Each consumer loan provides customers with cash, typically in exchange for a fee and an agreement to repay the amount advanced. These transactions result in a receivable or a loan, owed to the Company or a third party lender. These consumer loans take various forms, including short-term single payment loans (which are commonly referred to as payday loans), participation interests in receivables acquired from a third-party lender through the micro line of credit ("MLOC") services business and multi-payment installment loans, and generate revenue for the Company. Consumer loan fee revenue generated from the Company's consumer loans for the three and nine months ended September 30, 2011 and 2010 was as follows (in thousands):

In order to manage consumer loans effectively, the Company monitors the performance and maintains either an allowance or liability for losses on consumer loans (including fees and interest) at a level estimated to be adequate to absorb credit losses. The balances outstanding include all consumer loans, including short-term loans, participation interests in receivables acquired through the MLOC services business and multi-payment installment loans. The allowance for losses on Company-owned consumer loans offsets the outstanding loan amounts in the consolidated balance sheets. In addition, the Company maintains a liability for losses related to loans guaranteed under the Company's Credit Services Organization program. The liability for losses is included in "Accounts payable and accrued expenses" in the Company's consolidated balance sheets.

The Company classifies its consumer loan portfolio as either current, which represents active loans, and nonperforming, which represents loans that are 1-59 days delinquent. Short-term consumer loans are considered nonperforming on the date of the first missed payment, with no grace period. An installment loan is considered nonperforming if the customer does not make two consecutive payments, with no grace period. Once a loan is considered nonperforming, this status is not changed if the terms of the contract are modified or extended. Generally, consumer loan fees and interest do not accrue on nonperforming loans and once a consumer loan is considered non-performing, the Company does not resume accrual of interest on these loans. For nonperforming loans, all payments received are first applied against accrued but unpaid interest and fees and then against the principal balance of the loan. After the principal balance is recovered, the Company recognizes additional payments as consumer loan fee revenue.

In determining the allowance or liability for consumer loans, the Company applies a documented systematic methodology as follows. Outstanding loans are analyzed and divided into discrete groups, including "active," which are not delinquent, and delinquent or past due by age and stage of collection. Actual loss experience based on historical loss rates for each discrete group are calculated and adjusted for recent default trends. The required allowance is calculated by applying the resulting adjusted loss rates to each discrete loan group and aggregating the results. Increases in either the allowance or the liability, net of charge-offs and recoveries, are recorded as "Consumer loan loss provision" in the consolidated statements of income. The Company generally charges off all consumer loans once they have been in default for 60 consecutive days or sooner if deemed uncollectible. Recoveries on loans previously charged to the allowance are credited to the allowance when collected.

The allowance deducted from the carrying value of consumer loans was $47.3 million, $45.6 million, and $38.9 million at September 30, 2011 and 2010, and December 31, 2010, respectively. The Company guarantees borrowers' payment obligations to unrelated third-party lenders and is required to purchase the loan should a borrower not make payments as required by the contract. The guarantee is a repurchase obligation of specific loans, which generally have terms of less than 90 days. As of September 30, 2011 and 2010, and December 31, 2010, $51.2 million, $48.4 million, and $48.8 million, respectively, of active consumer loans owned by third-party lenders were guaranteed by the Company. The liability for losses on consumer loan guaranty obligations was $2.5 million, $2.8 million and $2.8 million at September 30, 2011 and 2010, and December 31, 2010, respectively.

The components of the Company-owned consumer loan portfolio at September 30, 2011 and 2010, and December 31, 2010 were as follows (in thousands):


	As of September 30, 2011
	Short-term Loans			Installment Loans			MLOC			Total
Current	$	137,439		$	44,534		$	-		$	181,973
Nonperforming loans		50,268			6,736			-			57,004
Total consumer loans, gross		187,707			51,270			-			238,977
Less: Allowance for losses		(38,969	)		(8,366	)		-			(47,335	)
Consumer loans, net	$	148,738		$	42,904		$	-		$	191,642

