Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2018shares | |
Document and Entity Information | |
Entity Registrant Name | Community Choice Financial Inc. |
Entity Central Index Key | 1,528,061 |
Document Type | 10-Q |
Document Period End Date | Mar. 31, 2018 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Common Stock, Shares Outstanding | 7,990,020 |
Document Fiscal Year Focus | 2,018 |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current Assets | ||
Cash and cash equivalents | $ 85,274 | $ 66,627 |
Restricted cash | 4,420 | 4,585 |
Finance receivables, net of allowance for loan losses of $12,293 and $13,517 | 68,286 | 89,707 |
Card related pre-funding and receivables | 841 | 1,062 |
Other current assets | 13,522 | 15,271 |
Total current assets | 172,343 | 177,252 |
Noncurrent Assets | ||
Finance receivables, net of allowance for loan losses of $2,510 and $2,810 | 3,626 | 4,632 |
Property, leasehold improvements and equipment, net | 24,816 | 26,848 |
Other intangible assets | 802 | 924 |
Security deposits | 2,429 | 2,750 |
Total assets | 204,016 | 212,406 |
Current Liabilities | ||
Accounts payable and accrued liabilities | 31,803 | 39,566 |
Money orders payable | 8,024 | 7,169 |
Accrued interest | 11,942 | 5,145 |
Current portion of capital lease obligation | 160 | 371 |
Current portion of subsidiary notes payable, net of deferred issuance costs of $1 and $1 | 120 | 118 |
Deferred revenue | 2,535 | 2,535 |
Total current liabilities | 54,584 | 54,904 |
Noncurrent Liabilities | ||
Lease termination payable | 569 | 818 |
Line of credit, net of deferred issuance costs of $4,201 and $1,871 | 42,799 | 45,129 |
Subsidiary notes payable, net of deferred issuance costs of $2,207 and $762 | 59,600 | 61,077 |
Senior secured notes, net of deferred issuance costs of $1,365 and $1,664 | 248,425 | 248,126 |
Deferred revenue | 6,887 | 7,520 |
Total liabilities | 412,864 | 417,574 |
Commitments and Contingencies | ||
Stockholders' Equity | ||
Preferred stock, par value $.01 per share, 3,000 shares authorized, no shares issued and outstanding | ||
Common stock, par value $.01 per share, 300,000 authorized shares and 7,990 outstanding shares at March 31, 2018 and December 31, 2017 | 90 | 90 |
Additional paid-in capital | 129,683 | 129,675 |
Retained deficit | (338,571) | (334,883) |
Treasury stock | (50) | (50) |
Total stockholders' deficit | (208,848) | (205,168) |
Total liabilities and stockholders' equity | $ 204,016 | $ 212,406 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Finance receivables, net | ||
Finance receivables current, allowance for loan losses (in dollars) | $ 12,293 | $ 13,517 |
Finance receivables noncurrent, allowance for loan losses (in dollars) | $ 2,510 | $ 2,810 |
Stockholders' equity | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 3,000 | 3,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 300,000 | 300,000 |
Common stock, shares outstanding | 7,990 | 7,990 |
Revolving credit facility | ||
Finance receivables, net | ||
Net of deferred issuance costs, noncurrent liabilities (in dollars) | $ 4,201 | $ 1,871 |
Subsidiary Note payable | ||
Finance receivables, net | ||
Net of deferred issuance costs, current liabilities (in dollars) | 1 | 1 |
Net of deferred issuance costs, noncurrent liabilities (in dollars) | 2,207 | 762 |
Senior secured notes payable | ||
Finance receivables, net | ||
Net of deferred issuance costs, noncurrent liabilities (in dollars) | $ 1,365 | $ 1,664 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues: | ||
Total Revenues | $ 87,651 | $ 85,352 |
Operating expenses: | ||
Salaries | 17,132 | 17,273 |
Provision for loan losses | 22,635 | 19,540 |
Occupancy | 6,343 | 6,629 |
Advertising and marketing | 1,011 | 814 |
Lease termination | 97 | 47 |
Depreciation and amortization | 2,223 | 2,538 |
Other | 11,025 | 11,915 |
Total operating expenses | 60,466 | 58,756 |
Operating gross profit | 27,185 | 26,596 |
Corporate and other expenses: | ||
Corporate expenses | 17,602 | 20,186 |
Lease termination | 1,762 | |
Depreciation and amortization | 1,093 | 1,309 |
Interest expense, net | 12,178 | 11,371 |
Total corporate and other expenses | 30,873 | 34,628 |
Loss from continuing operations, before tax | (3,688) | (8,032) |
Provision for income taxes | 333 | |
Net loss | (3,688) | (8,365) |
Finance receivable fees | ||
Revenues: | ||
Total Revenues | 50,932 | 49,051 |
Credit service fees | ||
Revenues: | ||
Total Revenues | 19,196 | 18,139 |
Check cashing fees | ||
Revenues: | ||
Total Revenues | 11,692 | 12,126 |
Card fees | ||
Revenues: | ||
Total Revenues | 1,948 | 2,007 |
Other | ||
Revenues: | ||
Total Revenues | $ 3,883 | $ 4,029 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Deficit | Total |
Balance at Dec. 31, 2017 | $ 90 | $ (50) | $ 129,675 | $ (334,883) | $ (205,168) |
Balance (in shares) at Dec. 31, 2017 | 7,990,020 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation expense | 8 | 8 | |||
Net loss | (3,688) | (3,688) | |||
Balance at Mar. 31, 2018 | $ 90 | $ (50) | $ 129,683 | $ (338,571) | $ (208,848) |
Balance (in shares) at Mar. 31, 2018 | 7,990,020 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities | ||
Net loss | $ (3,688) | $ (8,365) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Provision for loan losses | 22,635 | 19,540 |
Loss on disposal of assets | 113 | 1,042 |
Depreciation | 3,193 | 3,723 |
Amortization of note discount and deferred debt issuance costs | 908 | 728 |
Amortization of intangibles | 123 | 124 |
Deferred income taxes | 211 | |
Stock-based compensation | 8 | 32 |
Changes in assets and liabilities: | ||
Short-term investments | 500 | |
Card related pre-funding and receivables | 221 | (184) |
Other assets | 2,069 | 6,590 |
Deferred revenue | (633) | (475) |
Accrued interest | 6,797 | 6,793 |
Money orders payable | 855 | (378) |
Lease termination payable | (249) | 1,048 |
Accounts payable and accrued expenses | (7,763) | (8,729) |
Net cash provided by operating activities | 24,589 | 22,200 |
Cash flows from investing activities | ||
Net receivables originated | (208) | (2,721) |
Purchase of leasehold improvements and equipment | (1,274) | (1,001) |
Net cash used in investing activities | (1,482) | (3,722) |
Cash flows from financing activities | ||
Payments on subsidiary note | (30) | (29) |
Payments on capital lease obligations | (211) | (248) |
Net payments on lines of credit | (2,250) | |
Debt issuance costs | (4,384) | |
Net cash used in financing activities | (4,625) | (2,527) |
CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents | 18,482 | 15,951 |
Cash and cash equivalents and restricted cash: | ||
Beginning | 71,212 | 109,348 |
Ending | $ 89,694 | $ 125,299 |
Consolidated Statements of Cas7
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Consolidated Statements of Cash Flows | ||||
Cash and cash equivalents | $ 85,274 | $ 66,627 | $ 121,784 | $ 106,333 |
Restricted cash | 4,420 | 4,585 | 3,515 | 3,015 |
Total cash and cash equivalents and restricted cash | $ 89,694 | $ 71,212 | $ 125,299 | $ 109,348 |
Ownership, Nature of Business,
Ownership, Nature of Business, and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Ownership, Nature of Business, and Significant Accounting Policies | |
Ownership, Nature of Business, and Significant Accounting Policies | Note 1. Ownership, Nature of Business, and Significant Accounting Policies Nature of business: Community Choice Financial Inc. (together with its consolidated subsidiaries, “CCFI” or “the Company”) owned and operated 484 retail locations in 12 states and was licensed to deliver similar financial services over the internet in 30 states as of March 31, 2018. Through its network of retail locations and over the internet, the Company provides customers a variety of financial products and services, including secured and unsecured, short and medium‑term consumer loans, check cashing, prepaid debit cards, and other services that address the specific needs of its individual customers. A summary of the Company’s significant accounting policies follows: Basis of presentation: The accompanying interim unaudited consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10‑Q and accounting principles generally accepted in the United States (“GAAP”) for interim financial information. They do not include all information and footnotes required by GAAP for complete financial statements. Although management believes that the disclosures are adequate to prevent the information from being misleading, the interim unaudited consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2017, included in the Company’s Annual Report on Form 10‑K filed with the Securities & Exchange Commission on April 2, 2018. All adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company’s financial condition, have been included. The results for any interim period are not necessarily indicative of results to be expected for the year ending December 31, 2018. Basis of consolidation: The accompanying consolidated financial statements include the accounts of CCFI. All significant intercompany accounts and transactions have been eliminated in consolidation. Business segments: FASB Accounting Standards Codification (“ASC”) Topic 280 Segment Reporting requires that a public enterprise report a measure of segment profit or loss, certain specific revenue and expense items, segment assets, information about the way operating segments were determined and other items. The Company reports operating segments in accordance with FASB ASC Topic 280. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in determining how to allocate resources and assess performance. The Company operates in two segments: Retail financial services and Internet financial services. Equity method investments: Entities and investments over which the Company exercises significant influence over the activities of the entity but which do not meet the requirements for consolidation are accounted for using the equity method of accounting pursuant to ASC 323, whereby the Company records its share of the underlying income or loss of these entities. Intercompany profit arising from transactions with affiliates is eliminated to the extent of its beneficial interest. Equity in losses of equity method investments is not recognized after the carrying value of an investment, including advances and loans, has been reduced to zero, unless guarantees or other funding obligations exist. On September 30, 2017, the Company entered into a joint venture with a third party to offer insurance products through select retail locations in a certain market. The joint venture will be managed by the third party. Revenue recognition: Transactions include loans, credit service fees, check cashing, bill payment, money transfer, money order sales, and other miscellaneous products and services. The full amount of the check cashing fee is recognized as revenue at the time of the transaction. Fees and direct costs incurred for the origination of loans are deferred and amortized over the loan period using the interest method. The Company acts in an agency capacity regarding bill payment services, money transfers, card products, and money orders offered and sold at its retail locations. The Company records the net amount retained as revenue because the supplier is the primary obligor in the arrangement, the amount earned by the Company is fixed, and the supplier is determined to have the ultimate credit risk. Revenue on loans determined to be troubled debt restructurings are recognized at the impaired loans’ original interest rates until the impaired loans are charged off or paid by the customer. Credit service organization (“CSO”) fees are recognized over the arranged credit service period. Finance receivables: Finance receivables consist of short term and medium‑term consumer loans. Short-term consumer loans can be unsecured or secured with a maturity up to ninety days. Unsecured short-term loan products typically range in principal from $100 to $1,000, with a maturity between fourteen and thirty days, and include a written agreement to defer the presentment of the customer’s personal check or preauthorized debit for the aggregate amount of the advance plus fees. This form of lending is based on applicable laws and regulations, which vary by state. State statutes vary from charging fees of 15% to 20%, to charging interest at 25% per annum plus origination fees. The customers repay the cash advance by making cash payments or allowing a check or preauthorized debit to be presented. Secured consumer loans with a maturity of ninety days or less are included in this category and represented 14.0% and 14.5% of short-term consumer loans at March 31, 2018 and December 31, 2017, respectively. Medium-term consumer loans can be unsecured or secured with a maturity greater than ninety days and up to thirty-six months. Unsecured medium-term products typically range from $100 to $5,000, and are evidenced by a promissory note with a maturity between three and thirty-six months. These consumer loans vary in structure depending upon the applicable laws and regulations where they are offered. The medium-term consumer loans are payable in installments or provide for a line of credit with periodic payments. Secured consumer loans with a maturity greater than ninety days are included in this category and represented 14.0% and 12.6% of medium-term consumer loans at March 31, 2018, and December 31, 2017, respectively. Allowance for loan losses: Provisions for loan losses are charged to income in amounts sufficient to maintain an adequate allowance for loan losses and an adequate accrual for losses related to guaranteed loans processed for third-party lenders under the CSO programs. The factors used in assessing the overall adequacy of the allowance for loan losses, the accrual for losses related to guaranteed loans made by third-party lenders and the resulting provision for loan losses include an evaluation by product, by market based on historical loan loss experience, and delinquency of certain medium-term consumer loans. The Company evaluates various qualitative factors that may or may not affect the computed initial estimate of the allowance for loan losses, by using internal valuation inputs including historical loan loss experience, delinquency, overall portfolio quality, and current economic conditions. For short term unsecured consumer loans, the Company’s policy is to charge off loans when they become past due. The Company’s policy dictates that, where a customer has provided a check or ACH authorization for presentment upon the maturity of a loan, if the customer has not paid off the loan by the due date, the Company will deposit the customer’s check or draft the customer’s bank account for the amount due. If the check or draft is returned as unpaid, all accrued fees and outstanding principal are charged-off as uncollectible. For short term secured loans, the Company’s policy requires that balances be charged off when accounts are either thirty or sixty days past due depending on the product. For medium term secured and unsecured consumer loans that have a term of one year or less, the Company’s policy requires that balances be charged off when accounts are sixty days past due. For medium term secured and unsecured consumer loans that have an initial maturity of greater than one year, the Company’s policy requires that balances be charged off when accounts are ninety-one days past due. In certain markets, the Company reduced interest rates and favorably changed payment terms for medium-term consumer loans to assist borrowers in avoiding default and to mitigate risk of loss. These reduced interest rates and changed payment terms were limited to loans that the Company believed the customer had the ability to pay in the foreseeable future. These loans were accounted for as troubled debt restructurings and represent the only loans considered impaired due to the nature of the Company’s charge-off policy. Recoveries of amounts previously charged off are recorded to the allowance for loan losses or the accrual for third‑party losses in the period in which they are received. Lease termination payable: The Company records a liability in the consolidated balance sheets for the remaining lease obligations with the corresponding lease termination expense for closed retail locations disclosed in the operating expenses section, and closed corporate locations disclosed in the corporate and other expenses section, of the consolidated statements of operations, respectively. Fair value of financial instruments: Financial assets and liabilities measured at fair value are grouped in three levels. The levels prioritize the inputs used to measure the fair value of the assets or liabilities. These levels are: · Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities. · Level 2—Inputs other than quoted prices that are observable for assets and liabilities, either directly or indirectly. These inputs include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are less attractive. · Level 3—Unobservable inputs for assets and liabilities reflecting the reporting entity’s own assumptions. The Company follows the provisions of ASC 820‑10, Fair Value Measurements and Disclosures, which applies to all assets and liabilities that are being measured and reported on a fair value basis. ASC 820‑10 requires a disclosure that establishes a framework for measuring fair value within GAAP and expands the disclosure about fair value measurements. This standard enables a reader of consolidated financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The standard requires that assets and liabilities carried at fair value be classified and disclosed in one of the three categories. In determining the appropriate levels, the Company performed a detailed analysis of the assets and liabilities that are subject to ASC 820-10. