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2. Loans

12 Months Ended

Dec. 31, 2015

2. LOANS

The Company’s consumer loans are made to individuals in relatively small amounts for relatively short periods of time. First and second mortgage loans on real estate are made in larger amounts and for longer periods of time. The Company also purchases sales finance contracts from various dealers. All loans and sales contracts are held for investment.

Contractual Maturities of Loans:

An estimate of contractual maturities stated as a percentage of the loan balances based upon an analysis of the Company's portfolio as of December 31, 2015 is as follows:

		Direct		Real		Sales
Due In		Cash		Estate		Finance
Calendar Year		Loans		Loans		Contracts
2016		69.86 %		14.10 %		57.32 %
2017		25.45		13.86		28.50
2018		3.92		13.38		10.50
2019		.56		12.03		3.28
2020		.09		10.11		.39
2021 & beyond		.12		36.52		.01
		100.00 %		100.00 %		100.00 %

Historically, a majority of the Company's loans have been renewed many months prior to their final contractual maturity dates, and the Company expects this trend to continue in the future. Accordingly, the above contractual maturities should not be regarded as a forecast of future cash collections.

Cash Collections on Principal:

During the years ended December 31, 2015 and 2014, cash collections applied to the principal of loans totaled $332,703,123 and $300,064,326, respectively, and the ratios of these cash collections to principal average net receivables were 75.56% and 72.61%, respectively.

Allowance for Loan Losses:

The Allowance for Loan Losses is based on Management's evaluation of the inherent risks and changes in the composition of the Company's loan portfolio. Management’s approach to estimating and evaluating the allowance for loan losses is on a total portfolio level based on historical loss trends, bankruptcy trends, the level of receivables at the statement of financial position date, payment patterns and economic conditions primarily including, but not limited to, unemployment levels and gasoline prices. Historical loss trends are tracked on an on going basis. The trend analysis includes statistical analysis of the correlation between loan date and charge off date, charge off statistics by the total loan portfolio, and charge off statistics by branch, division and state. If trends indicate credit losses are increasing or decreasing, Management will evaluate to ensure the allowance for loan losses remains at proper levels. Delinquency and bankruptcy filing trends are also tracked. If these trends indicate an adjustment to the allowance for loan losses is warranted, Management will make what it considers to be appropriate adjustments. The level of receivables at the statement of financial position date is reviewed and adjustments to the allowance for loan losses are made, if Management determines increases or decreases in the level of receivables warrants an adjustment. The Company uses monthly unemployment statistics, and various other monthly or periodic economic statistics, published by departments of the U.S. government and other economic statistics providers to determine the economic component of the allowance for loan losses. Such allowance is, in the opinion of Management, sufficiently adequate for probable losses in the current loan portfolio. As the estimates used in determining the allowance for loan losses are influenced by outside factors, such as consumer payment patterns and general economic conditions, there is uncertainty inherent in these estimates. Actual results could vary based on future changes in significant assumptions.

Management does not disaggregate the Company’s loan portfolio by loan class when evaluating loan performance. The total portfolio is evaluated for credit losses based on contractual delinquency, and other economic conditions. The Company classifies delinquent accounts at the end of each month according to the number of installments past due at that time, based on the then-existing terms of the contract. Accounts are classified in delinquency categories based on the number of days past due. When three installments are past due, we classify the account as being 60-89 days past due; when four or more installments are past due, we classify the account as being 90 days or more past due. When a loan becomes five installments past due, it is charged off unless Management directs that it be retained as an active loan. In making this charge off evaluation, Management considers factors such as pending insurance, bankruptcy status and/or other indicators of collectability. In connection with any bankruptcy court-initiated repayment plan and as allowed by state regulatory authorities, the Company effectively resets the delinquency rating of each account to coincide with a court initiated repayment plan. In addition, no installment is counted as being past due if at least 80% of the contractual payment has been paid. The amount charged off is the unpaid balance less the unearned finance charges and the unearned insurance premiums, if applicable.

When a loan becomes 60 days or more past due based on its original terms, it is placed in nonaccrual status. At this time, the accrual of any additional finance charges is discontinued. Finance charges are then only recognized to the extent there is a loan payment received or until the account qualifies for return to accrual status. Non-accrual loans return to accrual status when the loan becomes less than 60 days past due.

There were no loans past due 60 days or more and still accruing interest at December 31, 2015 or December 31, 2014. The Company’s principal balances on non-accrual loans by loan class at December 31, 2015 and 2014 are as follows:

Loan Class		December 31, 2015		December 31, 2014

Consumer Loans		$ 25,070,209		$ 23,124,540
Real Estate Loans		846,894		919,600
Sales Finance Contracts		1,009,475		739,009
Total		$ 26,926,578		$ 24,783,149

An age analysis of principal balances past due, segregated by loan class, as of December 31, 2015 and 2014 is as follows:

December 31, 2015		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due Loans

Consumer Loans		$ 13,836,033		$ 8,073,384		$ 15,895,050		$ 37,804,467
Real Estate Loans		321,249		161,974		480,929		964,152
Sales Finance Contracts		498,374		346,930		584,919		1,430,223
Total		$ 14,655,656		$ 8,582,288		$ 16,960,898		$ 40,198,842

