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Note C - Finance Receivables | 6 Months Ended
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Oct. 31, 2014
Receivables [Abstract] |
Financing Receivables [Text Block] | C – Finance Receivables The Company originates installment sale contracts from the sale of used vehicles at its dealerships. These installment sale contracts typically include interest rates ranging from 11% to 19% per annum, are collateralized by the vehicle sold and typically provide for payments over periods ranging from 18 to 36 months. The weighted average interest rate for the portfolio was approximately 14.9% at October 31, 2014. The Company’s finance receivables are aggregated as one class of loans, which is sub-prime consumer automobile contracts. The level of risks inherent in the Company’s financing receivables is managed as one homogeneous pool. The components of finance receivables are as follows:
(In thousands) |  | October 31, 2014 |  |  | April 30, 2014 |
Gross contract amount |  | $ | 467,526 |  |  | $ | 432,327 |
Less unearned finance charges |  |  | (56,026 | ) |  |  | (52,995 | )
Principal balance |  |  | 411,500 |  |  |  | 379,332 |
Less allowance for credit losses |  |  | (92,460 | ) |  |  | (86,033 | )
Finance receivables, net |  | $ | 319,040 |  |  | $ | 293,299 |
Changes in the finance receivables, net are as follows:
|  | Six Months Ended October 31, |
(In thousands) |  | 2014 |  |  | 2013 |
Balance at beginning of period |  | $ | 293,299 |  |  | $ | 288,049 |
Finance receivable originations |  |  | 222,024 |  |  |  | 203,688 |
Finance receivable collections |  |  | (111,000 | ) |  |  | (102,986 | )
Provision for credit losses |  |  | (59,247 | ) |  |  | (54,826 | )
Losses on claims for payment protection plan |  |  | (4,764 | ) |  |  | (4,060 | )
Inventory acquired in repossession and payment protection plan claims |  |  | (21,272 | ) |  |  | (21,765 | )
Balance at end of period |  | $ | 319,040 |  |  | $ | 308,100 |
Changes in the finance receivables allowance for credit losses are as follows:
|  | Six Months Ended October 31, |
(In thousands) |  | 2014 |  |  | 2013 |
Balance at beginning of period |  | $ | 86,033 |  |  | $ | 75,345 |
Provision for credit losses |  |  | 59,247 |  |  |  | 54,826 |
Charge-offs, net of recovered collateral |  |  | (52,820 | ) |  |  | (49,472 | )
Balance at end of period |  | $ | 92,460 |  |  | $ | 80,699 |
The factors which influenced management’s judgment in determining the amount of the additions to the allowance charged to provision for credit losses are described below: The level of actual charge-offs, net of recovered collateral, is the most important factor in determining the charges to the provision for credit losses. This is due to the fact that once a contract becomes delinquent the account is either made current by the customer, the vehicle is repossessed or the account is written off if the collateral cannot be recovered. Net charge-offs as a percentage of average finance receivables increased to 13.4% for the six months ended October 31, 2014 compared to 13.1% for the same period in the prior year. The increase in net charge-offs for the first six months of fiscal 2015 resulted primarily from the increased severity of losses resulting from lower wholesale values at repossession. The increase in the provision is primarily the result of the increase in our provision percentage applied to the growth in finance receivables, net compared to the prior year percentage. Collections and delinquency levels can have a significant effect on additions to the allowance and are reviewed frequently. Collections as a percentage of average finance receivables were 28.2% for the six months ended October 31, 2014 compared to 27.3% for the prior year period. The increase in collections as a percentage of average finance receivables was primarily due to lower delinquencies and lower contract modifications, partially offset by the slightly longer overall contract term as compared to the first six months of the prior year. Delinquencies greater than 30 days were 4.4% for October 31, 2014 and 4.7% at October 31, 2013. Macro-economic factors, the competitive environment, and more importantly, proper execution of operational policies and procedures can have a significant effect on additions to the allowance charged to the provision. Higher unemployment levels, higher gasoline prices and higher prices for staple items can potentially have a significant effect. While the decreasing gas prices provided some relief to our customers during the second quarter of fiscal 2015, we believe our customers continue to be under significant pressure due to the persistent difficult macro-economic environment for the Company’s customer base. We expect these conditions to continue in the near to mid-term future. The Company continues to focus on operational improvements within the collections area such as credit reporting for customers and implementation of GPS units on vehicles sold. Credit quality information for finance receivables is as follows:
(Dollars in thousands) |  | October 31, 2014 |  |  | April 30, 2014 |  |  | October 31, 2013 |
|  | Principal Balance |  |  | Percent of Portfolio |  |  | Principal Balance |  |  | Percent of Portfolio |  |  | Principal Balance |  |  | Percent of Portfolio |
Current |  | $ | 341,555 |  |  |  | 83.00 | % |  | $ | 300,478 |  |  |  | 79.21 | % |  | $ | 313,006 |  |  |  | 80.50 | %
3 - 29 days past due |  |  | 51,990 |  |  |  | 12.63 | % |  |  | 62,108 |  |  |  | 16.38 | % |  |  | 57,429 |  |  |  | 14.77 | %
30 - 60 days past due |  |  | 12,002 |  |  |  | 2.92 | % |  |  | 10,926 |  |  |  | 2.88 | % |  |  | 12,008 |  |  |  | 3.09 | %
61 - 90 days past due |  |  | 3,986 |  |  |  | 0.97 | % |  |  | 4,665 |  |  |  | 1.23 | % |  |  | 4,429 |  |  |  | 1.14 | %
> 90 days past due |  |  | 1,967 |  |  |  | 0.48 | % |  |  | 1,155 |  |  |  | 0.30 | % |  |  | 1,927 |  |  |  | 0.50 | %
Total |  | $ | 411,500 |  |  |  | 100.00 | % |  | $ | 379,332 |  |  |  | 100.00 | % |  | $ | 388,799 |  |  |  | 100.00 | %
Accounts one and two days past due are considered current for this analysis, due to the varying payment dates and variation in the day of the week at each period end. Delinquencies may vary from period to period based on the average age of the portfolio, seasonality within the calendar year, the day of the week and overall economic factors. The above categories are consistent with internal operational measures used by the Company to monitor credit results. The Friday end date for the quarter ended October 31, 2014 contributed to the improvement in the aging of the portfolio, along with the improved collections. Substantially all of the Company’s automobile contracts involve contracts made to individuals with impaired or limited credit histories, or higher debt-to-income ratios than permitted by traditional lenders. Contracts made with buyers who are restricted in their ability to obtain financing from traditional lenders generally entail a higher risk of delinquency, default and repossession, and higher losses than contracts made with buyers with better credit. The Company monitors contract term length, down payment percentages, and collections for credit quality indicators.
|  | Six Months Ended October 31, |
|  | 2014 |  |  | 2013 |
Principal collected as a percent of average finance receivables |  |  | 28.2 | % |  |  | 27.3 | %
Average down-payment percentage |  |  | 6.8 | % |  |  | 6.4 | %
Average originating contract term (in months) |  |  | 27.4 |  |  |  | 27.5 |
|  | October 31, 2014 |  |  | October 31, 2013 |
Portfolio weighted average contract term, including modifications (in months) |  |  | 29.6 |  |  |  | 29.5 |
The increase in the principal collected as a percent of average finance receivables was primarily due to lower delinquencies and lower contract modifications, partially offset by the slightly longer overall contract term as compared to the first six months of the prior year. A lower average selling price and higher down payment percentages contributed to the decrease in average originating contract term compared to the prior year quarter. The increases in the portfolio weighted average contract term are primarily related to efforts to keep payments affordable, for competitive reasons and to continue to work more with our customers when they experience financial difficulties. In order to remain competitive term lengths may continue to increase.

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- Definition The entire disclosure for financing receivables. Examples of financing receivables include, but are not limited to, loans, trade accounts receivables, notes receivable, credit cards, and receivables relating to a lessor's right(s) to payment(s) from a lease other than an operating lease that is recognized as assets. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 55 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=32702940&loc=SL6953791-111525 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35738203&loc=d3e4975-111524 + Details
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