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3. The Company’s financial instruments consist primarily of cash and cash equivalents, finance receivables, restricted cash, and lines of credit. For all such instruments, other than senior secured notes and notes payable at March 31, 2018, and December 31, 2017, the carrying amounts in the consolidated financial statements approximate their fair values. Finance receivables are short term in nature and are originated at prevailing market rates and lines of credit bear interest at current market rates. The fair value of finance receivables at March 31, 2018 and December 31, 2017 approximates carrying value and is measured using internal valuation inputs including historical loan loss experience, delinquency, overall portfolio quality, and current economic conditions. The fair value of the Company’s 10.75% senior secured notes due 2019 (the “2019 notes”) and the 12.75% senior secured notes due 2020 (the “2020 notes”) were determined based on market yield on trades of the 2019 notes at the end of the recent reporting period. March 31, 2018 Carrying Amount Fair Value Level Financial assets: Cash and cash equivalents $ 85,274 $ 85,274 1 Restricted cash 4,420 4,420 1 Finance receivables 71,912 71,912 3 Financial liabilities: 10.75% Senior secured notes 237,290 222,103 1 12.75% Senior secured notes 12,500 11,479 2 Subsidiary Note payable 61,928 61,928 2 Line of Credit 47,000 47,000 2 December 31, 2017 Carrying Amount Fair Value Level Financial assets: Cash and cash equivalents $ 66,627 $ 66,627 1 Restricted cash 4,585 4,585 1 Finance receivables 94,339 94,339 3 Financial liabilities: 10.75% Senior secured notes 237,290 212,636 1 12.75% Senior secured notes 12,500 10,841 2 Subsidiary Note payable 61,958 61,958 2 Line of Credit 47,000 47,000 2 Treasury Stock: Treasury stock is reported at cost and consists of one million common shares at March 31, 2018 and December 31, 2017. Recent Accounting Pronouncements: In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The Company adopted ASC 606 as of January 1, 2018 using the modified retrospective method. The adoption of ASC 606 did not impact the Company’s revenue recognition for consumer loan fees as these revenue streams are outside of the scope of ASC 606. Further, the Company has not identified any impacts to its consolidated financial statements that were material as a result of the adoption of ASC 606 for its CSO fees. The Company has not changed the presentation of its consolidated financial statements for assets, liabilities, or revenues from contracts with customers, nor has the Company recognized any cumulative effect adjustment as a result of the adoption of ASC 606. In November 2016, the FASB issued ASU No. 2016-18, “Restricted Cash” . GAAP currently does not include specific guidance to address how to classify and present changes in restricted cash or restricted cash equivalents that occur when there are transfers between cash, cash equivalents, and restricted cash or restricted cash equivalents and when there are direct cash receipts into restricted cash or restricted cash equivalents or direct cash payments made from restricted cash or restricted cash equivalents. The amendments in this update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update do not provide a definition of restricted cash or restricted cash equivalents. For public business entities the amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted the new standard effective in 2018. As a result, the Company no longer reports the changes in restricted cash as an operating activity. Instead, restricted cash is included in the beginning and ending cash and cash equivalents balances on the consolidated statements of cash flows. Subsequent events: The Company has evaluated its subsequent events (events occurring after March 31, 2018) through the issuance date of May 14, 2018. |
Finance Receivables, Credit Qua
Finance Receivables, Credit Quality Information and Allowance for Loan Losses | 3 Months Ended |
Mar. 31, 2018 | |
Finance Receivables, Credit Quality Information and Allowance for Loan Losses | |
Finance Receivables, Credit Quality Information and Allowance for Loan Losses | Note 2. Finance Receivables, Credit Quality Information and Allowance for Loan Losses Finance receivables representing amounts due from customers for advances at March 31, 2018, and December 31, 2017, consisted of the following: March 31, December 31, 2018 2017 Short-term consumer loans $ 52,115 $ 66,465 Medium-term consumer loans 36,860 46,903 Gross receivables $ 88,975 $ 113,368 Unearned advance fees, net of deferred loan origination costs (2,260) (2,702) Finance receivables before allowance for loan losses 86,715 110,666 Allowance for loan losses (14,803) (16,327) Finance receivables, net $ 71,912 $ 94,339 Finance receivables, net Current portion $ 68,286 $ 89,707 Non-current portion 3,626 4,632 Total finance receivables, net $ 71,912 $ 94,339 Changes in the allowance for loan losses by product type for the three months ended March 31, 2018, are as follows: Allowance as Balance Balance Receivables a percentage 1/1/2018 Provision Charge-Offs Recoveries 3/31/2018 3/31/2018 of receivables Short-term consumer loans $ 2,697 $ 8,159 $ (18,424) $ 9,886 $ 2,318 $ 52,115 4.45 % Medium-term consumer loans 13,630 8,397 (11,067) 1,525 12,485 36,860 33.87 % $ 16,327 $ 16,556 $ (29,491) $ 11,411 $ 14,803 $ 88,975 16.64 % The provision for loan losses for the three months ended March 31, 2018, also includes losses from returned items from check cashing of $1,062. The provision for short-term consumer loans of $8,159 is net of debt sales of $412 for the three months ended March 31, 2018. The provision for medium-term consumer loans of $8,397 is net of debt sales of $562 for the three months ended March 31, 2018. The Company evaluates all short-term and medium-term consumer loans collectively for impairment, except for individually evaluating medium-term loans that have been modified and classified as troubled debt restructurings. In certain markets, the Company reduced interest rates and favorably changed payment terms for medium-term consumer loans to assist borrowers in avoiding default and to mitigate risk of loss. The provision and subsequent charge off related to these loans totaled $20 and is included in the provision for medium-term consumer loans for the three months ended March 31, 2018. For these loans evaluated for impairment, there were $54 of payment defaults during the three months ended March 31, 2018. The troubled debt restructurings during the three months ended March 31, 2018 are subject to an allowance of $6 with a net carrying value of $14 at March 31, 2018. Changes in the allowance for loan losses by product type for the three months ended March 31, 2017, are as follows: Allowance as Balance Balance Receivables a percentage 1/1/2017 Provision Charge-Offs Recoveries 3/31/2017 3/31/2017 of receivables Short-term consumer loans $ 2,223 $ 6,433 $ (19,134) $ 12,324 $ 1,846 $ 51,325 3.60 % Medium-term consumer loans 13,996 7,221 (11,979) 1,925 11,163 41,185 27.10 % $ 16,219 $ 13,654 $ (31,113) $ 14,249 $ 13,009 $ 92,510 14.06 % The provision for loan losses for the three months ended March 31, 2017, also includes losses from returned items from check cashing of $1,399. The provision for short-term consumer loans of $6,433 is net of debt sales of $89 for the three months ended March 31, 2017. The provision for medium-term consumer loans of $7,221 is net of debt sales of $375 for the three months ended March 31, 2017. The provision and subsequent charge off related to troubled debt restructurings totaled $13 and is included in the provision for medium-term consumer loans for the three months ended March 31, 2017. For these loans evaluated for impairment, there were no payment defaults during the three months ended March 31, 2017. The troubled debt restructurings during the three months ended March 31, 2017 are subject to an allowance of $5 with a net carrying value of $15 at March 31, 2017. The Company has subsidiaries that facilitate third-party lender loans. Changes in the accrual for third-party lender losses for the three months ended March 31, 2018, and 2017 were as follows: Three Months Ended March 31, 2018 2017 Short-term balance, beginning of period $ $ Provision for loan losses Charge-offs, net Short-term balance, end of period $ $ Medium-term balance, beginning of period $ $ Provision for loan losses Charge-offs, net Medium-term balance, end of period $ $ Total balance, beginning of period $ $ Provision for loan losses Charge-offs, net Total balance, end of period $ $ Total gross finance receivables for which the Company has recorded an accrual for third‑party lender losses totaled $29,575 and $36,967 at March 31, 2018, and December 31, 2017, respectively, and the corresponding guaranteed consumer loans are disclosed as an off‑balance sheet arrangement. The total gross finance receivables consist of $28,646 and $35,801 in short-term and $929 and $1,166 in medium-term loans at March 31, 2018 and December 31,2017, respectively. The provision for third party lender losses of $5,017 for the three months ending March 31, 2018 is net of debt sales of $210. The provision for third party lender losses of $4,487 for the three months ending March 31, 2017 is net of debt sales of $181, respectively. The Company was required to purchase $16,840 and $11,568 of short-term loans and $199 and $204 of medium-term loans as part of the CSO Program during the three months ended March 31, 2018 and 2017, respectively. As these loans were in default when purchased, they met the Company’s policy and were fully charged-off at acquisition. The Company recognized recoveries of $11,279 and $7,146 of short-term and $59 and $73 of medium-term collections on these loans during the three months ended March 31, 2018 and 2017, respectively. The Company considers the near term repayment performance of finance receivables as its primary credit quality indicator. The Company performs credit checks through consumer reporting agencies on certain borrowers. If a third-party lender provides the advance, the applicable third‑party lender decides whether to approve the loan and establishes all of the underwriting criteria and terms, conditions, and features of the customer’s loan agreement. The aging of receivables at March 31, 2018, and December 31, 2017, were as follows: March 31, 2018 December 31, 2017 Current finance receivables $ 81,847 92.0 % $ 101,102 89.2 % Past due finance receivables (1 - 30 days) Short-term consumer loans 1,280 1.4 % 2,046 1.8 % Medium-term consumer loans 2,575 2.9 % 6,502 5.7 % Total past due finance receivables (1 - 30 days) 3,855 4.3 % 8,548 7.5 % Past due finance receivables (31 - 60 days) Medium-term consumer loans 2,588 2.9 % 3,130 2.8 % Total past due finance receivables (31 - 60 days) 2,588 2.9 % 3,130 2.8 % Past due finance receivables (61 - 90 days) Medium-term consumer loans 685 0.8 % 588 0.5 % Total past due finance receivables (61 - 90 days) 685 0.8 % 588 0.5 % Total delinquent 7,128 8.0 % 12,266 10.8 % $ 88,975 % $ 113,368 % |
Related Party Transactions and
Related Party Transactions and Balances | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions and Balances | |
Related Party Transactions and Balances | Note 3. Related Party Transactions and Balances There were no new significant related party transactions, or material changes to existing related party transactions, during the three months ended March 31, 2018. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | Note 4. Other Intangible Assets Intangible amortization expense for the three months ended March 31, 2018, and 2017 was $123 and $124, respectively. There were no additional significant changes to other intangible assets during the three months ended March 31, 2018. |
Pledged Assets and Debt
Pledged Assets and Debt | 3 Months Ended |
Mar. 31, 2018 | |
Pledged Assets and Debt | |
Pledged Assets and Debt | Note 5. Pledged Assets and Debt Lines of credit at March 31, 2018 and December 31, 2017, consisted of the following: March 31, 2018 December 31, 2017 Deferred Deferred Issuance Net Issuance Net Principal Costs Principal Principal Costs Principal $47,000 Revolving credit, secured, interest rate as defined below, due April 2019, collateralized by all Guarantor Company assets $ 47,000 $ 4,201 $ 42,799 $ 47,000 $ 1,871 $ 45,129 47,000 4,201 42,799 47,000 1,871 45,129 Less current maturities — — — — — — Long-term portion $ 47,000 $ 4,201 $ 42,799 $ 47,000 $ 1,871 $ 45,129 The interest rate is set at three-month LIBOR plus 11%, and there is an exit fee for early termination of the facility. The 3-month LIBOR was 2.31% and 1.69% at March 31, 2018 and December 31, 2017, respectively, and the prime rate was 4.75% and 4.50% at March 31, 2018 and December 31, 2017, respectively. On March 30, 2018, the Company amended its revolving credit facility with Victory Park Management, LLC, as administrative agent, and certain of its affiliates as lenders, which we refer to collectively as VPC, to extend the maturity date to April 4, 2019. The amendment also waived certain events of default, eliminated the obligation to satisfy a quarterly fixed charge coverage test and added covenants addressing daily minimum liquidity and asset coverage tests, weekly operational reporting requirements and monthly EBITDA and borrowing base coverage tests. Additionally, the Company is required to use commercially reasonable efforts to obtain reasonably satisfactory modification of the 2019 and 2020 Notes. Senior secured notes payable at March 31, 2018, and December 31, 2017, consisted of the following: March 31, 2018 December 31, 2017 Deferred Deferred Issuance Net Issuance Net Principal Costs Principal Principal Costs Principal $395,000 Senior Note payable, 10.75 %, collateralized by all Guarantor Company assets, semi-annual interest payments with principal due May 2019 $ 237,290 $ 1,222 $ 236,068 $ 237,290 $ 1,504 $ 235,786 $25,000 Senior Note payable, 12.75 %, collateralized by all Guarantor Company assets, semi-annual interest payments with principal due May 2020 12,500 143 12,357 12,500 160 12,340 249,790 1,365 248,425 249,790 1,664 248,126 Less current maturities — — — — — — Long-term portion $ 249,790 $ 1,365 $ 248,425 $ 249,790 $ 1,664 $ 248,126 Subsidiary notes payable at March 31, 2018, and December 31, 2017, consisted of the following: March 31, 2018 December 31, 2017 Deferred Deferred Issuance Net Issuance Net Principal Costs Principal Principal Costs Principal $60,000 Note, secured, 16.75%, collateralized by acquired loans, due April 2019 $ 60,000 $ 2,191 $ 57,809 $ 60,000 $ 744 $ 59,256 $1,425 Term note, secured, 4.25%, collateralized by financed asset, due July 2019 867 4 863 882 5 877 $1,165 Term note, secured, 4.50%, collateralized by financed asset, due May 2021 1,061 13 1,048 1,076 14 1,062 61,928 2,208 59,720 61,958 763 61,195 Less current maturities 121 1 120 119 1 118 Long-term portion $ 61,807 $ 2,207 $ 59,600 $ 61,839 $ 762 $ 61,077 On March 30, 2018, the $60,000 Note was further amended to extend the maturity date to April 4, 2019. The amendment increases the administrative fee to 0.95% and permits an additional extension of the facility maturity date to April 2021 if certain conditions are met. The amendment allows for additional short term loans within the borrowing base and includes additional covenants addressing daily minimum cash and asset coverage tests, dividend limits, weekly operational reporting requirements, borrowing base reporting and a monthly consolidated EBITDA test. Liquidity and Need for Additional Capital The Company’s cash balance of $89,694 as of March 31, 2018, plus cash from operating activities, is expected to be sufficient to fund the Company’s operations through the first quarter of 2019. However, $237,290 of senior notes, $47,000 of revolving credit facility debt, and $60,000 in subsidiary notes are due in the second quarter of 2019. The Company’s expected cash position will not be sufficient to repay this indebtedness as it becomes due and the Company will need to restructure or refinance this indebtedness and there can be no assurances as to the ability of the Company to conclude such a restructuring or refinancing. These factors raise substantial doubt regarding the Company’s ability to meet its obligations and continue as a going concern for the period which extends one-year from the issuance of these financial statements. While the Company is currently engaged in negotiations with its largest bondholders, the success of such negotiations cannot be assured. Any inability to reach an agreement with existing debt holders, secure sufficient refinancing sources for our pending debt maturities and/or our inability to continue as a going concern could have a significant and material adverse effect on the Company, its operations and its investors and, in particular, could significantly impair recoveries by our investors under our existing indebtedness. It is unlikely that the Company’s assets, in any event, would be sufficient to satisfy its current debt obligations. See Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017 for more information on how these contingences could negatively impact the Company and its debt holders. |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 3 Months Ended |
