Purchased Receivables

12 Months Ended

Dec. 31, 2020

We purchase accounts receivable from our business customers and provide them with short-term working capital. We provide this service to our customers in Alaska and in Washington and the greater west coast through NFS. Our purchased receivable activity is guided by policies that outline risk management, documentation, and approval limits. The policies are reviewed and approved annually by the Board of Directors.

Purchased receivables are carried at their principal amount outstanding, net of a reserve for inherent losses that have not yet been identified, and have a maturity of less than one year. Purchased receivable balances are charged against this reserve when management believes that collection of principal is unlikely. Management evaluates the adequacy of the reserve for purchased receivable losses based on historical loss experience by segment and class of receivable and its assessment of current economic conditions. As of December 31, 2020, the Company has one segment and class of purchased receivables. There are no purchased receivables past due at December 31, 2020 or 2019, and there were no restructured purchased receivables in 2020, 2019, or 2018.

Income on purchased receivables is accrued and recognized on the balance outstanding using an effective interest method, except when management believes doubt exists as to the collectability of the income or principal. As of December 31, 2020, the Company is accruing income on all purchased receivable balances outstanding.

The following table summarizes the components of net purchased receivables at December 31, for the years indicated:


(In Thousands)	2020	2019
Purchased receivables	$13,995	$24,467
Reserve for purchased receivable losses	(73)	(94)
Total	$13,922	$24,373

The following table sets forth information regarding changes in the purchased receivable reserve for the periods indicated:


(In Thousands)	2020	2019	2018
Balance at beginning of year	$94	$190	$200



Reserve for (recovery from) purchased receivables	(21)	(96)	(10)
Balance at end of year	$73	$94	$190

The Company recorded no charge-offs of purchased receivables in 2020, 2019, or 2018.