Cash America 2007 Annual Report Download - page 91

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
71
If the Company collects a customer’s delinquent payment in an amount that is less than the amount
the Company paid to the third-party lender pursuant to the guaranty, the Company must absorb the shortfall.
If the amount collected exceeds the amount paid under the guaranty, the Company is entitled to the excess
and recognizes the excess amount in income. Since the Company may not be successful in collection of
these delinquent amounts, the Company’s cash advance loss provision includes amounts estimated to be
adequate to absorb credit losses from cash advances in the aggregate cash advance portfolio, including those
expected to be acquired by the Company as a result of its guaranty obligations. The estimated amounts of
losses on portfolios owned by the third-party lenders are included in “Accounts payable and accrued
expenses” in the consolidated balance sheets.
Prior to the program’s discontinuance, for cash advances originated by commercial banks, the banks
sold participation interests in the bank-originated cash advances to third parties, and the Company purchased
sub-participation interests in certain of those participations. The Company also received an administrative
fee for its services. In order to benefit from the use of the Company’s collection resources and proficiency,
the banks assigned cash advances unpaid after their payment due date to the Company at a discount from the
amount owed by the borrower.
The Company discontinued offering single payment third-party bank-originated cash advances to its
Texas, Florida and North Carolina customers in January 2006, discontinued offering single and multi-
payment third-party bank-originated cash advances to its Georgia customers in April 2006, and discontinued
offering multi-payment third-party bank-originated cash advances to its California customers in July 2006.
Cash advances outstanding at December 31, 2007 and 2006, were as follows (in thousands):
December 31,
2007 2006
Funded by the Company:
Active cash advances and fees receivable .................................................... $ 76,620 $ 69,489
Cash advances and fees in collection ................................................................... 24,099 24,499
Total Funded by the Company ................................................................... 100,719 93,988
Purchased by the Company from third-party lenders............................................... 13,105 5,500
Company-owned cash advances and fees receivable, gross ................................... 113,824 99,488
Less: Allowance for losses ......................................................................................... 25,676 19,513
Cash advances and fees receivable, net................................................................... $ 88,148 $ 79,975