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The net charge-off rate on our loan receivables increased 286 basis points and 119 basis points for the years ended
November 30, 2009 and 2008, respectively, compared to November 30, 2008 and 2007. The net charge-off rate has
steadily increased since the fourth quarter of 2008, reflecting the weakening economic environment as a result of rising
unemployment, an increase in bankruptcy-related charge-offs and the decrease in the availability of consumer credit.
Additionally, personal loans, which are included in other consumer loans, grew significantly in 2008 and into 2009,
have seasoned and have started to experience charge-offs.
Delinquencies
Delinquencies are an indicator of credit quality at any point in time. Loan balances are considered delinquent when
contractual payments on the loan become 30 days past due. Loan receivables are placed on non-accrual status upon
receipt of notification of the bankruptcy or death of a customer, suspected fraudulent activity on an account, as part of
certain collection management processes, and other instances in which management feels collectability is not assured. In
some cases of suspected fraudulent activity, loan receivables may resume accruing interest upon completion of the fraud
investigation.
The following table presents the amounts and delinquency rates of loan receivables over 30 days past due, loan
receivables over 90 days delinquent and accruing interest and loan receivables that are not accruing interest, regardless
of delinquency (dollars in thousands):
At November 30,
2009 2008 2007 2006 2005
$ %$ %$%$%$%
Loans over 30 days delinquent ........................... $1,161,497 4.92% $1,096,627 4.35% $679,306 3.26% $633,150 3.05% $756,198 3.67%
Loans over 90 days delinquent and accruing
interest ........................................................ $ 522,190 2.21% $ 444,324 1.76% $271,227 1.30% $244,675 1.18% $263,439 1.28%
Loans not accruing interest................................. $ 190,086 0.80% $ 173,123 0.69% $102,286 0.49% $110,625 0.53% $215,671 1.05%
The delinquency rates of loans over 30 days delinquent and loans over 90 days delinquent and accruing interest
increased 57 basis points and 45 basis points, respectively at November 30, 2009, as compared to November 30.
2008. The increase in both measures reflected the impact of the weaker economic environment on our customers’ ability
to pay their loan balances. Delinquency rates normally rise as charge-offs rise, however, since the third quarter 2008, we
have been experiencing a pattern of charge-offs rising faster than delinquencies. This pattern is the result of having a
higher proportion of balances move from delinquent status to charge-off than in historical periods. The movement from
delinquent status to charge-off has increased as more customers are unable to become current on their past-due accounts
and as more customers declare bankruptcy. Loan receivables not accruing interest at November 30, 2009 increased 11
basis points to 0.80%, as compared to November 30, 2008, as a result of an increase in bankruptcy notifications.
The delinquency rates of loans over 30 days delinquent and loans over 90 days delinquent and accruing interest
increased 109 basis points and 46 basis points, respectively, at November 30, 2008, as compared to November 30,
2007. This increase in both measures reflected of the weaker economic environment on our customers’ ability to pay their
loan balances. Loan receivables not accruing interest at November 30, 2008 increased 20 basis points to 0.69%, as
compared to November 30, 2007, as a result of an increase in bankruptcy notifications.
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