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FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES | 9 Months Ended
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Dec. 31, 2020
Receivables [Abstract] |
FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES | FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES The following is a summary of gross loans receivable by Customer Tenure as of:
Customer Tenure | December 31, 2020 |  |  |  |
0 to 5 months | $ | 109,146,394 |  |  |  |  |
6 to 17 months | 140,042,981 |  |  |  |  |
18 to 35 months | 189,205,533 |  |  |  |  |
36 to 59 months | 148,244,918 |  |  |  |  |
60+ months | 677,647,591 |  |  |  |  |
Tax advance loans | 242,898 |  |  |  |  |
Total gross loans | $ | 1,264,530,315 |  |  |  |  |
During the first quarter of fiscal 2021, we adopted ASU 2016-13, which replaces the incurred loss methodology for determining our provision for credit losses and allowance for credit losses with an expected loss methodology that is referred to as the CECL model, using the modified retrospective approach. Upon adoption, the total allowance for credit losses increased by $28.6 million, with no impact to the consolidated statement of operations. Based on the Company’s loan products, the purpose and the term, current payment performance is used to assess the capability of the borrower to repay contractual obligations of the loan agreements as scheduled. Current payment performance is monitored by management on a daily basis. On an as needed basis, qualitative information may be taken into consideration if new information arises related to the customer’s ability to repay the loan. The Company’s payment performance buckets are as follows: current, 30-60 days past due, 61-90 days past due, 91 days or more past due. The following tables provide a breakdown of the Company’s gross loans receivable by current payment performance on a recency basis and year of origination at December 31, 2020:
|  | Term Loans By Origination |  |  |
Loans |  | Up to 1 Year Ago | Between 1 and 2 Years Ago | Between 2 and 3 Years Ago | Between 3 and 4 Years Ago | Between 4 and 5 Years Ago | More than 5 Years Ago |  | Total |  |
Current |  | $ | 1,096,454,268 |  | $ | 53,542,759 |  | $ | 2,329,906 |  | $ | 128,216 |  | $ | 10,211 |  | $ | 3,063 |  |  | $ | 1,152,468,423 |  |  |
30 - 60 days past due |  | 42,220,508 |  | 4,099,955 |  | 272,431 |  | 58,886 |  | 8,142 |  | 168 |  |  | 46,660,090 |  |  |
61 - 90 days past due |  | 23,939,973 |  | 2,640,530 |  | 158,794 |  | 23,586 |  | 1,198 |  | 574 |  |  | 26,764,655 |  |  |
91 or more days past due |  | 31,674,388 |  | 6,339,220 |  | 325,237 |  | 46,724 |  | 6,639 |  | 2,041 |  |  | 38,394,249 |  |  |
Total |  | $ | 1,194,289,137 |  | $ | 66,622,464 |  | $ | 3,086,368 |  | $ | 257,412 |  | $ | 26,190 |  | $ | 5,846 |  |  | $ | 1,264,287,417 |  |  |
|  | Term Loans By Origination |  |  |
Tax advance loans |  | Up to 1 Year Ago | Between 1 and 2 Years Ago | Between 2 and 3 Years Ago | Between 3 and 4 Years Ago | Between 4 and 5 Years Ago | More than 5 Years Ago |  | Total |  |
Current |  | $ | 7,920 |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  |  | 7,920 |  |  |
30 - 60 days past due |  | 9,305 |  | — |  | — |  | — |  | — |  | — |  |  | 9,305 |  |  |
61 - 90 days past due |  | 11,647 |  | — |  | — |  | — |  | — |  | — |  |  | 11,647 |  |  |
91 or more days past due |  | 211,779 |  | 2,247 |  | — |  | — |  | — |  | — |  |  | 214,026 |  |  |
Total |  | $ | 240,651 |  | $ | 2,247 |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  |  | $ | 242,898 |  |  |
Total gross loans |  |  |  |  |  |  |  |  | $ | 1,264,530,315 |  |  |
The following tables provide a breakdown of the Company’s gross loans receivable by current payment performance on a contractual basis and year of origination at December 31, 2020:
|  | Term Loans By Origination |  |  |
Loans |  | Up to 1 Year Ago | Between 1 and 2 Years Ago | Between 2 and 3 Years Ago | Between 3 and 4 Years Ago | Between 4 and 5 Years Ago | More than 5 Years Ago |  | Total |  |
Current |  | $ | 1,082,056,393 |  | $ | 48,598,283 |  | $ | 1,885,402 |  | $ | 74,695 |  | $ | 270 |  | $ | 831 |  |  | $ | 1,132,615,874 |  |  |
30 - 60 days past due |  | 46,120,163 |  | 2,687,437 |  | 146,140 |  | 15,455 |  | — |  | — |  |  | 48,969,195 |  |  |
