4. Consumer Loans, Credit Quality Information on Consumer Loans, Allowance and Liability for Estimated Losses on Consumer Loans and Guarantees of Consumer Loans

Consumer loan fee revenue generated from the Company's consumer loans for the three months ended March 31, 2013 and 2012 was as follows (dollars in thousands):

	Three Months Ended March 31,
	2013		2012

Interest and fees on short-term loans	$	140,215	$	136,642
Interest and fees on line of credit accounts		23,234		11,651
Interest and fees on installment loans		46,756		24,547
Total consumer loan revenue	$	210,205	$	172,840

The Company classifies its consumer loans as either current or delinquent. Short-term loans are considered delinquent when payment of an amount due is not made as of the due date. If a line of credit account or installment loan customer misses one payment, that payment is considered delinquent. If a line of credit account or installment loan customer does not make two consecutive payments, the entire account or loan is classified as delinquent. The Company allows for normal payment processing time before considering a loan delinquent but does not provide for any additional grace period.

Where permitted by law, a customer may choose to renew a short-term loan contract or extend the due date on a short-term loan before it is considered delinquent by agreeing to pay the current finance charge for the right to make a later payment of the outstanding principal balance plus an additional finance charge. In addition, in some instances, customers agree to repay a new short-term loan in two or three payments, and in these cases the Company considers the obligation to make the first payment a new loan and the obligation to make the second and third payments renewals or extensions of that loan because the customer pays the finance charge due at the time of each payment, similar to a loan that has been renewed or extended. All references to renewals include both renewals and extensions made by customers to their existing short-term loans. If a short-term loan is renewed, but the customer fails to pay that loan's current finance charge as of the due date, the unpaid finance charge is classified as delinquent.

The Company generally does not accrue interest on delinquent consumer loans and does not resume accrual of interest unless a loan is returned to current status. Delinquent consumer loans may not be renewed, and if, during its attempt to collect on a delinquent consumer loan, the Company allows additional time for payment through a payment plan or a promise to pay, it is still considered delinquent. All payments received are first applied against accrued but unpaid interest and fees and then against the principal balance of the loan.

The Company monitors the performance of its consumer loan portfolio and maintains either an allowance or liability for estimated losses on consumer loans (including fees and interest) at a level estimated to be adequate to absorb credit losses inherent in the portfolio. The allowance for losses on the Company's owned consumer loans reduces the outstanding loan balance in the consolidated balance sheets. The liability for estimated losses related to loans guaranteed by the Company under its credit services organization programs ("CSO programs"), which approximates the fair value of the liability, is included in “Accounts payable and accrued expenses” in the consolidated balance sheets.

In determining the allowance or liability for estimated losses on consumer loans, the Company applies a documented systematic methodology. In calculating the allowance or liability for loan losses, outstanding loans are divided into discrete groups of short-term loans, line of credit accounts and installment loans and are analyzed as current or delinquent. Increases in either the allowance or the liability, net of charge-offs and recoveries, are recorded as a “Consumer loan loss provision” in the consolidated statements of income.

The allowance or liability for short-term loans classified as current is based on historical loss rates adjusted for recent default trends for current loans. For delinquent short-term loans, the allowance or liability for estimated losses is based on a six-month rolling average of loss rates by stage of collection. For line of credit and installment loan portfolios, the Company generally uses a migration analysis to estimate losses inherent in the portfolio. The allowance or liability calculation under the migration analysis is based on historical charge-off experience and the loss emergence period, which represents the average amount of time between the first occurrence of a loss event to the charge-off of a loan. The factors the Company considers to assess the adequacy of the allowance or liability include past due performance, historical behavior of monthly vintages, underwriting changes and recent trends in delinquency in the migration analysis.

The Company fully reserves and generally charges off consumer loans once the loan or a portion of the loan has been classified as delinquent for 60 consecutive days. If a loan is deemed uncollectible before it is fully reserved, it is charged off at that point. Consumer loans classified as delinquent generally have an age of one to 59 days from the date any portion of the loan became delinquent, as defined above. Recoveries on loans previously charged to the allowance are credited to the allowance when collected.

