Finance Receivables, Credit Quality Information

3 Months Ended

12 Months Ended

Mar. 31, 2019

Dec. 31, 2018

Finance Receivables, Credit Quality Information

Finance Receivables, Credit Quality Information

Note 2. Finance Receivables, Credit Quality Information and Allowance for Loan Losses

Finance receivables representing amounts due from customers for advances at March 31, 2019, and December 31, 2018, consisted of the following:

	March 31,		December 31,
	2019		2018
Short-term consumer loans:
Secured	$	6,879	$	6,908
Unsecured		44,404		46,871
Total short-term consumer loans		51,283		53,779
Medium-term consumer loans
Secured		4,222		4,936
Unsecured		24,650		31,093
Total medium-term consumer loans		28,872		36,029
Total gross receivables		80,155		89,808
Unearned advance fees, net of deferred loan origination costs		(1,993)		(1,970)
Finance receivables before allowance for loan losses		78,162		87,838
Allowance for loan losses		(6,039)		(3,474)
Finance receivables, net	$	72,123	$	84,364
Finance receivables, net
Current portion	$	69,721	$	81,093
Non-current portion		2,402		3,271
Total finance receivables, net	$	72,123	$	84,364

Changes in the allowance for loan losses by product type for the three months ended March 31, 2019, are as follows:

													Allowance as
	Balance								Balance		Receivables		a percentage
	1/1/2019		Provision		Charge-Offs		Recoveries		3/31/2019		3/31/2019		of receivables
Short-term consumer loans	$	2,018	$	7,572	$	(16,402)	$	9,127	$	2,315	$	51,283	4.51	%
Medium-term consumer loans		1,456		6,933		(5,633)		968		3,724		28,872	12.90	%
	$	3,474	$	14,505	$	(22,035)	$	10,095	$	6,039	$	80,155	7.53	%

The provision for loan losses for the three months ended March 31, 2019, also includes losses from returned items from check cashing of $1,023.

The Company evaluates all short-term and medium-term consumer loans collectively for impairment, except for individually evaluating certain unsecured medium-term loans that have been modified and classified as troubled debt restructurings. In certain markets, the Company reduced interest rates and favorably changed payment terms for certain unsecured medium-term consumer loans to assist borrowers in avoiding default and to mitigate risk of loss. The provision and subsequent charge off related to these loans totaled $10 and is included in the provision for medium-term consumer loans for the three months ended March 31, 2019. For these loans evaluated for impairment, there were $23 of payment defaults during the three months ended March 31, 2019. The troubled debt restructurings during the three months ended March 31, 2019 are subject to an allowance of $3 with a net carrying value of $6 at March 31, 2019.

Changes in the allowance for loan losses by product type for the three months ended March 31, 2018, are as follows:

													Allowance as
	Balance								Balance		Receivables		a percentage
	1/1/2018		Provision		Charge-Offs		Recoveries		3/31/2018		3/31/2018		of receivables
Short-term consumer loans	$	2,697	$	8,159	$	(18,424)	$	9,886	$	2,318	$	52,115	4.45	%
Medium-term consumer loans		13,630		8,397		(11,067)		1,525		12,485		36,860	33.87	%
	$	16,327	$	16,556	$	(29,491)	$	11,411	$	14,803	$	88,975	16.64	%

The provision for loan losses for the three months ended March 31, 2018, also includes losses from returned items from check cashing of $1,062.

The provision for short-term consumer loans of $8,159 is net of debt sales of $412 for the three months ended March 31, 2018.

The provision for medium-term consumer loans of $8,397 is net of debt sales of $562 for the three months ended March 31, 2018.

The Company evaluates all short-term and medium-term consumer loans collectively for impairment, except for individually evaluating medium-term loans that have been modified and classified as troubled debt restructurings. In certain markets, the Company reduced interest rates and favorably changed payment terms for medium-term consumer loans to assist borrowers in avoiding default and to mitigate risk of loss. The provision and subsequent charge off related to these loans totaled $20 and is included in the provision for medium-term consumer loans for the three months ended March 31, 2018. For these loans evaluated for impairment, there were $54 of payment defaults during the three months ended March 31, 2018. The troubled debt restructurings during the three months ended March 31, 2018 are subject to an allowance of $6 with a net carrying value of $14 at March 31, 2018.

