Cash America 2012 Annual Report Download - page 87

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YEAR ENDED 2012 COMPARED TO YEAR ENDED 2011
Pawn Lending Activities
Pawn lending activities consist of pawn loan fees and service charges from the retail services segment during the
period and the profit on disposition of collateral from unredeemed pawn loans, as well as the sale of merchandise
acquired from customers directly or from third parties.
The following table sets forth selected data related to the Company’s pawn lending activities as of and for the
years ended December 31, 2012 and 2011 (dollars in thousands):
2012 2011
Year Ended December 31, Domestic Foreign Total Domestic Foreign Total
Pawn loan fees and service charges $ 288,161 $ 12,768 $ 300,929 $ 261,829 $ 20,368 $ 282,197
Average pawn loan balance outstanding $ 225,066 $ 12,055 $ 237,121 $ 205,610 $ 20,037 $ 225,647
Amount of pawn loans written and renewed $ 916,215 $ 60,476 $ 976,691 $ 869,203 $ 118,126 $ 987,329
Annualized yield on pawn loans 128.0% 105.9% 126.9% 127.3% 101.7% 125.1%
Average amount per pawn loan (in ones) $ 131 $ 88 $ 124 $ 127 $ 103 $ 124
Gross profit margin on disposition of merchandise 33.5% 12.0% 32.1% 36.4% 18.6% 35.0%
Merchandise turnover 2.9 3.9 3.0 3.0 5.0 3.1
As of December 31,
Ending pawn loan balances $ 240,573 $ 4,067 $ 244,640 $ 238,399 $ 15,120 $ 253,519
Ending merchandise balance, net $ 161,655 $ 5,754 $ 167,409 $ 151,274 $ 10,610 $ 161,884
Pawn Loan Fees and Service Charges
Consolidated pawn loan balances as of December 31, 2012 were $244.6 million, which was $8.9 million, or
3.5%, lower than as of December 31, 2011, due primarily to the reduction in business activities in the Company’s
foreign pawn operations in 2012. Despite the decrease in the balance at the end of the period, the average consolidated
balance of pawn loans outstanding increased by $11.5 million, or 5.1%, in 2012 compared to 2011.
Domestic Pawn Loan Balances
The average balance of domestic pawn loans outstanding increased by $19.5 million, or 9.5%, in 2012 compared
to 2011, primarily due to the acquisition of 41 domestic retail services locations in late 2011 and in 2012. Higher
collateral values from higher average gold prices in preceding periods contributed to the increase in the average amount
per loan to $131 for 2012 compared to $127 in 2011. The increase in average domestic pawn loan balances was partially
offset by lower pawn loan balances in same-store domestic retail services locations in 2012 and a decrease in the length
of the loan period in certain markets, as described below.
Domestic pawn loan fees and service charges increased $26.4 million, or 10.1%, to $288.2 million in 2012 from
$261.8 million in 2011. The increase was mainly due to the addition of retail services locations, which resulted in higher
average pawn loan balances during most of 2012 and contributed $24.8 million of the increase. The increase was also
due to a higher average pawn loan yield due to a decrease in forfeitures, which resulted in better pawn loan performance,
and an increase in the statutorily permitted rate in some markets. In addition, pawn loan balances throughout 2012 were
lower due to a shortening of the maximum loan term from 90 to 60 days in certain locations in late 2011. This change
contributed to the higher annualized loan yields as customer payments of pawn loan fees and service charges occur in
higher frequency on the reduced loan balance.