3. 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 and six months ended June 30, 2013 and 2012 was as follows (dollars in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012

Interest and fees on short-term loans	$	126,560	$	137,940	$	266,775	$	274,582
Interest and fees on line of credit accounts		28,283		14,270		51,517		25,921
Interest and fees on installment loans		47,588		28,512		94,344		53,059
Total consumer loan revenue	$	202,431	$	180,722	$	412,636	$	353,562

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.

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. In addition, generally 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 in 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 accounts 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 June 30, 2013 and 2012 and December 31, 2012 were as follows (dollars in thousands):

	As of June 30, 2013
		Short-term Loans		Line of Credit Accounts		Installment Loans		Total
Current loans	$	119,084	$	51,508	$	124,126	$	294,718
Delinquent loans		49,074		6,563		16,635		72,272
Total consumer loans, gross		168,158		58,071		140,761		366,990
Less: allowance for losses		(42,068)		(10,649)		(27,146)		(79,863)
Consumer loans, net	$	126,090	$	47,422	$	113,615	$	287,127

	As of June 30, 2012
		Short-term Loans		Line of Credit Accounts		Installment Loans		Total
Current loans	$	123,261	$	27,440	$	76,644	$	227,345
Delinquent loans		53,494		3,155		12,941		69,590
Total consumer loans, gross		176,755		30,595		89,585		296,935
Less: allowance for losses		(45,409)		(5,243)		(19,919)		(70,571)
Consumer loans, net	$	131,346	$	25,352	$	69,666	$	226,364

	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 and six months ended June 30, 2013 and 2012 were as follows (dollars in thousands):

	Three Months Ended June 30, 2013
	Short-term Loans		Line of Credit Accounts		Installment Loans		Total

Allowance for losses for Company-owned consumer loans:
Balance at beginning of period	$	42,570	$	8,064	$	27,033	$	77,667
Consumer loan loss provision		42,039		9,919		24,319		76,277
Charge-offs		(52,852)		(8,874)		(27,731)		(89,457)
Recoveries		10,311		1,540		3,525		15,376
Balance at end of period	$	42,068	$	10,649	$	27,146	$	79,863

Liability for third-party lender-owned consumer loans:
Balance at beginning of period	$	1,547	$	-		548	$	2,095
Increase in liability		892		-		60		952
Balance at end of period	$	2,439	$	-		608	$	3,047

	Three Months Ended June 30, 2012
	Short-term Loans		Line of Credit Accounts		Installment Loans		Total

Allowance for losses for Company-owned consumer loans:
Balance at beginning of period	$	39,907	$	3,518	$	15,288	$	58,713
Consumer loan loss provision		49,774		5,185		16,636		71,595
Charge-offs		(53,558)		(3,735)		(13,206)		(70,499)
Recoveries		9,286		275		1,201		10,762
Balance at end of period	$	45,409	$	5,243	$	19,919	$	70,571

Liability for third-party lender-owned consumer loans:
Balance at beginning of period	$	1,630	$	-	$	363	$	1,993
Increase in liability		787		-		15		802
Balance at end of period	$	2,417	$	-	$	378	$	2,795

		Six Months Ended June 30, 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			88,592		16,472		47,468		152,532
Charge-offs			(113,642)		(20,076)		(55,475)		(189,193)
Recoveries			21,136		3,146		6,539		30,821
Balance at end of period		$	42,068	$	10,649	$	27,146	$	79,863

Liability for third-party lender-owned consumer loans:
Balance at beginning of period		$	2,934	$	-	$	564	$	3,498
(Decrease) increase in liability			(495)		-		44		(451)
Balance at end of period	-1	$	2,439	$	-	$	608	$	3,047

		Six Months Ended June 30, 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			95,307		8,606		31,134		135,047
Charge-offs			(114,814)		(7,755)		(26,543)		(149,112)
Recoveries			18,510		669		2,385		21,564
Balance at end of period		$	45,409	$	5,243	$	19,919	$	70,571

Liability for third-party lender-owned consumer loans:
Balance at beginning of period		$	2,617	$	-	$	445	$	3,062
Decrease in liability			(200)		-		(67)		(267)
Balance at end of period		$	2,417	$	-	$	378	$	2,795

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 June 30, 2013 and 2012 and December 31, 2012, the amount of consumer loans guaranteed by the Company was $50.9 million, $54.0 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 $3.0 million, $2.8 million and $3.5 million, as of June 30, 2013 and 2012 and December 31, 2012, respectively, is included in “Accounts payable and accrued expenses” in the accompanying consolidated balance sheets.