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:
In thousands |
|
September 30, 2020 |
|
|
December 31, 2019 |
|
Small loans |
|
$ |
382,785 |
|
|
$ |
467,613 |
|
Large loans |
|
|
655,932 |
|
|
|
632,068 |
|
Automobile loans |
|
|
4,892 |
|
|
|
9,640 |
|
Retail loans |
|
|
15,945 |
|
|
|
24,083 |
|
Net finance receivables |
|
$ |
1,059,554 |
|
|
$ |
1,133,404 |
|
Net finance receivables included net deferred origination fees of $11.2 million and $13.4 million as of September 30, 2020 and December 31, 2019, respectively.
Effective January 1, 2020, with the adoption of CECL accounting, the Company reclassified unearned insurance premiums out of the net finance receivables line item to align its consolidated balance sheet presentation with the amortized cost definition in the new accounting standard.
The tables below illustrate the impacts of this reclassification to the Company’s previously reported balance sheet presentation of receivables and other key metrics:
|
|
Quarterly Trend – As Reported (Pre-CECL Adoption) |
|
In thousands |
|
3/31/2019 |
|
|
6/30/2019 |
|
|
9/30/2019 |
|
|
12/31/2019 |
|
Gross finance receivables |
|
$ |
1,204,495 |
|
|
$ |
1,300,043 |
|
|
$ |
1,404,172 |
|
|
$ |
1,500,962 |
|
Unearned finance charges |
|
|
(273,651 |
) |
|
|
(305,063 |
) |
|
|
(337,086 |
) |
|
|
(367,558 |
) |
Unearned insurance premiums |
|
|
(18,594 |
) |
|
|
(21,546 |
) |
|
|
(24,900 |
) |
|
|
(28,591 |
) |
Finance receivables |
|
|
912,250 |
|
|
|
973,434 |
|
|
|
1,042,186 |
|
|
|
1,104,813 |
|
Allowance for credit losses |
|
|
(56,400 |
) |
|
|
(57,200 |
) |
|
|
(60,900 |
) |
|
|
(62,200 |
) |
Net finance receivables |
|
$ |
855,850 |
|
|
$ |
916,234 |
|
|
$ |
981,286 |
|
|
$ |
1,042,613 |
|
Average finance receivables |
|
$ |
924,948 |
|
|
$ |
934,373 |
|
|
$ |
1,010,515 |
|
|
$ |
1,071,265 |
|
As a % of finance receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses |
|
|
6.2 |
% |
|
|
5.9 |
% |
|
|
5.8 |
% |
|
|
5.6 |
% |
30+ day contractual delinquency |
|
|
7.0 |
% |
|
|
6.4 |
% |
|
|
6.6 |
% |
|
|
7.2 |
% |
As a % of average finance receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fee yield (annualized) |
|
|
32.1 |
% |
|
|
32.5 |
% |
|
|
32.9 |
% |
|
|
32.8 |
% |
Operating expense ratio (annualized) |
|
|
16.5 |
% |
|
|
16.2 |
% |
|
|
15.9 |
% |
|
|
15.3 |
% |
Net credit loss ratio (annualized) |
|
|
10.9 |
% |
|
|
10.7 |
% |
|
|
8.2 |
% |
|
|
9.2 |
% |
|
|
Quarterly Trend – Amortized Cost Basis (Post-CECL Adoption) |
|
In thousands |
|
3/31/2019 |
|
|
6/30/2019 |
|
|
9/30/2019 |
|
|
12/31/2019 |
|
Net finance receivables |
|
$ |
930,844 |
|
|
$ |
994,980 |
|
|
$ |
1,067,086 |
|
|
$ |
1,133,404 |
|
Unearned insurance premiums |
|
|
(18,594 |
) |
|
|
(21,546 |
) |
|
|
(24,900 |
) |
|
|
(28,591 |
) |
Allowance for credit losses |
|
|
(56,400 |
) |
|
|
(57,200 |
) |
|
|
(60,900 |
) |
|
|
(62,200 |
) |
Net finance receivables, less unearned insurance
premiums and allowance for credit losses |
|
$ |
855,850 |
