Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2013

Schedule of fair values and carrying values of financial instruments and fair value hierarchy based on the level of inputs utilized to determine such fair value

	Fair Value Measurements Using						Total		Total
							Fair		Carrying
(dollars in thousands)	Level 1		Level 2		Level 3		Value		Value

September 30, 2013

Assets
Cash and cash equivalents	$	1,048,751	$	-	$	-	$	1,048,751	$	1,048,751
Investment securities	100		541,676		26,431		568,207		568,207
Net finance receivables, less allowance for finance receivable losses	-		-		11,097,113		11,097,113		10,969,326
Note receivable from parent	-		537,989		-		537,989		537,989
Restricted cash	346,631		-		-		346,631		346,631
Other assets:
Commercial mortgage loans	-		-		94,885		94,885		102,798
Escrow advance receivable	-		-		19,674		19,674		19,674
Receivable from parent and affiliates	-		17,664		-		17,664		17,664

Liabilities
Long-term debt	$	-	$	12,694,404	$	-	$	12,694,404	$	11,740,773

December 31, 2012

Assets
Cash and cash equivalents	$	1,357,212	$	-	$	-	$	1,357,212	$	1,357,212
Investment securities	255		639,148		29,767		669,170		669,170
Net finance receivables, less allowance for finance receivable losses	-		-		11,608,720		11,608,720		11,516,591
Note receivable from parent	-		537,989		-		537,989		537,989
Restricted cash	113,703		-		-		113,703		113,703
Other assets:
Commercial mortgage loans	-		-		99,933		99,933		110,398
Cross currency interest rate derivative	-		26,699		-		26,699		26,699
Escrow advance receivable	-		-		18,520		18,520		18,520
Receivable from parent and affiliates	-		16,196		-		16,196		16,196

Liabilities
Long-term debt	$	-	$	12,912,712	$	-	$	12,912,712	$	12,454,316
Payable to affiliate	-		30,750		-		30,750		30,750

Schedule of information about assets and liabilities measured at fair value on a recurring basis and the fair value hierarchy based on the levels of inputs utilized to determine such fair value

	Fair Value Measurements Using						Total Carried
(dollars in thousands)	Level 1		Level 2		Level 3		At Fair Value

September 30, 2013

Assets
Cash and cash equivalents in mutual funds	$	264,135	$	-	$	-	$	264,135
Investment securities:
Bonds:
U.S. government and government sponsored entities	-		74,783		-		74,783
Obligations of states, municipalities, and political subdivisions	-		94,974		-		94,974
Corporate debt	-		207,550		15,090		222,640
RMBS	-		139,051		85		139,136
CMBS	-		20,212		2		20,214
CDO/ABS	-		5,106		8,433		13,539
Total	-		541,676		23,610		565,286
Other long-term investments (a)	-		-		1,375		1,375
Common stocks (b)	100		-		-		100
Total investment securities	100		541,676		24,985		566,761
Restricted cash in mutual funds	284,816		-		-		284,816
Total	$	549,051	$	541,676	$	24,985	$	1,115,712

December 31, 2012

Assets
Cash and cash equivalents in mutual funds	$	630,227	$	-	$	-	$	630,227
Investment securities:
Bonds:
U.S. government and government sponsored entities	-		36,442		-		36,442
Obligations of states, municipalities, and political subdivisions	-		140,224		-		140,224
Corporate debt	-		274,272		13,417		287,689
RMBS	-		172,135		74		172,209
CMBS	-		12,899		153		13,052
CDO/ABS	-		3,176		13,392		16,568
Total	-		639,148		27,036		666,184
Other long-term investments (a)	-		-		1,380		1,380
Common stocks (b)	255		-		-		255
Total investment securities	255		639,148		28,416		667,819
Restricted cash in mutual funds	93,781		-		-		93,781
Other assets - cross currency interest rate derivative	-		26,699		-		26,699
Total	$	724,263	$	665,847	$	28,416	$	1,418,526

(a) Other long-term investments excludes our interest in a limited partnership of $0.6 million at September 30, 2013 and December 31, 2012 that we account for using the equity method.

(b) Common stocks excludes stocks not carried at fair value of $0.9 million at September 30, 2013 and $0.7 million at December 31, 2012.