61 - 90 days past due |  | 27,167,688 |  | 2,234,188 |  | 81,559 |  | 945 |  | — |  | — |  |  | 29,484,380 |  |  |
91 or more days past due |  | 38,944,893 |  | 13,102,556 |  | 973,268 |  | 166,317 |  | 25,919 |  | 5,015 |  |  | 53,217,968 |  |  |
Total |  | $ | 1,194,289,137 |  | $ | 66,622,464 |  | $ | 3,086,369 |  | $ | 257,412 |  | $ | 26,189 |  | $ | 5,846 |  |  | $ | 1,264,287,417 |  |  |
|  | Term Loans By Origination |  |  |
Tax advance loans |  | Up to 1 Year Ago | Between 1 and 2 Years Ago | Between 2 and 3 Years Ago | Between 3 and 4 Years Ago | Between 4 and 5 Years Ago | More than 5 Years Ago |  | Total |  |
Current |  | $ | 63 |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  |  | $ | 63 |  |  |
30 - 60 days past due |  | 50 |  | — |  | — |  | — |  | — |  | — |  |  | 50 |  |  |
61 - 90 days past due |  | 2,744 |  | — |  | — |  | — |  | — |  | — |  |  | 2,744 |  |  |
91 or more days past due |  | 237,794 |  | 2,247 |  | — |  | — |  | — |  | — |  |  | 240,041 |  |  |
Total |  | $ | 240,651 |  | $ | 2,247 |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  |  | $ | 242,898 |  |  |
Total gross loans |  |  |  |  |  |  |  |  | $ | 1,264,530,315 |  |  |
The allowance for credit losses is applied to amortized cost, which is defined as the amount at which a financing receivable is originated, and net of deferred fees and costs, collection of cash, and charge-offs. Amortized cost also includes interest earned but not collected. Credit Risk is inherent in the business of extending loans to borrowers and is continuously monitored by management and reflected within the allowance for credit losses for loans. The allowance for credit losses is an estimate of expected losses inherent within the Company’s gross loans receivable portfolio. In estimating the allowance for credit losses, loans with similar risk characteristics are aggregated into pools and collectively assessed. The Company’s loan products have generally the same terms therefore the Company looked to borrower characteristics as a way to disaggregate loans into pools sharing similar risks. In determining the allowance for credit losses, the Company examined four borrower risk metrics as noted below. 1.Borrower type 2.Active months 3.Prior loan performance 4.Customer Tenure To determine how well each metric predicts default risk the Company uses loss rate data over an observation period of twelve months at the loan level. The information value was then calculated for each metric. From this analysis management determined the metric that had the strongest predictor of default risk was Customer Tenure. The Customer Tenure buckets used in the allowance for credit loss calculation are: 1.0 to 5 months 2.6 to 17 months 3.18 to 35 months 4.36 to 59 months 5.60+ months Management will continue to monitor this credit metric on a quarterly basis. Management estimates an allowance for each Customer Tenure bucket by performing a historical migration analysis of loans in that bucket for the twelve most recent historical twelve-month migration periods, adjusted for seasonality. All loans that are greater than 90 days past due on a recency basis and not written off as of the reporting date are reserved for at 100% of the outstanding balance, net of a calculated Rehab Rate. Management considers whether current credit conditions might suggest a change is needed to the allowance for credit losses by monitoring trends in 60-day delinquencies, FICO scores and average loan size as compared to metrics in the historical migration period. Due to the short term nature of the loan portfolio, forecasted changes in macroeconomic variables such as unemployment do not have a significant impact on loans outstanding at the end of a particular reporting period. Therefore, management develops a reasonable and supportable forecast of losses by comparing the most recent 6-month loss curves as compared to historical loss curves to see if there are significant changes in borrower behavior that may indicate the historical migration rates should be adjusted. If an adjustment is made as a result of the forecast, then the Company has elected to immediately revert back to historical experience past the forecast period. The following table presents a roll forward of the allowance for credit losses on our gross loans receivable for the three and nine months ended December 31, 2020 and 2019.
