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LOANS AND ALLOWANCE FOR CREDIT LOSSES
 3 Months Ended
Mar. 31, 2026
Receivables [Abstract]  
LOANS AND ALLOWANCE FOR CREDIT LOSSES LOANS AND ALLOWANCE FOR CREDIT LOSSES
The Company primarily makes consumer loans to individuals for personal or family needs, in relatively small amounts with maturities of approximately 2 years. The Company historically extended real estate loans. Beginning in 2024, 1FFC discontinued the origination of real estate loans, and the portfolio is currently in runoff. The Company also purchases sales finance contracts from various dealers.
Loans and sales finance contracts are held for investment and recorded on the Condensed Consolidated Statements of Financial Position on an amortized cost basis. Discounts and premiums on purchased loans are accreted or amortized to interest income over the estimated life of the loans using methods that approximate the effective interest method. Insurance reserves and unearned premiums applicable to credit risks on consumer receivables are treated as a reduction of loans in the consolidated balance sheets as the payments on such policies are generally used to reduce outstanding balances.
Interest income on loans is recognized as revenue on an accrual basis using the effective interest method. The net amount of nonrefundable origination fees, and certain direct costs associated with the lending process are deferred and amortized to interest income over the contractual life of the loan using methods that approximate the effective interest method. If a loan liquidates before amortization is complete, the Company applies any unamortized fees and origination costs to interest income at the date of liquidation. The Company recognizes late charges and prepayment penalties as revenue when received.
Loan Renewals
Loan renewals are an important part of 1FFC's business and are accounted for in accordance with the applicable guidance in ASC Topic 310-20 – Nonrefundable Fees and Other Costs. Our customers use renewals to extend and expand their lending relationships. The Company generally offers loan renewals to existing customers who have demonstrated an ability and willingness to repay amounts owed to us. Renewals typically refinance one or more of a customer’s loans into a single new loan, which in some cases will be for a larger principal balance than the customer’s original loan, though 1FFC permits renewals of existing loans at or below the original loan amount. In evaluating a loan for renewal, in addition to standard underwriting requirements, the Company will take into consideration the customer’s prior payment performance, which 1FFC believes to be an indicator of the customer’s future credit performance.
When a renewal is generated, the original loan(s) are extinguished along with the associated unearned finance charges. Substantially all renewals include a non-cash component that represents the exchange of the original principal balance for the new principal balance and a cash component for the net proceeds distributed to the customer for the additional amount borrowed.
Cash, unearned finance charges, origination fees, discounts, premiums, deferred fees, and, in the instance of a loan renewal, the net payoff of the renewed loan are included in the loan origination amount. The cash component of the loan origination is included in the Condensed Consolidated Statements of Cash Flows from Investing Activities as Loans Originated or Purchased, while the non-cash component is presented as a non-cash investing activity.
Loan Portfolio Performance
The Company monitors and classifies delinquent accounts at the end of each month according to the number of installment payments past due.
Loans are generally placed on non-accrual status after two missed payments. For loans placed on non-accrual status, the Company ceases accruing interest and finance charges and previously accrued interest is reversed against interest income. Finance charges are only recognized to the extent there is a loan payment received or when the account qualifies for return to accrual status. Loans generally return to accrual status when the outstanding balance is less than 2 payments (or less than 60 days) past due.
The Company’s balances on non-accrual loans by loan class are as follows (in thousands):
Loan ClassMarch 31,
2026		December 31,
2025
Direct Cash Loans$54,779 $58,802 
Real Estate Loans 1,464 1,407 
Sales Finance Contracts 4,172 4,863 
Total $60,415 $65,072 
1FFC generally charges off a loan when a full contractual payment has not been received in the preceding 180 days. There are limited exception situations where a loan may be more than 180 days past due and not charged off - specifically pending insurance transactions and bankruptcy status. The amount charged off is the unpaid balance less the unearned finance charges and the unearned insurance premiums, if applicable.
The allowance for credit losses is evaluated and pooled based on similar risk characteristics, pricing, and term, among other factors. 1FFC also evaluates credit quality based on the aging status of the loan and by payment activity. Accounts are classified in delinquency categories of 30-59 days (1 installment), 60-89 days (2 installments), or 90 or more days (3+ installments) past due. The Company categorizes its loans into risk categories based on relevant information about the ability of borrowers to service their debt. 1FFC analyzes the loan portfolio by credit risk and updates the rating periodically based on current credit information. These risk ratings serve as the Company’s primary credit-quality indicator under ASC 326 – Financial Instruments - Credit Losses. The following are definitions for the loan portfolio risk ratings:

Performing – Loans in this category are current or less than 60 days past due and are considered to have a low probability of default.

