Allowance for Finance Receivable Losses (Tables)

9 Months Ended

Sep. 30, 2013

Allowance for Finance Receivable Losses

Schedule of changes in the allowance for finance receivable losses by finance receivable type

	Personal			Real			Retail			Consolidated
(dollars in thousands)	Loans			Estate Loans			Sales Finance			Total
Three Months Ended September 30, 2013
Balance at beginning of period	$	60,250		$	184,440		$	920		$	245,610
Provision for finance receivable losses (a)	39,685			55,886			1,843			97,414
Charge-offs	(32,527		)	(32,733		)	(2,032		)	(67,292		)
Recoveries	2,135			1,324			294			3,753
Balance at end of period	$	69,543		$	208,917		$	1,025		$	279,485
Three Months Ended September 30, 2012
Balance at beginning of period	$	41,431		$	49,051		$	1,191		$	91,673
Provision for finance receivable losses (a)	29,010			59,308			2,518			90,836
Charge-offs	(26,797		)	(31,432		)	(4,049		)	(62,278		)
Recoveries	7,865			2,545			2,427			12,837
Balance at end of period	$	51,509		$	79,472		$	2,087		$	133,068
Nine Months Ended September 30, 2013
Balance at beginning of period	$	66,580		$	111,296		$	2,260		$	180,136
Provision for finance receivable losses (a)	64,282			202,094			(4,234		)	262,142
Charge-offs (b)	(106,161		)	(120,061		)	(7,338		)	(233,560		)
Recoveries (c)	44,842			15,588			10,337			70,767
Balance at end of period	$	69,543		$	208,917		$	1,025		$	279,485
Nine Months Ended September 30, 2012
Balance at beginning of period	$	39,522		$	31,471		$	1,007		$	72,000
Provision for finance receivable losses (a)	69,731			148,509			9,190			227,430
Charge-offs	(82,035		)	(107,496		)	(15,974		)	(205,505		)
Recoveries	25,398			6,988			8,058			40,444
Transfers to finance receivables held for sale (d)	(1,107		)	-			(194		)	(1,301		)
Balance at end of period	$	51,509		$	79,472		$	2,087		$	133,068

(a) Components of provision for finance receivable losses on our real estate loans were as follows:

	Three Months		Three Months		Nine Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30,		September 30,		September 30,		September 30,
(dollars in thousands)	2013		2012		2013		2012
Real estate loans
Provision for finance receivable losses
Non-credit impaired finance receivables	$	17,808	$	19,501	$	62,968	$	69,924
Purchased credit impaired finance receivables	21,210		18,015		60,511		37,365
TDR finance receivables	16,868		21,792		78,615		41,220
Total	$	55,886	$	59,308	$	202,094	$	148,509

(b) Effective March 31, 2013, we charge off to the allowance for finance receivable losses for personal loans that are 180 days past due. Previously, we charged-off to the allowance for finance receivable losses for personal loans on which payments received in the prior six months totaled less than 5% of the original loan amount. As a result of this change, we recorded $13.3 million of additional charge-offs in March 2013.

(c) Recoveries during the nine months ended September 30, 2013 included $41.2 million ($25.4 million of personal loan recoveries, $9.9 million of real estate loan recoveries, and $5.9 million of retail sales finance recoveries) resulting from a sale of previously charged-off finance receivables in June 2013.

(d) During the nine months ended September 30, 2012, we decreased the allowance for finance receivable losses as a result of the transfers of $77.8 million of finance receivables from finance receivables held for investment to finance receivables held for sale due to management’s intent to no longer hold these finance receivables for the foreseeable future.

Schedule of components of provision for finance receivable losses on real estate loans

	Three Months		Three Months		Nine Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30,		September 30,		September 30,		September 30,
(dollars in thousands)	2013		2012		2013		2012
Real estate loans
Provision for finance receivable losses
Non-credit impaired finance receivables	$	17,808	$	19,501	$	62,968	$	69,924
Purchased credit impaired finance receivables	21,210		18,015		60,511		37,365
TDR finance receivables	16,868		21,792		78,615		41,220
Total	$	55,886	$	59,308	$	202,094	$	148,509

Schedule of carrying value charged-off for purchased credit impaired loans

	Three Months		Three Months		Nine Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30,		September 30,		September 30,		September 30,
(dollars in thousands)	2013		2012		2013		2012
Real estate loans
Charged-off against provision for finance receivable losses:
Purchased credit impaired finance receivables *	$	9,873	$	9,362	$	31,501	$	28,712

* Represents additional impairment recognized, subsequent to the establishment of the pools of purchased credit impaired loans, related to loans that have been foreclosed and transferred to real estate owned status.

Schedule of allowance for finance receivable losses and net finance receivables by type and by impairment method

	Personal		Real		Retail
(dollars in thousands)	Loans		Estate Loans		Sales Finance		Total
September 30, 2013
Allowance for finance receivable losses for finance receivables:
Collectively evaluated for impairment	$	69,543	$	1,450	$	1,025	$	72,018
Acquired with deteriorated credit quality (purchased credit impaired finance receivables)	-		46,003		-		46,003
Individually evaluated for impairment (TDR finance receivables)	-		161,464		-		161,464
Total	$	69,543	$	208,917	$	1,025	$	279,485
Finance receivables:
Collectively evaluated for impairment	$	3,019,806	$	5,517,460	$	117,888	$	8,655,154
Purchased credit impaired finance receivables	-		1,328,686		-		1,328,686
TDR finance receivables	-		1,264,971		-		1,264,971
Total	$	3,019,806	$	8,111,117	$	117,888	$	11,248,811
December 31, 2012
Allowance for finance receivable losses for finance receivables:
Collectively evaluated for impairment	$	66,580	$	1,600	$	2,260	$	70,440
Purchased credit impaired finance receivables	-		16,973		-		16,973
TDR finance receivables	-		92,723		-		92,723
Total	$	66,580	$	111,296	$	2,260	$	180,136
Finance receivables:
Collectively evaluated for impairment	$	2,649,732	$	6,641,453	$	208,357	$	9,499,542
Purchased credit impaired finance receivables	-		1,390,765		-		1,390,765
TDR finance receivables	-		806,420		-		806,420
Total	$	2,649,732	$	8,838,638	$	208,357	$	11,696,727