Allowance for Doubtful Accounts and Accrual for Third-Party Lender Losses

12 Months Ended

Dec. 31, 2011

Allowance for Doubtful Accounts and Accrual for Third-Party Lender Losses

Allowance for Doubtful Accounts and Accrual for Third-Party Lender Losses

4. Allowance for Doubtful Accounts and Accrual for Third-Party Lender Losses

The Company defines its portfolio segment as short-term consumer loans.

Changes in the allowance for doubtful accounts were as follows (in thousands):

	2009			2010			2011

Beginning balance	$	59,441		$	53,031		$	48,382
Provision for doubtful accounts		124,007			103,336			108,239
Charge-offs		(153,881	)		(126,957	)		(129,791	)
Recoveries		23,464			18,972			22,958

Ending balance	$	53,031		$	48,382		$	49,788

Changes in the accrual for third-party lender losses were as follows (in thousands):

	2009		2010		2011

Beginning balance	$	3,960	$	4,528	$	5,420
Provision for doubtful accounts		568		892		(328	)

Ending balance	$	4,528	$	5,420	$	5,092

The total changes in the allowance for doubtful accounts, and the accrual for third-party lender losses were as follows (in thousands):

	2009			2010			2011

Beginning balance	$	63,401		$	57,559		$	53,802
Provision for doubtful accounts		124,575			104,228			107,911
Charge-offs		(153,881	)		(126,957	)		(129,791	)
Recoveries		23,464			18,972			22,958

Ending balance	$	57,559		$	53,802		$	54,880

Total loans outstanding as of December 31, 2011, evaluated for impairment, were $296.3 million.

The Company considers returned items receivable as its primary credit quality indicator. If a third-party lender provides the advance, such as in Texas and online, the applicable third-party lender decides whether to approve the cash advance and establishes all of the underwriting criteria and terms, conditions, and features of the customer agreements.

Advance America, Cash Advance Centers, Inc. 10-K