3. Finance Receivables

We have three finance receivable types as defined below:

· Personal loans - are secured by consumer goods, automobiles, or other personal property or are unsecured, generally have maximum original terms of 60 months, and are usually fixed-rate, fixed-term loans.

· Retail sales finance- includes retail sales contracts and revolving retail. Retail sales contracts are closed-end accounts that represent a single purchase transaction. Revolving retail are open-end accounts that can be used for financing repeated purchases from the same merchant. Retail sales contracts are secured by the personal property designated in the contract and generally have maximum original terms of 60 months. Revolving retail are secured by the goods purchased and generally require minimum monthly payments based on the amount financed calculated after the most recent purchase or outstanding balances. In January 2013, we ceased purchasing retail sales contracts and revolving retail accounts.

· Real estate loans - are secured by first or second mortgages on residential real estate, generally have maximum original terms of 360 months, and are usually considered non-conforming. Real estate loans may be closed-end accounts or open-end home equity lines of credit and are primarily fixed-rate products. As of January 1, 2012, we ceased originating real estate loans.

Components of net finance receivables by type were as follows:

	Personal			Retail			Real
(dollars in thousands)	Loans			Sales Finance			Estate Loans			Total

March 31, 2013

Gross receivables	$	2,998,428		$	189,804		$	8,564,490		$	11,752,722
Unearned finance charges and points and fees	(416,533		)	(20,588		)	(4,715		)	(441,836		)
Accrued finance charges	34,974			1,707			48,470			85,151
Deferred origination costs	31,292			-			332			31,624
Premiums, net of discounts	-			(2		)	(193		)	(195		)
Total	$	2,648,161		$	170,921		$	8,608,384		$	11,427,466

December 31, 2012

Gross receivables	$	2,984,423		$	233,300		$	8,793,664		$	12,011,387
Unearned finance charges and points and fees	(402,828		)	(27,087		)	(5,910		)	(435,825		)
Accrued finance charges	36,937			2,148			50,666			89,751
Deferred origination costs	31,200			-			351			31,551
Premiums, net of discounts	-			(4		)	(133		)	(137		)
Total	$	2,649,732		$	208,357		$	8,838,638		$	11,696,727

Included in the table above are personal loans totaling $650.4 million at March 31, 2013 and real estate loans totaling $3.9 billion at March 31, 2013 and $4.0 billion at December 31, 2012 associated with securitizations that remain on our balance sheet. The carrying amount of consolidated long-term debt associated with securitizations totaled $3.4 billion at March 31, 2013 and $3.0 billion at December 31, 2012. See Note 10 for further discussion regarding our securitization transactions. Also included in the table above are finance receivables totaling $5.2 billion at March 31, 2013 and December 31, 2012, which have been pledged as collateral for SLFC’s secured term loan. In April 2013, certain real estate loans were released from the secured term loan collateral to back the notes associated with the 2013-1 securitization transaction. See Note 19 for further information on this subsequent event.

Unused credit lines extended to customers by the Company totaled $79.2 million at March 31, 2013 and $164.5 million at December 31, 2012. At March 31, 2013, unused credit lines of revolving retail were zero compared to $56.3 million at December 31, 2012 due to the cessation of purchases of revolving retail accounts effective January 16, 2013. Unused lines of credit on home equity lines of credit can be terminated for delinquency. Unused lines of credit can be suspended if one of the following occurs: the value of the real estate declines significantly below the property’s initial appraised value; we believe the borrower will be unable to fulfill the repayment obligations because of a material change in the borrower’s financial circumstances; the borrower’s equity position falls significantly; or any other material default.

CREDIT QUALITY INDICATORS

We consider the delinquency status and nonperforming status of the finance receivable as our credit quality indicators.

We accrue finance charges on revolving retail finance receivables up to the date of charge-off at 180 days past due. We had $0.6 million of revolving retail finance receivables that were more than 90 days past due at March 31, 2013, compared to $1.0 million at December 31, 2012. Our personal and real estate loans do not have finance receivables that were more than 90 days past due and still accruing finance charges.

Delinquent Finance Receivables

We consider the delinquency status of the finance receivable as our primary credit quality indicator. We monitor delinquency trends to manage our exposure to credit risk. We consider finance receivables 60 days or more past due as delinquent.

