Finance Receivables

9 Months Ended

Sep. 30, 2022

Finance receivables at fair value: The components of installment finance receivables at fair value as of September 30, 2022 and December 31, 2021 were as follows (in thousands):


	September 30, 2022		December 31, 2021
Unpaid principal balance of finance receivables - accrual	$	368,775	$	307,059
Unpaid principal balance of finance receivables - non-accrual	33,796		25,185
Unpaid principal balance of finance receivables	$	402,571	$	332,244

Finance receivables at fair value - accrual	$	437,573	$	369,576
Finance receivables at fair value - non-accrual	5,206		3,677
Finance receivables at fair value, excluding accrued interest and fees receivable	442,779		373,253
Accrued interest and fees receivable	15,286		10,637
Finance receivables at fair value	$	458,065	$	383,890

Difference between unpaid principal balance and fair value	$	40,208	$	41,009

The Company’s policy is to discontinue and reverse the accrual of interest income on installment finances receivables at the earlier of 60 days past due on a recency basis or 90 days past due on a contractual basis. As of September 30, 2022, the

aggregate unpaid principal balance and fair value of installment finance receivables 90 days or more past due was $14.0 million and $2.2 million, respectively. As of December 31, 2021, the aggregate unpaid principal balance and fair value of installment finance receivables 90 days or more past due was $10.5 million and $1.5 million, respectively.

Changes in the fair value of installment finance receivables at fair value for the three and nine months ended September 30, 2022 and 2021 were as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Balance at the beginning of the period	$	450,703	$	296,381	$	383,890	$	289,166
Originations of principal	185,092		155,055		550,483		401,373
Repayments of principal and recoveries	(109,519)		(98,202)		(318,677)		(303,305)
Accrued interest and fees receivable	2,390		(180)		4,649		1,332
Charge-offs, net (1)	(67,709)		(24,891)		(161,479)		(62,046)
Adjustment to fair value	—		—		—		(1,817)
Net change in fair value (1)	(2,892)		5,951		(801)		9,411
Balance at the end of the period	$	458,065	$	334,114	$	458,065	$	334,114

(1) Included in "Change in fair value of finance receivables" in the consolidated statements of operations.

Finance receivables at amortized cost, net: The components of finance receivables carried at amortized cost as of September 30, 2022 and December 31, 2021 were as follows (in thousands):


	September 30, 2022		December 31, 2021
Finance receivables	$	5,159	$	5,285
Accrued interest and fees	12		24
Unearned annual fee income	(81)		(286)
Allowance for credit losses	(1,232)		(803)
Finance receivables at amortized cost, net	$	3,858	$	4,220

Changes in the allowance for credit losses on finance receivables for the three and nine months ended September 30, 2022 and 2021 were as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Beginning balance	$	1,045	$	11	$	803	$	55,031
Effects of adopting fair value option	—		—		—		(55,031)
Provisions for credit losses on finance receivables	1,017		143		2,043		181
Finance receivables charged off	(831)		(8)		(1,615)		(35)
Recoveries of charge-offs	1		—		1		—
Ending balance	$	1,232	$	146	$	1,232	$	146

The following is an assessment of the credit quality of finance receivables at amortized cost and presents the recency and contractual delinquency of the finance receivable portfolio as of September 30, 2022 and December 31, 2021 (in thousands):


	September 30, 2022				December 31, 2021
	Recency delinquency		Contractual delinquency		Recency delinquency		Contractual delinquency
Current	$	3,518	$	3,399	$	5,016	$	4,993
Delinquency
30-59 days	290		302		152		171
60-89 days	227		285		102		104
90+ days	1,124		1,173		15		17
Total delinquency	1,641		1,760		269		292
Finance receivables	$	5,159	$	5,159	$	5,285	$	5,285

In accordance with the Company’s income recognition policy, finance receivables in non-accrual status as of September 30, 2022 and December 31, 2021 were $1.4 million and $0.1 million, respectively.