| Three months ended December 31, |  | Nine months ended December 31,
| 2020 |  | 2019 |  | 2020 |  | 2019
Beginning balance | 109,601,359 |  |  | $ | 101,469,313 |  |  | $ | 96,487,856 |  |  | $ | 81,519,624 |
Impact of ASC 326 adoption | — |  |  | — |  |  | 28,628,368 |  |  | — |
Provision for credit losses | 28,857,443 |  |  | 55,219,470 |  |  | 80,608,470 |  |  | 149,478,577 |
Charge-offs | (29,239,780) |  |  | (46,850,430) |  |  | (106,865,225) |  |  | (128,978,851) |
Recoveries | 4,248,339 |  |  | 3,231,288 |  |  | 14,607,892 |  |  | 11,050,291 |
Net charge-offs | (24,991,441) |  |  | (43,619,142) |  |  | (92,257,333) |  |  | (117,928,560) |
Ending Balance | $ | 113,467,361 |  |  | $ | 113,069,641 |  |  | $ | 113,467,361 |  |  | $ | 113,069,641 |
The following table is an aging analysis on a recency basis at amortized cost of the Company’s gross loans receivable at December 31, 2020:
|  |  | Days Past Due - Recency Basis |  |  |
Customer Tenure |  | Current | 30 - 60 | 61 - 90 | Over 90 | Total Past Due | Total Loans |
0 to 5 months |  | $ | 91,287,471 |  | $ | 6,542,056 |  | $ | 4,492,845 |  | $ | 6,824,023 |  | $ | 17,858,924 |  | $ | 109,146,395 |  |
6 to 17 months |  | 118,906,270 |  | 7,443,204 |  | 5,183,990 |  | 8,509,517 |  | 21,136,711 |  | 140,042,981 |  |
18 to 35 months |  | 171,201,659 |  | 7,495,044 |  | 4,324,184 |  | 6,184,645 |  | 18,003,873 |  | 189,205,532 |  |
36 to 59 months |  | 136,570,735 |  | 5,156,489 |  | 2,804,847 |  | 3,712,847 |  | 11,674,183 |  | 148,244,918 |  |
60+ months |  | 634,502,288 |  | 20,023,296 |  | 9,958,789 |  | 13,163,218 |  | 43,145,303 |  | 677,647,591 |  |
Tax advance loans |  | 7,920 |  | 9,305 |  | 11,647 |  | 214,026 |  | $ | 234,978 |  | 242,898 |  |
Total gross loans |  | 1,152,476,343 |  | 46,669,394 |  | 26,776,302 |  | 38,608,276 |  | 112,053,972 |  | 1,264,530,315 |  |
Unearned interest, insurance and fees |  | (305,365,570) |  | (12,365,743) |  | (7,094,775) |  | (10,229,831) |  | (29,690,349) |  | (335,055,919) |  |
Total net loans |  | $ | 847,110,773 |  | $ | 34,303,651 |  | $ | 19,681,527 |  | $ | 28,378,445 |  | $ | 82,363,623 |  | $ | 929,474,396 |  |
Percentage of period-end gross loans receivable |  |  | 3.7% | 2.1% | 3.1% | 8.9% |  |
|  |  | Days Past Due - Contractual Basis |  |  |
Customer Tenure |  | Current | 30 - 60 | 61 - 90 | Over 90 | Total Past Due | Total Loans |
0 to 5 months |  | $ | 90,177,810 |  | $ | 6,466,041 |  | $ | 4,502,768 |  | $ | 7,999,773 |  | $ | 18,968,582 |  | $ | 109,146,392 |  |
6 to 17 months |  | 116,381,121 |  | 7,566,591 |  | 5,380,327 |  | 10,714,943 |  | 23,661,861 |  | 140,042,982 |  |
18 to 35 months |  | 168,402,428 |  | 7,688,576 |  | 4,805,036 |  | 8,309,493 |  | 20,803,105 |  | 189,205,533 |  |
36 to 59 months |  | 134,268,134 |  | 5,473,173 |  | 3,130,245 |  | 5,373,367 |  | 13,976,785 |  | 148,244,919 |  |
60+ months |  | 623,386,383 |  | 21,774,814 |  | 11,666,004 |  | 20,820,390 |  | 54,261,208 |  | 677,647,591 |  |
Tax advance loans |  | 63 |  | 50 |  | 2,744 |  | 240,041 |  | $ | 242,835 |  | 242,898 |  |
Total gross loans |  | 1,132,615,939 |  | 48,969,245 |  | 29,487,124 |  | 53,458,007 |  | 131,914,376 |  | 1,264,530,315 |  |
Unearned interest, insurance and fees |  | (300,103,263) |  | (12,975,122) |  | (7,813,048) |  | (14,164,486) |  | (34,952,656) |  | (335,055,919) |  |
Total net loans |  | $ | 832,512,676 |  | $ | 35,994,123 |  | $ | 21,674,076 |  | $ | 39,293,521 |  | $ | 96,961,720 |  | $ | 929,474,396 |  |
Percentage of period-end gross loans receivable |  |  | 3.9% | 2.3% | 4.2% | 10.4 | % |  |