|
|
$ |
916,234 |
|
|
$ |
981,286 |
|
|
$ |
1,042,613 |
|
Average net finance receivables |
|
$ |
944,763 |
|
|
$ |
954,940 |
|
|
$ |
1,033,939 |
|
|
$ |
1,098,410 |
|
As a % of net finance receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses |
|
|
6.1 |
% |
|
|
5.7 |
% |
|
|
5.7 |
% |
|
|
5.5 |
% |
30+ day contractual delinquency |
|
|
6.9 |
% |
|
|
6.3 |
% |
|
|
6.5 |
% |
|
|
7.0 |
% |
As a % of average net finance receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fee yield (annualized) |
|
|
31.5 |
% |
|
|
31.8 |
% |
|
|
32.1 |
% |
|
|
32.0 |
% |
Operating expense ratio (annualized) |
|
|
16.2 |
% |
|
|
15.8 |
% |
|
|
15.5 |
% |
|
|
14.9 |
% |
Net credit loss ratio (annualized) |
|
|
10.7 |
% |
|
|
10.4 |
% |
|
|
8.1 |
% |
|
|
9.0 |
% |
|
|
Quarterly Trend – Reclassification Change |
|
In thousands |
|
3/31/2019 |
|
|
6/30/2019 |
|
|
9/30/2019 |
|
|
12/31/2019 |
|
Net finance receivables |
|
$ |
18,594 |
|
|
$ |
21,546 |
|
|
$ |
24,900 |
|
|
$ |
28,591 |
|
Average net finance receivables |
|
$ |
19,815 |
|
|
$ |
20,567 |
|
|
$ |
23,424 |
|
|
$ |
27,145 |
|
As a % of net finance receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses |
|
|
(0.1 |
)% |
|
|
(0.2 |
)% |
|
|
(0.1 |
)% |
|
|
(0.1 |
)% |
30+ day contractual delinquency |
|
|
(0.1 |
)% |
|
|
(0.1 |
)% |
|
|
(0.1 |
)% |
|
|
(0.2 |
)% |
As a % of average net finance receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fee yield (annualized) |
|
|
(0.6 |
)% |
|
|
(0.7 |
)% |
|
|
(0.8 |
)% |
|
|
(0.8 |
)% |
Operating expense ratio (annualized) |
|
|
(0.3 |
)% |
|
|
(0.4 |
)% |
|
|
(0.4 |
)% |
|
|
(0.4 |
)% |
Net credit loss ratio (annualized) |
|
|
(0.2 |
)% |
|
|
(0.3 |
)% |
|
|
(0.1 |
)% |
|
|
(0.2 |
)% |
The credit quality of the Company’s finance receivable portfolio is the result of the Company’s ability to enforce sound underwriting standards, maintain diligent servicing of the portfolio, and respond to changing economic conditions as it 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 the FICO scores. The first FICO band category includes the lowest FICO scores, while the sixth FICO band category includes the highest FICO scores.
Net finance receivables by product, FICO band, and origination year as of September 30, 2020 are as follows:
|
|
Net Finance Receivables by Origination Year |
|
In thousands |
|
2020 (1) |
|
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
Prior |
|
|
Total Net Finance Receivables |
|
Small Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FICO Band |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
$ |
58,932 |
|
|
$ |
28,780 |
|
|
$ |
3,316 |
|
|
$ |
368 |
|
|
$ |
50 |
|
|
$ |
18 |
|
|
$ |
91,464 |
|
2 |
|
|
29,746 |
|
|
|
13,327 |
|
|
|
1,068 |
|
|
|
73 |
|
|
|
8 |
|
|
|
3 |
|
|
|
44,225 |
|
3 |
|
|
30,537 |
|
|
|
14,142 |
|
|
|
1,156 |
|
|
|
66 |
|
|
|
3 |
|
|
|
3 |
|
|
|
45,907 |
|
4 |
|
|
32,863 |
|
|
|
15,107 |
|
|
|
1,124 |
|
|
|
43 |
|
|
|
4 |
|
|
|
1 |
|
|
|
49,142 |
|
5 |
|
|
34,514 |
