3,312        1.8     263        0.6     1,266        0.8     201        0.8     6,899        1.2

120 to 149 days

    1,478        1.2     2,343        1.2     204        0.4     758        0.5     205        0.8     4,988        0.9

150 to 179 days

    990        0.8     1,934        1.0     120        0.3     513        0.3     117        0.4     3,674        0.7

180 days and over

    —         0.0     —         0.0     —         0.0     —         0.0     —         0.0     —         0.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total delinquency

  $ 10,247        8.0   $ 17,165        9.0   $ 2,106        4.6   $ 10,302        6.7   $ 1,316        5.0   $ 41,136        7.5
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total finance receivables

  $ 128,217        100.0   $ 191,316        100.0   $ 46,147        100.0   $ 154,382        100.0   $ 26,130        100.0   $ 546,192        100.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Finance receivables in nonaccrual status

  $ 4,325        3.4   $ 7,589        4.0   $ 587        1.3   $ 2,537        1.6   $ 523        2.0   $ 15,561        2.8
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    December 31, 2013  
    Branch Small     Convenience Check     Large     Automobile     Retail     Total  
    $     %     $     %     $     %     $     %     $     %     $     %  

Current

  $ 84,196        76.7   $ 143,720        80.2   $ 32,513        75.1   $ 122,313        67.5   $ 24,829        79.4   $ 407,571        74.9

1 to 29 days delinquent

    15,369        14.0     20,056        11.2     7,788        18.0     45,841        25.3     4,249        13.6     93,303        17.1
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Delinquent accounts

                       

30 to 59 days

    3,515        3.2     4,515        2.5     1,220        2.8     7,089        4.0     749        2.4     17,088        3.1

60 to 89 days

    2,268        2.1     3,332        1.9     530        1.2     2,721        1.5     416        1.3     9,267        1.7

90 to 119 days

    1,755        1.5     3,172        1.7     364        0.8     1,195        0.6     357        1.2     6,843        1.3

120 to 149 days

    1,275        1.2     2,490        1.4     245        0.6     807        0.4     291        0.9     5,108        0.9

150 to 179 days

    984        0.9     1,425        0.8     259        0.6     525        0.3     216        0.7     3,409        0.6

180 days and over

    414        0.4     493        0.3     392        0.9     635        0.4     161        0.5     2,095        0.4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total delinquency

  $ 10,211        9.3   $ 15,427        8.6   $ 3,010        6.9   $ 12,972        7.2   $ 2,190        7.0   $ 43,810        8.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total finance receivables

  $ 109,776        100.0   $ 179,203        100.0   $ 43,311        100.0   $ 181,126        100.0   $ 31,268        100.0   $ 544,684        100.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Finance receivables in nonaccrual status

  $ 4,428        4.0   $ 7,580        4.2   $ 1,260        2.9   $ 3,162        1.7   $ 1,025        3.3   $ 17,455        3.2
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Following is a summary of finance receivables evaluated for impairment at December 31, 2014 and 2013:

 

    December 31, 2014  
    Branch
Small
    Convenience
Check
    Large     Automobile     Retail      Total  

Accounts 180 or more days past due, excluding accounts of customers in bankruptcy

  $ —        $ —        $ —        $ —        $ —         $ —     

Customers in Chapter 13 bankruptcy

    582        544        1,260        3,698        119         6,203   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total impaired accounts specifically evaluated

  $ 582      $ 544      $ 1,260      $ 3,698      $ 119       $ 6,203   

Finance receivables evaluated collectively

    127,635        190,772        44,887        150,684        26,011         539,989   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Finance receivables outstanding

  $ 128,217      $ 191,316      $ 46,147      $ 154,382      $ 26,130       $ 546,192   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Accounts in bankruptcy in nonaccrual status

  $ 140      $ 159      $ 133      $ 559      $ 16       $ 1,007   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Amount of the specific reserve for impaired accounts

  $ 143      $ 165      $ 309      $ 981      $ 18       $ 1,616   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Average impaired accounts

  $ 1,097      $ 1,266      $ 1,616      $ 4,134      $ 235       $ 8,348   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Amount of the general component of the allowance

  $ 6,817      $ 18,155      $ 1,671      $ 10,795      $ 1,457       $ 38,895   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 
    December 31, 2013  
    Branch
Small
    Convenience
Check
    Large     Automobile     Retail      Total  

Accounts 180 or more days past due, excluding accounts of customers in bankruptcy

  $ 379      $ 467      $ 173      $ 398      $ 146       $ 1,563   

Customers in Chapter 13 bankruptcy

    714        784        1,677        3,706        143         7,024   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total impaired accounts specifically evaluated

  $ 1,093      $ 1,251      $ 1,850      $ 4,104      $ 289       $ 8,587   

Finance receivables evaluated collectively

    108,683        177,952        41,461        177,022        30,979         536,097   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Finance receivables outstanding

  $ 109,776      $ 179,203      $ 43,311      $ 181,126      $ 31,268       $ 544,684   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Accounts in bankruptcy in nonaccrual status

  $ 308      $ 359      $ 426      $ 804      $ 58       $ 1,955   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Amount of the specific reserve for impaired accounts

  $ 574      $ 672      $ 756      $ 1,565      $ 180       $ 3,747   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Average impaired accounts

  $ 994      $ 1,085      $ 1,935      $ 3,831      $ 273       $ 8,118   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Amount of the general component of the allowance

  $ 4,592      $ 9,532      $ 1,477      $ 9,262      $ 1,479       $ 26,342   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

It is not practical to compute the amount of interest earned on impaired loans.