Cash America 2011 Annual Report Download - page 131

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
100
during its attempt to collect on a nonperforming loan the Company extends the time for payment through a payment
plan or a promise to pay, it is still considered nonperforming. Nonperforming loans are analyzed by stage of
collection. Actual loss experience based on historical loss rates for each discrete group is calculated and adjusted for
recent default trends. The required allowance is calculated by applying the resulting adjusted loss rates to each
discrete loan group and aggregating the results. Increases in either the allowance or the liability, net of charge-offs and
recoveries, are recorded as a “Consumer loan loss provision” in the consolidated statements of income. The Company
fully reserves and generally charges off all consumer loans once they have been classified as nonperforming for 60
consecutive days. If a loan is deemed uncollectible before it is fully reserved, it is charged off at that point. All loans
included in nonperforming loans have an age of one to 59 days from the date they became nonperforming loans, as
defined above. Recoveries on loans previously charged to the allowance are credited to the allowance when collected.
The allowance deducted from the carrying value of consumer loans was $63.1 million and $38.9 million at
December 31, 2011 and 2010, respectively. In connection with its CSO programs, the Company guarantees consumer
loan payment obligations to unrelated third-party lenders and is required to purchase the loan should a consumer not
make payments as required by the contract. The guarantee represents an obligation to purchase specific loans that go
into default, which generally have terms of less than 90 days. At December 31, 2011 and 2010, the amount of
consumer loans guaranteed by the Company was $59.4 million and $52.6 million, respectively, representing amounts
due under consumer loans originated by third-party lenders under the CSO programs. The estimated fair value of the
liability related to these guarantees of $3.1 million and $2.8 million at December 31, 2011 and 2010, respectively, is
included in “Accounts payable and accrued expenses” in the accompanying consolidated balance sheets.
The components of Company-owned consumer loan portfolio receivables at December 31, 2011 and 2010 was
as follows (dollars in thousands):
As of December 31, 2011
Short-term
Loans
Installment
Loans MLOC Total
Performing loans $ 157,056 $ 59,146 $ - $ 216,202
N
onperforming loans 59,148 10,500 - 69,648
Total consumer loans, gross 216,204 69,646 - 285,850
Less: Allowance for losses (50,129) (12,943) - (63,072)
Consumer loans, net $ 166,075 $ 56,703 $ - $ 222,778
As of December 31, 2010
Short-term
Loans
Installment
Loans MLOC Total
Performing loans $ 115,535 $ 16,309 $ - $ 131,844
N
onperforming loans 43,599 1,377 1,510 46,486
Total consumer loans, gross 159,134 17,686 1,510 178,330
Less: Allowance for losses (34,455) (2,988) (1,510) (38,953)
Consumer loans, net $ 124,679 $ 14,698 $ - $ 139,377