Non-performing – Loans in this category meet the Company’s non-accrual policy based on grade delinquency rules. A loan is generally considered to be non-accrual when two payments remain unpaid.
An age analysis of balances past due, segregated by loan class is as follows (in thousands):
March 31, 2026
Loan Class30-59 Days
Past Due		60-89 Days
Past Due		90 Days or
More
Past Due		Total
Past Due
Loans
Direct Cash Loans$33,172 $20,445 $34,334 $87,951 
Real Estate Loans1,008 491 973 2,472 
Sales Finance Contracts2,992 1,459 2,713 7,164 
Total$37,172 $22,395 $38,020 $97,587 
December 31, 2025
Loan Class30-59 Days
Past Due		60-89 Days
Past Due		90 Days or
More
Past Due		Total
Past Due
Loans
Direct Cash Loans$32,184 $20,223 $38,601 $91,008 
Real Estate Loans707 406 1,001 2,114 
Sales Finance Contracts3,322 1,964 2,900 8,186 
Total $36,213 $22,593 $42,502 $101,308 

While delinquency rating analysis is a primary credit quality indicator, 1FFC also considers the ratio of bankrupt accounts to the total loan portfolio in evaluating whether any qualitative adjustments were necessary to the allowance for credit losses. The ratio of bankrupt accounts to total principal loan balances outstanding was 1.34% at March 31, 2026, compared to 1.30% at December 31, 2025.
The following tables present the balance in each segment in the portfolio for the period indicated based on payment performance by year of origination (in thousands):
Payment Performance - Balance by Origination Year as of March 31, 2026
2026(1)2025202420232022PriorTotal Balance
Direct Cash Loans
Performing$286,685 $744,712 $121,750 $34,671 $11,743 $4,753 $1,204,314 
Nonperforming— 41,222 8,727 2,840 1,265 725 54,779 
$286,685 $785,934 $130,477 $37,511 $13,008 $5,478 $1,259,093 
Real Estate Loans:
Performing $— $— $2,454 $— $854 $12,814 $16,122 
Nonperforming — — — — 51 1,413 1,464 
$— $— $2,454 $— $905 $14,227 $17,586 
Sales Finance Contracts:
Performing $12,605 $39,773 $26,591 $19,102 $8,219 $2,294 $108,584 
Nonperforming — 1,166 1,029 1,142 550 285 4,172 
$12,605 $40,939 $27,620 $20,244 $8,769 $2,579 $112,756 
(1)Includes loans originated during the three months ended March 31, 2026.