|
|
|
17,702 |
|
|
|
1,125 |
|
|
|
32 |
|
|
|
4 |
|
|
|
— |
|
|
|
53,377 |
|
6 |
|
|
61,957 |
|
|
|
34,781 |
|
|
|
1,886 |
|
|
|
44 |
|
|
|
2 |
|
|
|
— |
|
|
|
98,670 |
|
Total small loans |
|
$ |
248,549 |
|
|
$ |
123,839 |
|
|
$ |
9,675 |
|
|
$ |
626 |
|
|
$ |
71 |
|
|
$ |
25 |
|
|
$ |
382,785 |
|
Large Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FICO Band |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
$ |
37,946 |
|
|
$ |
33,147 |
|
|
$ |
9,527 |
|
|
$ |
3,859 |
|
|
$ |
842 |
|
|
$ |
396 |
|
|
$ |
85,717 |
|
2 |
|
|
25,688 |
|
|
|
19,228 |
|
|
|
3,241 |
|
|
|
751 |
|
|
|
129 |
|
|
|
111 |
|
|
|
49,148 |
|
3 |
|
|
50,822 |
|
|
|
45,266 |
|
|
|
8,623 |
|
|
|
1,635 |
|
|
|
84 |
|
|
|
71 |
|
|
|
106,501 |
|
4 |
|
|
58,523 |
|
|
|
54,544 |
|
|
|
9,202 |
|
|
|
1,882 |
|
|
|
84 |
|
|
|
24 |
|
|
|
124,259 |
|
5 |
|
|
53,177 |
|
|
|
48,824 |
|
|
|
9,377 |
|
|
|
1,950 |
|
|
|
39 |
|
|
|
16 |
|
|
|
113,383 |
|
6 |
|
|
84,260 |
|
|
|
74,467 |
|
|
|
15,424 |
|
|
|
2,676 |
|
|
|
80 |
|
|
|
17 |
|
|
|
176,924 |
|
Total large loans |
|
$ |
310,416 |
|
|
$ |
275,476 |
|
|
$ |
55,394 |
|
|
$ |
12,753 |
|
|
$ |
1,258 |
|
|
$ |
635 |
|
|
$ |
655,932 |
|
Automobile Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FICO Band |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,122 |
|
|
$ |
801 |
|
|
$ |
305 |
|
|
$ |
2,228 |
|
2 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
438 |
|
|
|
357 |
|
|
|
73 |
|
|
|
868 |
|
3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
554 |
|
|
|
307 |
|
|
|
41 |
|
|
|
902 |
|
4 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
256 |
|
|
|
126 |
|
|
|
43 |
|
|
|
425 |
|
5 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
80 |
|
|
|
129 |
|
|
|
14 |
|
|
|
223 |
|
6 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
145 |
|
|
|
99 |
|
|
|
2 |
|
|
|
246 |
|
Total automobile loans |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,595 |
|
|
$ |
1,819 |
|
|
$ |
478 |
|
|
$ |
4,892 |
|
Retail Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FICO Band |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
$ |
548 |
|
|
$ |
1,192 |
|
|
$ |
365 |
|
|
$ |
42 |
|
|
$ |
3 |
|
|
$ |
2 |
|
|
$ |
2,152 |
|
2 |
|
|
352 |
|
|
|
911 |
|
|
|
328 |
|
|
|
38 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1,631 |
|
3 |
|
|
696 |
|
|
|
937 |
|
|
|
389 |
|
|
|
44 |
|
|
|
4 |
|
|
|
2 |
|
|
|
2,072 |
|
4 |
|
|
1,393 |
|
|
|
1,669 |
|
|
|
760 |
|
|
|
92 |
|
|
|
1 |
|
|
|
2 |
|
|
|
3,917 |
|
5 |
|
|
968 |
|
|
|
1,321 |
|
|
|
601 |
|
|
|
96 |
|
|
|
1 |
|
|
|
1 |
|
|
|
2,988 |
|
6 |
|
|
1,101 |
|
|
|
1,357 |
|
|
|
633 |
|
|
|
90 |
|
|
|
2 |
|
|
|
2 |
|
|
|
3,185 |
|
Total retail loans |
|
$ |
5,058 |
|
|
$ |
7,387 |
|
|
$ |
3,076 |
|
|
$ |
402 |
|
|
$ |
12 |
|
|
$ |
10 |
|
|
$ |
15,945 |
|
Total Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FICO Band |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
$ |
97,426 |
|
|
$ |
63,119 |
|
|
$ |
13,208 |
|
|
$ |
5,391 |
|
|
$ |
1,696 |