Schedule of changes in Level 3 assets and liabilities measured at fair value on a recurring basis

The following table presents changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the three months ended September 30, 2013:

			Net gains (losses) included in:
									Purchases,
									sales,
	Balance at					Other			issues,			Transfers		Transfers		Balance
	beginning		Other			comprehensive			settlements			into		out of		at end of
(dollars in thousands)	of period		revenues			income (loss)			(a)			Level 3		Level 3		period

Three Months Ended
September 30, 2013

Investment securities:
Bonds:
Corporate debt	$	13,114	$	(58	)	$	18		$	2,016		$	-	$	-	$	15,090
RMBS	218		-			(133		)	-			-		-		85
CMBS	2		-			-			-			-		-		2
CDO/ABS	8,463		49			(4		)	(75		)	-		-		8,433
Total	21,797		(9		)	(119		)	1,941			-		-		23,610
Other long-term investments (b)	1,478		-			(103		)	-			-		-		1,375
Total investment securities	$	23,275	$	(9	)	$	(222	)	$	1,941		$	-	$	-	$	24,985

(a) The detail of purchases, sales, issues, and settlements for the three months ended September 30, 2013 is presented in the table below.

(b) Other long-term investments excludes our interest in a limited partnership of $0.6 million at September 30, 2013 that we account for using the equity method.

The following table presents the detail of purchases, sales, issuances, and settlements of Level 3 assets and liabilities measured at fair value on a recurring basis for the three months ended September 30, 2013:

(dollars in thousands)

Purchases

Sales

Issues

Settlements

Total

Three Months Ended

September 30, 2013

Investment securities:

Bonds:

Corporate debt

2,016

CDO/ABS

(75

)

(75

)

Total investment securities

2,016

(75

)

1,941

The following table presents changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the three months ended September 30, 2012:

			Net gains (losses) included in:
									Purchases,
									sales,
	Balance at					Other			issues,			Transfers		Transfers			Balance
	beginning		Other			comprehensive			settlements			into		out of			at end of
(dollars in thousands)	of period		revenues			income (loss)			(a)			Level 3		Level 3			period

Three Months Ended
September 30, 2012

Investment securities:
Bonds:
Corporate debt	$	-	$	(19	)	$	8		$	-		$	14,133	$	-		$	14,122
RMBS	2,025		(207		)	(362		)	(62		)	-		(1,304		)	90
CMBS	7,864		(29		)	59			(456		)	-		(7,159		)	279
CDO/ABS	9,696		100			379			(263		)	5,169		(909		)	14,172
Total	19,585		(155		)	84			(781		)	19,302		(9,372		)	28,663
Other long-term investments (b)	2,707		-			(196		)	-			-		-			2,511
Total investment securities	$	22,292	$	(155	)	$	(112	)	$	(781	)	$	19,302	$	(9,372	)	$	31,174

(a) “Purchases, sales, issues, and settlements” column only consist of settlements. There were no purchases, sales, or issues of investment securities for the three months ended September 30, 2012.

(b) Other long-term investments excludes our interest in a limited partnership of $0.6 million at September 30, 2012 that we account for using the equity method.

The following table presents changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the nine months ended September 30, 2013:

			Net gains (losses) included in:
									Purchases,
									sales,
	Balance at					Other			issues,			Transfers		Transfers		Balance
	beginning		Other			comprehensive			settlements			into		out of		at end of
(dollars in thousands)	of period		revenues			income (loss)			(a)			Level 3		Level 3		period

Nine Months Ended
September 30, 2013

Investment securities:
Bonds:
Corporate debt	$	13,417	$	(167	)	$	305		$	1,535		$	-	$	-	$	15,090
RMBS	74		(35		)	46			-			-		-		85
CMBS	153		(8		)	6			(149		)	-		-		2
CDO/ABS	13,392		671			(535		)	(5,095		)	-		-		8,433
Total	27,036		461			(178		)	(3,709		)	-		-		23,610
Other long-term investments (b)	1,380		2			4			(11		)	-		-		1,375
Total investment securities	$	28,416	$	463		$	(174	)	$	(3,720	)	$	-	$	-	$	24,985

(a) The detail of purchases, sales, issues, and settlements for the nine months ended September 30, 2013 is presented in the table below.

(b) Other long-term investments excludes our interest in a limited partnership of $0.6 million at September 30, 2013 that we account for using the equity method.

