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

Finance receivables representing amounts due from customers for advances at March 31, 2020, and December 31, 2019, consisted of the following:


	March 31,		December 31,
	2020		2019
Short-term consumer loans:
Secured	$	7,560	$	8,774
Unsecured		37,348		53,199
Total short-term consumer loans		44,908		61,973
Medium-term consumer loans
Secured		3,103		5,612
Unsecured		25,141		30,745
Total medium-term consumer loans		28,244		36,357
Total gross receivables		73,152		98,330
Unearned advance fees, net of deferred loan origination costs		(1,365)		(2,507)
Finance receivables before allowance for loan losses		71,787		95,823
Allowance for loan losses		(11,420)		(13,828)
Finance receivables, net	$	60,367	$	81,995

Finance receivables, net
Current portion	$	59,309	$	79,692
Non-current portion		1,058		2,303
Total finance receivables, net	$	60,367	$	81,995

Changes in the allowance for loan losses by product type for the three months ended March 31, 2020, are as follows:


													Allowance as
	Balance								Balance		Receivables		a percentage
	1/1/2020		Provision		Charge-Offs		Recoveries		3/31/2020		3/31/2020		of receivables
Short-term consumer loans	$	2,654	$	8,068	$	(17,366)	$	8,790	$	2,146	$	44,908	4.78	%
Medium-term consumer loans		11,174		5,556		(8,083)		627		9,274		28,244	32.84	%
	$	13,828	$	13,624	$	(25,449)	$	9,417	$	11,420	$	73,152	15.61	%

The provision for loan losses for the three months ended March 31, 2020, also includes losses from returned items from check cashing of $1,320.

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 $11 and is included in the provision for medium-term consumer loans for the three months ended March 31, 2020. For these loans evaluated for impairment, there were $22 of payment defaults during the three months ended March 31, 2020. The troubled debt restructurings during the three months ended March 31, 2020, are subject to an allowance of $2 with a net carrying value of $4 at March 31, 2020.

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 provision and subsequent charge off related to troubled debt restructurings 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.

The Company has subsidiaries that facilitate third-party lender loans under the CSO model. Changes in the accrual for third-party lender losses for the three months ended March 31, 2020, and 2019, were as follows:


	Three Months Ended March 31,
	2020		2019

Short-term balance, beginning of period	$	1,304	$	4,454
Provision for loan losses		2,124		2,857
Charge-offs, net		(2,617)		(4,410)
Short-term balance, end of period	$	811	$	2,901

Medium-term balance, beginning of period	$	1,266	$	59
Provision for loan losses		(148)		2,901
Charge-offs, net		(260)		(7)
Medium-term balance, end of period	$	858	$	2,953

Total balance, beginning of period	$	2,570	$	4,513
Provision for loan losses		1,976		5,758
Charge-offs, net		(2,877)		(4,417)
Total balance, end of period	$	1,669	$	5,854

A subsidiary of the Company offers a CSO product in Texas, and another subsidiary offered a CSO product in Ohio until April 2019, to assist consumers in obtaining credit with unaffiliated third-party lenders. Ohio House Bill 123 (“HB123”) prohibits CSO transactions in Ohio on or after April 28, 2019, at which time, the Ohio CSO product was no longer offered. Total gross finance receivables for which the Company has recorded an accrual for third-party lender losses totaled $5,839 and $12,096 at March 31, 2020, and December 31, 2019, 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 $2,585 and $7,143 in medium-term loans at March 31, 2020, and December 31, 2019, respectively. The total gross finance receivables for the Texas CSO product consist of $3,254 and $4,953 in short-term loans at March 31, 2020 and December 31, 2019, respectively.

For the Ohio CSO Program, the Company was required to purchase $80 and $9,898 of short-term loans and $616 and $63 of medium-term loans during the three months ended March 31, 2020, and 2019, 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 $38 and $6,936 of short-term and $368 and $58 of medium-term collections on these loans during the three months ended March 31, 2020, and 2019, respectively.

For the Texas CSO Program, the Company was required to purchase $4,473 and $2,547 of short-term loans during the three months ended March 31, 2020 and 2019, 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 $2,107 and $1,205 of short-term collections on these loans during the three months ended March 31, 2020, and 2019, respectively.

Additionally, certain subsidiaries of ours entered into a debt buying agreement with other third parties whereby the subsidiaries will purchase certain delinquent loans. Total gross finance receivables for which the Company recorded a debt buyer liability were $26,667 and $28,444 and the amount reserved for the debt buyer liability was $3,408 and $3,474 as of March 31, 2020 and December 31, 2019, respectively. The purchase price for any delinquent loan is equal to an agreed upon percentage of the unpaid principal balance and accrued interest and fees. The Company records these at fair value and the difference between the purchase price and expected recoverability is charged through the provision for loan losses. The Company has determined the fair value at repurchase based on a historical review of collections on defaulted or delinquent loans. The Company will sell to a third-party or will charge-off the remaining balance after a certain time period of collections activity.

Under the debt buying agreement, the Company’s subsidiary purchased $4,116 of loans and recognized recoveries of $1,241 of collections on these loans during the three months ended March 31, 2020.

Changes in the accrual for the debt buyer liability for the three months ended March 31, 2020, were as follows:


	Three Months
	Ended
	March 31,
	2020
Balance, beginning of period	$	3,474
Provision for loan losses		2,809
Charge-offs, net		(2,875)
Balance, end of period	$	3,408

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, 2020, and December 31, 2019, were as follows:


	March 31, 2020				December 31, 2019
Current finance receivables	$	63,751	87.1	%	$	86,935	88.4	%
Past due finance receivables (1 - 30 days)
Secured short-term consumer loans		1,229	1.7	%		1,513	1.5	%
Unsecured short-term consumer loans		1,070	1.5	%		1,132	1.2	%
Short-term consumer loans		2,299	3.2	%		2,645	2.7	%
Secured medium-term consumer loans		812	1.1	%		1,321	1.3	%
Unsecured medium-term consumer loans		3,307	4.5	%		4,241	4.3	%
Medium-term consumer loans		4,119	5.6	%		5,562	5.7	%
Total past due finance receivables (1 - 30 days)		6,418	8.8	%		8,207	8.4	%
Past due finance receivables (31 - 60 days)
Secured medium-term consumer loans		331	0.5	%		461	0.5	%
Unsecured medium-term consumer loans		2,120	2.9	%		2,373	2.4	%
Medium-term consumer loans		2,451	3.4	%		2,834	2.9	%
Total past due finance receivables (31 - 60 days)		2,451	3.4	%		2,834	2.9	%
Past due finance receivables (61 - 90 days)
Secured medium-term consumer loans		12	0.0	%		10	-	%
Unsecured medium-term consumer loans		520	0.7	%		344	0.3	%
Medium-term consumer loans		532	0.7	%		354	0.3	%
Total past due finance receivables (61 - 90 days)		532	0.7	%		354	0.4	%
Total delinquent		9,401	12.9	%		11,395	11.6	%
	$	73,152	100.0	%	$	98,330	100.0	%
Finance receivables in non-accrual status	$	1,614	2.2	%	$	1,560	1.6	%