Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2018

The fair value of financial instruments is determined by reference to various market data and other valuation techniques, as appropriate. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The three fair value levels are (from highest to lowest):

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Recurring Fair Value Measurements

As of March 31, 2018, 2017 and December 31, 2017, the Company did not have any financial assets or liabilities measured at fair value on a recurring basis.

Fair Value Measurements on a Nonrecurring Basis

The Company measures non-financial assets and liabilities such as property and equipment and intangible assets at fair value on a nonrecurring basis or when events or circumstances indicate that the carrying amount of the assets may be impaired.

Financial Assets and Liabilities Not Measured at Fair Value

The Company’s financial assets and liabilities as of March 31, 2018, 2017 and December 31, 2017 that are not measured at fair value in the condensed consolidated balance sheets are as follows (in thousands):



	Carrying Value		Estimated Fair Value
	March 31,		March 31,		Fair Value Measurements Using
	2018		2018		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	110,408	$	110,408	$	110,408	$	—	$	—
Pawn loans	322,625		322,625		—		—		322,625
Consumer loans, net	17,447		17,447		—		—		17,447
Fees and service charges receivable	40,022		40,022		—		—		40,022
	$	490,502	$	490,502	$	110,408	$	—	$	380,094

Financial liabilities:
Revolving unsecured credit facility	$	83,000	$	83,000	$	—	$	83,000	$	—
Senior unsecured notes, outstanding principal	300,000		305,000		—		305,000		—
	$	383,000	$	388,000	$	—	$	388,000	$	—



	Carrying Value		Estimated Fair Value
	March 31,		March 31,		Fair Value Measurements Using
	2017		2017		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	73,148	$	73,148	$	73,148	$	—	$	—
Pawn loans	314,505		314,505		—		—		314,505
Consumer loans, net	22,209		22,209		—		—		22,209
Fees and service charges receivable	38,021		38,021		—		—		38,021
	$	447,883	$	447,883	$	73,148	$	—	$	374,735

Financial liabilities:
Revolving unsecured credit facility	$	137,000	$	137,000	$	—	$	137,000	$	—
Senior unsecured notes, outstanding principal	200,000		208,000		—		208,000		—
	$	337,000	$	345,000	$	—	$	345,000	$	—



	Carrying Value		Estimated Fair Value
	December 31,		December 31,		Fair Value Measurements Using
	2017		2017		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	114,423	$	114,423	$	114,423	$	—	$	—
Pawn loans	344,748		344,748		—		—		344,748
Consumer loans, net	23,522		23,522		—		—		23,522
Fees and service charges receivable	42,736		42,736		—		—		42,736
	$	525,429	$	525,429	$	114,423	$	—	$	411,006

Financial liabilities:
Revolving unsecured credit facility	$	107,000	$	107,000	$	—	$	107,000	$	—
Senior unsecured notes, outstanding principal	300,000		314,000		—		314,000		—
	$	407,000	$	421,000	$	—	$	421,000	$	—

As cash and cash equivalents have maturities of less than three months, the carrying value of cash and cash equivalents approximates fair value. Due to their short-term maturities, the carrying value of pawn loans and fees and service charges receivable approximate fair value. Short-term loans and installment loans, collectively, represent consumer loans, net on the accompanying condensed consolidated balance sheets and are carried net of the allowance for estimated loan losses, which is calculated by applying historical loss rates combined with recent default trends to the gross consumer loan balance. The unobservable inputs used to calculate the fair value of these loans include historical loss rates, recent default trends and estimated remaining loan terms. Therefore, the carrying value approximates the fair value.

The carrying value of the Company’s revolving unsecured credit facility approximates fair value as of March 31, 2018, 2017 and December 31, 2017. The fair value of the senior unsecured notes have been estimated based on a discounted cash flow analysis using a discount rate representing the Company’s estimate of the rate that would be used by market participants. Changes in assumptions or estimation methodologies may have a material effect on these estimated fair values.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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