The Company elected not to record an allowance for credit losses for accrued interest as outlined in ASC 326-20-30-5A. Loans are placed on nonaccrual status when management determines that the full payment of principal and collection of interest according to contractual terms is no longer likely. The accrual of interest is discontinued when a loan is 61 days or more past the contractual due date. When the interest accrual is discontinued, all unpaid accrued interest is reversed against interest income. While a loan is on nonaccrual status, interest revenue is recognized only when a payment is received. Once a loan moves to nonaccrual status, it remains in nonaccrual status until it is paid out, charged off or refinanced. During the three months ended December 31, 2020, the Company reversed a total of $6.4 million of unpaid accrued interest against interest income. During the nine months ended December 31, 2020, the Company reversed a total of $16.2 million of unpaid accrued interest against interest income. The following table presents the amortized cost basis of loans on nonaccrual status as of the beginning of the reporting period and the end of the reporting period and the amortized cost basis of nonaccrual loans without related expected credit loss. It also shows year-to-date interest income recognized on nonaccrual loans:
|  | Nonaccrual Financial Assets
Customer Tenure |  | As of December 31, 2020 | As of March 31, 2020 | Financial Assets 61 Days or More Past Due, Not on Nonaccrual Status | Nonaccrual Financial Assets With No Allowance as of December 31, 2020 | Interest Income Recognized
0 to 5 months |  | $ | 12,725,225 |  | $ | 26,040,593 |  | $ | — |  | $ | — |  | $ | 1,283,886 |
6 to 17 months |  | 16,352,270 |  | 17,466,450 |  | — |  | — |  | 1,617,925 |
18 to 35 months |  | 13,429,551 |  | 13,723,295 |  | — |  | — |  | 1,418,093 |
36 to 59 months |  | 8,794,918 |  | 10,071,288 |  | — |  | — |  | 1,082,178 |
60+ months |  | 33,829,640 |  | 44,293,545 |  | — |  | — |  | 4,822,468 |
Tax advance loans |  | 296,191 |  | 41,573 |  | — |  | — |  |
Unearned interest, insurance and fees |  | (22,635,352) |  | (28,510,140) |  | — |  | — |  |
Total |  | $ | 62,792,443 |  | $ | 83,126,604 |  | $ | — |  | $ | — |  | $ | 10,224,550 |
Under the prior incurred loss methodology, loss contingencies were evaluated as: probable, reasonably possible, or remote. If, at the date of financial statement presentation, information was available that indicated an asset had been impaired and the amount of loss could be reasonably estimated, then an allowance for that loss could be recorded. Recording an allowance for a loss that was considered reasonably possible or remote was not permitted. With the adoption of ASC 326, the Company considers the lifetime potential for losses at the point of origination and records an allowance for that potential, at that point in time, removing the necessity of differentiation between the three loss contingency concepts and impairment. The following disclosures are presented under previously applicable GAAP. The following is a summary of loans individually and collectively evaluated for impairment for the periods indicated:
March 31, 2020 | Loans individually evaluated for impairment (impaired loans) |  | Loans collectively evaluated for impairment |  | Total
Gross loans in bankruptcy, excluding contractually delinquent | $ | 5,165,752 |  |  | — |  |  | 5,165,752 |
Gross loans contractually delinquent | 70,719,727 |  |  | — |  |  | 70,719,727 |