Payment Performance - Balance by Origination Year as of December 31, 2025
20252024202320222021PriorTotal Balance
Direct Cash Loans
Performing$1,009,416 $171,538 $46,258 $15,694 $5,108 $1,259 $1,249,273 
Nonperforming39,164 13,514 3,603 1,584 701 236 58,802 
$1,048,580 $185,052 $49,861 $17,278 $5,809 $1,495 $1,308,075 
Real Estate Loans:
Performing$— $2,454 $— $854 $6,494 $7,650 $17,452 
Nonperforming— — — 97 607 703 1,407 
$— $2,454 $— $951 $7,101 $8,353 $18,859 
Sales Finance Contracts:
Performing$46,711 $31,957 $23,268 $10,618 $2,807 $445 $115,806 
Nonperforming1,131 1,553 1,044 697 364 74 4,863 
$47,842 $33,510 $24,312 $11,315 $3,171 $519 $120,669 
Allowance for Credit Losses
The allowance for credit losses calculation is evaluated and pooled based upon the consistent risk characteristics inherent in the portfolio. The Company utilizes a Probability of Default (“PD”)/Loss Given Default (“LGD”) model to estimate the allowance for credit losses whereby estimated loss is equal to the product of PD and LGD. The allowance for credit losses model estimates instances of loss and the average severity of losses using the characteristics of the loan portfolio, along with incorporating a reasonable and supportable forecast which is utilized to support the adjustments to historical loss experience of loans with similar credit risk.
Management’s periodic evaluation of the adequacy of the allowance for credit losses takes into consideration the Company’s probable inherent risks in the homogeneous loan portfolio and current economic conditions, including the geographic regions where the Company has a concentration.
Key segmentation in the calculation is origination vintage, remaining contractual term, risk score and state of origination. The allowance for credit loss methodology produces a variety of alternative economic scenarios. The Company considers how macroeconomic and/or other factors might impact expected credit losses over the
remaining maturity of the portfolio and determine which scenario(s) and specific scenario weights are applied within the estimation. The allowance for credit losses recorded in the Condensed Consolidated Statements of Financial Position reflects the Company's best estimate of expected credit losses.
The allowance for credit losses decreased by $0.3 million to $76.0 million as of March 31, 2026, compared to $76.3 million as of December 31, 2025.
Gross charge offs by origination year are as follows (in thousands):
Three Months Ended March 31, 2026
20262025202420232022PriorTotal
Direct Cash Loans$8 $25,131 $7,918 $1,632 $708 $445 $35,842 
Real Estate Loans— — — — — — — 
Sales Finance Contracts— 697 749 455 286 128 2,315 
Total$8 $25,828 $8,667 $2,087 $994 $573 $38,157 
Three Months Ended March 31, 2025
20252024202320222021PriorTotal
Direct Cash Loans$11 $16,380 $8,148 $2,268 $930 $314 $28,051 
Real Estate Loans— 6 — — — — 6 
Sales Finance Contracts— 838 1,159 737 285 130 3,149 
Total$11 $17,224 $9,307 $3,005 $1,215 $444 $31,206 
The following table represents the rollforward of the allowance for credit losses for the periods presented (in thousands):

Three Months Ended March 31, 2026
Direct Cash LoansReal Estate LoansSales Finance ContractsTotal
Ending Balance 12/31/2025$68,669 $1,235 $6,375 $76,279 
Provision for Credit Losses29,201 (186)1,220 30,235 
Charge-offs(35,842)— (2,315)(38,157)
Recoveries7,083 1 586 7,670 
Ending Balance 3/31/2026$69,111 $1,050 $5,866 $76,027 

Three Months Ended March 31, 2025
Direct Cash LoansReal Estate LoansSales Finance ContractsTotal
Ending Balance 12/31/2024$63,371 $1,616 $8,379 $73,366 
Provision for Credit Losses19,966 (196)1,779 21,549 
Charge-offs(28,051)(6)(3,149)(31,206)
Recoveries6,078 2 695 6,775 
Ending Balance 3/31/2025$61,364 $1,416 $7,704 $70,484 
Loan Modifications to Borrowers Experiencing Financial Difficulty

The Company allows refinancing of delinquent loans on a case-by-case basis for those who satisfy certain eligibility requirements. The eligible customers can include those experiencing temporary hardships, lawsuits, or
those who have declared bankruptcy. In most cases, loans eligible for restructuring are between 90 and 180 days past due. The Company does not allow the amount of the new loan to exceed the original amount of the existing loan. Refinancing also provides a resolution to temporary financial setbacks for these borrowers and sustain their credit rating.

Legal fees and other direct costs incurred by the Company during a restructuring are expensed when incurred. The effective interest rate for restructured loans is based on the original contractual rate. Modified loans are adjusted to be recorded at the value of expected cash flows to be received in the future. Modifications that lower the principal balance experience a direct charge-off for the difference of the original and modified principal amount. Substantially all of the Company's restructurings relate to term and interest rate concessions. The Company only lowers the principal balance in the event of a court order.