Mar. 31, 2018 | |
Accounts Payable and Accrued Liabilities | |
Accounts Payable and Accrued Liabilities | Note 6. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities at March 31, 2018, and December 31, 2017, consisted of the following: March 31, December 31, 2018 2017 Accounts payable $ 3,477 $ 5,465 Accrued payroll and compensated absences 6,316 7,718 Wire transfers payable 1,502 2,238 Accrual for third-party losses 3,768 4,818 Unearned CSO Fees 6,620 8,029 Deferred rent 791 867 Bill payment service liability 2,036 2,604 Lease termination 1,727 1,978 Other 5,566 5,849 $ 31,803 $ 39,566 |
Operating and Capital Lease Com
Operating and Capital Lease Commitments and Total Rental Expense | 3 Months Ended |
Mar. 31, 2018 | |
Operating and Capital Lease Commitments and Total Rental Expense | |
Operating and Capital Lease Commitments and Total Rental Expense | Note 7. Operating and Capital Lease Commitments and Total Rental Expense Rental expense, including common area maintenance and real estate tax expense, totaled $6,660 and $7,034 for the three months ended March 31, 2018, and 2017, respectively. The Company closed its Utah facility during the three months ended March 31, 2017, resulting in lease termination expense of $1,762 which is disclosed on the consolidated statement of operations There were no additional significant changes to operating and capital lease commitments during the three months ended March 31, 2018. |
Concentrations of Credit Risks
Concentrations of Credit Risks | 3 Months Ended |
Mar. 31, 2018 | |
Concentrations of Credit Risks | |
Concentrations of Credit Risks | Note 8. Concentrations of Credit Risks The Company’s portfolio of finance receivables is comprised of loan agreements with customers living in thirty three states and consequently such customers’ ability to honor their contracts may be affected by economic conditions in those states. Additionally, the Company is subject to regulation by federal and state governments that affect the products and services provided by the Company. To the extent that laws and regulations are passed that affect the Company’s ability to offer loans or similar products in any of the states in which it operates, the Company’s financial position could be adversely affected. The following table summarizes the allocation of the portfolio balance by state at March 31, 2018, and December 31, 2017: March 31, 2018 December 31, 2017 Balance Percentage of Balance Percentage of State Outstanding Total Outstanding Outstanding Total Outstanding Alabama $ 10,001 % $ 12,808 % Arizona 9,935 11,994 California 31,290 39,835 Mississippi 5,864 7,409 Virginia 10,152 12,018 Other retail segment states 14,685 19,696 Other internet segment states 7,048 9,608 Total $ 88,975 100.0 % $ 113,368 100.0 % The other retail segment states are: Florida, Indiana, Kentucky, Michigan, Ohio, Oregon, and Tennessee. The other internet segment states are: Alabama, Alaska, California, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Kansas, Louisiana, Maine, Minnesota, Mississippi, Missouri, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin, and Wyoming. The Company offers a CSO product in Ohio and Texas to assist consumers in obtaining credit with unaffiliated third-party lenders. Total gross finance receivables for which the Company has recorded an accrual for third-party lender losses totaled $29,575 and $36,967 at March 31, 2018, and December 31, 2017, respectively, and the corresponding guaranteed consumer loans are disclosed as an off-balance sheet arrangement. The total gross finance receivables consist of $28,646 and $35,801 in short-term and $929 and $1,166 in medium-term loans at March 31, 2018, and December 31, 2017, respectively. |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Contingencies | |
Contingencies | Note 9. Contingencies From time‑to‑time the Company is a defendant in various lawsuits and administrative proceedings wherein certain amounts are claimed or violations of law or regulations are asserted. In the opinion of the Company’s management, these claims are without substantial merit and should not result in judgments which in the aggregate would have a material adverse effect on the Company’s financial statements. |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Mar. 31, 2018 | |
Stock Based Compensation | |
Stock Based Compensation | Note 10. Stock Based Compensation During the three months ended March 31, 2018, the Company issued 76,559 options with a per share exercise price of $1.00 with the options vesting on specific dates defined in the award agreements. The following weighted average assumptions were used by the Company for awards granted during the three months ended March 31, 2018: 2018 Risk‑free interest rate Dividend yield Expected volatility Expected term (years) 1.00 Weighted average fair value of options granted $ — Stock-based compensation costs for the three months ended March 31, 2018, and 2017 were $8 and $32, respectively. As of March 31, 2018, and December 31, 2017, unrecognized stock-based compensation costs to be recognized over future periods approximated $58 and $66, respectively. At March 31, 2018, the remaining unrecognized compensation expense was $58 for certain awards that vest over the requisite service period. The remaining compensation expense of $58 is expected to be recognized over a weighted-average period of 1.8 years. The total income tax benefit recognized in the income statement for the stock-based compensation arrangements was $2 and $9 for the three months ended March 31, 2018, and 2017, respectively. Stock option activity for the three months ended March 31, 2018, is as follows (these amounts have not been rounded in thousands): Weighted-Average Aggregate Exercise Price Weighted-Average Intrinsic (actual per Remaining Value Shares share price) Contractual Term (thousands) Outstanding at December 31, 2017 1,332,632 $ 2.25 8.5 N/A Granted 76,559 1.00 8.3 N/A Exercised — — — N/A Forfeited or expired — — — N/A Outstanding at March 31, 2018 1,409,191 $ 2.18 8.3 N/A Exercisable at March 31, 2018 1,277,737 $ 2.25 8.2 $ — Vested or expected to vest at March 31, 2018 1,409,191 $ 2.18 8.3 $ — |
Business Segments
Business Segments | 3 Months Ended |
Mar. 31, 2018 | |
Business Segments | |
Business Segments | Note 11. Business Segments The Company has elected to organize and report on its operations as two operating segments: Retail financial services and Internet financial services. The following tables present summarized financial information for the Company’s segments: As of and for the three months ended March 31, 2018 Retail Internet Unallocated Financial % of Financial % of (Income) % of Services Revenue Services Revenue Expenses Consolidated Revenue Total Assets $ 166,505 $ 37,511 $ 204,016 Other Intangible Assets 336 466 802 Total Revenues $ 72,797 100.0 % $ 14,854 100.0 % $ 87,651 100.0 % Provision for Loan Losses 15,620 21.4 % 7,015 47.2 % 22,635 25.8 % Other Operating Expenses 36,291 49.9 % 1,540 10.4 % 37,831 43.2 % Operating Gross Profit 20,886 28.7 % 6,299 42.4 % 27,185 31.0 % Interest Expense, net 9,479 13.0 % 2,699 18.2 % 12,178 13.9 % Depreciation and Amortization 1,000 1.4 % 93 0.6 % 1,093 1.3 % Other Corporate Expenses (a) — — — — 17,602 17,602 20.1 % Income (Loss) from Continuing Operations, before tax 10,407 14.3 % 3,507 23.6 % (17,602) (3,688) (4.2) % (a) Represents expenses not associated directly with operations that are not allocated between reportable segments. Therefore, the Company has elected to disclose other corporate expenses as unallocated. As of and for the three months ended March 31, 2017 Retail Internet Unallocated Financial % of Financial % of (Income) % of Services Revenue Services Revenue Expenses Consolidated Revenue Total Assets $ 309,595 $ 57,106 $ 366,701 Goodwill 113,256 — 113,256 Other Intangible Assets 488 800 1,288 Total Revenues $ 68,691 100.0 % $ 16,661 100.0 % $ 85,352 100.0 % Provision for Loan Losses 12,058 17.6 % 7,482 44.9 % 19,540 22.9 % Other Operating Expenses 38,207 55.6 % 1,009 6.1 % 39,216 45.9 % Operating Gross Profit 18,426 26.8 % 8,170 49.0 % 26,596 31.2 % Interest Expense, net 7,366 10.7 % 4,005 24.0 % 11,371 13.3 % Depreciation and Amortization 1,129 1.6 % 180 1.1 % 1,309 1.5 % Lease termination Expenses — — % 1,762 10.6 % 1,762 2.1 % Other Corporate Expenses (a) — — — — 20,186 20,186 23.7 % Income (loss) from Continuing Operations, before tax 9,931 14.5 % 2,223 13.3 % (20,186) (8,032) (9.4) % (a) |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Taxes | |
Income Taxes | Note 12. Income Taxes The Company files a consolidated federal income tax return. The Company files consolidated or separate state income tax returns as permitted by the individual states in which it operates. The differences between our effective rate and the U.S. statutory rate is primarily due to non-deductible expenses, state taxes, and changes in valuation allowance. The Company had no liability recorded for unrecognized tax benefits at March 31, 2018, and December 31, 2017. At March 31, 2018, the Company had gross deferred tax assets of $72,877 and a valuation allowance of $72,877. At December 31, 2017, the Company had gross deferred tax assets of $71,896 and a valuation allowance of $71,896. The Company maintains a full valuation allowance against its deferred tax assets as it is more likely than not that the deferred tax assets will not be realized. In evaluating whether a valuation allowance is needed for the deferred tax assets, the Company considered the ability to carry net operating losses back to prior periods, reversing taxable temporary differences, and estimates of future taxable income. There have been no credits or net operating losses that have expired. The projections were evaluated in light of past operating results and considered the risks associated with generating future taxable income due to macroeconomic conditions in the markets in which the Company operates, regulatory developments and cost containment. The Company will continue to evaluate the need for a valuation allowance against deferred tax assets in future periods and will adjust the allowance as necessary if it determines that it is more likely than not that some or all of the deferred tax assets will be realized. |
Transactions with Variable Inte
Transactions with Variable Interest Entities | 3 Months Ended |
Mar. 31, 2018 | |
Transactions with Variable Interest Entities | |
Transactions with Variable Interest Entities | Note 13. Transactions with Variable Interest Entities The Company has limited agency agreements with unaffiliated third-party lenders. The agreements govern the terms by which the Company refers customers to that lender, on a non-exclusive basis, for a possible extension of credit, processes loan applications, and commits to reimburse the lender for any loans or related fees that were not collected from such customers. As of March 31, 2018, and December 31, 2017, the outstanding amount of active consumer loans guaranteed by the Company, which represents the Company’s maximum exposure, was $29,575 and $36,967, respectively. The outstanding amount of consumer loans with unaffiliated third-party lenders consist of $28,646 and $35,801 in short-term and $929 and $1,166 in installment loans at March 31, 2018, and December 31, 2017, respectively. The accrual for third party lender losses related to these obligations totaled $3,768 and $4,818 as of March 31, 2018, and December 31, 2017, respectively. This obligation is recorded as a current liability on the Company’s consolidated balance sheet. The Company has determined that the lenders are Variable Interest Entities (“VIEs”) but that the Company is not the primary beneficiary of the VIEs. Therefore, the Company has not consolidated either lender. |
Supplemental Guarantor Informat
Supplemental Guarantor Information | 3 Months Ended |
Mar. 31, 2018 | |
Supplemental Guarantor Information | |
Supplemental Guarantor Information | Note 14. Supplemental Guarantor Information The 2019 notes and the 2020 notes contain various covenants that, subject to certain exceptions defined in the indentures governing the notes (the “Indentures”), limit the Company’s ability to, among other things, engage in certain transactions with affiliates, pay dividends or distributions, redeem or repurchase capital stock, incur or assume liens or additional debt, and consolidate or merge with or into another entity or sell substantially all of its assets. The Company has optional redemption features on the 2019 notes and the 2020 notes prior to their maturity which, depending on the date of the redemption, would require premiums to be paid in addition to all principal and interest due. The 2019 notes and 2020 notes are guaranteed by all of the Company’s guarantor subsidiaries existing as of April 29, 2011 (the date the Company issued the 2019 notes) and any subsequent guarantor subsidiaries that guarantee the Company’s indebtedness or the indebtedness of any other subsidiary guarantor (the “Subsidiary Guarantors”), in accordance with the Indentures. The Company is a holding company and has no independent assets or operations of its own. The guarantees under the 2019 notes and 2020 notes are full, unconditional, and joint and several. There are no restrictions on the ability of the Company or any of the Subsidiary Guarantors to obtain funds from its restricted subsidiaries by dividend or loan, except for net worth requirements of certain states in which the Company operates. Certain Subsidiary Guarantors are required to maintain net worth ranging from $10 to $2,000. The total net worth requirements of these Subsidiary Guarantors is $4,610. The Indentures contain certain affirmative and negative covenants applicable to the Company and its Subsidiary Guarantors, including restrictions on their ability to incur additional indebtedness, consummate certain asset sales, make investments in certain entities that create liens on their assets, enter into certain affiliate transactions and make certain restricted payments, including restrictions on the Company’s ability to pay dividends on, or repurchase, its common stock. |
Supplemental Condensed Consolid
Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information | 3 Months Ended |
Mar. 31, 2018 | |
Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information | |
Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information | Note 15. Supplemental Condensed Consolidating Guarantor and Non‑Guarantor Financial Information The following presents the condensed consolidating guarantor financial information as of March 31, 2018, and December 31, 2017, and for the three months ended March 31, 2018, and 2017, for the subsidiaries of the Company that serve as guarantors of the 2019 notes and the 2020 notes, and for the subsidiaries that do not serve as a guarantor. As of March 31, 2018, the non-guarantor subsidiaries are CCFI Funding LLC and CCFI Funding II LLC. During or prior to the first quarter of 2017, the following non-guarantor subsidiaries were dissolved; Direct Financial Solutions of UK Limited and its subsidiary Cash Central UK Limited, Direct Financial Solutions of Canada, Inc and its subsidiaries DFS-CC Financial Services LLC, DFS-CC Financial Services (Calgary) LLC and DFS-CC Financial Services (Toronto) LLC, and Direct Financial Solutions of Australia Pty Ltd and its subsidiary Cash Central of Australia Pty Ltd. The UK, Canada, and Australia entities, and their subsidiaries. The Florida II non-guarantor subsidiary was sold on February 1, 2016. Each of the Company’s guarantor subsidiaries are 100% owned by the Company or its subsidiaries, and all guarantees are full, unconditional, and joint and several. Of the entities under “Non-Guarantor Subsidiaries” in the tables below, Florida II, CCFI Funding, and CCFI Funding II are “Unrestricted Subsidiaries” as defined in the Indentures. Buckeye Check Cashing of Florida II, LLC was acquired on July 31, 2012, and was sold on February 1, 2016, CCFI Funding was created on December 20, 2013, and CCFI Funding II was established on September 19, 2014. Refer to the “Non-Guarantor Subsidiaries” columns in the following condensed consolidating schedules. The remainder of the entities included under “Non-Guarantor Subsidiaries” in the tables below are “Restricted Subsidiaries” as defined in the Indentures governing the 2019 notes and the 2020 notes and, for the periods specified, did not have material assets, liabilities, revenue or expenses. Community Choice Financial Inc. and Subsidiaries Condensed Consolidating Balance Sheets (unaudited) March 31, 2018 Community Guarantor Non ‑ Guarantor Choice Financial Subsidiaries Subsidiaries Eliminations Consolidated Assets Current Assets Cash and cash equivalents $ — $ 63,751 $ 21,523 $ — $ 85,274 Restricted cash — 4,420 — — 4,420 Finance receivables, net — 20,859 47,427 — 68,286 Card related pre-funding and receivables — 841 — — 841 Other current assets — 22,161 9,655 (18,294) 13,522 Total current assets — 112,032 78,605 (18,294) 172,343 Noncurrent Assets Investment in Subsidiaries 365,365 — — (365,365) — Finance receivables, net — 3,626 — — 3,626 Property, leasehold improvements and equipment, net — 24,816 — — 24,816 Other intangible assets — 802 — — 802 Security deposits — 2,429 — — 2,429 Total assets $ 365,365 $ 143,705 $ 78,605 $ (383,659) $ 204,016 Liabilities and Stockholders' Equity Current Liabilities Accounts payable and accrued liabilities $ — $ 25,761 $ 14,251 $ (8,209) $ 31,803 Money orders payable — 8,024 — — 8,024 Accrued interest 11,937 5 4,232 (4,232) 11,942 Current portion of capital lease obligation — 160 — — 160 Current portion of subsidiary note payable — 120 — — 120 CCFI Funding notes — — 5,853 (5,853) — Deferred revenue — 2,535 — — 2,535 Total current liabilities 11,937 36,605 24,336 (18,294) 54,584 Noncurrent Liabilities Lease termination payable — 569 — — 569 Lines of credit 42,799 — — — 42,799 Subsidiary note payable — 1,791 57,809 — 59,600 Senior secured notes 248,425 — — — 248,425 Deferred revenue — 6,887 — — 6,887 Total liabilities 303,161 45,852 82,145 (18,294) 412,864 Stockholders' Equity (Deficit) 62,204 97,853 (3,540) (365,365) (208,848) Total liabilities and stockholders' equity $ 365,365 $ 143,705 $ 78,605 $ (383,659) $ 204,016 Community Choice Financial Inc. and Subsidiaries Condensed Consolidating Balance Sheets December 31, 2017 Community Guarantor Non ‑ Guarantor Choice Financial Subsidiaries Subsidiaries Eliminations Consolidated Assets Current Assets Cash and cash equivalents $ — $ 57,526 $ 9,101 $ — $ 66,627 Restricted cash — 4,585 — — 4,585 Finance receivables, net — 47,221 42,486 — 89,707 Card related pre-funding and receivables — 1,062 — — 1,062 Other current assets — 39,604 17,951 (42,284) 15,271 Total current assets — 149,998 69,538 (42,284) 177,252 Noncurrent Assets Investment in Subsidiaries 360,599 — — (360,599) — Finance receivables, net — 4,632 — — 4,632 Property, leasehold improvements and equipment, net — 26,848 — — 26,848 Other intangible assets — 924 — — 924 Security deposits — 2,750 — — 2,750 Total assets $ 360,599 $ 185,152 $ 69,538 $ (402,883) $ 212,406 Liabilities and Stockholders' Equity Current Liabilities Accounts payable and accrued liabilities $ — $ 57,696 $ 14,364 $ (32,494) $ 39,566 Money orders payable — 7,169 — — 7,169 Accrued interest 5,140 5 3,937 (3,937) 5,145 Current portion of capital lease obligation — 371 — — 371 Current portion of subsidiary note payable — 118 — — 118 CCFI Funding notes — — 5,853 (5,853) — Deferred revenue — 2,535 — — 2,535 Total current liabilities 5,140 67,894 24,154 (42,284) 54,904 Noncurrent Liabilities Lease termination payable — 818 — — 818 Lines of credit 45,129 — — — 45,129 Subsidiary note payable — 1,821 59,256 — 61,077 Senior secured notes 248,126 — — — 248,126 Deferred Revenue — 7,520 — — 7,520 Total liabilities 298,395 78,053 83,410 (42,284) 417,574 Stockholders' Equity (Deficit) 62,204 107,099 (13,872) (360,599) (205,168) Total liabilities and stockholders' equity $ 360,599 $ 185,152 $ 69,538 $ (402,883) $ 212,406 Community Choice Financial Inc. and Subsidiaries Condensed Consolidating Statements of Income (unaudited) Three Months Ended March 31, 2018 Community Guarantor Non ‑ Guarantor Choice Financial Subsidiaries Subsidiaries Eliminations Consolidated Revenues: Finance receivable fees $ — $ $ $ — $ 50,932 Credit service fees — — — 19,196 Check cashing fees — — — 11,692 Card fees — — — 1,948 Other — (295) 3,883 Total revenues — (295) 87,651 Operating expenses: Salaries — — — 17,132 Provision for loan losses — — 22,635 Occupancy — — — 6,343 Advertising and marketing — — — 1,011 Lease termination costs — — — 97 Depreciation and amortization — — — 2,223 Other — — — 11,025 Total operating expenses — — 60,466 Operating gross profit — (295) 27,185 Corporate expenses — — 17,602 Intercompany management fee — — — Depreciation and amortization — — — 1,093 Interest expense, net (295) 12,178 Interest expense allocation (9,367) 9,367 — — — Total corporate and other expenses — (295) 30,873 Income (loss) before income taxes — — (3,688) Provision for income taxes — — — — — Net income (loss) $ — $ $ $ — $ (3,688) Community Choice Financial Inc. and Subsidiaries Condensed Consolidating Statements of Income (unaudited) Three Months Ended March 31, 2017 Community Guarantor Non ‑ Guarantor Choice Financial Subsidiaries Subsidiaries Eliminations Consolidated Revenues: Finance receivable fees $ — $ $ $ — $ 49,051 Credit service fees — — — 18,139 Check cashing fees — — — 12,126 Card fees — — — 2,007 Dividend — — (3,000) — Other — (295) 4,029 Total revenues — (3,295) 85,352 Operating expenses: Salaries — — — 17,273 Provision for loan losses — — 19,540 Occupancy — — — 6,629 Advertising and marketing — — — 814 Lease termination costs — — — 47 Depreciation and amortization — — — 2,538 Other — — 11,915 Total operating expenses — — 58,756 Operating gross profit — (3,295) 26,596 Corporate expenses — — 20,186 Intercompany management fee — — — Lease termination — — — 1,762 Depreciation and amortization — — — 1,309 Interest expense, net (295) 11,371 Interest expense allocation — — — Total corporate and other expenses — (295) 34,628 Income (loss) before income taxes — (3,000) (8,032) Provision for (benefit from) income taxes — 125 333 Net income (loss) $ — $ (8,595) $ 3,355 $ (3,125) $ (8,365) Community Choice Financial Inc. and Subsidiaries Condensed Consolidating Statements of Cash Flows (unaudited) Three Months Ended March 31, 2018 Community Guarantor Non ‑ Guarantor Choice Financial Subsidiaries Subsidiaries Consolidated Net cash provided by (used in) operating activities $ 2,762 $ (10,588) $ 32,415 $ 24,589 Cash flows from investing activities Net receivables repaid (originated) — 18,163 (18,371) (208) Purchase of leasehold improvements and equipment — (1,274) — (1,274) Net cash provided by (used in) investing activities — 16,889 (18,371) (1,482) Cash flows from financing activities Payments on subsidiary note — (30) — (30) Payments on capital lease obligations — (211) — (211) Debt issuance costs (2,762) — (1,622) (4,384) Net cash used in financing activities (2,762) (241) (1,622) (4,625) Net increase in cash and cash equivalents and restricted cash — 6,060 12,422 18,482 Cash and cash equivalents and restricted cash: Beginning — 62,111 9,101 71,212 Ending $ — $ 68,171 $ 21,523 $ 89,694 Community Choice Financial Inc. and Subsidiaries Condensed Consolidating Statements of Cash Flows (unaudited) Three Months Ended March 31, 201 Community Guarantor Non ‑ Guarantor Choice Financial Subsidiaries Subsidiaries Consolidated Net cash provided by operating activities $ — $ 16,121 $ 6,079 $ 22,200 Cash flows from investing activities Net receivables repaid (originated) — (5,830) 3,109 (2,721) Purchase of leasehold improvements and equipment — (1,001) — (1,001) Net cash provided by (used in) investing activities — (6,831) 3,109 (3,722) Cash flows from financing activities Payments on subsidiary note — (29) — (29) Payments on capital lease obligations, net — (248) — (248) Payments on lines of credit — (2,250) — (2,250) Net cash used in financing activities — (2,527) — (2,527) Net increase in cash and cash equivalents and restricted cash — 6,763 9,188 15,951 Cash and cash equivalents and restricted cash: Beginning — 74,792 34,556 109,348 Ending $ — $ 81,555 $ 43,744 $ 125,299 |
Ownership, Nature of Business23
Ownership, Nature of Business, and Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Ownership, Nature of Business, and Significant Accounting Policies | |
Basis of presentation | Basis of presentation: The accompanying interim unaudited consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10‑Q and accounting principles generally accepted in the United States (“GAAP”) for interim financial information. They do not include all information and footnotes required by GAAP for complete financial statements. Although management believes that the disclosures are adequate to prevent the information from being misleading, the interim unaudited consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2017, included in the Company’s Annual Report on Form 10‑K filed with the Securities & Exchange Commission on April 2, 2018. All adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company’s financial condition, have been included. The results for any interim period are not necessarily indicative of results to be expected for the year ending December 31, 2018. |
Basis of consolidation | Basis of consolidation: The accompanying consolidated financial statements include the accounts of CCFI. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Business segments | Business segments: FASB Accounting Standards Codification (“ASC”) Topic 280 Segment Reporting requires that a public enterprise report a measure of segment profit or loss, certain specific revenue and expense items, segment assets, information about the way operating segments were determined and other items. The Company reports operating segments in accordance with FASB ASC Topic 280. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in determining how to allocate resources and assess performance. The Company operates in two segments: Retail financial services and Internet financial services. |
Equity Method Investments | Equity method investments: Entities and investments over which the Company exercises significant influence over the activities of the entity but which do not meet the requirements for consolidation are accounted for using the equity method of accounting pursuant to ASC 323, whereby the Company records its share of the underlying income or loss of these entities. Intercompany profit arising from transactions with affiliates is eliminated to the extent of its beneficial interest. Equity in losses of equity method investments is not recognized after the carrying value of an investment, including advances and loans, has been reduced to zero, unless guarantees or other funding obligations exist. On September 30, 2017, the Company entered into a joint venture with a third party to offer insurance products through select retail locations in a certain market. The joint venture will be managed by the third party. |
Revenue recognition | Revenue recognition: Transactions include loans, credit service fees, check cashing, bill payment, money transfer, money order sales, and other miscellaneous products and services. The full amount of the check cashing fee is recognized as revenue at the time of the transaction. Fees and direct costs incurred for the origination of loans are deferred and amortized over the loan period using the interest method. The Company acts in an agency capacity regarding bill payment services, money transfers, card products, and money orders offered and sold at its retail locations. The Company records the net amount retained as revenue because the supplier is the primary obligor in the arrangement, the amount earned by the Company is fixed, and the supplier is determined to have the ultimate credit risk. Revenue on loans determined to be troubled debt restructurings are recognized at the impaired loans’ original interest rates until the impaired loans are charged off or paid by the customer. Credit service organization (“CSO”) fees are recognized over the arranged credit service period. |
Finance receivables | Finance receivables: Finance receivables consist of short term and medium‑term consumer loans. Short-term consumer loans can be unsecured or secured with a maturity up to ninety days. Unsecured short-term loan products typically range in principal from $100 to $1,000, with a maturity between fourteen and thirty days, and include a written agreement to defer the presentment of the customer’s personal check or preauthorized debit for the aggregate amount of the advance plus fees. This form of lending is based on applicable laws and regulations, which vary by state. State statutes vary from charging fees of 15% to 20%, to charging interest at 25% per annum plus origination fees. The customers repay the cash advance by making cash payments or allowing a check or preauthorized debit to be presented. Secured consumer loans with a maturity of ninety days or less are included in this category and represented 14.0% and 14.5% of short-term consumer loans at March 31, 2018 and December 31, 2017, respectively. Medium-term consumer loans can be unsecured or secured with a maturity greater than ninety days and up to thirty-six months. Unsecured medium-term products typically range from $100 to $5,000, and are evidenced by a promissory note with a maturity between three and thirty-six months. These consumer loans vary in structure depending upon the applicable laws and regulations where they are offered. The medium-term consumer loans are payable in installments or provide for a line of credit with periodic payments. Secured consumer loans with a maturity greater than ninety days are included in this category and represented 14.0% and 12.6% of medium-term consumer loans at March 31, 2018, and December 31, 2017, respectively. |
Allowance for loan losses | Allowance for loan losses: Provisions for loan losses are charged to income in amounts sufficient to maintain an adequate allowance for loan losses and an adequate accrual for losses related to guaranteed loans processed for third-party lenders under the CSO programs. The factors used in assessing the overall adequacy of the allowance for loan losses, the accrual for losses related to guaranteed loans made by third-party lenders and the resulting provision for loan losses include an evaluation by product, by market based on historical loan loss experience, and delinquency of certain medium-term consumer loans. The Company evaluates various qualitative factors that may or may not affect the computed initial estimate of the allowance for loan losses, by using internal valuation inputs including historical loan loss experience, delinquency, overall portfolio quality, and current economic conditions. For short term unsecured consumer loans, the Company’s policy is to charge off loans when they become past due. The Company’s policy dictates that, where a customer has provided a check or ACH authorization for presentment upon the maturity of a loan, if the customer has not paid off the loan by the due date, the Company will deposit the customer’s check or draft the customer’s bank account for the amount due. If the check or draft is returned as unpaid, all accrued fees and outstanding principal are charged-off as uncollectible. For short term secured loans, the Company’s policy requires that balances be charged off when accounts are either thirty or sixty days past due depending on the product. For medium term secured and unsecured consumer loans that have a term of one year or less, the Company’s policy requires that balances be charged off when accounts are sixty days past due. For medium term secured and unsecured consumer loans that have an initial maturity of greater than one year, the Company’s policy requires that balances be charged off when accounts are ninety-one days past due. In certain markets, the Company reduced interest rates and favorably changed payment terms for medium-term consumer loans to assist borrowers in avoiding default and to mitigate risk of loss. These reduced interest rates and changed payment terms were limited to loans that the Company believed the customer had the ability to pay in the foreseeable future. These loans were accounted for as troubled debt restructurings and represent the only loans considered impaired due to the nature of the Company’s charge-off policy. Recoveries of amounts previously charged off are recorded to the allowance for loan losses or the accrual for third‑party losses in the period in which they are received. |