|
|
$ |
721 |
|
|
$ |
181,561 |
|
2 |
|
|
55,786 |
|
|
|
33,466 |
|
|
|
4,637 |
|
|
|
1,300 |
|
|
|
495 |
|
|
|
188 |
|
|
|
95,872 |
|
3 |
|
|
82,055 |
|
|
|
60,345 |
|
|
|
10,168 |
|
|
|
2,299 |
|
|
|
398 |
|
|
|
117 |
|
|
|
155,382 |
|
4 |
|
|
92,779 |
|
|
|
71,320 |
|
|
|
11,086 |
|
|
|
2,273 |
|
|
|
215 |
|
|
|
70 |
|
|
|
177,743 |
|
5 |
|
|
88,659 |
|
|
|
67,847 |
|
|
|
11,103 |
|
|
|
2,158 |
|
|
|
173 |
|
|
|
31 |
|
|
|
169,971 |
|
6 |
|
|
147,318 |
|
|
|
110,605 |
|
|
|
17,943 |
|
|
|
2,955 |
|
|
|
183 |
|
|
|
21 |
|
|
|
279,025 |
|
Total loans |
|
$ |
564,023 |
|
|
$ |
406,702 |
|
|
$ |
68,145 |
|
|
$ |
16,376 |
|
|
$ |
3,160 |
|
|
$ |
1,148 |
|
|
$ |
1,059,554 |
|
(1) |
Includes loans originated during the nine months ended September 30, 2020. |
The contractual delinquency of the net finance receivables portfolio by product and aging for the periods indicated are as follows:
|
|
September 30, 2020 |
|
|
|
Small |
|
|
Large |
|
|
Automobile |
|
|
Retail |
|
|
Total |
|
In thousands |
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
Current |
|
$ |
329,099 |
|
|
|
86.0 |
% |
|
$ |
584,352 |
|
|
|
89.1 |
% |
|
$ |
3,630 |
|
|
|
74.2 |
% |
|
$ |
12,697 |
|
|
|
79.6 |
% |
|
$ |
929,778 |
|
|
|
87.8 |
% |
1 to 29 days past due |
|
|
30,782 |
|
|
|
8.0 |
% |
|
|
46,091 |
|
|
|
7.0 |
% |
|
|
925 |
|
|
|
18.9 |
% |
|
|
2,040 |
|
|
|
12.8 |
% |
|
|
79,838 |
|
|
|
7.5 |
% |
Delinquent accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 to 59 days |
|
|
7,064 |
|
|
|
1.8 |
% |
|
|
8,572 |
|
|
|
1.3 |
% |
|
|
112 |
|
|
|
2.3 |
% |
|
|
357 |
|
|
|
2.3 |
% |
|
|
16,105 |
|
|
|
1.5 |
% |
60 to 89 days |
|
|
4,965 |
|
|
|
1.3 |
% |
|
|
5,702 |
|
|
|
0.9 |
% |
|
|
90 |
|
|
|
1.8 |
% |
|
|
257 |
|
|
|
1.6 |
% |
|
|
11,014 |
|
|
|
1.0 |
% |
90 to 119 days |
|
|
3,730 |
|
|
|
1.0 |
% |
|
|
4,381 |
|
|
|
0.7 |
% |
|
|
55 |
|
|
|
1.2 |
% |
|
|
209 |
|
|
|
1.3 |
% |
|
|
8,375 |
|
|
|
0.8 |
% |
120 to 149 days |
|
|
3,793 |
|
|
|
1.0 |
% |
|
|
3,926 |
|
|
|
0.6 |
% |
|
|
60 |
|
|
|
1.2 |
% |
|
|
188 |
|
|
|
1.2 |
% |
|
|
7,967 |
|
|
|
0.8 |
% |
150 to 179 days |
|
|
3,352 |
|
|
|
0.9 |
% |
|
|
2,908 |
|
|
|
0.4 |
% |
|
|
20 |
|
|
|
0.4 |
% |
|
|
197 |
|
|
|
1.2 |
% |
|
|
6,477 |
|
|
|
0.6 |
% |
Total delinquency |
|
$ |
22,904 |
|
|
|
6.0 |
% |
|
$ |
25,489 |
|
|
|
3.9 |
% |
|
$ |
337 |
|
|
|
6.9 |
% |
|
$ |
1,208 |
|
|
|
7.6 |
% |
|
$ |
49,938 |
|
|
|
4.7 |
% |
Total net finance receivables |
|
$ |
382,785 |
|
|
|
100.0 |
% |
|
$ |
655,932 |
|
|
|
100.0 |
% |
|
$ |
4,892 |
|
|
|
100.0 |
% |
|
$ |
15,945 |
|
|
|
100.0 |
% |
|
$ |
1,059,554 |
|
|
|
100.0 |
% |
Net finance receivables in nonaccrual status |
|
$ |
12,417 |
|
|
|
3.2 |
% |
|
$ |
13,313 |
|
|
|
2.0 |
% |
|
$ |
260 |
|
|
|
5.3 |
% |
|
$ |
715 |
|
|
|
4.5 |
% |
|
$ |
26,705 |
|
|
|
2.5 |
% |
|
|
December 31, 2019 |
|
|
|
Small |
|
|
Large |
|
|
Automobile |
|
|
Retail |
|
|
Total |
|
In thousands |
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
Current |
|
$ |
377,775 |