The Company has subsidiaries that facilitate third-party lender loans. Changes in the accrual for third-party lender losses for the three months ended March 31, 2019, and 2018 were as follows:

		Three Months Ended March 31,
	2019		2018
	Successor		Predecessor
Short-term balance, beginning of period	$	4,454	$	4,570
Provision for loan losses		2,857		4,938
Charge-offs, net		(4,410)		(5,928)
Short-term balance, end of period	$	2,901	$	3,580
Medium-term balance, beginning of period	$	59	$	248
Provision for loan losses		2,901		79
Charge-offs, net		(7)		(139)
Medium-term balance, end of period	$	2,953	$	188
Total balance, beginning of period	$	4,513	$	4,818
Provision for loan losses		5,758		5,017
Charge-offs, net		(4,417)		(6,067)
Total balance, end of period	$	5,854	$	3,768

The Company offers a CSO product in Ohio and Texas to assist consumers in obtaining credit with unaffiliated third-party lenders. Total gross finance receivables for which the Company has recorded an accrual for third-party lender losses totaled $33,854 and $34,144 at March 31, 2019 and December 31, 2018, respectively, and the corresponding guaranteed consumer loans are disclosed as an off-balance sheet arrangement. The total gross finance receivables for the Ohio CSO product consist of $17,620 and $30,490 in short-term and $13,350 and $303 in medium-term loans at March 31, 2019 and December 31, 2018, respectively. The total gross finance receivables for the Texas CSO product consist of $2,884 and $3,351 in short-term loans at March 31, 2019 and December 31, 2018, respectively. The provision for third party lender losses of $5,017 for the three months ending March 31, 2018 is net of debt sales of $210.  

For the Ohio CSO Program, the Company was required to purchase $9,898 and $13,186 of short-term loans and $63 and $199 of medium-term loans during the three months ended March 31, 2019 and 2018, respectively. As these loans were in default when purchased, they met the Company’s policy and were fully charged-off at acquisition. The Company recognized recoveries of $6,936 and $9,841 of short-term and $58 and $59 of medium-term collections on these loans during the three months ended March 31, 2019 and 2018, respectively.

For the Texas CSO Program, the Company was required to purchase $2,547 and $3,654 of short-term loans during the three months ended March 31, 2019 and 2018, respectively. As these loans were in default when purchased, they met the Company’s policy and were fully charged-off at acquisition. The Company recognized recoveries of $1,205 and $1,437 of short-term collections on these loans during the three months ended March 31, 2019 and 2018, respectively.

Ohio House Bill 123 (“HB123”) prohibits CSO transactions in Ohio on or after April 28, 2019, at which time, the Ohio CSO product will no longer be offered. The Company is focused on generating revenue through Money Service Business offerings at its Ohio subsidiaries. Absent additional revenues generated from sales of these products, HB 123 will have a material adverse effect on the Company’s results of operations.

The Company considers the near-term repayment performance of finance receivables as its primary credit quality indicator. The Company performs credit checks through consumer reporting agencies on certain borrowers. If a third-party lender provides the advance, the applicable third‑party lender decides whether to approve the loan and establishes all of the underwriting criteria and terms, conditions, and features of the customer’s loan agreement.

The aging of receivables at March 31, 2019, and December 31, 2018, were as follows:

	March 31, 2019				December 31, 2018
Current finance receivables	$	73,126	91.2	%	$	81,097	90.3	%
Past due finance receivables (1 - 30 days)
Secured short-term consumer loans		606	0.8	%		629	0.7	%
Unsecured hurt-term consumer loans		396	0.5	%		449	0.5	%
Short-term consumer loans		1,002	1.3	%		1,078	1.2	%
Secured medium-term consumer loans		761	0.9	%		898	1.0	%
Unsecured medium-term consumer loans		3,058	3.8	%		3,772	4.2	%
Medium-term consumer loans		3,819	4.7	%		4,670	5.2	%
Total past due finance receivables (1 - 30 days)		4,821	6.0	%		5,748	6.4	%
Past due finance receivables (31 - 60 days)
Secured medium-term consumer loans		243	0.3	%		269	0.3	%
Unsecured medium-term consumer loans		1,727	2.2	%		2,425	2.7	%
Medium-term consumer loans		1,970	2.5	%		2,694	3.0	%
Total past due finance receivables (31 - 60 days)		1,970	2.5	%		2,694	3.0	%
Past due finance receivables (61 - 90 days)
Secured medium-term consumer loans		2	0.0	%		18	0.0	%
Unsecured medium-term consumer loans		236	0.3	%		251	0.3	%
Medium-term consumer loans		238	0.3	%		269	0.3	%
Total past due finance receivables (61 - 90 days)		238	0.3	%		269	0.3	%
Total delinquent		7,029	8.8	%		8,711	9.7	%
	$	80,155	100.0	%	$	89,808	100.0	%

