Cash America 2012 Annual Report Download - page 35

10
time or make required minimum payments in accordance with the terms of the line of credit agreement. As long as the
customer’s account is in good standing, customers may continue to borrow on their line of credit. The Company also
offers a line of credit product in Mexico, which is similar to the MLOC product for which the Company previously
provided services. In connection with this line of credit product, a customer is approved for a certain credit limit and
may draw on their line of credit in increments of their choosing up to their credit limit. The full amount of the draw is
due on the due date.
The Company’s multi-payment installment loan products include unsecured installment loans and secured auto
equity loans. Unsecured installment loans, which are offered in some states in the United States and in the United
Kingdom, typically have terms between four and 12 months, but may have available terms up to 36 months. Secured
auto equity loans, which are offered in some states in the United States, generally have contract terms between 12 and 42
months. Both unsecured and secured installment loans require the repayment of principal in installments over the term
of the loan.
The Company monitors the performance of its portfolio of consumer loans and maintains either an allowance or
liability for estimated losses on consumer loans (including fees and interest) at a level estimated to be adequate to absorb
credit losses inherent in the portfolio. The allowance for losses on the Company’s owned consumer loans reduces the
outstanding loan balance in the consolidated balance sheets. In addition, the Company maintains a liability for estimated
losses related to loans guaranteed under the CSO programs, which approximates the fair value of the liability, and is
included in the consolidated balance sheets.
In 2012, revenue from the foreign component of the e-commerce segment was 49.5% of total revenue for the e-
commerce segment, and 18.2% of total consolidated revenue. The total revenue in the foreign component of the e-
commerce segment was primarily derived from operations in the United Kingdom. The percentage of total revenue from
foreign operations to total revenue from the e-commerce segment and total consolidated revenue has increased over the
last three years as the Company’s e-commerce segment’s operations in the United Kingdom have grown significantly.
The Company generally experiences seasonal growth in consumer loan fees in conjunction with the growth in
loan balances that typically occurs after the heavy repayment period of consumer loans with tax refund proceeds
received by customers in the United States in the first quarter each year. Due to the nature of the short-term loan product
and the high velocity of loans written and renewed, seasonal trends are evidenced in quarter-to-quarter performance. In
the typical business cycle, the combined consumer loan loss provision as a percent of combined consumer loans written
and renewed is usually lowest in the first quarter and increases throughout the year, with the final two quarters generally
combining for the peak levels of loss provision expense. See “Item 7. Management’s Discussion and Analysis—
Combined Consumer Loans—Consumer Loan Loss Experience” for additional information about the seasonality of
consumer loan losses and for information about combined consumer loans.
Collection activities are an important aspect of the consumer loan product offering due to the high incidence of
unpaid balances beyond stated terms. The Company operates centralized collection centers to maximize loan repayment,
facilitate regulatory compliance and coordinate a consistent approach to customer service and collections.
Check Cashing and Other Financial Services
The Company provides check cashing and other ancillary services through its retail services locations. Other
financial services include money orders, wire transfers, prepaid debit cards, tax filing services and auto insurance. Most
of these ancillary services offered in the retail services segment are provided through third-party vendors. When the
Company provides a check cashing service to its customers, it charges check cashing fees based on the type and face
amount of the check being cashed. The Company receives check cashing fees from many of its retail services locations.
In addition, the Company franchises its stand-alone check cashing business, Mr. Payroll, and each franchisee pays
royalties based on the gross revenues of check cashing services provided within the franchisee’s facility.