|
|
|
80.7 |
% |
|
$ |
546,415 |
|
|
|
86.4 |
% |
|
$ |
6,921 |
|
|
|
71.8 |
% |
|
$ |
18,093 |
|
|
|
75.1 |
% |
|
$ |
949,204 |
|
|
|
83.8 |
% |
1 to 29 days past due |
|
|
47,463 |
|
|
|
10.2 |
% |
|
|
51,732 |
|
|
|
8.2 |
% |
|
|
1,964 |
|
|
|
20.4 |
% |
|
|
3,531 |
|
|
|
14.7 |
% |
|
|
104,690 |
|
|
|
9.2 |
% |
Delinquent accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 to 59 days |
|
|
12,702 |
|
|
|
2.8 |
% |
|
|
11,480 |
|
|
|
1.8 |
% |
|
|
241 |
|
|
|
2.5 |
% |
|
|
853 |
|
|
|
3.6 |
% |
|
|
25,276 |
|
|
|
2.2 |
% |
60 to 89 days |
|
|
9,916 |
|
|
|
2.1 |
% |
|
|
8,192 |
|
|
|
1.3 |
% |
|
|
110 |
|
|
|
1.1 |
% |
|
|
563 |
|
|
|
2.3 |
% |
|
|
18,781 |
|
|
|
1.7 |
% |
90 to 119 days |
|
|
7,518 |
|
|
|
1.6 |
% |
|
|
5,894 |
|
|
|
1.0 |
% |
|
|
129 |
|
|
|
1.4 |
% |
|
|
375 |
|
|
|
1.5 |
% |
|
|
13,916 |
|
|
|
1.2 |
% |
120 to 149 days |
|
|
6,584 |
|
|
|
1.4 |
% |
|
|
4,588 |
|
|
|
0.7 |
% |
|
|
127 |
|
|
|
1.3 |
% |
|
|
357 |
|
|
|
1.5 |
% |
|
|
11,656 |
|
|
|
1.0 |
% |
150 to 179 days |
|
|
5,655 |
|
|
|
1.2 |
% |
|
|
3,767 |
|
|
|
0.6 |
% |
|
|
148 |
|
|
|
1.5 |
% |
|
|
311 |
|
|
|
1.3 |
% |
|
|
9,881 |
|
|
|
0.9 |
% |
Total delinquency |
|
$ |
42,375 |
|
|
|
9.1 |
% |
|
$ |
33,921 |
|
|
|
5.4 |
% |
|
$ |
755 |
|
|
|
7.8 |
% |
|
$ |
2,459 |
|
|
|
10.2 |
% |
|
$ |
79,510 |
|
|
|
7.0 |
% |
Total net finance receivables |
|
$ |
467,613 |
|
|
|
100.0 |
% |
|
$ |
632,068 |
|
|
|
100.0 |
% |
|
$ |
9,640 |
|
|
|
100.0 |
% |
|
$ |
24,083 |
|
|
|
100.0 |
% |
|
$ |
1,133,404 |
|
|
|
100.0 |
% |
Net finance receivables in nonaccrual status |
|
$ |
22,773 |
|
|
|
4.9 |
% |
|
$ |
17,924 |
|
|
|
2.8 |
% |
|
$ |
591 |
|
|
|
6.1 |
% |
|
$ |
1,186 |
|
|
|
4.9 |
% |
|
$ |
42,474 |
|
|
|
3.7 |
% |
The following table illustrates the impacts to the allowance for credit losses for the periods indicated:
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
In thousands |
|
January 1, 2020 |
|
|
March 31, 2020 |
|
|
June 30, 2020 |
|
|
September 30, 2020 |
|
|
September 30, 2020 |
|
Beginning balance |
|
$ |
62,200 |
|
|
$ |
122,300 |
|
|
$ |
142,400 |
|
|
$ |
142,000 |
|
|
$ |
62,200 |
|
Impact of CECL adoption |
|
|
60,100 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
60,100 |
|
COVID reserve build / (release) |
|
|
— |
|
|
|
23,900 |
|
|
|
9,500 |
|
|
|
(1,500 |
) |
|
|
31,900 |
|
Change due to portfolio growth / (liquidation) |
|
|
— |
|
|
|
(3,800 |
) |
|
|
(9,900 |
) |
|
|
3,500 |
|
|
|
(10,200 |
) |
Ending balance |
|
$ |
122,300 |
|
|
$ |
142,400 |
|
|
$ |
142,000 |
|
|
$ |
144,000 |
|
|
$ |
144,000 |
|
Allowance for credit losses as a percentage of net finance receivables |
|
|
10.8 |
% |
|
|
12.9 |
% |
|
|
13.9 |
% |
|
|
13.6 |
% |
|
|
13.6 |
% |
The allowance for credit losses was $62.2 million, or 5.5% of net finance receivables, as of December 31, 2019. The Company adopted CECL accounting on January 1, 2020, and increased the allowance for credit losses to $122.3 million, or 10.8% of net finance receivables.
