Cash America 2011 Annual Report Download - page 95

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Consumer Loan Activities:
Consumer loans fees. Consumer loan fees increased $119.1 million, or 32.0%, to $491.0 million in 2010
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 channel increased during 2010 as the
Company expanded the customer base for the third-party MLOC products. See “General—E-Commerce Segment”
section above for a discussion of the current status of the Company's MLOC business. 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 of consumer loan products.
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. First-time 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 comprises 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 when the Company stopped providing MLOC services on behalf of a third-party
lender during the fourth quarter of 2010.
The following table sets forth consumer loan fees by segment, adjusted for the deduction of the loan loss
provision for years ended December 31, 2010 and 2009 (dollars in thousands):
Year Ended December 31,
2010 2009
Retail
Services E-Commerce Total Retail Services E-Commerce Total
Short-term loans $ 112,679 $ 338,553 $ 451,232 $ 117,997 $ 236,854 $ 354,851
Installment loans 1,294 10,783 12,077 - 4,414 4,414
MLOC - 27,643 27,643 - 12,591 12,591
Consumer loan fees $ 113,973 $ 376,979 $ 490,952 $ 117,997 $ 253,859 $ 371,856
Consumer loan loss provision 17,437 164,957 182,394 21,642 109,174 130,816
Consumer loan fees, net of loan loss provision $ 96,536 $ 212,022 $ 308,558 $ 96,355 $ 144,685 $ 241,040
Year-over-year change - $ $ 181 $ 67,337 $ 67,518 $ (11,226) $ 28,386 $ 17,160
Year-over-year change - % 0.2 % 46.5 % 28.0 % (10.4) % 24.4 % 7.7 %
Consumer loan loss provision as a % of
consumer loan fees 15.3 % 43.8 % 37.2 % 18.3 % 43.0 % 35.2 %
Combined consumer loans.In addition to reporting consumer loans owned by the Company and consumer
loans guaranteed by the Company, which are either GAAP items or disclosures required by GAAP, the Company has
provided combined consumer loans, which is a non-GAAP measure. In addition, the Company has reported disclosure
regarding consumer loans written, which is statistical data that is not included in the Company’s financial statements.
The Company also reports allowances and liabilities for estimated losses on consumer loans on a combined basis, which
are GAAP measures.
Management believes these measures provide investors with important information needed to evaluate the
magnitude of potential loan losses and the opportunity for revenue performance of the consumer loan portfolio on an