Lease Termination Payable | Lease termination payable: The Company records a liability in the consolidated balance sheets for the remaining lease obligations with the corresponding lease termination expense for closed retail locations disclosed in the operating expenses section, and closed corporate locations disclosed in the corporate and other expenses section, of the consolidated statements of operations, respectively. |
Fair value of financial instruments | Fair value of financial instruments: Financial assets and liabilities measured at fair value are grouped in three levels. The levels prioritize the inputs used to measure the fair value of the assets or liabilities. These levels are: · Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities. · Level 2—Inputs other than quoted prices that are observable for assets and liabilities, either directly or indirectly. These inputs include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are less attractive. · Level 3—Unobservable inputs for assets and liabilities reflecting the reporting entity’s own assumptions. The Company follows the provisions of ASC 820‑10, Fair Value Measurements and Disclosures, which applies to all assets and liabilities that are being measured and reported on a fair value basis. ASC 820‑10 requires a disclosure that establishes a framework for measuring fair value within GAAP and expands the disclosure about fair value measurements. This standard enables a reader of consolidated financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The standard requires that assets and liabilities carried at fair value be classified and disclosed in one of the three categories. In determining the appropriate levels, the Company performed a detailed analysis of the assets and liabilities that are subject to ASC 820-10. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3. The Company’s financial instruments consist primarily of cash and cash equivalents, finance receivables, restricted cash, and lines of credit. For all such instruments, other than senior secured notes and notes payable at March 31, 2018, and December 31, 2017, the carrying amounts in the consolidated financial statements approximate their fair values. Finance receivables are short term in nature and are originated at prevailing market rates and lines of credit bear interest at current market rates. The fair value of finance receivables at March 31, 2018 and December 31, 2017 approximates carrying value and is measured using internal valuation inputs including historical loan loss experience, delinquency, overall portfolio quality, and current economic conditions. The fair value of the Company’s 10.75% senior secured notes due 2019 (the “2019 notes”) and the 12.75% senior secured notes due 2020 (the “2020 notes”) were determined based on market yield on trades of the 2019 notes at the end of the recent reporting period. March 31, 2018 Carrying Amount Fair Value Level Financial assets: Cash and cash equivalents $ 85,274 $ 85,274 1 Restricted cash 4,420 4,420 1 Finance receivables 71,912 71,912 3 Financial liabilities: 10.75% Senior secured notes 237,290 222,103 1 12.75% Senior secured notes 12,500 11,479 2 Subsidiary Note payable 61,928 61,928 2 Line of Credit 47,000 47,000 2 December 31, 2017 Carrying Amount Fair Value Level Financial assets: Cash and cash equivalents $ 66,627 $ 66,627 1 Restricted cash 4,585 4,585 1 Finance receivables 94,339 94,339 3 Financial liabilities: 10.75% Senior secured notes 237,290 212,636 1 12.75% Senior secured notes 12,500 10,841 2 Subsidiary Note payable 61,958 61,958 2 Line of Credit 47,000 47,000 2 |
Treasury stock | Treasury Stock: Treasury stock is reported at cost and consists of one million common shares at March 31, 2018 and December 31, 2017. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements: In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The Company adopted ASC 606 as of January 1, 2018 using the modified retrospective method. The adoption of ASC 606 did not impact the Company’s revenue recognition for consumer loan fees as these revenue streams are outside of the scope of ASC 606. Further, the Company has not identified any impacts to its consolidated financial statements that were material as a result of the adoption of ASC 606 for its CSO fees. The Company has not changed the presentation of its consolidated financial statements for assets, liabilities, or revenues from contracts with customers, nor has the Company recognized any cumulative effect adjustment as a result of the adoption of ASC 606. In November 2016, the FASB issued ASU No. 2016-18, “Restricted Cash” . GAAP currently does not include specific guidance to address how to classify and present changes in restricted cash or restricted cash equivalents that occur when there are transfers between cash, cash equivalents, and restricted cash or restricted cash equivalents and when there are direct cash receipts into restricted cash or restricted cash equivalents or direct cash payments made from restricted cash or restricted cash equivalents. The amendments in this update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update do not provide a definition of restricted cash or restricted cash equivalents. For public business entities the amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted the new standard effective in 2018. As a result, the Company no longer reports the changes in restricted cash as an operating activity. Instead, restricted cash is included in the beginning and ending cash and cash equivalents balances on the consolidated statements of cash flows. |
Subsequent events | Subsequent events: The Company has evaluated its subsequent events (events occurring after March 31, 2018) through the issuance date of May 14, 2018. |
Ownership, Nature of Business24
Ownership, Nature of Business, and Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Ownership, Nature of Business, and Significant Accounting Policies | |
Schedule of estimated fair values of financial instruments | March 31, 2018 Carrying Amount Fair Value Level Financial assets: Cash and cash equivalents $ 85,274 $ 85,274 1 Restricted cash 4,420 4,420 1 Finance receivables 71,912 71,912 3 Financial liabilities: 10.75% Senior secured notes 237,290 222,103 1 12.75% Senior secured notes 12,500 11,479 2 Subsidiary Note payable 61,928 61,928 2 Line of Credit 47,000 47,000 2 December 31, 2017 Carrying Amount Fair Value Level Financial assets: Cash and cash equivalents $ 66,627 $ 66,627 1 Restricted cash 4,585 4,585 1 Finance receivables 94,339 94,339 3 Financial liabilities: 10.75% Senior secured notes 237,290 212,636 1 12.75% Senior secured notes 12,500 10,841 2 Subsidiary Note payable 61,958 61,958 2 Line of Credit 47,000 47,000 2 |
Finance Receivables, Credit Q25
Finance Receivables, Credit Quality Information and Allowance for Loan Losses (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Finance Receivables, Credit Quality Information and Allowance for Loan Losses | |
Schedule of finance receivables representing amounts due from customers for advances | March 31, December 31, 2018 2017 Short-term consumer loans $ 52,115 $ 66,465 Medium-term consumer loans 36,860 46,903 Gross receivables $ 88,975 $ 113,368 Unearned advance fees, net of deferred loan origination costs (2,260) (2,702) Finance receivables before allowance for loan losses 86,715 110,666 Allowance for loan losses (14,803) (16,327) Finance receivables, net $ 71,912 $ 94,339 Finance receivables, net Current portion $ 68,286 $ 89,707 Non-current portion 3,626 4,632 Total finance receivables, net $ 71,912 $ 94,339 |
Schedule of changes in the allowance for loan losses by product type | XBRL-Only Conte Note 2. Finance Receivables, Credit Quality Information and Allowance for Loan Losses Allowance as Balance Balance Receivables a percentage 1/1/2018 Provision Charge-Offs Recoveries 3/31/2018 3/31/2018 of receivables Short-term consumer loans $ 2,697 $ 8,159 $ (18,424) $ 9,886 $ 2,318 $ 52,115 4.45 % Medium-term consumer loans 13,630 8,397 (11,067) 1,525 12,485 36,860 33.87 % $ 16,327 $ 16,556 $ (29,491) $ 11,411 $ 14,803 $ 88,975 16.64 % nt Allowance as Balance Balance Receivables a percentage 1/1/2017 Provision Charge-Offs Recoveries 3/31/2017 3/31/2017 of receivables Short-term consumer loans $ 2,223 $ 6,433 $ (19,134) $ 12,324 $ 1,846 $ 51,325 3.60 % Medium-term consumer loans 13,996 7,221 (11,979) 1,925 11,163 41,185 27.10 % $ 16,219 $ 13,654 $ (31,113) $ 14,249 $ 13,009 $ 92,510 14.06 % |
Schedule of changes in the accrual for third-party lender losses | Three Months Ended March 31, 2018 2017 Short-term balance, beginning of period $ $ Provision for loan losses Charge-offs, net Short-term balance, end of period $ $ Medium-term balance, beginning of period $ $ Provision for loan losses Charge-offs, net Medium-term balance, end of period $ $ Total balance, beginning of period $ $ Provision for loan losses Charge-offs, net Total balance, end of period $ $ |
Schedule of aging of receivables | March 31, 2018 December 31, 2017 Current finance receivables $ 81,847 92.0 % $ 101,102 89.2 % Past due finance receivables (1 - 30 days) Short-term consumer loans 1,280 1.4 % 2,046 1.8 % Medium-term consumer loans 2,575 2.9 % 6,502 5.7 % Total past due finance receivables (1 - 30 days) 3,855 4.3 % 8,548 7.5 % Past due finance receivables (31 - 60 days) Medium-term consumer loans 2,588 2.9 % 3,130 2.8 % Total past due finance receivables (31 - 60 days) 2,588 2.9 % 3,130 2.8 % Past due finance receivables (61 - 90 days) Medium-term consumer loans 685 0.8 % 588 0.5 % Total past due finance receivables (61 - 90 days) 685 0.8 % 588 0.5 % Total delinquent 7,128 8.0 % 12,266 10.8 % $ 88,975 % $ 113,368 % |
Pledged Assets and Debt (Tables
Pledged Assets and Debt (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Pledged Assets and Debt | |
Schedule of lines of credit | March 31, 2018 December 31, 2017 Deferred Deferred Issuance Net Issuance Net Principal Costs Principal Principal Costs Principal $47,000 Revolving credit, secured, interest rate as defined below, due April 2019, collateralized by all Guarantor Company assets $ 47,000 $ 4,201 $ 42,799 $ 47,000 $ 1,871 $ 45,129 47,000 4,201 42,799 47,000 1,871 45,129 Less current maturities — — — — — — Long-term portion $ 47,000 $ 4,201 $ 42,799 $ 47,000 $ 1,871 $ 45,129 |
Schedule of senior secured notes payable | March 31, 2018 December 31, 2017 Deferred Deferred Issuance Net Issuance Net Principal Costs Principal Principal Costs Principal $395,000 Senior Note payable, 10.75 %, collateralized by all Guarantor Company assets, semi-annual interest payments with principal due May 2019 $ 237,290 $ 1,222 $ 236,068 $ 237,290 $ 1,504 $ 235,786 $25,000 Senior Note payable, 12.75 %, collateralized by all Guarantor Company assets, semi-annual interest payments with principal due May 2020 12,500 143 12,357 12,500 160 12,340 249,790 1,365 248,425 249,790 1,664 248,126 Less current maturities — — — — — — Long-term portion $ 249,790 $ 1,365 $ 248,425 $ 249,790 $ 1,664 $ 248,126 |
Schedule of subsidiary note payable | March 31, 2018 December 31, 2017 Deferred Deferred Issuance Net Issuance Net Principal Costs Principal Principal Costs Principal $60,000 Note, secured, 16.75%, collateralized by acquired loans, due April 2019 $ 60,000 $ 2,191 $ 57,809 $ 60,000 $ 744 $ 59,256 $1,425 Term note, secured, 4.25%, collateralized by financed asset, due July 2019 867 4 863 882 5 877 $1,165 Term note, secured, 4.50%, collateralized by financed asset, due May 2021 1,061 13 1,048 1,076 14 1,062 61,928 2,208 59,720 61,958 763 61,195 Less current maturities 121 1 120 119 1 118 Long-term portion $ 61,807 $ 2,207 $ 59,600 $ 61,839 $ 762 $ 61,077 |
Accounts Payable and Accrued 27
Accounts Payable and Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounts Payable and Accrued Liabilities | |
Schedule of accounts payable and accrued liabilities | March 31, December 31, 2018 2017 Accounts payable $ 3,477 $ 5,465 Accrued payroll and compensated absences 6,316 7,718 Wire transfers payable 1,502 2,238 Accrual for third-party losses 3,768 4,818 Unearned CSO Fees 6,620 8,029 Deferred rent 791 867 Bill payment service liability 2,036 2,604 Lease termination 1,727 1,978 Other 5,566 5,849 $ 31,803 $ 39,566 |
Concentrations of Credit Risks
Concentrations of Credit Risks (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Concentrations of Credit Risks | |
Summary of allocation of portfolio balance by state | March 31, 2018 December 31, 2017 Balance Percentage of Balance Percentage of State Outstanding Total Outstanding Outstanding Total Outstanding Alabama $ 10,001 % $ 12,808 % Arizona 9,935 11,994 California 31,290 39,835 Mississippi 5,864 7,409 Virginia 10,152 12,018 Other retail segment states 14,685 19,696 Other internet segment states 7,048 9,608 Total $ 88,975 100.0 % $ 113,368 100.0 % |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Stock Based Compensation | |
Schedule of weighted average assumptions used for awards granted | The following weighted average assumptions were used by the Company for awards granted during the three months ended March 31, 2018: 2018 Risk‑free interest rate Dividend yield Expected volatility Expected term (years) 1.00 Weighted average fair value of options granted $ — |
Schedule of stock option activity | Stock option activity for the three months ended March 31, 2018, is as follows (these amounts have not been rounded in thousands): Weighted-Average Aggregate Exercise Price Weighted-Average Intrinsic (actual per Remaining Value Shares share price) Contractual Term (thousands) Outstanding at December 31, 2017 1,332,632 $ 2.25 8.5 N/A Granted 76,559 1.00 8.3 N/A Exercised — — — N/A Forfeited or expired — — — N/A Outstanding at March 31, 2018 1,409,191 $ 2.18 8.3 N/A Exercisable at March 31, 2018 1,277,737 $ 2.25 8.2 $ — Vested or expected to vest at March 31, 2018 1,409,191 $ 2.18 8.3 $ — |
Business Segment (Tables)
Business Segment (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Business Segments | |
Summary of financial information of segments | As of and for the three months ended March 31, 2018 Retail Internet Unallocated Financial % of Financial % of (Income) % of Services Revenue Services Revenue Expenses Consolidated Revenue Total Assets $ 166,505 $ 37,511 $ 204,016 Other Intangible Assets 336 466 802 Total Revenues $ 72,797 100.0 % $ 14,854 100.0 % $ 87,651 100.0 % Provision for Loan Losses 15,620 21.4 % 7,015 47.2 % 22,635 25.8 % Other Operating Expenses 36,291 49.9 % 1,540 10.4 % 37,831 43.2 % Operating Gross Profit 20,886 28.7 % 6,299 42.4 % 27,185 31.0 % Interest Expense, net 9,479 13.0 % 2,699 18.2 % 12,178 13.9 % Depreciation and Amortization 1,000 1.4 % 93 0.6 % 1,093 1.3 % Other Corporate Expenses (a) — — — — 17,602 17,602 20.1 % Income (Loss) from Continuing Operations, before tax 10,407 14.3 % 3,507 23.6 % (17,602) (3,688) (4.2) % (a) Represents expenses not associated directly with operations that are not allocated between reportable segments. Therefore, the Company has elected to disclose other corporate expenses as unallocated. As of and for the three months ended March 31, 2017 Retail Internet Unallocated Financial % of Financial % of (Income) % of Services Revenue Services Revenue Expenses Consolidated Revenue Total Assets $ 309,595 $ 57,106 $ 366,701 Goodwill 113,256 — 113,256 Other Intangible Assets 488 800 1,288 Total Revenues $ 68,691 100.0 % $ 16,661 100.0 % $ 85,352 100.0 % Provision for Loan Losses 12,058 17.6 % 7,482 44.9 % 19,540 22.9 % Other Operating Expenses 38,207 55.6 % 1,009 6.1 % 39,216 45.9 % Operating Gross Profit 18,426 26.8 % 8,170 49.0 % 26,596 31.2 % Interest Expense, net 7,366 10.7 % 4,005 24.0 % 11,371 13.3 % Depreciation and Amortization 1,129 1.6 % 180 1.1 % 1,309 1.5 % Lease termination Expenses — — % 1,762 10.6 % 1,762 2.1 % Other Corporate Expenses (a) — — — — 20,186 20,186 23.7 % Income (loss) from Continuing Operations, before tax 9,931 14.5 % 2,223 13.3 % (20,186) (8,032) (9.4) % (a) |
Supplemental Condensed Consol31
Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information | |
