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3. Finance Receivables
 12 Months Ended
Dec. 31, 2014
Finance Receivables  
Finance Receivables

Our portfolio of finance receivables consists of small-balance homogeneous contracts comprising a single segment and class that is collectively evaluated for impairment on a portfolio basis according to delinquency status. Our contract purchase guidelines are designed to produce a homogenous portfolio. We report delinquency on a contractual basis. Once a contract becomes greater than 90 days delinquent, we do not recognize additional interest income until the obligor under the contract makes sufficient payments to be less than 90 days delinquent. Any payments received on a contract that is greater than 90 days delinquent are first applied to accrued interest and then to principal reduction.

 

The following table presents the components of finance receivables, net of unearned interest:

 

  December 31, 
   2014   2013 
  (In thousands) 
Finance receivables          
Automobile finance receivables, net of unearned interest  $1,612,246   $1,182,950 
Less: Unearned acquisition fees and discounts   (16,290)   (27,887)
Finance receivables  $1,595,956   $1,155,063 

 

We consider an automobile contract delinquent when an obligor fails to make at least 90% of a contractually due payment by the following due date, which date may have been extended within limits specified in the servicing agreements. The period of delinquency is based on the number of days payments are contractually past due, as extended where applicable. Automobile contracts less than 31 days delinquent are not included. In certain circumstances we will grant obligors one-month payment extensions to assist them with temporary cash flow problems. The only modification of terms is to advance the obligor’s next due date by one month and extend the maturity date of the receivable by one month. In certain limited cases, a two-month extension may be granted. There are no other concessions such as a reduction in interest rate, forgiveness of principal or of accrued interest. Accordingly, we consider such extensions to be insignificant delays in payments rather than troubled debt restructurings. The following table summarizes the delinquency status of finance receivables as of December 31, 2014 and 2013:

 

   December 31, 
   2014   2013 
   (In thousands) 
Delinquency Status          
Current  $1,523,020   $1,125,926 
31 - 60 days  42,730    21,421 
61 - 90 days  23,300    24,663 
91 + days  23,196    10,940 
   $1,612,246   $1,182,950 

 

Finance receivables totaling $23.2 million and $10.9 million at December 31, 2014 and 2013, respectively, have been placed on non-accrual status as a result of their delinquency status.

 

The following table presents a summary of the activity for the allowance for finance credit losses, for the years ended December 31, 2014, 2013 and 2012:

 

   December 31, 
   2014   2013   2012 
   (In thousands) 
Balance at beginning of year  $39,626   $19,594   $10,351 
Provision for credit losses  108,228   76,869    33,495 
Charge-offs  (109,914)  (69,455)   (37,638)
Recoveries  23,520   12,618    13,386 
Balance at end of year  $61,460   $39,626   $19,594 

 

Excluded from finance receivables are contracts that were previously classified as finance receivables but were reclassified as other assets because we have repossessed the vehicle securing the Contract. The following table presents a summary of such repossessed inventory together with the allowance for losses on repossessed inventory:

 

   December 31, 
   2014   2013 
   (In thousands) 
Gross balance of repossessions in inventory  $28,234   $24,743 
Allowance for losses on repossessed inventory  (17,829)   (14,779)
Net repossessed inventory included in other assets  $10,405   $9,964