Note 2. Finance Receivables, Credit Quality Information and Allowance for Loan Losses

Finance receivables represent amounts due from customers for advances at December 31, 2018 and December 31, 2017 consisted of the following:

	December 31,		December 31,
	2018		2017
	Successor		Predecessor
Short-term consumer loans:
Secured	$	6,908	$	9,608
Unsecured		46,871		56,857
Total short-term consumer loans		53,779		66,465
Medium-term consumer loans
Secured		4,936		5,932
Unsecured		31,093		40,971
Total medium-term consumer loans		36,029		46,903
Total gross receivables		89,808		113,368
Unearned advance fees, net of deferred loan origination costs		(1,970)		(2,702)
Finance receivables before allowance for loan losses		87,838		110,666
Allowance for loan losses		(3,474)		(16,327)
Finance receivables, net	$	84,364	$	94,339
Finance receivables, net
Current portion	$	81,093	$	89,707
Non-current portion		3,271		4,632
Total finance receivables, net	$	84,364	$	94,339

Changes in the allowance for the loan losses by product type for the Successor period ended December 31, 2018 are as follows:

													Allowance as
	Balance								Balance		Receivables		a percentage
	12/13/2018		Provision		Charge-Offs		Recoveries		12/31/2018		12/31/2018		of receivables
Short-term consumer loans	$	—	$	1,180	$	(1,038)	$	1,876	$	2,018	$	53,779	3.75	%
Medium-term consumer loans		—		799		—		657		1,456		36,029	4.04	%
	$	—	$	1,979	$	(1,038)	$	2,533	$	3,474	$	89,808	3.87	%

The provision for loan losses for the Successor period ended December 31, 2018 also includes losses from returned items from check cashing of $187.  

The Company evaluates all short-term and medium-term consumer loans collectively for impairment, except for individually evaluating certain unsecured medium-term loans that have been modified and classified as troubled debt restructurings. In certain markets, the Company reduced interest rates and favorably changed payment terms for certain unsecured medium-term consumer loans to assist borrowers in avoiding default and to mitigate risk of loss. The provision and subsequent charge off related to these loans totaled $3 and is included in the provision for medium-term consumer loans for the Successor period ended December 31, 2018. For these loans evaluated for impairment, there were $1 of payment defaults during the Successor period ended December 31, 2018. The troubled debt restructurings during the Successor period ended December 31, 2018 are subject to an allowance of $1 with a net carrying value of $3 at December 31, 2018.

Changes in the allowance for the loan losses by product type for the Predecessor period ended December 12, 2018 are as follows:

													Allowance as
	Balance								Balance		Receivables		a percentage
	1/1/2018		Provision		Charge-Offs		Recoveries		12/12/2018		12/12/2018		of receivables
Short-term consumer loans	$	2,697	$	38,012	$	(69,716)	$	31,825	$	2,818	$	60,780	4.64	%
Medium-term consumer loans		13,630		29,815		(33,911)		4,027		13,561		40,600	33.40	%
	$	16,327	$	67,827	$	(103,627)	$	35,852	$	16,379	$	101,380	16.16	%

The provision for loan losses for the Predecessor period ended December 12, 2018 also includes losses from returned items from check cashing of $5,013.  

The provision for short-term consumer loans of $38,012 is net of debt sales of $1,188 and the provision for medium-term consumer loans of $29,815 is net of debt sales of $1,196.

