Cash America 2010 Annual Report Download - page 72

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43
The table below summarizes the age of merchandise held for disposition related to the Company’s domestic
pawn operations before valuation allowance of $0.7 million as of both December 31, 2010 and 2009 (dollars in
thousands):
2010 2009
Balance at December 31, Amount % Amount %
Jewelry – held for one year or less $79,566 63.6 $70,834 61.9
Other merchandise – held for one year or less 39,809 31.8 35,328 30.8
Total merchandise held for one year or less 119,375 95.4 106,162 92.7
Jewelry – held for more than one year 2,685 2.2 4,938 4.3
Other merchandise – held for more than one year 3,039 2.4 3,424 3.0
Total merchandise held for more than one year 5,724 4.6 8,362 7.3
Total merchandise held for disposition $125,099 100.0 $114,524 100.0
Consumer Loan Activities:
Consumer loan fees increased $119.1 million, or 32.0%, to $491.0 million in 2010 as compared to $371.9
million in 2009. The increase in consumer loan fees is primarily due to growth in the e-commerce segment from
online lending in the United Kingdom and the United States, and to a lesser extent, the Australian and Canadian
markets. In addition, consumer loan fees generated by the MLOC services channel increased during 2010 as the
Company expanded the customer base for the third-party MLOC products. These increases offset the loss of revenue
from certain domestic markets in which the Company either no longer offers consumer loans or has reduced its
offering. See “Item 1. Business—Regulatory Developments” for further discussion of regulatory changes affecting the
Company’s consumer loan business.
MetaBank, whose iAdvance program has generated earnings for the Company's MLOC services channel,
terminated its iAdvance program as of October 13, 2010. The Company intends to develop new opportunities to offer
its MLOC services to other parties; however, until a replacement product is offered, the MLOC services channel will
not provide any revenue for the Company. See “General—E-Commerce Segment” section above for a discussion of
the current status of the Company's MLOC business.
Consumer loan fees and consumer loan loss provision. The consumer loan loss provision increased by $51.6
million, to $182.4 million in 2010, from $130.8 million in 2009, primarily due to higher loan balances in 2010
compared to 2009. The loss provision as a percentage of consumer loan fees increased to 37.2% in 2010, from 35.2%
in 2009, due primarily to a change in the mix in loans in the e-commerce segment to include more first-time customers
and more international customers. First-time customers and international customers tend to have a higher risk of
default than customers with a history of successfully repaying loans and the e-commerce segment has a higher mix of
new customers, primarily due to significant growth in its foreign lending activities. In addition, e-commerce consumer
loans have historically experienced higher loss rates than retail services consumer loans, and the e-commerce portfolio
composes a higher overall percentage of the combined portfolio in 2010 compared to 2009. Lastly, the consumer loan
loss provision as a percentage of consumer loan fees also increased as a result of an abnormally high level of defaults
from the termination of the iAdvance product in the MLOC services channel during the fourth quarter of 2010.