Cash America 2008 Annual Report Download - page 76

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53
deviated from this typical cycle as sequential loss rates decreased from the second to the third quarter and
from the third quarter to the fourth quarter. Management believes that this sequential decrease was mainly
due to the increase in customers who had established borrowing histories as a percent of all customers in the
later half of the year. This change in mix was primarily in the portfolio of cash advances originated by the
Company’s online channel. In addition, management took steps to reduce losses in its storefront business
beginning in the last half of 2007, including additional underwriting guidelines and more emphasis on
collections activities. These changes accounted for a smaller portion of the decrease in relation to the
customer composition mix.
2007 ,
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter,
Fiscal
Year
Combined cash advance loss provision as a % of combined
cash advances written (a) (b) ................................................... 7.4% 8.4% 8.1% 6.8% 7.7%
Charge-offs (net of recoveries) as a % of combined cash
advances written (a) (b) ............................................................... 6.5% 6.5% 8.3% 7.8% 7.3%
Combined cash advance loss provision as a % of cash
advance fees (a) (b) .................................................................. 41.7% 48.7% 45.7% 38.8% 43.7%
Combined cash advances and fees receivable, gross(a) (b)........... $ 115,547 $ 139,576 $ 144,779 $ 148,404 $ 148,404
Combined allowance for losses on cash advances................ 24,394 33,996 32,757 27,504 27,504
Combined cash advances and fees receivable, net(a) (b)............. $ 91,153 $ 105,580 $ 112,022 $ 120,900 $ 120,900
Combined allowance for losses and accrued third-party lender
losses as a % of combined gross portfolio (a) (b) ................... 21.1% 24.4% 22.6% 18.5% 18.5%
2006 ,
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter ,
Fiscal
Year
Combined cash advance loss provision as a % of combined
cash advances written (a) (b) ................................................... 2.1% 4.5% 5.9% 6.3% 5.1%
Charge-offs (net of recoveries) as a % of combined cash
advances written (a) (b) ........................................................... 3.5% 2.7% 4.8% 4.2% 3.9%
Combined cash advance loss provision as a % of cash
advance fees (a) (b) .................................................................. 12.5% 27.4% 36.2% 37.3% 30.5%
Combined cash advances and fees receivable, gross(a) (b)........... $ 47,879 $ 63,682 $ 97,732 $ 124,175 $ 124,175
Combined allowance for losses on cash advances 4,146 8,432 11,842 20,666 20,666
Combined cash advances and fees receivable, net(a) (b)............. $ 43,733 $ 55,250 $ 85,890 $ 103,509 $ 103,509
Combined allowance for losses and accrued third-party lender
losses as a % of combined gross portfolio (a) (b) ................... 8.7% 13.2% 12.1% 16.6% 16.6%
(a) Non-GAAP presentation. For informational purposes and to provide a greater understanding of the Company’s businesses. Management
believes that information provided with this level of detail is meaningful and useful in understanding the activities and business metrics of
the Company’s operations.
(b) Includes (i) cash advances written by the Company, and (ii) cash advances written by third-party lenders that were arranged by the
Company on behalf of the third-party lenders, all at the Company’s pawn and cash advance locations and through the Company’s internet
distribution channel.
The following table summarizes the cash advance loss provision and combined allowance for losses
and accrued third-party lender losses for the years ended and at December 31, 2007 and 2006, and contains
certain non-GAAP measures with respect to the cash advances written by third-party lenders that are not
included in the Company’s consolidated balance sheets and related statistics. The Company believes that
presenting these non-GAAP measures is meaningful and necessary because management evaluates and
measures the cash advance portfolio performance on an aggregate basis including its evaluation of the loss
provision for the Company-owned portfolio and the third-party lender-owned portfolio that the Company
guarantees (dollars in thousands).