The provision and subsequent charge off related to these troubled debt restructurings totaled $111 and is included in the provision for medium-term consumer loans for the Predecessor period ended December 12, 2018. For these loans evaluated for impairment, there were $210 of payment defaults during the Predecessor period ended December 12, 2018. The troubled debt restructurings during the Predecessor period ended December 12, 2018 are subject to an allowance of $41 with a net carrying value of $64 at December 12, 2018.

Changes in the allowance for the loan losses by product type for the Predecessor year ended December 31, 2017 are as follows:

													Allowance as
	Balance								Balance		Receivables		a percentage
	1/1/2017		Provision		Charge-Offs		Recoveries		12/31/2017		12/31/2017		of receivable
Short-term consumer loans	$	2,223	$	46,240	$	(91,072)	$	45,306	$	2,697	$	66,465	4.06	%
Medium-term consumer loans		13,996		51,329		(57,263)		5,568		13,630		46,903	29.06	%
	$	16,219	$	97,569	$	(148,335)	$	50,874	$	16,327	$	113,368	14.40	%

The provision for loan losses for the Predecessor year ended December 31, 2017 also includes losses from returned items from check cashing of $5,966. 

The provision for short-term consumer loans of $46,240 is net of debt sales of $1,199 and the provision for medium-term consumer loans of $51,329 is net of debt sales of $1,555.

The provision and subsequent charge off related to these troubled debt restructurings totaled $256 and is included in the provision for medium-term consumer loans for the Predecessor year ended December 31, 2017. For these loans evaluated for impairment, there were $432 of payment defaults during the Predecessor year ended December 31, 2017. The troubled debt restructurings during the Predecessor year ended December 31, 2017 are subject to an allowance of $80 with a net carrying value of $146 at December 31, 2017.

Changes in the allowance for the loan losses by product type for the Predecessor year ended December 31, 2016 are as follows:

													Allowance as
	Balance								Balance		Receivables		a percentage
	1/1/2016		Provision		Charge-Offs		Recoveries		12/31/2016		12/31/2016		of receivable
Short-term consumer loans	$	3,676	$	37,906	$	(101,069)	$	61,710	$	2,223	$	61,589	3.61	%
Medium-term consumer loans		20,216		46,836		(60,831)		7,775		13,996		51,431	27.21	%
	$	23,892	$	84,742	$	(161,900)	$	69,485	$	16,219	$	113,020	14.35	%

The provision for loan losses for the Predecessor year ended December 31, 2016 also includes losses from returned items from check cashing of $6,056.  

The provision for short-term consumer loans of $37,906 is net of debt sales of $1,484 and the provision for medium-term consumer loans of $46,836 is net of debt sales of $2,606.

The provision and subsequent charge off related to troubled debt restructurings totaled $669 and is included in the provision for medium-term consumer loans for the Predecessor year ended December 31, 2016. For these loans evaluated for impairment, there were $1,279 of payment defaults during the Predecessor year ended December 31, 2016. The troubled debt restructurings during the Predecessor year ended December 31, 2016 are subject to an allowance of $219 with a net carrying value of $660 at December 31, 2016.

The Company has subsidiaries that facilitate third party lender loans.  Changes in the accrual for third-party lender losses for the Successor period ended December 31, 2018, and the Predecessor period ended December 12, 2018, and for the Predecessor years ended December 31, 2017, and 2016 were as follows:

	December 31,		December 12,		Years Ended December 31,
	2018		2018		2017		2016
	Successor		Predecessor		Predecessor		Predecessor
Short-term balance, beginning of period	$	4,379	$	4,571	$	2,907	$	2,390
Provision for loan losses		947		24,045		32,277		24,261
Charge-offs, net		(872)		(24,237)		(30,613)		(23,744)
Short-term balance, end of period	$	4,454	$	4,379	$	4,571	$	2,907
Medium-term balance, beginning of period	$	62	$	247	$	192	$	220
Provision for loan losses		-		213		389		903
Charge-offs, net		(3)		(398)		(334)		(931)
Medium-term balance, end of period	$	59	$	62	$	247	$	192
Total balance, beginning of period	$	4,441	$	4,818	$	3,099	$	2,610
Provision for loan losses		947		24,258		32,666		25,164
Charge-offs, net		(875)		(24,635)		(30,947)		(24,675)
Total balance, end of period	$	4,513	$	4,441	$	4,818	$	3,099