Loans not contractually delinquent and not in bankruptcy | — |  |  | 1,133,985,887 |  |  | 1,133,985,887 |
Gross loan balance | 75,885,479 |  |  | 1,133,985,887 |  |  | 1,209,871,366 |
Unearned interest and fees | (16,848,762) |  |  | (292,131,962) |  |  | (308,980,724) |
Net loans | 59,036,717 |  |  | 841,853,925 |  |  | 900,890,642 |
Allowance for credit losses | (54,090,509) |  |  | (42,397,347) |  |  | (96,487,856) |
Loans, net of allowance for credit losses | $ | 4,946,208 |  |  | 799,456,578 |  |  | 804,402,786 |
December 31, 2019 | Loans individually evaluated for impairment (impaired loans) |  | Loans collectively evaluated for impairment |  | Total
Gross loans in bankruptcy, excluding contractually delinquent | $ | 5,066,019 |  |  | — |  |  | 5,066,019 |
Gross loans contractually delinquent | 80,765,569 |  |  | — |  |  | 80,765,569 |
Loans not contractually delinquent and not in bankruptcy | — |  |  | 1,286,936,992 |  |  | 1,286,936,992 |
Gross loan balance | 85,831,588 |  |  | 1,286,936,992 |  |  | 1,372,768,580 |
Unearned interest and fees | (19,140,361) |  |  | (346,893,706) |  |  | (366,034,067) |
Net loans | 66,691,227 |  |  | 940,043,286 |  |  | 1,006,734,513 |
Allowance for losses | (61,840,514) |  |  | (51,229,127) |  |  | (113,069,641) |
Loans, net of allowance for losses | $ | 4,850,713 |  |  | 888,814,159 |  |  | 893,664,872 |
The average net balance of impaired loans was $56.7 million for the nine-month period ended December 31, 2019. It is not practical to compute the amount of interest earned on impaired loans. The following is an assessment of the credit quality of loans for the periods indicated:
|  |  | March 31, 2020 |  | December 31, 2019
Credit risk |  |  |  |  |
Consumer loans- non-bankrupt accounts |  |  | $ | 1,203,552,152 |  |  | $ | 1,366,079,543 |
Consumer loans- bankrupt accounts |  |  | 6,319,214 |  |  | 6,689,037 |
Total gross loans |  |  | $ | 1,209,871,366 |  |  | $ | 1,372,768,580 |
Consumer credit exposure |  |  |  |  |
Credit risk profile based on payment activity, performing |  |  | $ | 1,104,130,714 |  |  | $ | 1,255,471,072 |
Contractual non-performing, 61 or more days delinquent (1) |  |  | 105,740,652 |  |  | 117,297,508 |
Total gross loans |  |  | $ | 1,209,871,366 |  |  | $ | 1,372,768,580 |
Credit risk profile based on customer type |  |  |  |  |
New borrower |  |  | $ | 124,800,193 |  |  | $ | 155,284,022 |
Former borrower |  |  | 127,108,125 |  |  | 161,575,535 |
Refinance |  |  | 935,448,882 |  |  | 1,031,380,059 |
Delinquent refinance |  |  | 22,514,166 |  |  | 24,528,964 |
Total gross loans |  |  | $ | 1,209,871,366 |  |  | $ | 1,372,768,580 |
_______________________________________________________ (1) Loans in non-accrual status. The following is a summary of the past due receivables as of:
|  |  | March 31, 2020 |  | December 31, 2019
Contractual basis: |  |  |  |  |
30-60 days past due |  |  | $ | 49,137,102 |  |  | $ | 55,172,208 |
61-90 days past due |  |  | 35,020,925 |  |  | 36,531,939 |
91 days or more past due |  |  | 70,719,727 |  |  | 80,765,569 |
Total |  |  | $ | 154,877,754 |  |  | $ | 172,469,716 |
Percentage of period-end gross loans receivable |  |  | 12.8 | % |  | 12.6 | %
Recency basis: |  |  |  |  |
30-60 days past due |  |  | $ | 48,206,910 |  |  | $ | 54,090,162 |
61-90 days past due |  |  | 28,450,942 |  |  | 33,295,364 |
91 days or more past due |  |  | 50,669,837 |  |  | 62,565,314 |
Total |  |  | $ | 127,327,689 |  |  | $ | 149,950,840 |
Percentage of period-end gross loans receivable |  |  | 10.5 | % |  | 10.9 | %

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