In March 2020, the spread of COVID-19 was declared a pandemic by the World Health Organization. Subsequently, the pandemic was declared a national emergency in the United States and the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law. The CARES Act provided a variety of financial aid to a meaningful portion of the Company’s customer base.
During the nine months ended September 30, 2020, the Company increased the allowance for credit losses by $21.7 million, which included a $31.9 million reserve related to the economic impact of COVID-19, offset by a base reserve release of $10.2 million primarily related to portfolio liquidation. The $2.0 million increase in the allowance for credit losses during the three months ended September 30, 2020 included a macroeconomic reserve release of $1.5 million, offset by a base reserve build of $3.5 million primarily related to portfolio growth. The ending balance of the allowance for credit losses as a percentage of net finance receivables was 13.6% as of September 30, 2020. The Company ran several macroeconomic stress scenarios, and its final forecast assumed elevated unemployment in 2020 with a gradual decline to 9% by the end of 2021. The severity of the Company’s macroeconomic assumptions remained relatively consistent with its model as of June 30, 2020. The macroeconomic scenario was adjusted for the potential benefits of internal borrower assistance programs.
The following is a reconciliation of the allowance for credit losses by product for the periods indicated:
In thousands |
|
Small |
|
|
Large |
|
|
Automobile |
|
|
Retail |
|
|
Total |
|
Beginning balance at July 1, 2020 |
|
$ |
58,205 |
|
|
$ |
79,305 |
|
|
$ |
1,160 |
|
|
$ |
3,330 |
|
|
$ |
142,000 |
|
Provision for credit losses |
|
|
9,662 |
|
|
|
12,507 |
|
|
|
(102 |
) |
|
|
22 |
|
|
|
22,089 |
|
Credit losses |
|
|
(11,549 |
) |
|
|
(9,331 |
) |
|
|
(85 |
) |
|
|
(409 |
) |
|
|
(21,374 |
) |
Recoveries |
|
|
698 |
|
|
|
521 |
|
|
|
22 |
|
|
|
44 |
|
|
|
1,285 |
|
Ending balance at September 30, 2020 |
|
$ |
57,016 |
|
|
$ |
83,002 |
|
|
$ |
995 |
|
|
$ |
2,987 |
|
|
$ |
144,000 |
|
Net finance receivables at September 30, 2020 |
|
$ |
382,785 |
|
|
$ |
655,932 |
|
|
$ |
4,892 |
|
|
$ |
15,945 |
|
|
$ |
1,059,554 |
|
Allowance as percentage of net finance receivables at September 30, 2020 |
|
|
14.9 |
% |
|
|
12.7 |
% |
|
|
20.3 |
% |
|
|
18.7 |
% |
|
|
13.6 |
% |
In thousands |
|
Small |
|
|
Large |
|
|
Automobile |
|
|
Retail |
|
|
Total |
|
Beginning balance at July 1, 2019 |
|
$ |
29,134 |
|
|
$ |
25,054 |
|
|
$ |
1,093 |