Schedule of condensed consolidating balance sheet | Community Choice Financial Inc. and Subsidiaries Condensed Consolidating Balance Sheets (unaudited) March 31, 2018 Community Guarantor Non ‑ Guarantor Choice Financial Subsidiaries Subsidiaries Eliminations Consolidated Assets Current Assets Cash and cash equivalents $ — $ 63,751 $ 21,523 $ — $ 85,274 Restricted cash — 4,420 — — 4,420 Finance receivables, net — 20,859 47,427 — 68,286 Card related pre-funding and receivables — 841 — — 841 Other current assets — 22,161 9,655 (18,294) 13,522 Total current assets — 112,032 78,605 (18,294) 172,343 Noncurrent Assets Investment in Subsidiaries 365,365 — — (365,365) — Finance receivables, net — 3,626 — — 3,626 Property, leasehold improvements and equipment, net — 24,816 — — 24,816 Other intangible assets — 802 — — 802 Security deposits — 2,429 — — 2,429 Total assets $ 365,365 $ 143,705 $ 78,605 $ (383,659) $ 204,016 Liabilities and Stockholders' Equity Current Liabilities Accounts payable and accrued liabilities $ — $ 25,761 $ 14,251 $ (8,209) $ 31,803 Money orders payable — 8,024 — — 8,024 Accrued interest 11,937 5 4,232 (4,232) 11,942 Current portion of capital lease obligation — 160 — — 160 Current portion of subsidiary note payable — 120 — — 120 CCFI Funding notes — — 5,853 (5,853) — Deferred revenue — 2,535 — — 2,535 Total current liabilities 11,937 36,605 24,336 (18,294) 54,584 Noncurrent Liabilities Lease termination payable — 569 — — 569 Lines of credit 42,799 — — — 42,799 Subsidiary note payable — 1,791 57,809 — 59,600 Senior secured notes 248,425 — — — 248,425 Deferred revenue — 6,887 — — 6,887 Total liabilities 303,161 45,852 82,145 (18,294) 412,864 Stockholders' Equity (Deficit) 62,204 97,853 (3,540) (365,365) (208,848) Total liabilities and stockholders' equity $ 365,365 $ 143,705 $ 78,605 $ (383,659) $ 204,016 Community Choice Financial Inc. and Subsidiaries Condensed Consolidating Balance Sheets December 31, 2017 Community Guarantor Non ‑ Guarantor Choice Financial Subsidiaries Subsidiaries Eliminations Consolidated Assets Current Assets Cash and cash equivalents $ — $ 57,526 $ 9,101 $ — $ 66,627 Restricted cash — 4,585 — — 4,585 Finance receivables, net — 47,221 42,486 — 89,707 Card related pre-funding and receivables — 1,062 — — 1,062 Other current assets — 39,604 17,951 (42,284) 15,271 Total current assets — 149,998 69,538 (42,284) 177,252 Noncurrent Assets Investment in Subsidiaries 360,599 — — (360,599) — Finance receivables, net — 4,632 — — 4,632 Property, leasehold improvements and equipment, net — 26,848 — — 26,848 Other intangible assets — 924 — — 924 Security deposits — 2,750 — — 2,750 Total assets $ 360,599 $ 185,152 $ 69,538 $ (402,883) $ 212,406 Liabilities and Stockholders' Equity Current Liabilities Accounts payable and accrued liabilities $ — $ 57,696 $ 14,364 $ (32,494) $ 39,566 Money orders payable — 7,169 — — 7,169 Accrued interest 5,140 5 3,937 (3,937) 5,145 Current portion of capital lease obligation — 371 — — 371 Current portion of subsidiary note payable — 118 — — 118 CCFI Funding notes — — 5,853 (5,853) — Deferred revenue — 2,535 — — 2,535 Total current liabilities 5,140 67,894 24,154 (42,284) 54,904 Noncurrent Liabilities Lease termination payable — 818 — — 818 Lines of credit 45,129 — — — 45,129 Subsidiary note payable — 1,821 59,256 — 61,077 Senior secured notes 248,126 — — — 248,126 Deferred Revenue — 7,520 — — 7,520 Total liabilities 298,395 78,053 83,410 (42,284) 417,574 Stockholders' Equity (Deficit) 62,204 107,099 (13,872) (360,599) (205,168) Total liabilities and stockholders' equity $ 360,599 $ 185,152 $ 69,538 $ (402,883) $ 212,406 |
Schedule of consolidated statements of operations | Community Choice Financial Inc. and Subsidiaries Condensed Consolidating Statements of Income (unaudited) Three Months Ended March 31, 2018 Community Guarantor Non ‑ Guarantor Choice Financial Subsidiaries Subsidiaries Eliminations Consolidated Revenues: Finance receivable fees $ — $ $ $ — $ 50,932 Credit service fees — — — 19,196 Check cashing fees — — — 11,692 Card fees — — — 1,948 Other — (295) 3,883 Total revenues — (295) 87,651 Operating expenses: Salaries — — — 17,132 Provision for loan losses — — 22,635 Occupancy — — — 6,343 Advertising and marketing — — — 1,011 Lease termination costs — — — 97 Depreciation and amortization — — — 2,223 Other — — — 11,025 Total operating expenses — — 60,466 Operating gross profit — (295) 27,185 Corporate expenses — — 17,602 Intercompany management fee — — — Depreciation and amortization — — — 1,093 Interest expense, net (295) 12,178 Interest expense allocation (9,367) 9,367 — — — Total corporate and other expenses — (295) 30,873 Income (loss) before income taxes — — (3,688) Provision for income taxes — — — — — Net income (loss) $ — $ $ $ — $ (3,688) Community Choice Financial Inc. and Subsidiaries Condensed Consolidating Statements of Income (unaudited) Three Months Ended March 31, 2017 Community Guarantor Non ‑ Guarantor Choice Financial Subsidiaries Subsidiaries Eliminations Consolidated Revenues: Finance receivable fees $ — $ $ $ — $ 49,051 Credit service fees — — — 18,139 Check cashing fees — — — 12,126 Card fees — — — 2,007 Dividend — — (3,000) — Other — (295) 4,029 Total revenues — (3,295) 85,352 Operating expenses: Salaries — — — 17,273 Provision for loan losses — — 19,540 Occupancy — — — 6,629 Advertising and marketing — — — 814 Lease termination costs — — — 47 Depreciation and amortization — — — 2,538 Other — — 11,915 Total operating expenses — — 58,756 Operating gross profit — (3,295) 26,596 Corporate expenses — — 20,186 Intercompany management fee — — — Lease termination — — — 1,762 Depreciation and amortization — — — 1,309 Interest expense, net (295) 11,371 Interest expense allocation — — — Total corporate and other expenses — (295) 34,628 Income (loss) before income taxes — (3,000) (8,032) Provision for (benefit from) income taxes — 125 333 Net income (loss) $ — $ (8,595) $ 3,355 $ (3,125) $ (8,365) |
Schedule of condensed consolidating statement of cash flows | Community Choice Financial Inc. and Subsidiaries Condensed Consolidating Statements of Cash Flows (unaudited) Three Months Ended March 31, 2018 Community Guarantor Non ‑ Guarantor Choice Financial Subsidiaries Subsidiaries Consolidated Net cash provided by (used in) operating activities $ 2,762 $ (10,588) $ 32,415 $ 24,589 Cash flows from investing activities Net receivables repaid (originated) — 18,163 (18,371) (208) Purchase of leasehold improvements and equipment — (1,274) — (1,274) Net cash provided by (used in) investing activities — 16,889 (18,371) (1,482) Cash flows from financing activities Payments on subsidiary note — (30) — (30) Payments on capital lease obligations — (211) — (211) Debt issuance costs (2,762) — (1,622) (4,384) Net cash used in financing activities (2,762) (241) (1,622) (4,625) Net increase in cash and cash equivalents and restricted cash — 6,060 12,422 18,482 Cash and cash equivalents and restricted cash: Beginning — 62,111 9,101 71,212 Ending $ — $ 68,171 $ 21,523 $ 89,694 Community Choice Financial Inc. and Subsidiaries Condensed Consolidating Statements of Cash Flows (unaudited) Three Months Ended March 31, 201 Community Guarantor Non ‑ Guarantor Choice Financial Subsidiaries Subsidiaries Consolidated Net cash provided by operating activities $ — $ 16,121 $ 6,079 $ 22,200 Cash flows from investing activities Net receivables repaid (originated) — (5,830) 3,109 (2,721) Purchase of leasehold improvements and equipment — (1,001) — (1,001) Net cash provided by (used in) investing activities — (6,831) 3,109 (3,722) Cash flows from financing activities Payments on subsidiary note — (29) — (29) Payments on capital lease obligations, net — (248) — (248) Payments on lines of credit — (2,250) — (2,250) Net cash used in financing activities — (2,527) — (2,527) Net increase in cash and cash equivalents and restricted cash — 6,763 9,188 15,951 Cash and cash equivalents and restricted cash: Beginning — 74,792 34,556 109,348 Ending $ — $ 81,555 $ 43,744 $ 125,299 |
Ownership, Nature of Business32
Ownership, Nature of Business, and Significant Accounting Policies (Details) | 3 Months Ended |
Mar. 31, 2018locationsegmentstate | |
Nature of business | |
Number of retail locations owned and operated | location | 484 |
Number of states in which stores are operated | 12 |
Number of states in which the Company had an internet presence | 30 |
Business Segments | |
Number of operating segments | segment | 2 |
Ownership, Nature of Business33
Ownership, Nature of Business, and Significant Accounting Policies - Financing Receivables (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Medium term loans up to one year | ||
Finance receivables | ||
Maturity period of loan, for loan balances to be charged-off when accounts are past due by stipulated period | 1 year | |
Period of past due when accounts are required to be charged-off | 60 days | |
Medium term loans greater than one year | ||
Finance receivables | ||
Maturity period of loan, for loan balances to be charged-off when accounts are past due by stipulated period | 1 year | |
Minimum | Secured short term loan | ||
Finance receivables | ||
Period of past due when accounts are required to be charged-off | 30 days | |
Maximum | Secured short term loan | ||
Finance receivables | ||
Period of past due when accounts are required to be charged-off | 60 days | |
Maximum | Medium term loans greater than one year | ||
Finance receivables | ||
Period of past due when accounts are required to be charged-off | 91 days | |
Consumer Borrower | Secured short term loan | ||
Finance receivables | ||
Fee per $.1 borrowed (as a percent) | 14.00% | 14.50% |
Consumer Borrower | Unsecured short term loan | ||
Finance receivables | ||
Interest rate on loan products (as a percent) | 25.00% | |
Consumer Borrower | Secured Medium Term Loan | ||
Finance receivables | ||
Maturity period of promissory note | 90 days | |
Fee per $.1 borrowed (as a percent) | 14.00% | 12.60% |
Consumer Borrower | Minimum | Secured short term loan | ||
Finance receivables | ||
Maturity period of promissory note | 90 days | |
Consumer Borrower | Minimum | Unsecured short term loan | ||
Finance receivables | ||
Consumer loan products | $ 100 | |
Maturity period of promissory note | 14 days | |
Fee per $.1 borrowed (as a percent) | 15.00% | |
Consumer Borrower | Minimum | Medium-term consumer loans | ||
Finance receivables | ||
Maturity period of promissory note | 90 days | |
Consumer Borrower | Minimum | Unsecured Medium Term Loan | ||
Finance receivables | ||
Consumer loan products | $ 100 | |
Maturity period of promissory note | 3 months | |
Consumer Borrower | Maximum | Short-term consumer loans | ||
Finance receivables | ||
Maturity period of promissory note | 90 days | |
Consumer Borrower | Maximum | Unsecured short term loan | ||
Finance receivables | ||
Consumer loan products | $ 1,000 | |
Maturity period of promissory note | 30 days | |
Fee per $.1 borrowed (as a percent) | 20.00% | |
Consumer Borrower | Maximum | Medium-term consumer loans | ||
Finance receivables | ||
Maturity period of promissory note | 36 months | |
Consumer Borrower | Maximum | Unsecured Medium Term Loan | ||
Finance receivables | ||
Consumer loan products | $ 5,000 | |
Maturity period of promissory note | 36 months |
Ownership, Nature of Business34
Ownership, Nature of Business, and Significant Accounting Policies - Estimated fair values of financial instruments (Details) - USD ($) $ in Thousands, shares in Millions | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Financial assets: | ||||
Restricted cash | $ 4,420 | $ 4,585 | $ 3,515 | $ 3,015 |
Treasury stock. | ||||
Shares held in treasury stock | 1 | 1 | ||
Level 1 | Carrying Amount | ||||
Financial assets: | ||||
Cash and cash equivalents | $ 85,274 | $ 66,627 | ||
Restricted cash | 4,420 | 4,585 | ||
Level 1 | Fair Value | ||||
Financial assets: | ||||
Cash and cash equivalents | 85,274 | 66,627 | ||
Restricted cash | 4,420 | 4,585 | ||
Level 2 | Carrying Amount | ||||
Financial liabilities: | ||||
Lines of Credit | 47,000 | 47,000 | ||
Level 2 | Fair Value | ||||
Financial liabilities: | ||||
Lines of Credit | 47,000 | 47,000 | ||
Level 3 | Carrying Amount | ||||
Financial assets: | ||||
Finance receivables | 71,912 | 94,339 | ||
Level 3 | Fair Value | ||||
Financial assets: | ||||
Finance receivables | 71,912 | 94,339 | ||
Subsidiary Note payable | Level 2 | Carrying Amount | ||||
Financial liabilities: | ||||
Notes payable | 61,928 | 61,958 | ||
Subsidiary Note payable | Level 2 | Fair Value | ||||
Financial liabilities: | ||||
Notes payable | $ 61,928 | 61,958 | ||
10.75% senior secured notes due 2019 | Level 1 | Carrying Amount | ||||
Financial liabilities: | ||||
Notes payable | 237,290 | |||
10.75% senior secured notes due 2019 | Level 1 | Fair Value | ||||
Financial liabilities: | ||||
Notes payable | $ 212,636 | |||
10.75% senior secured notes due 2019 | Senior secured notes payable | ||||
Estimated fair values of financial instruments | ||||
Interest rate (as a percent) | 10.75% | 10.75% | ||
10.75% senior secured notes due 2019 | Senior secured notes payable | Level 1 | Carrying Amount | ||||
Financial liabilities: | ||||
Notes payable | $ 237,290 | |||
10.75% senior secured notes due 2019 | Senior secured notes payable | Level 1 | Fair Value | ||||
Financial liabilities: | ||||
Notes payable | $ 222,103 | |||
12.75% senior secured notes due 2020 | Level 2 | Carrying Amount | ||||
Financial liabilities: | ||||
Notes payable | $ 12,500 | |||
12.75% senior secured notes due 2020 | Level 2 | Fair Value | ||||
Financial liabilities: | ||||
Notes payable | $ 10,841 | |||
12.75% senior secured notes due 2020 | Senior secured notes payable | ||||
Estimated fair values of financial instruments | ||||
Interest rate (as a percent) | 12.75% | 12.75% | ||
12.75% senior secured notes due 2020 | Senior secured notes payable | Level 2 | Carrying Amount | ||||
Financial liabilities: | ||||
Notes payable | $ 12,500 | |||
12.75% senior secured notes due 2020 | Senior secured notes payable | Level 2 | Fair Value | ||||
Financial liabilities: | ||||
Notes payable | $ 11,479 |
Finance Receivables, Credit Q35
Finance Receivables, Credit Quality Information and Allowance for Loan Losses (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Finance Receivables, Credit Quality Information and Allowance for Loan Losses | ||||
Gross receivables | $ 88,975 | $ 92,510 | ||
Allowance for loan losses | (14,803) | $ (16,327) | (13,009) | $ (16,219) |
Finance receivables, net | 71,912 | 94,339 | ||
Consumer Borrower | ||||
Finance Receivables, Credit Quality Information and Allowance for Loan Losses | ||||
Gross receivables | 88,975 | 113,368 | ||
Unearned advance fees, net of deferred loan origination costs | (2,260) | (2,702) | ||
Finance receivables before allowance for loan losses | 86,715 | 110,666 | ||
Allowance for loan losses | (14,803) | (16,327) | ||
Finance receivables, net | 71,912 | 94,339 | ||
Short-term consumer loans | Consumer Borrower | ||||
Finance Receivables, Credit Quality Information and Allowance for Loan Losses | ||||
Gross receivables | 52,115 | 66,465 | 51,325 | |
Allowance for loan losses | (2,318) | (2,697) | (1,846) | (2,223) |
Medium-term consumer loans | Consumer Borrower | ||||
Finance Receivables, Credit Quality Information and Allowance for Loan Losses | ||||
Gross receivables | 36,860 | 46,903 | 41,185 | |
Allowance for loan losses | $ (12,485) | $ (13,630) | $ (11,163) | $ (13,996) |
Finance Receivables, Credit Q36
Finance Receivables, Credit Quality Information and Allowance for Loan Losses - Finance receivables (net), current and non-current portion (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Finance receivables, net | ||
Finance receivables, net Current portion | $ 68,286 | $ 89,707 |
Finance receivables, net Non-current portion | 3,626 | 4,632 |
Finance receivables, net | $ 71,912 | $ 94,339 |
Finance Receivables, Credit Q37
Finance Receivables, Credit Quality Information and Allowance for Loan Losses - Changes in the allowance for the loan losses by product type (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Changes in the allowance for the loan losses by product type | |||
Balance at the beginning of the period | $ 16,327 | $ 16,219 | |
Provision | 16,556 | 13,654 | |
Charge-offs | (29,491) | (31,113) | |
Recoveries | 11,411 | 14,249 | |
Balance at the end of the period | 14,803 | 13,009 | |
Total Finance receivables at the end of the period | $ 88,975 | $ 92,510 | |
Allowance as a percentage of receivable | 16.64% | 14.06% | |
Third party lender | |||
Changes in the allowance for the loan losses by product type | |||
Balance at the beginning of the period | $ 4,818 | $ 3,099 | |
Provision | 5,017 | 4,487 | |
Charge-offs | (6,067) | (4,895) | |
Balance at the end of the period | 3,768 | 2,691 | |
Debt sales | 210 | 181 | |
Total gross finance receivables for which accrual for third-party lender losses has been recorded | 29,575 | $ 36,967 | |
Consumer Borrower | |||
Changes in the allowance for the loan losses by product type | |||
Balance at the beginning of the period | 16,327 | ||
Balance at the end of the period | 14,803 | ||
