Asset-backed Loans
"Asset-backed loans" in the Condensed Consolidated Balance Sheets as of June 30, 2013 and September 30, 2012, consisted of the following:
|
| | | | | | | |
| June 30,
2013 | | September 30, 2012 |
Asset-backed loans, by major industry: | | | |
Wholesale | $ | 23.0 |
| | $ | 77.2 |
|
Apparel | 177.5 |
| | 70.1 |
|
Jewelry | 59.8 |
| | 27.9 |
|
Other | 173.0 |
| | 6.3 |
|
Total asset-backed loans | 433.3 |
| | 181.5 |
|
Less: Allowance for credit losses | 3.1 |
| | 1.4 |
|
Total asset-backed loans, net | $ | 430.2 |
| | $ | 180.1 |
|
Allowance for credit losses are established through a provision for credit losses based on its evaluation of the credit quality of its loan portfolio. The following table presents the activity in its allowance for credit losses for the three and nine months ended June 30, 2013 and July 1, 2012:
|
| | | | | | | | | | | | | | | |
| Three months ended | | Nine months ended |
| June 30, 2013 | | July 1,
2012 | | June 30, 2013 | | July 1,
2012 |
Allowance for credit losses: | | | | | | | |
Balance at beginning of period | $ | 2.8 |
| | $ | 0.2 |
| | $ | 1.4 |
| | $ | — |
|
Provision for credit losses | 0.3 |
| | 0.4 |
| | 1.7 |
| | 0.6 |
|
Charge-offs | — |
| | — |
| | — |
| | — |
|
Recoveries | — |
| | — |
| | — |
| | — |
|
Balance at end of period | $ | 3.1 |
| | $ | 0.6 |
| | $ | 3.1 |
| | $ | 0.6 |
|
The Company monitors credit quality as indicated by various factors and utilizes such information in its evaluation of the adequacy of the allowance for credit losses. As of June 30, 2013 and September 30, 2012, we had no outstanding loans that either were non-performing, in a non-accrual status, or had been subject to a troubled-debt restructuring. As of June 30, 2013 and September 30, 2012, there were no outstanding loans that had been individually considered impaired, as all loans were in current payment status.
Our Internal loan ratings provide information about the credit quality of its asset-based lending borrowers, and its risk of potential loss. The following tables present information about the credit quality of the asset-based loan portfolio, based on National Association of Insurance Commissioners ("NAIC") risk rating, as of June 30, 2013 and September 30, 2012:
|
| | | | | | | | | | | | | | | | |
NAIC Designation | | Credit Equivalent Rating | | June 30,
2013 | | Percent of Total | | September 30, 2012 | | Percent of Total |
1 | | AAA/AA/A | | $ | 19.8 |
| | 4.6 | % | | $ | 75.8 |
| | 41.7 | % |
2 | | BBB | | 392.8 |
| | 90.7 | % | | 94.9 |
| | 52.3 | % |
3 | | BB | | — |
| | — | % | | 10.8 |
| | 6.0 | % |
4 | | B | | — |
| | — | % | | — |
| | — | % |
5 | | CCC | | 20.7 |
| | 4.7 | % | | — |
| | — | % |
Not rated | | | | — |
| | — | % | | — |
| | — | % |
Total | | | | $ | 433.3 |
| | 100.0 | % | | $ | 181.5 |
| | 100.0 | % |