|
|
$ |
1,919 |
|
|
$ |
57,200 |
|
Provision for credit losses |
|
|
13,192 |
|
|
|
10,518 |
|
|
|
164 |
|
|
|
641 |
|
|
|
24,515 |
|
Credit losses |
|
|
(12,465 |
) |
|
|
(8,386 |
) |
|
|
(361 |
) |
|
|
(722 |
) |
|
|
(21,934 |
) |
Recoveries |
|
|
628 |
|
|
|
422 |
|
|
|
35 |
|
|
|
34 |
|
|
|
1,119 |
|
Ending balance at September 30, 2019 |
|
$ |
30,489 |
|
|
$ |
27,608 |
|
|
$ |
931 |
|
|
$ |
1,872 |
|
|
$ |
60,900 |
|
Net finance receivables at September 30, 2019 |
|
$ |
453,969 |
|
|
$ |
574,988 |
|
|
$ |
12,144 |
|
|
$ |
25,985 |
|
|
$ |
1,067,086 |
|
Allowance as percentage of net finance receivables at September 30, 2019 |
|
|
6.7 |
% |
|
|
4.8 |
% |
|
|
7.7 |
% |
|
|
7.2 |
% |
|
|
5.7 |
% |
In thousands |
|
Small |
|
|
Large |
|
|
Automobile |
|
|
Retail |
|
|
Total |
|
Beginning balance at January 1, 2020 |
|
$ |
30,588 |
|
|
$ |
29,148 |
|
|
$ |
820 |
|
|
$ |
1,644 |
|
|
$ |
62,200 |
|
Impact of CECL adoption |
|
|
24,185 |
|
|
|
33,550 |
|
|
|
599 |
|
|
|
1,766 |
|
|
|
60,100 |
|
Provision for credit losses |
|
|
45,729 |
|
|
|
51,774 |
|
|
|
10 |
|
|
|
1,597 |
|
|
|
99,110 |
|
Credit losses |
|
|
(45,497 |
) |
|
|
(32,986 |
) |
|
|
(511 |
) |
|
|
(2,134 |
) |
|
|
(81,128 |
) |
Recoveries |
|
|
2,011 |
|
|
|
1,516 |
|
|
|
77 |
|
|
|
114 |
|
|
|
3,718 |
|
Ending balance at September 30, 2020 |
|
$ |
57,016 |
|
|
$ |
83,002 |
|
|
$ |
995 |
|
|
$ |
2,987 |
|
|
$ |
144,000 |
|
Net finance receivables at September 30, 2020 |
|
$ |
382,785 |
|
|
$ |
655,932 |
|
|
$ |
4,892 |
|
|
$ |
15,945 |
|
|
$ |
1,059,554 |
|
Allowance as percentage of net finance receivables at September 30, 2020 |
|
|
14.9 |
% |
|
|
12.7 |
% |
|
|
20.3 |
% |
|
|
18.7 |
% |
|
|
13.6 |
% |
In thousands |
|
Small |
|
|
Large |
|
|
Automobile |
|
|
Retail |
|
|
Total |
|
Beginning balance at January 1, 2019 |
|
$ |
30,759 |
|
|
$ |
23,702 |
|
|
$ |
1,893 |
|
|
$ |
1,946 |
|
|
$ |
58,300 |
|
Provision for credit losses |
|
|
40,883 |
|
|
|
29,958 |
|
|
|
404 |
|
|
|
2,327 |
|
|
|
73,572 |
|
Credit losses |
|
|
(42,946 |
) |
|
|
(27,273 |
) |
|
|
(1,579 |
) |
|
|
(2,514 |
) |
|
|
(74,312 |
) |
Recoveries |
|
|
1,793 |
|
|
|
1,221 |
|
|
|
213 |
|
|
|
113 |
|
|
|
3,340 |
|
Ending balance at September 30, 2019 |
|
$ |
30,489 |
|
|
$ |
27,608 |
|
|
$ |
931 |
|
|
$ |
1,872 |
|
|
$ |
60,900 |
|
Net finance receivables at September 30, 2019 |
|
$ |
453,969 |
|
|
$ |
574,988 |
|
|
$ |
12,144 |
|
|
$ |
25,985 |
|
|
$ |
1,067,086 |
|
Allowance as percentage of net finance receivables at September 30, 2019 |
|
|
6.7 |
% |
|
|
4.8 |
% |
|
|
7.7 |
% |
|
|
7.2 |
% |
|
|
5.7 |
% |
|