The information relating to modifications to borrowers experiencing financial difficulty for the period indicated are as follows (in thousands, except for %):

Three Months Ended March 31, 2026
Loan ClassInterest Rate ReductionTerm ExtensionPrincipal ForgivenessCombination - Term Extension and Principal ForgivenessCombination - Term Extension and Interest Rate Reduction
Direct Cash Loans$2,569 0.8 %$4,749 1.5 %$388 0.1 %$— — %$9,482 3.0 %
Real Estate Loans— — %— — %— — %— — %— — %
Sales Finance Contracts3 — %32 0.1 %38 0.1 %— — %32 0.1 %
Total$2,572 0.7 %$4,781 1.4 %$426 0.1 %$— — %$9,514 2.7 %
Three Months Ended March 31, 2025
Loan ClassInterest Rate ReductionTerm ExtensionPrincipal ForgivenessCombination - Term Extension and Principal ForgivenessCombination - Term Extension and Interest Rate Reduction
Direct Cash Loans$1,094 0.4 %$2,660 1.0 %$1,113 0.4 %$16 — %$5,306 2.0 %
Real Estate Loans— — %— — %— — %— — %— — %
Sales Finance Contracts134 0.4 %217 0.6 %141 0.4 %— — %722 2.1 %
Total$1,228 0.4 %$2,877 1.0 %$1,254 0.4 %$16 — %$6,028 2.0 %
The financial effects of the modifications to borrowers experiencing financial difficulty for the period indicated are:
As of and for the three months ended March 31, 2026
Loan ModificationLoan ClassFinancial Effect
Principal ForgivenessDirect Cash Loans
Reduced the gross balance of the loans $0.3 million
Real Estate LoansNo Financial Effect
Sales Finance Contracts
Reduced the gross balance of the loans < $0.1 million
Interest Rate ReductionDirect Cash Loans
Reduced the weighted-average contractual interest rate from 30.8% to 21.5%
Real Estate LoansNo Financial Effect
Sales Finance Contracts
Reduced the weighted-average contractual interest rate from 20.1% to 18.9%
Term ExtensionDirect Cash Loans
Added a weighted average 15 months to the term
Real Estate LoansNo Financial Effect
Sales Finance Contracts
Added a weighted average 21 months to the term
As of and for the three months ended March 31, 2025
Loan ModificationLoan ClassFinancial Effect
Principal ForgivenessDirect Cash Loans
Reduced the gross balance of the loans < $0.1 million
Real Estate LoansNo Financial Effect
Sales Finance Contracts
Reduced the gross balance of the loans < $0.1 million
Interest Rate ReductionDirect Cash Loans
Reduced the weighted-average contractual interest rate from 26.7% to 17.8%
Real Estate LoansNo Financial Effect
Sales Finance Contracts
Reduced the weighted-average contractual interest rate from 20.1% to 7.7%
Term ExtensionDirect Cash Loans
Added a weighted average 16 months to the term
Real Estate LoansNo Financial Effect
Sales Finance Contracts
Added a weighted average 20 months to the term
Aging of loans modified for borrowers experiencing financial difficulty in the past 12 months are as follows (in thousands):
March 31, 2026
Loan ClassCurrent30 - 89 Past Due90+ Past DueTotal
Direct Cash Loans$46,037 $5,762 $3,766 $55,565 
Real Estate Loans— — — — 
Sales Finance Contracts1,315 303 223 1,841 
     Total$47,352 $6,065 $3,989 $57,406 
March 31, 2025
Loan ClassCurrent30 - 89 Past Due90+ Past DueTotal
Direct Cash Loans$36,206 $6,252 $5,230 $47,688 
Real Estate Loans22 25 43 90 
Sales Finance Contracts4,155 505 579 5,239 
     Total$40,383 $6,782 $5,852 $53,017 
Loans modified for borrowers experiencing financial difficulty during the prior 12 months that subsequently charged off (in thousands):
Three Months Ended March 31, 2026
Loan ClassInterest Rate ReductionTerm ExtensionPrincipal ForgivenessCombination - Term Extension and Principal ForgivenessCombination - Term Extension and Interest Rate Reduction
Direct Cash Loans$144 $1,056 $94 $— $1,675 
Real Estate Loans— — — — — 
Sales Finance Contracts— 40 22 — 173 
Total$144 $1,096 $116 $— $1,848 
Three Months Ended March 31, 2025
Loan ClassInterest Rate ReductionTerm ExtensionPrincipal ForgivenessCombination - Term Extension and Principal ForgivenessCombination - Term Extension and Interest Rate Reduction
Direct Cash Loans$887 $665 $383 $1,115 $630 
Real Estate Loans— — — — — 
Sales Finance Contracts54 22 79 116 14 
Total$941 $687 $462 $1,231 $644