Finance Receivables

12 Months Ended

Mar. 31, 2013

Receivables [Abstract]

Finance Receivables

3. Finance Receivables

Finance receivables consist of Contracts and direct consumer loans (“Direct Loans”), each of which comprise a portfolio segment. Each portfolio segment consists of smaller balance homogeneous loans which are collectively evaluated for impairment.

The Company purchases individual Contracts from new and used automobile dealers in its markets. There is no relationship between the Company and the dealer with respect to a given contract once the assignment of that contract is complete. The dealer has no vested interest in the performance of any installment contract the Company purchases. The Company charges-off receivables when an individual account has become more than 120 days contractually delinquent. In the event of repossession the charge-off will occur in the month in which the vehicle was repossessed.

Contracts included in finance receivables are detailed as follows as of fiscal years ended March 31:

	2013			2012			2011
Indirect finance receivables, gross contract	$	386,940,093		$	382,766,667		$	368,099,418
Unearned interest		(111,121,493	)		(109,456,018	)		(105,622,007	)
Indirect finance receivables, net of unearned interest		275,818,600			273,310,649			262,477,411
Unearned dealer discounts		(16,415,169	)		(17,091,567	)		(17,024,119	)
Indirect finance receivables, net of unearned interest and unearned dealer discounts		259,403,431			256,219,082			245,453,292
Allowance for credit losses		(16,090,652	)		(19,499,208	)		(19,952,595	)
Indirect finance receivables, net	$	243,312,779		$	236,719,874		$	225,500,697

The terms of the Contracts range from 12 to 72 months and bear a weighted average contractual interest rate of 23.34% and 23.58% as of March 31, 2013 and 2012, respectively.

The following table sets forth a reconciliation of the changes in the allowance for credit losses on Contracts for the fiscal years ended March 31:

	2013			2012			2011
Balance at beginning of year	$	19,499,208		$	19,952,595		$	16,383,893
Provision for credit losses		13,252,382			12,185,529			15,485,607
Losses absorbed		(19,851,080	)		(14,971,422	)		(14,036,888	)
Recoveries		3,190,142			2,405,750			2,255,683
Discounts accreted		—			(73,244	)		(135,700	)
Balance at end of year	$	16,090,652		$	19,499,208		$	19,952,595

The Company purchases Contracts from automobile dealers at a negotiated price that is less than the original principal amount being financed by the purchaser of the automobile. The Contracts are predominately for used vehicles. As of March 31, 2013, the average model year of vehicles collateralizing the portfolio was 2005. The average loan to value ratio, which expresses the amount of the Contract as a percentage of the value of the automobile, is approximately 93%. The Company utilizes a static pool approach to track portfolio performance. If the allowance for credit losses is determined to be inadequate for a static pool, then an additional charge to income through the provision is used to maintain adequate reserves based on management’s evaluation of the risk inherent in the loan portfolio, the composition of the portfolio, and current economic conditions. Such evaluation, considers among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, historical loan loss experience, management’s estimate of probable credit losses and other factors that warrant recognition in providing for an adequate allowance for credit losses. In determining the provision and allowance for loan for credit losses, we consider the reduction in the net carrying amount of finance receivables resulting from dealer discounts.

Direct Loans are also included in finance receivables and are detailed as follows as of fiscal years ended March 31:

	2013			2012			2011
Direct finance receivables, gross contract	$	8,781,637		$	6,221,688		$	4,850,865
Unearned interest		(1,800,698	)		(1,195,948	)		(890,555	)
Direct finance receivables, net of unearned interest		6,980,939			5,025,740			3,960,310
Allowance for credit losses		(467,917	)		(492,184	)		(378,418	)
Direct finance receivables, net	$	6,513,022		$	4,533,556		$	3,581,892

The terms of the Direct Loans range from 6 to 48 months and bear a weighted average contractual interest rate of 25.84% and 26.14% as of March 31, 2013 and 2012, respectively.

The following table sets forth a reconciliation of the changes in the allowance for credit losses on Direct Loans for the fiscal years ended March 31:

	2013			2012			2011
Balance at beginning of year	$	492,184		$	378,418		$	382,869
Provision for credit losses		139,493			182,062			125,937
Losses absorbed		(190,871	)		(93,041	)		(173,970	)
Recoveries		27,111			24,745			43,582
Balance at end of year	$	467,917		$	492,184		$	378,418

Direct Loans are loans originated directly between the Company and the consumer. These loans are typically for amounts ranging from $1,000 to $9,000 and are generally secured by a lien on an automobile, watercraft or other permissible tangible personal property. The majority of Direct Loans are originated with current or former customers under the Company’s automobile financing program. The typical Direct Loan represents a significantly better credit risk than Contracts due to the customer’s historical payment history with the Company. In deciding whether or not to make a loan, the Company considers the individual’s credit history, job stability, income and impressions created during a personal interview with a Company loan officer. Additionally, because most of the Direct Loans made by the Company to date have been made to borrowers under Contracts previously purchased by the Company, the payment history of the borrower under the Contract is a significant factor in making the loan decision. As of March 31, 2013, loans made by the Company pursuant to its direct loan program constituted approximately 2% of the aggregate principal amount of the Company’s loan portfolio.

Changes in the allowance for credit losses for both Contracts and Direct Loans were driven by current economic conditions and credit loss trends over several reporting periods which are useful in estimating future losses and overall portfolio performance.

The following table is an assessment of the credit quality by creditworthiness as of March 31. A performing account is defined as an account that is less than 60 days past due. A non-performing account is defined as an account that is contractually delinquent for 60 days or more and the accrual of interest income is suspended. When an account is 120 days contractually delinquent, the account is written off.

	2013				2012
	Contracts		Direct Loans		Contracts		Direct Loans
Non-bankrupt accounts	$	386,324,594	$	8,779,270	$	382,358,608	$	4,844,683
Bankrupt accounts		615,499		2,367		408,059		6,182
Total	$	386,940,093	$	8,781,637	$	382,766,667	$	4,850,865
Performing accounts	$	382,843,130	$	8,746,338	$	380,213,503	$	4,833,310
Non-performing accounts		4,096,963		35,299		2,553,164		17,555
Total	$	386,940,093	$	8,781,637	$	382,766,667	$	4,850,865

The following tables present certain information regarding the delinquency rates experienced by the Company with respect to Contracts and Direct Loans:

			Delinquencies
Contracts	Gross Balance Outstanding		30 – 59 days			60 – 89 days			90 + days			Total
March 31, 2013	$	386,940,093	$	10,557,122		$	2,723,456		$	1,373,507		$	14,654,085
				2.73	%		0.70	%		0.35	%		3.78	%
March 31, 2012	$	382,766,667	$	8,994,485		$	1,889,643		$	663,521		$	11,547,649
				2.35	%		0.49	%		0.17	%		3.01	%
March 31, 2011	$	368,099,418	$	6,106,211		$	1,468,079		$	549,518		$	8,123,808
				1.66	%		0.40	%		0.15	%		2.21	%
Direct Loans	Gross Balance Outstanding		30 – 59 days			60 – 89 days			90 + days			Total
March 31, 2013	$	8,781,637	$	72,364		$	21,509		$	13,790		$	107,663
				0.82	%		0.25	%		0.16	%		1.23	%
March 31, 2012	$	6,221,688	$	48,899		$	14,257		$	4,933		$	68,089
				0.79	%		0.23	%		0.07	%		1.09	%
March 31, 2011	$	4,850,865	$	37,399		$	5,636		$	11,919		$	54,954
				0.77	%		0.11	%		0.25	%		1.13	%