December 31, 2014		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due Loans

Consumer Loans		$ 11,919,463		$ 7,217,788		$ 14,282,710		$ 33,419,961
Real Estate Loans		441,721		180,756		504,384		1,126,861
Sales Finance Contracts		374,821		209,845		463,957		1,048,623
Total		$ 12,736,005		$ 7,608,389		$ 15,251,051		$ 35,595,445

In addition to the delinquency rating analysis, the ratio of bankrupt accounts to our total loan portfolio is also used as a credit quality indicator. The ratio of bankrupt accounts to total principal loan balances outstanding at December 31, 2015 and December 31, 2014 was 2.40% and 2.48%, respectively.

Nearly our entire loan portfolio consists of small homogeneous consumer loans (of the product types set forth in the table below).

December 31, 2015		Principal Balance		% Portfolio		Net Charge Offs		% Net Charge Offs

Consumer Loans		$ 492,742,657		90.5 %		$ 31,119,348		97.2 %
Real Estate Loans		21,754,111		4.0		10,699		.0
Sales Finance Contracts		29,908,790		5.5		877,238		2.8
Total		$ 544,405,558		100.0 %		$ 32,007,285		100.0 %

December 31, 2014

Consumer Loans		$ 468,956,278		91.5 %		$ 27,824,196		97.0 %
Real Estate Loans		19,914,898		3.9		71,789		.0
Sales Finance Contracts		23,721,528		4.6		787,350		3.0
Total		$ 512,592,704		100.0 %		$ 28,683,335		100.0 %

Sales finance contracts are similar to consumer loans in nature of loan product, terms, customer base to whom these products are marketed, factors contributing to risk of loss and historical payment performance, and together with consumer loans, represented approximately 96% of the Company’s loan portfolio at December 31, 2015 and 2014. As a result of these similarities, which have resulted in similar historical performance, consumer loans and sales finance contracts represent substantially all loan losses. Real estate loans and related losses have historically been insignificant, and, as a result, we do not stratify the loan portfolio for purposes of determining and evaluating our loan loss allowance. Due to the composition of the loan portfolio, the Company determines and monitors the allowance for loan losses on a collectively evaluated, single portfolio segment basis. Therefore, a roll forward of the allowance for loan loss activity at the portfolio segment level is the same as at the total portfolio level. We have not acquired any impaired loans with deteriorating quality during any period reported. The following table provides additional information on our allowance for loan losses based on a collective evaluation:

		2015		2014		2013
Allowance For Credit Losses:
Beginning Balance		$ 28,620,000		$ 24,680,789		$ 22,010,085
Provision for Loan Losses		36,887,285		32,622,546		27,623,368
Charge-Offs		(42,017,880)		(38,024,773)		(33,938,554)
Recoveries		10,010,595		9,341,438		8,985,890
Ending Balance		$ 33,500,000		$ 28,620,000		$ 24,680,789

		2015		2014		2013
Finance Receivables:
Ending Balance		$ 544,405,558		$ 512,592,704		$ 485,149,825
Ending Balance; collectively evaluated for impairment		$ 544,405,558		$ 512,592,704		$ 485,149,825

Troubled debt restructurings (“TDRs”) represent loans on which the original terms have been modified as a result of the following conditions: (i) the restructuring constitutes a concession and (ii) the borrower is experiencing financial difficulties. Loan modifications by the Company involve payment alterations, interest rate concessions and/ or reductions in the amount owed by the customer. The following table presents a summary of loans that were restructured during the year ended December 31, 2015.

		Number of Loans		Pre-Modification Recorded Investment		Post-Modification Recorded Investment

Consumer Loans		6,975		$ 15,593,924		$ 14,501,969
Real Estate Loans		44		379,550		372,984
Sales Finance Contracts		251		500,839		464,498
Total		7,270		$ 16,474,313		$ 15,339,451

TDRs that subsequently defaulted during the year ended December 31, 2015 are listed below.

		Number of Loans		Pre-Modification Recorded Investment

Consumer Loans		2,147		$ 2,996,600
Real Estate Loans		2		8,045
Sales Finance Contracts		64		93,051
Total		2,213		$ 3,097,696

The following table presents a summary of loans that were restructured during the year ended December 31, 2014.

		Number of Loans		Pre-Modification Recorded Investment		Post-Modification Recorded Investment

Consumer Loans		3,745		$ 11,810,926		$ 10,827,585
Real Estate Loans		57		519,530		505,474
Sales Finance Contracts		190		450,156		421,242
Total		3,992		$ 12,780,612		$ 11,754,301

TDRs that subsequently defaulted during the year ended December 31, 2014 are listed below.

		Number of Loans		Pre-Modification Recorded Investment

Consumer Loans		587		$ 1,163,067
Real Estate Loans		4		23,040
Sales Finance Contracts		27		54,574
Total		618		$ 1,240,681

The level of TDRs, including those which have experienced a subsequent default, is considered in the determination of an appropriate level of allowance for loan losses.