	As of September 30, 2010
	Short-term Loans			Installment Loans			MLOC			Total
Current	$	95,795		$	6,292		$	17,374		$	119,461
Nonperforming loans		50,925			858			3,822			55,605
Total consumer loans, gross		146,720			7,150			21,196			175,066
Less: Allowance for losses		(40,567	)		(1,375	)		(3,644	)		(45,586	)
Consumer loans, net	$	106,153		$	5,775		$	17,552		$	129,480


	As of December 31, 2010
	Short-term Loans			Installment Loans			MLOC			Total
Current	$	115,535		$	16,309		$	-		$	131,844
Nonperforming loans		43,599			1,377			1,510			46,486
Total consumer loans, gross		159,134			17,686			1,510			178,330
Less: Allowance for losses		(34,455	)		(2,988	)		(1,510	)		(38,953	)
Consumer loans, net	$	124,679		$	14,698		$	-		$	139,377

Changes in the allowance for losses for the Company-owned portfolio and the liability for losses for third-party lender-owned portfolios during the three and nine months ended September 30, 2011 and 2010 was as follows (in thousands):


	Three Months Ended September 30, 2011
	Short-term Loans			Installment Loans			MLOC			Total
Allowance for losses for Company-owned consumer loans:

Balance at beginning of period	$	31,196		$	6,015		$	-		$	37,211
Consumer loan loss provision		50,330			9,896			-			60,226
Charge-offs		(50,254	)		(7,944	)		-			(58,198	)
Recoveries		7,697			399			-			8,096

Balance at end of period	$	38,969		$	8,366		$	-		$	47,335

Liability for third-party lender-owned consumer loans:

Balance at beginning of period	$	1,852		$	285		$	-		$	2,137
Increase in liability		262			88			-			350

Balance at end of period	$	2,114		$	373		$	-		$	2,487

	Three Months Ended September 30, 2010
	Short-term Loans			Installment Loans			MLOC			Total
Allowance for losses for Company-owned consumer loans:

Balance at beginning of period	$	32,179		$	1,016		$	3,528		$	36,723
Consumer loan loss provision		46,342			1,359			3,970			51,671
Charge-offs		(43,723	)		(1,076	)		(4,136	)		(48,935	)
Recoveries		5,769			76			282			6,127

Balance at end of period	$	40,567		$	1,375		$	3,644		$	45,586

Liability for third-party lender-owned consumer loans:

Balance at beginning of period	$	3,319		$	6		$	-		$	3,325
Decrease in liability		(590	)		55			-			(535	)

Balance at end of period	$	2,729		$	61		$	-		$	2,790


	Nine Months Ended September 30, 2011
	Short-term Loans			Installment Loans			MLOC			Total
Allowance for losses for Company-owned consumer loans:

Balance at beginning of period	$	34,455		$	2,988		$	1,510		$	38,953
Consumer loan loss provision		124,490			21,757			(691	)		145,556
Charge-offs		(142,055	)		(17,200	)		(1,571	)		(160,826	)
Recoveries		22,079			821			752			23,652
Balance at end of period	$	38,969		$	8,366		$	-		$	47,335

Liability for third-party lender-owned consumer loans:

Balance at beginning of period	$	2,610		$	228		$	-		$	2,838
Decrease in liability		(496	)		145			-			(351	)

Balance at end of period	$	2,114		$	373		$	-		$	2,487

	Nine Months Ended September 30, 2010
	Short-term Loans			Installment Loans			MLOC			Total
Allowance for losses for Company-owned consumer loans:

Balance at beginning of period	$	25,194		$	520		$	1,636		$	27,350
Consumer loan loss provision		116,213			3,260			10,644			130,117
Charge-offs		(119,832	)		(2,615	)		(9,321	)		(131,768	)
Recoveries		18,992			210			685			19,887

Balance at end of period	$	40,567		$	1,375		$	3,644		$	45,586

Liability for third-party lender-owned consumer loans:

Balance at beginning of period	$	2,944		$	-		$	-		$	2,944
Decrease in liability		(215	)		61			-			(154	)

Balance at end of period	$	2,729		$	61		$	-		$	2,790