The following table presents the detail of purchases, sales, issuances, and settlements of Level 3 assets and liabilities measured at fair value on a recurring basis for the nine months ended September 30, 2013:

(dollars in thousands)

Purchases

Sales

Issues

Settlements

Total

Nine Months Ended

September 30, 2013

Investment securities:

Bonds:

Corporate debt

2,016

(481

)

1,535

CMBS

(149

)

(149

)

CDO/ABS

(5,095

)

(5,095

)

Total

2,016

(5,725

)

(3,709

)

Other long-term investments

(11

)

(11

)

Total investment securities

2,016

(5,736

)

(3,720

)

The following table presents changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the nine months ended September 30, 2012:

			Net gains (losses) included in:
									Purchases,
									sales,
	Balance at					Other			issues,			Transfers		Transfers			Balance
	beginning		Other			comprehensive			settlements			into		out of			at end of
(dollars in thousands)	of period		revenues			income (loss)			(a)			Level 3		Level 3			period

Nine Months Ended
September 30, 2012

Investment securities:
Bonds:
Corporate debt	$	2,800	$	(16	)	$	192		$	(2,987	)	$	14,133	$	-		$	14,122
RMBS	1,914		(171		)	(170		)	(179		)	-		(1,304		)	90
CMBS	7,944		(40		)	342			(808		)	-		(7,159		)	279
CDO/ABS	8,916		232			1,236			(472		)	5,169		(909		)	14,172
Total	21,574		5			1,600			(4,446		)	19,302		(9,372		)	28,663
Other long-term investments (b)	4,127		-			(680		)	(936		)	-		-			2,511
Common stocks	3		(5		)	2			-			-		-			-
Total investment securities	$	25,704	$	-		$	922		$	(5,382	)	$	19,302	$	(9,372	)	$	31,174

(a) “Purchases, sales, issues, and settlements” column only consist of settlements. There were no purchases, sales, or issues of investment securities for the nine months ended September 30, 2012.

(b) Other long-term investments excludes our interest in a limited partnership of $0.6 million at September 30, 2012 that we account for using the equity method.

Quantitative information about Level 3 inputs for assets measured on a recurring basis

			Range (Weighted Average)
	Valuation Technique(s)	Unobservable Input	September 30, 2013	December 31, 2012
Corporate debt	Discounted cash flows	Yield	2.61% - 7.61% (4.41%)	2.74% - 7.35% (4.45%)
Other long-term investments	Discounted cash flows and indicative valuations	Historical costs Nature of investment Local market conditions Comparables Operating performance Recent financing activity	N/A*	N/A*

* Not applicable.

Schedule of assets measured at fair value on a non-recurring basis on which impairment charges were recorded

	Fair Value Measurements Using
(dollars in thousands)	Level 1		Level 2		Level 3		Total

September 30, 2013

Assets
Real estate owned	$	-	$	-	$	69,497	$	69,497
Commercial mortgage loans	-		-		11,735		11,735
Total	$	-	$	-	$	81,232	$	81,232

December 31, 2012

Assets
Real estate owned	$	-	$	-	$	98,379	$	98,379
Commercial mortgage loans	-		-		19,037		19,037
Total	$	-	$	-	$	117,416	$	117,416

Schedule of net impairment charges recorded on assets measured at fair value on a non-recurring basis

	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

Assets
Real estate owned	$	5,668		$	7,686	$	19,270		$	27,546
Commercial mortgage loans	(61		)	1,626		(1,774		)	3,093
Finance receivables held for sale	-			-		-			1,371
Other intangible assets	-			4,555		-			4,555
Total	$	5,607		$	13,867	$	17,496		$	36,565

Quantitative information about Level 3 inputs for assets measured on a nonrecurring basis

			Range (Weighted Average)
	Valuation Technique(s)	Unobservable Input	September 30, 2013	December 31, 2012
Real estate owned	Market approach	Third-party valuation	N/A*	N/A*
Commercial mortgage loans	Market approach	Local market conditions Nature of investment Comparable property sales Operating performance	N/A*	N/A*
Finance receivables held for sale	Market approach	Negotiated prices with prospective purchasers	N/A*	N/A*
Other intangible assets	Discounted cash flows	N/A*	N/A*	N/A*

* Not applicable.

- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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