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Finance Receivables, net

9 Months Ended

Sep. 30, 2025

(2) Finance Receivables, net

Our portfolio of finance receivables, net 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. For key terms such as interest rate, length of contract, monthly payment and amount financed, there is relatively little variation from the average for the 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.

In January 2018 the Company adopted the fair value method of accounting for finance receivables, net acquired after 2017. Finance receivables, net measured at fair value are recorded separately on the Company’s Balance Sheet and are excluded from all tables in this footnote.

The following table presents the components of Finance Receivables, net of allowance for finance credit losses:


	September 30,		December 31,
	2025		2024
	(In thousands)
Finance receivables	$	977	$	5,420
Less: Allowance for finance credit losses		–		(433	)
Finance receivables, net	$	977	$	4,987

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 reported as delinquent. In certain circumstances we will grant obligors one-month payment extensions. 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. The following table summarizes the delinquency status of finance receivables as of September 30, 2025, and December 31, 2024:


	September 30,		December 31,
	2025		2024
Delinquency Status	(In thousands)
Current	$	556	$	2,994
31-60 days		154		1,184
61-90 days		227		971
91 + days		40		271
	$	977	$	5,420

Finance receivables totaling $40,000 and $271,000 at September 30, 2025, and December 31, 2024, respectively, have been placed on non-accrual status as a result of their delinquency status.

Allowance for Credit Losses – Finance Receivables

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of finance receivables to present the net amount expected to be collected. Charge offs are deducted from the allowance when management believes that collectability is unlikely.

Management estimates the allowance using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. We believe our historical credit loss experience provides the best basis for the estimation of expected credit losses. Consequently, we use historical loss experience for older receivables, aggregated into vintage pools based on their calendar quarter of origination, to forecast expected losses for less seasoned quarterly vintage pools.

We measure the weighted average monthly incremental change in cumulative net losses for the vintage pools in the relevant historical period. For the pools in the relevant historical period, we consider each pool’s performance from its inception through the end of the current period. We then apply the results of the historical analysis to less seasoned vintage pools beginning with each vintage pool’s most recent actual cumulative net loss experience and extrapolating from that point based on the historical data. We believe the pattern and magnitude of losses on older vintages allows us to establish a reasonable and supportable forecast of less seasoned vintages.

The following table presents a summary of the activity for the allowance for finance credit losses for the three-month and nine-month periods ended September 30, 2025, and 2024:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2025			2024			2025			2024
	(In thousands)						(In thousands)
Balance at beginning of period	$	145		$	684		$	433		$	2,869
Provision for credit losses on finance receivables		(712	)		(994	)		(2,472	)		(4,579	)
Charge-offs		(120	)		(544	)		(584	)		(1,976	)
Recoveries		687			1,340			2,623			4,172
Balance at end of period	$	–		$	486		$	–		$	486