Total Finance receivables at the end of the period | 88,975 | 113,368 | |
Troubled debt restructuring | |||
Changes in the allowance for the loan losses by product type | |||
Allowance for TDR's | 6 | 5 | |
Net carrying value of TDR's | 14 | 15 | |
Short-term consumer loans | |||
Changes in the allowance for the loan losses by product type | |||
Total gross finance receivables for which accrual for third-party lender losses has been recorded | 28,646 | 35,801 | |
Short-term consumer loans | Third party lender | |||
Changes in the allowance for the loan losses by product type | |||
Balance at the beginning of the period | 4,570 | 2,907 | |
Provision | 4,938 | 4,428 | |
Charge-offs | (5,928) | (4,764) | |
Balance at the end of the period | 3,580 | 2,571 | |
Short-term consumer loans | Consumer Borrower | |||
Changes in the allowance for the loan losses by product type | |||
Balance at the beginning of the period | 2,697 | 2,223 | |
Provision | 8,159 | 6,433 | |
Charge-offs | (18,424) | (19,134) | |
Recoveries | 9,886 | 12,324 | |
Balance at the end of the period | 2,318 | 1,846 | |
Total Finance receivables at the end of the period | $ 52,115 | $ 51,325 | 66,465 |
Allowance as a percentage of receivable | 4.45% | 3.60% | |
Debt sales | $ 412 | $ 89 | |
Required purchases | 16,840 | 11,568 | |
Short-term consumer loans | Credit service program (CSO Program) | Consumer Borrower | |||
Changes in the allowance for the loan losses by product type | |||
Recoveries | 11,279 | 7,146 | |
Medium-term consumer loans | |||
Changes in the allowance for the loan losses by product type | |||
Total gross finance receivables for which accrual for third-party lender losses has been recorded | 929 | 1,166 | |
Medium-term consumer loans | Third party lender | |||
Changes in the allowance for the loan losses by product type | |||
Balance at the beginning of the period | 248 | 192 | |
Provision | 79 | 59 | |
Charge-offs | (139) | (131) | |
Balance at the end of the period | 188 | 120 | |
Medium-term consumer loans | Consumer Borrower | |||
Changes in the allowance for the loan losses by product type | |||
Balance at the beginning of the period | 13,630 | 13,996 | |
Provision | 8,397 | 7,221 | |
Charge-offs | (11,067) | (11,979) | |
Recoveries | 1,525 | 1,925 | |
Balance at the end of the period | 12,485 | 11,163 | |
Total Finance receivables at the end of the period | $ 36,860 | $ 41,185 | $ 46,903 |
Allowance as a percentage of receivable | 33.87% | 27.10% | |
Debt sales | $ 562 | $ 375 | |
Required purchases | 199 | 204 | |
Medium-term consumer loans | Troubled debt restructuring | Consumer Borrower | |||
Changes in the allowance for the loan losses by product type | |||
Provision and write off | 20 | 13 | |
Payment defaults for loans evaluated for impairment | 54 | 0 | |
Medium-term consumer loans | Credit service program (CSO Program) | Consumer Borrower | |||
Changes in the allowance for the loan losses by product type | |||
Recoveries | 59 | 73 | |
Check cashing | Consumer Borrower | |||
Changes in the allowance for the loan losses by product type | |||
Provision | $ 1,062 | $ 1,399 |
Finance Receivables, Credit Q38
Finance Receivables, Credit Quality Information and Allowance for Loan Losses - Aging of receivables (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 |
Past due finance receivables | |||
Gross receivables | $ 88,975 | $ 92,510 | |
Consumer Borrower | |||
Aging of receivables | |||
Current finance receivables | $ 81,847 | $ 101,102 | |
Current finance receivables (as a percent) | 92.00% | 89.20% | |
Past due finance receivables | |||
Total past due finance receivables (1 - 30 days) | $ 3,855 | $ 8,548 | |
Total past due finance receivables (1 - 30 days) (as a percent) | 4.30% | 7.50% | |
Total past due finance receivables (31 - 60 days) | $ 2,588 | $ 3,130 | |
Total past due finance receivables (31 - 60 days) (as a percent) | 2.90% | 2.80% | |
Total past due finance receivables (61 - 90 days) | $ 685 | $ 588 | |
Total past due finance receivables (61 - 90 days) (as a percent) | 0.80% | 0.50% | |
Total delinquent | $ 7,128 | $ 12,266 | |
Total delinquent (as a percent) | 8.00% | 10.80% | |
Gross receivables | $ 88,975 | $ 113,368 | |
Gross receivables (as a percent) | 100.00% | 100.00% | |
Consumer Borrower | Short-term consumer loans | |||
Past due finance receivables | |||
Total past due finance receivables (1 - 30 days) | $ 1,280 | $ 2,046 | |
Total past due finance receivables (1 - 30 days) (as a percent) | 1.40% | 1.80% | |
Gross receivables | $ 52,115 | $ 66,465 | 51,325 |
Consumer Borrower | Medium-term consumer loans | |||
Past due finance receivables | |||
Total past due finance receivables (1 - 30 days) | $ 2,575 | $ 6,502 | |
Total past due finance receivables (1 - 30 days) (as a percent) | 2.90% | 5.70% | |
Total past due finance receivables (31 - 60 days) | $ 2,588 | $ 3,130 | |
Total past due finance receivables (31 - 60 days) (as a percent) | 2.90% | 2.80% | |
Total past due finance receivables (61 - 90 days) | $ 685 | $ 588 | |
Total past due finance receivables (61 - 90 days) (as a percent) | 0.80% | 0.50% | |
Gross receivables | $ 36,860 | $ 46,903 | $ 41,185 |
Related Party Transactions an39
Related Party Transactions and Balances (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Related Party Transactions and Balances | |
Related party transaction | $ 0 |
Goodwill and Other Intangible40
Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Goodwill and Other Intangible Assets | ||
Goodwill and other intangible assets | $ 0 | |
Intangible amortization expense | $ 123 | $ 124 |
Pledged Assets and Debt - Line
Pledged Assets and Debt - Line of Credit Facility (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Line of Credit Facility | ||
Line of credit, noncurrent | $ 42,799 | $ 45,129 |
Revolving credit due April 2019 | ||
Line of Credit Facility | ||
Maximum borrowing capacity | 47,000 | |
Revolving credit facility | ||
Line of Credit Facility | ||
Principal | 47,000 | 47,000 |
Principal, noncurrent | 47,000 | 47,000 |
Deferred issuance costs | 4,201 | 1,871 |
Deferred Issuance costs, noncurrent | 4,201 | 1,871 |
Line of credit | 42,799 | 45,129 |
Line of credit, noncurrent | 42,799 | 45,129 |
Revolving credit facility | Revolving credit due April 2019 | ||
Line of Credit Facility | ||
Principal | 47,000 | 47,000 |
Deferred issuance costs | 4,201 | 1,871 |
Line of credit | 42,799 | $ 45,129 |
Maximum borrowing capacity | $ 47,000 | |
Prime rate | ||
Line of Credit Facility | ||
Interest rate at the end of period (as a percent) | 4.75% | 4.50% |
3-Month LIBOR | ||
Line of Credit Facility | ||
Variable rate basis | 3-month LIBOR | 3-month LIBOR |
Interest rate at the end of period (as a percent) | 2.31% | 1.69% |
3-Month LIBOR | Revolving credit facility | ||
Line of Credit Facility | ||
Margin (as a percent) | 11.00% |
Pledged Assets and Debt - Senio
Pledged Assets and Debt - Senior secured notes payable (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Senior secure notes payable | ||
Net principal, Noncurrent | $ 248,425 | $ 248,126 |
Senior secured notes payable | ||
Senior secure notes payable | ||
Deferred issuance costs | 1,365 | 1,664 |
Deferred Issuance costs, noncurrent | 1,365 | 1,664 |
Principal | 249,790 | 249,790 |
Principal, Noncurrent | 249,790 | 249,790 |
Net principal | 248,425 | 248,126 |
Net principal, Noncurrent | 248,425 | 248,126 |
Senior secured notes payable | 10.75% senior secured notes due 2019 | ||
Senior secure notes payable | ||
Maximum borrowing capacity | $ 395,000 | |
Interest rate (as a percent) | 10.75% | |
Deferred issuance costs | $ 1,222 | 1,504 |
Principal | 237,290 | 237,290 |
Net principal | $ 236,068 | $ 235,786 |
Senior secured notes payable | 12.75% senior secured notes due 2020 | ||
Senior secure notes payable | ||
Interest rate (as a percent) | 12.75% | 12.75% |
Deferred issuance costs | $ 143 | $ 160 |
Principal | 12,500 | 12,500 |
Net principal | $ 12,357 | $ 12,340 |
Pledged Assets and Debt - Subsi
Pledged Assets and Debt - Subsidiary notes payable (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 30, 2018 | Dec. 31, 2017 | |
Debt | |||
Net principal, current | $ 120 | $ 118 | |
Net principal, noncurrent | 59,600 | 61,077 | |
Cash balance | 89,694 | ||
Revolving credit due April 2019 | |||
Debt | |||
Maximum borrowing capacity | 47,000 | ||
Subsidiary Note payable | |||
Debt | |||
Principal | 61,928 | 61,958 | |
Principal, current | 121 | 119 | |
Principal, noncurrent | 61,807 | 61,839 | |
Deferred issuance costs | 2,208 | 763 | |
Deferred issuance costs, current | 1 | 1 | |
Deferred Issuance costs, noncurrent | 2,207 | 762 | |
Net principal | 59,720 | 61,195 | |
Net principal, current | 120 | 118 | |
Net principal, noncurrent | 59,600 | 61,077 | |
Subsidiary Note payable | Note, secured, due April 2019 | |||
Debt | |||
Principal | 60,000 | 60,000 | |
Deferred issuance costs | 2,191 | 744 | |
Net principal | 57,809 | 59,256 | |
Face amount of debt | $ 60,000 | ||
Interest rate (as a percent) | 16.75% | ||
Maximum borrowing capacity | $ 60,000 | ||
Administrative fee | 0.95% | ||
Subsidiary Note payable | Term note, secured, due July 2019 | |||
Debt | |||
Principal | $ 867 | 882 | |
Deferred issuance costs | 4 | 5 | |
Net principal | 863 | 877 | |
Face amount of debt | $ 1,425 | ||
Interest rate (as a percent) | 4.25% | ||
Subsidiary Note payable | Term Note, secured, due May 2021 | |||
Debt | |||
Principal | $ 1,061 | 1,076 | |
Deferred issuance costs | 13 | 14 | |
Net principal | 1,048 | 1,062 | |
Face amount of debt | $ 1,165 | ||
Interest rate (as a percent) | 4.50% | ||
Senior secured notes payable | |||
Debt | |||
Deferred issuance costs | $ 1,365 | 1,664 | |
Deferred Issuance costs, noncurrent | 1,365 | 1,664 | |
Principal | $ 249,790 | $ 249,790 | |
Senior secured notes payable | 10.75% senior secured notes due 2019 | |||
Debt | |||
Interest rate (as a percent) | 10.75% | 10.75% | |
Principal | $ 237,290 | ||
Maximum borrowing capacity | $ 25,000 |
Accounts Payable and Accrued 44
Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Accounts Payable and Accrued Liabilities | ||
Accounts payable | $ 3,477 | $ 5,465 |
Accrued payroll and compensated absences | 6,316 | 7,718 |
Wire transfers payable | 1,502 | 2,238 |
Accrual for third-party losses | 3,768 | 4,818 |
Unearned CSO fees | 6,620 | 8,029 |
Deferred rent | 791 | 867 |
Bill payment service liability | 2,036 | 2,604 |
Lease termination | 1,727 | 1,978 |
Other | 5,566 | 5,849 |
Accounts payable and accrued liabilities | $ 31,803 | $ 39,566 |
Operating and Capital Lease C45
Operating and Capital Lease Commitments and Total Rental Expense- Rental expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Operating and Capital Lease Commitments and Total Rental Expense | ||
Rental expense, including maintenance and real estate tax expense | $ 6,660 | $ 7,034 |
Lease termination cost | $ 1,762 | |
Reduction in lease commitments | $ 0 |
Concentrations of Credit Risk46
Concentrations of Credit Risks (Details) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018USD ($)item | Dec. 31, 2017USD ($) | |
Finance receivables | ||
Concentration of credit risks | ||
Number of states in which customers are living | item | 33 | |
Finance receivables | Geographic concentration risk | ||
Concentration of credit risks | ||
Balance Outstanding | $ 88,975 | $ 113,368 |
Percentage of Total Outstanding | 100.00% | 100.00% |
Finance receivables | Geographic concentration risk | Alabama | ||
Concentration of credit risks | ||
Balance Outstanding | $ 10,001 | $ 12,808 |
Percentage of Total Outstanding | 11.20% | 11.30% |
Finance receivables | Geographic concentration risk | Arizona | ||
Concentration of credit risks | ||
Balance Outstanding | $ 9,935 | $ 11,994 |
Percentage of Total Outstanding | 11.20% | 10.60% |
Finance receivables | Geographic concentration risk | California | ||
Concentration of credit risks | ||
Balance Outstanding | $ 31,290 | $ 39,835 |
Percentage of Total Outstanding | 35.20% | 35.10% |
Finance receivables | Geographic concentration risk | Mississippi | ||
Concentration of credit risks | ||
Balance Outstanding | $ 5,864 | $ 7,409 |
Percentage of Total Outstanding | 6.60% | 6.50% |
Finance receivables | Geographic concentration risk | Virginia | ||
Concentration of credit risks | ||
Balance Outstanding | $ 10,152 | $ 12,018 |
Percentage of Total Outstanding | 11.40% | 10.60% |
Finance receivables | Geographic concentration risk | Other retail segment states | ||
Concentration of credit risks | ||
Balance Outstanding | $ 14,685 | $ 19,696 |
Percentage of Total Outstanding | 16.50% | 17.40% |
Finance receivables | Geographic concentration risk | Other Internet Segment States | ||
Concentration of credit risks | ||
Balance Outstanding | $ 7,048 | $ 9,608 |
Percentage of Total Outstanding | 7.90% | 8.50% |
Third party lender | ||
Concentration of credit risks | ||
Total gross finance receivables for which accrual for third-party lender losses has been recorded | $ 29,575 | $ 36,967 |
Short-term consumer loans | ||
Concentration of credit risks | ||
Total gross finance receivables for which accrual for third-party lender losses has been recorded | 28,646 | 35,801 |
Medium-term consumer loans | ||
Concentration of credit risks | ||
Total gross finance receivables for which accrual for third-party lender losses has been recorded | $ 929 | $ 1,166 |
Stock Based Compensation - (Det
Stock Based Compensation - (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Stock based compensation | |||
Granted (in shares) | 76,559 | ||
Granted (in dollars per share) | $ 1 | ||
Weighted average assumptions for options grants | |||
Risk-free interest rate (as a percent) | 1.76% | ||
Dividend yield (as a percent) | 0.00% | ||
Expected volatility (as a percent) | 150.00% | ||
Expected term (years) | 1 year | ||
Additional disclosure | |||
Stock-based compensation costs | $ 8 | $ 32 | |
Unrecognized stock-based compensation costs to be recognized over future periods | 58 | $ 66 | |
Unrecognized stock-based compensation costs to be recognized in future periods for awards that vest over requisite service period | $ 58 | ||
Weighted average period over which unrecognized stock-based compensation costs are expected to be recognized, for awards that vest over requisite service period or upon change in control | 1 year 9 months 18 days | ||
Income tax benefit recognized in the consolidated statements of operations for share-based compensation arrangements | $ 2 | $ 9 | |
Shares | |||
Outstanding at the beginning of the period (in shares) | 1,332,632 | ||
Granted (in shares) | 76,559 | ||
Outstanding at the end of the period (in shares) | 1,409,191 | 1,332,632 | |
Exercisable at the end of the period (in shares) | 1,277,737 | ||
Vested or expected to vest at the end of the period (in shares) | 1,409,191 | ||
Weighted-Average Exercise Price (actual per share price) | |||
Outstanding at the beginning of the period (in dollars per share) | $ 2.25 | ||
Granted (in dollars per share) | 1 | ||
Outstanding at the end of the period (in dollars per share) | 2.18 | $ 2.25 | |
Exercisable at the end of the period (in dollars per share) | 2.25 | ||
Vested or expected to vest at the end of the period (in dollars per share) | $ 2.18 | ||
Weighted-Average Remaining Contractual Term | |||
Weighted-Average Remaining Contractual Term | 8 years 3 months 18 days | 8 years 6 months | |
Granted | 8 years 3 months 18 days | ||
Exercisable at the end of the period | 8 years 2 months 12 days | ||
Vested or expected to vest at the end of the period | 8 years 3 months 18 days | ||
Stock options | |||
Stock based compensation | |||
Granted (in shares) | 76,559 | ||
Granted (in dollars per share) | $ 1 | ||
Shares | |||
Granted (in shares) | 76,559 | ||
Weighted-Average Exercise Price (actual per share price) | |||
Granted (in dollars per share) | $ 1 |
Business Segments (Details)
Business Segments (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018USD ($)segment | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | |
Business segment | |||
Number of operating segments | segment | 2 | ||
Total Assets | $ 204,016 | $ 366,701 | $ 212,406 |
Goodwill | 113,256 | ||
Other Intangible Assets | 802 | 1,288 | $ 924 |
Total Revenues | $ 87,651 | $ 85,352 | |
Total Revenues, % of Revenue | 100.00% | 100.00% | |
Provision for loan losses | $ 22,635 | $ 19,540 | |
Provision for Loan Losses, % of Revenue | 25.80% | 22.90% | |
Other Operating Expenses | $ 37,831 | $ 39,216 | |
Other Operating Expenses, % of Revenue | 43.20% | 45.90% | |
Operating Gross Profit | $ 27,185 | $ 26,596 | |
Operating Gross Profit, % of Revenue | 31.00% | 31.20% | |
Interest Expense, net | $ 12,178 | $ 11,371 | |
Interest Expense, net, % of Revenue | 13.90% | 13.30% | |
Depreciation and Amortization | $ 1,093 | $ 1,309 | |
Depreciation and Amortization, % of Revenue | 1.30% | 1.50% | |
Lease termination | $ 1,762 | ||