Our delinquency by finance receivable type was as follows:

	Personal		Retail		Real
(dollars in thousands)	Loans		Sales Finance		Estate Loans		Total

March 31, 2013

Net finance receivables:
60-89 days past due	$	17,977	$	1,373	$	82,753	$	102,103
90-119 days past due	13,674		1,021		59,751		74,446
120-149 days past due	12,679		792		50,583		64,054
150-179 days past due	9,398		462		47,980		57,840
180 days or more past due	2,920		231		382,353		385,504
Total delinquent finance receivables	56,648		3,879		623,420		683,947
Current	2,560,004		164,040		7,819,577		10,543,621
30-59 days past due	31,509		3,002		165,387		199,898
Total	$	2,648,161	$	170,921	$	8,608,384	$	11,427,466

December 31, 2012

Net finance receivables:
60-89 days past due	$	21,683	$	2,107	$	99,472	$	123,262
90-119 days past due	17,538		1,416		73,712		92,666
120-149 days past due	14,050		1,171		57,985		73,206
150-179 days past due	9,613		743		45,326		55,682
180 days or more past due	12,107		331		382,227		394,665
Total delinquent finance receivables	74,991		5,768		658,722		739,481
Current	2,534,960		197,392		7,983,413		10,715,765
30-59 days past due	39,781		5,197		196,503		241,481
Total	$	2,649,732	$	208,357	$	8,838,638	$	11,696,727

Nonperforming Finance Receivables

We also monitor finance receivable performance trends to evaluate the potential risk of future credit losses. At 90 days or more past due, we consider our finance receivables to be nonperforming. Once the finance receivables are considered as nonperforming, we consider them to be at increased risk for credit loss.

Our performing and nonperforming net finance receivables by type were as follows:

	Personal		Retail		Real
(dollars in thousands)	Loans		Sales Finance		Estate Loans		Total

March 31, 2013

Performing	$	2,609,490	$	168,415	$	8,067,717	$	10,845,622
Nonperforming	38,671		2,506		540,667		581,844
Total	$	2,648,161	$	170,921	$	8,608,384	$	11,427,466

December 31, 2012

Performing	$	2,596,424	$	204,696	$	8,279,388	$	11,080,508
Nonperforming	53,308		3,661		559,250		616,219
Total	$	2,649,732	$	208,357	$	8,838,638	$	11,696,727

PURCHASED CREDIT IMPAIRED FINANCE RECEIVABLES

We include the carrying amount (which initially was the fair value) of our purchased credit impaired finance receivables in net finance receivables, less allowance for finance receivable losses. Prepayments reduce the outstanding balance, contractual cash flows, and cash flows expected to be collected. Information regarding these purchased credit impaired finance receivables was as follows:

	March 31,		December 31,
(dollars in thousands)	2013		2012

Carrying amount, net of allowance	$	1,340,949	$	1,373,792

Outstanding balance	$	1,911,443	$	1,957,260

Allowance for purchased credit impaired finance receivable losses	$	29,145	$	16,973

The allowance for purchased credit impaired finance receivable losses at March 31, 2013 and December 31, 2012 reflected the net carrying value of these purchased credit impaired finance receivables being higher than the present value of the expected cash flows.

Changes in accretable yield for purchased credit impaired finance receivables were as follows:

(dollars in thousands)
At or for the Three Months Ended March 31,	2013			2012

Balance at beginning of period	$	624,879		$	463,960
Accretion	(32,831		)	(31,700		)
Disposals	(7,128		)	(5,989		)
Balance at end of period	$	584,920		$	426,271

No finance receivables have been added to these pools subsequent to November 30, 2010.

TROUBLED DEBT RESTRUCTURED FINANCE RECEIVABLES

Information regarding troubled debt restructured (TDR) finance receivables were as follows:

	Real Estate
(dollars in thousands)	Loans

March 31, 2013

TDR gross finance receivables	$	963,851
TDR net finance receivables	$	967,900
Allowance for TDR finance receivable losses	$	119,470

December 31, 2012

TDR gross finance receivables	$	802,495
TDR net finance receivables	$	806,420
Allowance for TDR finance receivable losses	$	92,723

We have no commitments to lend additional funds on our TDR finance receivables.

TDR average net receivables and finance charges recognized on TDR finance receivables were as follows:

(dollars in thousands)
Three Months Ended March 31,	2013		2012

Real Estate Loans

TDR average net receivables	$	912,832	$	323,392
TDR finance charges recognized	$	14,642	$	4,195

Information regarding the financial effects of the TDR finance receivables was as follows:

(dollars in thousands)
Three Months Ended March 31,	2013		2012

Real Estate Loans

Number of TDR accounts	2,032		623
Pre-modification TDR net finance receivables	$	163,616	$	73,873
Post-modification TDR net finance receivables	$	171,086	$	72,834

Net finance receivables that were modified as TDR finance receivables within the previous 12 months and for which there was a default during the period were as follows:

(dollars in thousands)
Three Months Ended March 31,	2013		2012

Real Estate Loans

Number of TDR accounts	216		161
TDR net finance receivables*	$	17,978	$	19,165

* Represents the corresponding balance of TDR net finance receivables at the end of the month in which they defaulted.