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 and nine months ended September 30, 2013 and 2012 was as follows (dollars in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012

Interest and fees on short-term loans	$	118,775	$	145,857	$	385,548	$	420,439
Interest and fees on line of credit accounts		50,504		20,077		102,021		45,998
Interest and fees on installment loans		58,284		39,160		152,630		92,219
Total consumer loan revenue	$	227,563	$	205,094	$	640,199	$	558,656

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 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 September 30, 2013 and 2012 and December 31, 2012 were as follows (dollars in thousands):

	As of September 30, 2013
		Short-term Loans		Line of Credit Accounts		Installment Loans		Total
Current loans	$	103,320	$	87,554	$	155,100	$	345,974
Delinquent loans		41,706		12,052		18,505		72,263
Total consumer loans, gross		145,026		99,606		173,605		418,237
Less: allowance for losses		(34,829)		(21,934)		(33,193)		(89,956)
Consumer loans, net	$	110,197	$	77,672	$	140,412	$	328,281

	As of September 30, 2012
		Short-term Loans		Line of Credit Accounts		Installment Loans		Total
Current loans	$	130,034	$	33,724	$	98,262	$	262,020
Delinquent loans		52,438		4,879		16,734		74,051
Total consumer loans, gross		182,472		38,603		114,996		336,071
Less: allowance for losses		(43,852)		(8,163)		(27,231)		(79,246)
Consumer loans, net	$	138,620	$	30,440	$	87,765	$	256,825

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

	Three Months Ended September 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	$	42,068	$	10,649	$	27,146	$	79,863
Consumer loan loss provision		42,032		25,140		32,738		99,910
Charge-offs		(58,862)		(15,414)		(30,762)		(105,038)
Recoveries		9,591		1,559		4,071		15,221
Balance at end of period	$	34,829	$	21,934	$	33,193	$	89,956

Liability for third-party lender-owned consumer loans:
Balance at beginning of period	$	2,439	$	-		608	$	3,047
(Decrease) increase in liability		(226)		-		9		(217)
Balance at end of period	$	2,213	$	-		617	$	2,830

	Three Months Ended September 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	$	45,409	$	5,243	$	19,919	$	70,571
Consumer loan loss provision		50,846		9,656		23,155		83,657
Charge-offs		(63,281)		(8,817)		(17,635)		(89,733)
Recoveries		10,878		2,081		1,792		14,751
Balance at end of period	$	43,852	$	8,163	$	27,231	$	79,246

Liability for third-party lender-owned consumer loans:
Balance at beginning of period	$	2,417	$	-	$	378	$	2,795
Increase in liability		618		-		24		642
Balance at end of period	$	3,035	$	-	$	402	$	3,437

		Nine Months Ended September 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			130,624		41,612		80,206		252,442
Charge-offs			(172,504)		(35,490)		(86,237)		(294,231)
Recoveries			30,727		4,705		10,610		46,042
Balance at end of period		$	34,829	$	21,934	$	33,193	$	89,956

Liability for third-party lender-owned consumer loans:
Balance at beginning of period		$	2,934	$	-	$	564	$	3,498
(Decrease) increase in liability			(721)		-		53		(668)
Balance at end of period	-1	$	2,213	$	-	$	617	$	2,830

		Nine Months Ended September 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			146,156		18,259		54,289		218,704
Charge-offs			(178,095)		(16,572)		(44,178)		(238,845)
Recoveries			29,385		2,753		4,177		36,315
Balance at end of period		$	43,852	$	8,163	$	27,231	$	79,246

Liability for third-party lender-owned consumer loans:
Balance at beginning of period		$	2,617	$	-	$	445	$	3,062
Increase (decrease) in liability			418		-		(43)		375
Balance at end of period		$	3,035	$	-	$	402	$	3,437

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 September 30, 2013 and 2012 and December 31, 2012, the amount of consumer loans guaranteed by the Company was $50.1 million, $55.3 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 $2.8 million, $3.4 million and $3.5 million, as of September 30, 2013 and 2012 and December 31, 2012, respectively, is included in “Accounts payable and accrued expenses” in the accompanying consolidated balance sheets.