The Company offers a CSO product in Ohio and Texas to assist consumers in obtaining credit with unaffiliated third-party lenders. Total gross finance receivables for which the Company has recorded an accrual for third-party lender losses totaled $34,144 and $36,967 at December 31, 2018 and 2017, respectively, and the corresponding guaranteed consumer loans are disclosed as an off-balance sheet arrangement. The total gross finance receivables for the Ohio CSO product consist of $30,490 and $31,341 in short-term and $303 and $1,166 in installment loans at December 31, 2018 and 2017, respectively. The total gross finance receivables for the Texas CSO product consist of $3,351 and $4,460 in short-term loans at December 31, 2018 and 2017, respectively. The provision for third-party lender losses of $24,258 and $32,666 for the Predecessor period ended December 12, 2018 and the Predecessor year ended December 31, 2017 is net of debt sales of $934 and $988, respectively.

For the Ohio CSO Program, the Company was required to purchase $2,082,  $46,368,  and $43,584 of short-term and $17,  $669,  and $638 of installment loans during the Successor period ended December 31, 2018,  Predecessor period ended December 12, 2018, and the Predecessor year ended December 31, 2017, respectively. As these loans were in default when purchased, they met the Company’s policy and were fully charged-off at acquisition. The Company recognized recoveries of $1,216,  $29,912, and $23,557 of short-term and $19,  $270,  and $305 of installment collections on these loans during the Successor period ended December 31, 2018, Predecessor period ended December 12, 2018, and the Predecessor year ended December 31, 2017, respectively. 

For the Texas CSO Program, the Company was required to purchase $485,  $11,293, and $17,542 of short-term loans during the Successor period ended December 31, 2018, Predecessor period ended December 12, 2018, and the Predecessor year ended December 31, 2017, respectively. As these loans were in default when purchased, they met the Company’s policy and were fully charged-off at acquisition. The Company recognized recoveries of $270,  $4,123, and $6,888 of short-term collections on these loans during the Successor period ended December 31, 2018, Predecessor period ended December 12, 2018, and the Predecessor year ended December 31, 2017, respectively. 

The Company considers the near term repayment performance of finance receivables as its primary credit quality indicator. The Company performs credit checks through consumer reporting agencies on certain borrowers. If a third-party lender provides the advance, the applicable third-party lender decides whether to approve the loan and establishes all of the underwriting criteria and terms, conditions, and features of the customer’s loan agreement.

The aging of receivables at December 31, 2018 and 2017 are as follows :

	December 31, 2018				December 31, 2017
	Successor				Predecessor
Current finance receivables	$	81,097	90.3	%	$	101,102	89.2	%
Past due finance receivables (1 - 30 days)
Secured short-term consumer loans		629	0.7	%		1,385	1.2	%
Unsecured short-term consumer loans		449	0.5	%		661	0.6	%
Short-term consumer loans		1,078	1.2	%		2,046	1.8	%
Secured medium-term consumer loans		898	1.0	%		428	0.3	%
Unsecured medium-term consumer loans		3,772	4.2	%		6,074	5.4	%
Medium-term consumer loans		4,670	5.2	%		6,502	5.7	%
Total past due finance receivables (1 - 30 days)		5,748	6.4	%		8,548	7.5	%
Past due finance receivables (31 - 60 days)
Secured medium-term consumer loans		269	0.3	%		197	0.2	%
Unsecured medium-term consumer loans		2,425	2.7	%		2,933	2.6	%
Medium-term consumer loans		2,694	3.0	%		3,130	2.8	%
Total past due finance receivables (31 - 60 days)		2,694	3.0	%		3,130	2.8	%
Past due finance receivables (61 - 90 days)
Secured medium-term consumer loans						-	-	%
Unsecured medium-term consumer loans		18	-	%		588	0.5	%
Medium-term consumer loans		251	0.3	%		588	0.5	%
Total past due finance receivables (61 - 90 days)		269	0.3	%		588	0.5	%
Total delinquent		8,711	9.7	%		12,266	10.8	%
	$	89,808	100.0	%	$	113,368	100.0	%