Lease termination Expenses, % of Revenue | 2.10% | ||
Other Corporate Expenses | $ 17,602 | $ 20,186 | |
Other corporate Expenses, % of Revenue | 20.10% | 23.70% | |
Loss from continuing operations, before tax | $ (3,688) | $ (8,032) | |
Income from Continuing Operations, before tax | (4.20%) | (9.40%) | |
Unallocated (Income) Expenses | |||
Business segment | |||
Other Corporate Expenses | $ 17,602 | $ 20,186 | |
Loss from continuing operations, before tax | (17,602) | (20,186) | |
Retail Financial Services | |||
Business segment | |||
Total Assets | 166,505 | 309,595 | |
Goodwill | 113,256 | ||
Other Intangible Assets | 336 | 488 | |
Total Revenues | $ 72,797 | $ 68,691 | |
Total Revenues, % of Revenue | 100.00% | 100.00% | |
Provision for loan losses | $ 15,620 | $ 12,058 | |
Provision for Loan Losses, % of Revenue | 21.40% | 17.60% | |
Other Operating Expenses | $ 36,291 | $ 38,207 | |
Other Operating Expenses, % of Revenue | 49.90% | 55.60% | |
Operating Gross Profit | $ 20,886 | $ 18,426 | |
Operating Gross Profit, % of Revenue | 28.70% | 26.80% | |
Interest Expense, net | $ 9,479 | $ 7,366 | |
Interest Expense, net, % of Revenue | 13.00% | 10.70% | |
Depreciation and Amortization | $ 1,000 | $ 1,129 | |
Depreciation and Amortization, % of Revenue | 1.40% | 1.60% | |
Loss from continuing operations, before tax | $ 10,407 | $ 9,931 | |
Income from Continuing Operations, before tax | 14.30% | 14.50% | |
Internet Financial Services | |||
Business segment | |||
Total Assets | $ 37,511 | $ 57,106 | |
Other Intangible Assets | 466 | 800 | |
Total Revenues | $ 14,854 | $ 16,661 | |
Total Revenues, % of Revenue | 100.00% | 100.00% | |
Provision for loan losses | $ 7,015 | $ 7,482 | |
Provision for Loan Losses, % of Revenue | 47.20% | 44.90% | |
Other Operating Expenses | $ 1,540 | $ 1,009 | |
Other Operating Expenses, % of Revenue | 10.40% | 6.10% | |
Operating Gross Profit | $ 6,299 | $ 8,170 | |
Operating Gross Profit, % of Revenue | 42.40% | 49.00% | |
Interest Expense, net | $ 2,699 | $ 4,005 | |
Interest Expense, net, % of Revenue | 18.20% | 24.00% | |
Depreciation and Amortization | $ 93 | $ 180 | |
Depreciation and Amortization, % of Revenue | 0.60% | 1.10% | |
Lease termination | $ 1,762 | ||
Lease termination Expenses, % of Revenue | 10.60% | ||
Loss from continuing operations, before tax | $ 3,507 | $ 2,223 | |
Income from Continuing Operations, before tax | 23.60% | 13.30% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Income Taxes | ||
Liability recorded for unrecognized tax benefits | $ 0 | $ 0 |
Gross deferred tax assets | 72,877 | 71,896 |
Valuation allowance | 72,877 | $ 71,896 |
Credits or net operating losses | $ 0 |
Transactions with Variable In50
Transactions with Variable Interest Entities (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Variable Interest Entities | ||
Accrual for third-party losses | $ 3,768 | $ 4,818 |
Insight Holdings | ||
Variable Interest Entities | ||
Outstanding amount of active third party consumer loans | 29,575 | 36,967 |
Accrual for third-party losses | 3,768 | 4,818 |
Short-term consumer loans | Insight Holdings | ||
Variable Interest Entities | ||
Outstanding amount of active third party consumer loans | 28,646 | 35,801 |
Medium-term consumer loans | Insight Holdings | ||
Variable Interest Entities | ||
Outstanding amount of active third party consumer loans | $ 929 | $ 1,166 |
Supplemental Guarantor Inform51
Supplemental Guarantor Information (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
CCFI | |
Supplemental guarantor information | |
Independent assets | $ 0 |
Independent operations | 0 |
Guarantor Subsidiaries | Financial guarantee | 2019 and 2020 Notes | |
Supplemental guarantor information | |
Total net worth requirements | 4,610 |
Guarantor Subsidiaries | Financial guarantee | Minimum | 2019 and 2020 Notes | |
Supplemental guarantor information | |
Net worth required to be maintained | 10 |
Guarantor Subsidiaries | Financial guarantee | Maximum | 2019 and 2020 Notes | |
Supplemental guarantor information | |
Net worth required to be maintained | $ 2,000 |
Supplemental Condensed Consol52
Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information (Details) | Mar. 31, 2018 |
Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information | |
Ownership interest (as a percent) | 100.00% |
Supplemental Condensed Consol53
Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information - Condensed Consolidating Balance Sheet (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Current Assets | ||||
Cash and cash equivalents | $ 85,274 | $ 66,627 | $ 121,784 | $ 106,333 |
Restricted cash | 4,420 | 4,585 | 3,515 | $ 3,015 |
Finance receivables, net | 68,286 | 89,707 | ||
Card related pre-funding and receivables | 841 | 1,062 | ||
Other current assets | 13,522 | 15,271 | ||
Total current assets | 172,343 | 177,252 | ||
Noncurrent Assets | ||||
Finance receivables, net | 3,626 | 4,632 | ||
Property, leasehold improvements and equipment, net | 24,816 | 26,848 | ||
Goodwill | 113,256 | |||
Other intangible assets | 802 | 924 | 1,288 | |
Security deposits | 2,429 | 2,750 | ||
Total assets | 204,016 | 212,406 | $ 366,701 | |
Current Liabilities | ||||
Accounts payable and accrued liabilities | 31,803 | 39,566 | ||
Money orders payable | 8,024 | 7,169 | ||
Accrued interest | 11,942 | 5,145 | ||
Current portion of capital lease obligation | 160 | 371 | ||
Current portion of subsidiary note payable | 120 | 118 | ||
Deferred revenue | 2,535 | 2,535 | ||
Total current liabilities | 54,584 | 54,904 | ||
Noncurrent Liabilities | ||||
Lease termination payable | 569 | 818 | ||
Lines of credit | 42,799 | 45,129 | ||
Subsidiary note payable | 59,600 | 61,077 | ||
Senior secured notes | 248,425 | 248,126 | ||
Deferred Revenue | 6,887 | 7,520 | ||
Total liabilities | 412,864 | 417,574 | ||
Stockholders' Equity (Deficit) | ||||
Total stockholders' deficit | (208,848) | (205,168) | ||
Total liabilities and stockholders' equity | 204,016 | 212,406 | ||
Eliminations | ||||
Current Assets | ||||
Other current assets | (18,294) | (42,284) | ||
Total current assets | (18,294) | (42,284) | ||
Noncurrent Assets | ||||
Investment in Subsidiaries | (365,365) | (360,599) | ||
Total assets | (383,659) | (402,883) | ||
Current Liabilities | ||||
Accounts payable and accrued liabilities | (8,209) | (32,494) | ||
Accrued interest | (4,232) | (3,937) | ||
CCFI funding notes | (5,853) | (5,853) | ||
Total current liabilities | (18,294) | (42,284) | ||
Noncurrent Liabilities | ||||
Total liabilities | (18,294) | (42,284) | ||
Stockholders' Equity (Deficit) | ||||
Total stockholders' deficit | (365,365) | (360,599) | ||
Total liabilities and stockholders' equity | (383,659) | (402,883) | ||
Community Choice Financial | Reportable legal entities | ||||
Noncurrent Assets | ||||
Investment in Subsidiaries | 365,365 | 360,599 | ||
Total assets | 365,365 | 360,599 | ||
Current Liabilities | ||||
Accrued interest | 11,937 | 5,140 | ||
Total current liabilities | 11,937 | 5,140 | ||
Noncurrent Liabilities | ||||
Lines of credit | 42,799 | 45,129 | ||
Senior secured notes | 248,425 | 248,126 | ||
Total liabilities | 303,161 | 298,395 | ||
Stockholders' Equity (Deficit) | ||||
Total stockholders' deficit | 62,204 | 62,204 | ||
Total liabilities and stockholders' equity | 365,365 | 360,599 | ||
Guarantor Subsidiaries | Reportable legal entities | ||||
Current Assets | ||||
Cash and cash equivalents | 63,751 | 57,526 | ||
Restricted cash | 4,420 | 4,585 | ||
Finance receivables, net | 20,859 | 47,221 | ||
Card related pre-funding and receivables | 841 | 1,062 | ||
Other current assets | 22,161 | 39,604 | ||
Total current assets | 112,032 | 149,998 | ||
Noncurrent Assets | ||||
Finance receivables, net | 3,626 | 4,632 | ||
Property, leasehold improvements and equipment, net | 24,816 | 26,848 | ||
Other intangible assets | 802 | 924 | ||
Security deposits | 2,429 | 2,750 | ||
Total assets | 143,705 | 185,152 | ||
Current Liabilities | ||||
Accounts payable and accrued liabilities | 25,761 | 57,696 | ||
Money orders payable | 8,024 | 7,169 | ||
Accrued interest | 5 | 5 | ||
Current portion of capital lease obligation | 160 | 371 | ||
Current portion of subsidiary note payable | 120 | 118 | ||
Deferred revenue | 2,535 | 2,535 | ||
Total current liabilities | 36,605 | 67,894 | ||
Noncurrent Liabilities | ||||
Lease termination payable | 569 | 818 | ||
Subsidiary note payable | 1,791 | 1,821 | ||
Deferred Revenue | 6,887 | 7,520 | ||
Total liabilities | 45,852 | 78,053 | ||
Stockholders' Equity (Deficit) | ||||
Total stockholders' deficit | 97,853 | 107,099 | ||
Total liabilities and stockholders' equity | 143,705 | 185,152 | ||
Non-Guarantor Subsidiaries | Reportable legal entities | ||||
Current Assets | ||||
Cash and cash equivalents | 21,523 | 9,101 | ||
Finance receivables, net | 47,427 | 42,486 | ||
Other current assets | 9,655 | 17,951 | ||
Total current assets | 78,605 | 69,538 | ||
Noncurrent Assets | ||||
Total assets | 78,605 | 69,538 | ||
Current Liabilities | ||||
Accounts payable and accrued liabilities | 14,251 | 14,364 | ||
Accrued interest | 4,232 | 3,937 | ||
CCFI funding notes | 5,853 | 5,853 | ||
Total current liabilities | 24,336 | 24,154 | ||
Noncurrent Liabilities | ||||
Subsidiary note payable | 57,809 | 59,256 | ||
Total liabilities | 82,145 | 83,410 | ||
Stockholders' Equity (Deficit) | ||||
Total stockholders' deficit | (3,540) | (13,872) | ||
Total liabilities and stockholders' equity | $ 78,605 | $ 69,538 |
Supplemental Condensed Consol54
Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information - Consolidated Statements of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues: | ||
Total Revenues | $ 87,651 | $ 85,352 |
Corporate and other expenses: | ||
Salaries | 17,132 | 17,273 |
Provision for loan losses | 22,635 | 19,540 |
Occupancy | 6,343 | 6,629 |
Advertising and marketing | 1,011 | 814 |
Lease termination costs | 97 | 47 |
Depreciation and amortization | 2,223 | 2,538 |
Other | 11,025 | 11,915 |
Total operating expenses | 60,466 | 58,756 |
Operating gross profit | 27,185 | 26,596 |
Corporate expenses | 17,602 | 20,186 |
Lease Termination | 1,762 | |
Depreciation and amortization | 1,093 | 1,309 |
Interest expense, net | 12,178 | 11,371 |
Total corporate and other expenses | 30,873 | 34,628 |
Loss from continuing operations, before tax | (3,688) | (8,032) |
Provision for income taxes | 333 | |
Net loss | (3,688) | (8,365) |
Eliminations | ||
Revenues: | ||
Dividend | (3,000) | |
Total Revenues | (295) | (3,295) |
Corporate and other expenses: | ||
Operating gross profit | (295) | (3,295) |
Interest expense, net | (295) | (295) |
Total corporate and other expenses | (295) | (295) |
Loss from continuing operations, before tax | (3,000) | |
Provision for income taxes | 125 | |
Net loss | (3,125) | |
Community Choice Financial | Reportable legal entities | ||
Corporate and other expenses: | ||
Interest expense, net | 9,367 | 9,023 |
Interest expense allocation | (9,367) | (9,023) |
Guarantor Subsidiaries | Reportable legal entities | ||
Revenues: | ||
Dividend | 3,000 | |
Total Revenues | 59,584 | 79,377 |
Corporate and other expenses: | ||
Salaries | 17,132 | 17,273 |
Provision for loan losses | 9,205 | 16,458 |
Occupancy | 6,343 | 6,629 |
Advertising and marketing | 1,011 | 814 |
Lease termination costs | 97 | 47 |
Depreciation and amortization | 2,223 | 2,538 |
Other | 11,025 | 11,914 |
Total operating expenses | 47,036 | 55,673 |
Operating gross profit | 12,548 | 23,704 |
Corporate expenses | 17,490 | 20,095 |
Intercompany management fee | (1,385) | (427) |
Lease Termination | 1,762 | |
Depreciation and amortization | 1,093 | 1,309 |
Interest expense, net | 124 | 195 |
Interest expense allocation | 9,367 | 9,023 |
Total corporate and other expenses | 26,689 | 31,957 |
Loss from continuing operations, before tax | (14,141) | (8,253) |
Provision for income taxes | 342 | |
Net loss | (14,141) | (8,595) |
Non-Guarantor Subsidiaries | Reportable legal entities | ||
Revenues: | ||
Total Revenues | 28,362 | 9,270 |
Corporate and other expenses: | ||
Provision for loan losses | 13,430 | 3,082 |
Other | 1 | |
Total operating expenses | 13,430 | 3,083 |
Operating gross profit | 14,932 | 6,187 |
Corporate expenses | 112 | 91 |
Intercompany management fee | 1,385 | 427 |
Interest expense, net | 2,982 | 2,448 |
Total corporate and other expenses | 4,479 | 2,966 |
Loss from continuing operations, before tax | 10,453 | 3,221 |
Provision for income taxes | (134) | |
Net loss | 10,453 | 3,355 |
Finance receivable fees | ||
Revenues: | ||
Total Revenues | 50,932 | 49,051 |
Finance receivable fees | Guarantor Subsidiaries | Reportable legal entities | ||
Revenues: | ||
Total Revenues | 22,863 | 39,830 |
Finance receivable fees | Non-Guarantor Subsidiaries | Reportable legal entities | ||
Revenues: | ||
Total Revenues | 28,069 | 9,221 |
Credit service fees | ||
Revenues: | ||
Total Revenues | 19,196 | 18,139 |
Credit service fees | Guarantor Subsidiaries | Reportable legal entities | ||
Revenues: | ||
Total Revenues | 19,196 | 18,139 |
Check cashing fees | ||
Revenues: | ||
Total Revenues | 11,692 | 12,126 |
Check cashing fees | Guarantor Subsidiaries | Reportable legal entities | ||
Revenues: | ||
Total Revenues | 11,692 | 12,126 |
Card fees | ||
Revenues: | ||
Total Revenues | 1,948 | 2,007 |
Card fees | Guarantor Subsidiaries | Reportable legal entities | ||
Revenues: | ||
Total Revenues | 1,948 | 2,007 |
Other | ||
Revenues: | ||
Total Revenues | 3,883 | 4,029 |
Other | Eliminations | ||
Revenues: | ||
Total Revenues | (295) | (295) |
Other | Guarantor Subsidiaries | Reportable legal entities | ||
Revenues: | ||
Total Revenues | 3,885 | 4,275 |
Other | Non-Guarantor Subsidiaries | Reportable legal entities | ||
Revenues: | ||
Total Revenues | $ 293 | $ 49 |
Supplemental Condensed Consol55
Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information - Condensed Consolidating Statement of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Condensed Consolidating Statement of Cash Flows | ||
Net cash provided by operating activities | $ 24,589 | $ 22,200 |
Cash flows from investing activities | ||
Net receivables repaid (originated) | (208) | (2,721) |
Purchase of leasehold improvements and equipment | (1,274) | (1,001) |
Net cash used in investing activities | (1,482) | (3,722) |
Cash flows from financing activities | ||
Payments on subsidiary note | (30) | (29) |
Payments on capital lease obligations, net | (211) | (248) |
Payments on capital lease obligations, net | (2,250) | |
Debt issuance costs | (4,384) | |
Net cash used in financing activities | (4,625) | (2,527) |
CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents | 18,482 | 15,951 |
Cash and cash equivalents and restricted cash: | ||
Beginning | 71,212 | 109,348 |
Ending | 89,694 | 125,299 |
Nonoperating Income (Expense) | (30,873) | (34,628) |
Eliminations | ||
Cash and cash equivalents and restricted cash: | ||
Nonoperating Income (Expense) | 295 | 295 |
Community Choice Financial | Reportable legal entities | ||
Condensed Consolidating Statement of Cash Flows | ||
Net cash provided by operating activities | 2,762 | |
Cash flows from financing activities | ||
Debt issuance costs | (2,762) | |
Net cash used in financing activities | (2,762) | |
Guarantor Subsidiaries | Reportable legal entities | ||
Condensed Consolidating Statement of Cash Flows | ||
Net cash provided by operating activities | (10,588) | 16,121 |
Cash flows from investing activities | ||
Net receivables repaid (originated) | 18,163 | (5,830) |
Purchase of leasehold improvements and equipment | (1,274) | (1,001) |
Net cash used in investing activities | 16,889 | (6,831) |
Cash flows from financing activities | ||
Payments on subsidiary note | (30) | (29) |
Payments on capital lease obligations, net | (211) | (248) |
Payments on capital lease obligations, net | (2,250) | |
Net cash used in financing activities | (241) | (2,527) |
CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents | 6,060 | 6,763 |
Cash and cash equivalents and restricted cash: | ||
Beginning | 62,111 | 74,792 |
Ending | 68,171 | 81,555 |
Nonoperating Income (Expense) | (26,689) | (31,957) |
Non-Guarantor Subsidiaries | Reportable legal entities | ||
Condensed Consolidating Statement of Cash Flows | ||
Net cash provided by operating activities | 32,415 | 6,079 |
Cash flows from investing activities | ||
Net receivables repaid (originated) | (18,371) | 3,109 |
Net cash used in investing activities | (18,371) | 3,109 |
Cash flows from financing activities | ||
Debt issuance costs | (1,622) | |
Net cash used in financing activities | (1,622) | |
CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents | 12,422 | 9,188 |
Cash and cash equivalents and restricted cash: | ||
Beginning | 9,101 | 34,556 |
Ending | 21,523 | 43,744 |
Nonoperating Income (Expense) | $ (4,479) | $ (2,966) |