15. Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value Measurements Tables

Warrant

	Year Ended December 31,
	2012		2011
Expected life (years)		7.30		7.00
Risk-free interest rate		1.26%		1.40%
Volatility		40%		39%

Reconciliation for Level 3 assets measured at fair value on a recurring basis

	2012			2011
	(in thousands)			(in thousands)
Residual Interest in Securitizations:
Balance at beginning of year	$	4,414		$	3,841
Cash paid (received)		(48	)		–
Included in earnings		458			573
Balance at end of year	$	4,824		$	4,414
Warrant Derivative Liability:
Balance at beginning of year	$	967		$	1,639
Included in earnings		695			(672	)
Reclassification to equity		(1,307	)		–
Balance at end of year	$	355		$	967

Reconciliation of the acquired finance receivables and related debt measured at fair value on a recurring basis

The table below presents a reconciliation of the acquired finance receivables and related debt measured at fair value on a recurring basis using significant unobservable inputs:

	December 31,
	2012		2011
	(in thousands)
Finance Receivables Measured at Fair Value:
Balance at beginning of year	$	160,253	$	–
Acquisitions		–		199,554
Payments on finance receivables at fair value		(104,682)		(41,926)
Charge-offs on finance receivables at fair value		(6,681)		(3,528)
Discount accretion		4,144		5,979
Mark to fair value		6,634		174
Balance at end of year	$	59,668	$	160,253
Debt Secured by Finance Receivables Measured at Fair Value:
Balance at beginning of year	$	166,828	$	–
New issuances		–		196,473
Principal payments on debt at fair value		(121,413)		(34,450)
Premium accretion		4,579		5,606
Mark to fair value		7,113		(801)
Balance at end of year		57,107		166,828
Reduction for principal payments collected and payable		(5,548)		(12,218)
Adjusted balance at end of year	$	51,559	$	154,610

Comparision of fair values of the Fireside receivables and the related secured debt

	December 31, 2012				December 31, 2011
	Contractual		Fair		Contractual		Fair
	Balance		Value		Balance		Value
	(In thousands)
Fireside receivables portfolio	$	60,804	$	59,668	$	172,167	$	160,253
Debt secured by Fireside receivables portfolio		41,365		57,107		162,812		166,828

Estimated fair values of financial assets and liabilities

	As of December 31, 2012
Financial Instrument	(In thousands)
	Carrying		Fair Value Measurements Using:
	Value		Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	12,966	$	12,966	$	–	$	–	$	12,966
Restricted cash and equivalents		104,445		104,445		–		–		104,445
Finance receivables, net		744,749		–		–		740,511		740,511
Finance receivables measured at fair value		59,668		–		–		59,668		59,668
Residual interest in securitizations		4,824		–		–		4,824		4,824
Accrued interest receivable		10,411		–		–		10,411		10,411
Liabilities:
Warrant derivative liability	$	355	$	–	$	–	$	355	$	355
Warehouse lines of credit		21,731		–		–		21,731		21,731
Accrued interest payable		2,795		–		–		2,795		2,795
Residual interest financing		13,773		–		–		13,773		13,773
Securitization trust debt		792,497		–		–		803,290		803,290
Debt secured by receivables measured at fair value		57,107		–		–		57,107		57,107
Senior secured debt		50,135		–		–		50,135		50,135
Subordinated renewable notes		23,281		–		–		23,281		23,281

	As of December 31, 2011
Financial Instrument	(In thousands)
	Carrying		Fair Value Measurements Using:
	Value		Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	10,094	$	10,094	$	–	$	–	$	10,094
Restricted cash and equivalents		159,228		159,228		–		–		159,228
Finance receivables, net		506,279		–		–		506,647		506,647
Finance receivables measured at fair value		160,253		–		–		160,253		160,253
Residual interest in securitizations		4,414		–		–		4,414		4,414
Accrued interest receivable		6,432		–		–		6,432		6,432
Liabilities:
Warrant derivative liability	$	967	$	–	$	–	$	967	$	967
Warehouse lines of credit		25,393		–		–		25,393		25,393
Accrued interest payable		6,892		–		–		6,892		6,892
Residual interest financing		21,884		–		–		21,884		21,884
Securitization trust debt		583,065		–		–		594,224		594,224
Debt secured by receivables measured at fair value		166,828		–		–		166,828		166,828
Senior secured debt		58,344		–		–		58,344		58,344
Subordinated renewable notes		20,750		–		–		20,750		20,750