The components of Company-owned consumer loan portfolio receivables as of March 31, 2013 and 2012 and December 31, 2012 were as follows (dollars in thousands):

	As of March 31, 2013
		Short-term Loans		Line of Credit Accounts		Installment Loans		Total
Current loans	$	119,280	$	32,039	$	110,630	$	261,949
Delinquent loans		48,448		4,916		16,155		69,519
Total consumer loans, gross		167,728		36,955		126,785		331,468
Less: allowance for losses		(42,570)		(8,064)		(27,033)		(77,667)
Consumer loans, net	$	125,158	$	28,891	$	99,752	$	253,801

	As of March 31, 2012
		Short-term Loans		Line of Credit Accounts		Installment Loans		Total
Current loans	$	117,877	$	18,281	$	65,127	$	201,285
Delinquent loans		45,941		1,834		10,018		57,793
Total consumer loans, gross		163,818		20,115		75,145		259,078
Less: allowance for losses		(39,907)		(3,518)		(15,288)		(58,713)
Consumer loans, net	$	123,911	$	16,597	$	59,857	$	200,365

	As of December 31, 2012
		Short-term Loans		Line of Credit Accounts		Installment Loans		Total
Current loans	$	146,732	$	36,603	$	117,641	$	300,976
Delinquent loans		52,565		6,097		15,483		74,145
Total consumer loans, gross		199,297		42,700		133,124		375,121
Less: allowance for losses		(45,982)		(11,107)		(28,614)		(85,703)
Consumer loans, net	$	153,315	$	31,593	$	104,510	$	289,418

Changes in the allowance for losses for the Company-owned loans and the liability for estimated losses on the Company's guarantees of third-party lender-owned loans during the three months ended March 31, 2013 and 2012 were as follows (dollars in thousands):

	Three Months Ended March 31, 2013
	Short-term Loans		Line of Credit Accounts		Installment Loans		Total

Allowance for losses for Company-owned consumer loans:
Balance at beginning of period	$	45,982	$	11,107	$	28,614	$	85,703
Consumer loan loss provision		46,553		6,553		23,149		76,255
Charge-offs		(60,790)		(11,202)		(27,744)		(99,736)
Recoveries		10,825		1,606		3,014		15,445
Balance at end of period	$	42,570	$	8,064	$	27,033	$	77,667

Liability for third-party lender-owned consumer loans:
Balance at beginning of period	$	2,934	$	-	$	564	$	3,498
Decrease in liability		(1,387)		-		(16)		(1,403)
Balance at end of period	$	1,547	$	-	$	548	$	2,095

	Three Months Ended March 31, 2012
	Short-term Loans		Line of Credit Accounts		Installment Loans		Total

Allowance for losses for Company-owned consumer loans:
Balance at beginning of period	$	46,406	$	3,723	$	12,943	$	63,072
Consumer loan loss provision		45,534		3,420		14,498		63,452
Charge-offs		(61,255)		(4,021)		(13,337)		(78,613)
Recoveries		9,222		396		1,184		10,802
Balance at end of period	$	39,907	$	3,518	$	15,288	$	58,713

Liability for third-party lender-owned consumer loans:
Balance at beginning of period	$	2,617	$	-	$	445	$	3,062
Decrease in liability		(987)		-		(82)		(1,069)
Balance at end of period	$	1,630	$	-	$	363	$	1,993

In connection with its CSO programs, the Company guarantees consumer loan payment obligations to unrelated third-party lenders and is required to purchase any defaulted loans it has guaranteed. The guarantee represents an obligation to purchase specific loans that go into default. Short-term loans that are guaranteed generally have terms of less than 90 days. Secured auto equity loans, which are included in the Company's installment loan portfolio, that are guaranteed typically have an average term of less than 24 months, with available terms of up to 42 months. As of March 31, 2013 and 2012 and December 31, 2012, the amount of consumer loans guaranteed by the Company was $43.9 million, $44.5 million, and $64.7 million, respectively, representing amounts due under consumer loans originated by third-party lenders under the CSO programs. The estimated fair value of the liability for estimated losses on consumer loans guaranteed by the Company of $2.1 million, $2.0 million and $3.5 million, as of March 31, 2013 and 2012 and December 31, 2012, respectively, is included in “Accounts payable and accrued expenses” in the accompanying consolidated balance sheets.