Cash America 2013 Annual Report Download - page 100
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75
Line of Credit Accounts
The consumer loan loss provision as a percentage of average consumer loan balance for line of credit accounts
exhibits a similar quarterly seasonal trend to short-term consumer loan loss rates as the ratio is typically lower in the first
quarter and increases throughout the remainder of the year, peaking in the third and fourth quarters with higher loan
demand.
Consumer loan loss provision as a percentage of consumer loan fees are generally higher for line of credit
accounts because the highest level of default is exhibited in the early stages of the loan, while the revenue is recognized
over the term of the loan. As a result, particularly in periods of higher growth for line of credit account portfolios, which
has been the case in recent years, the consumer loan loss provision as a percentage of consumer loan fees will be higher
for this product than for the Company's short-term loan products. Another factor contributing to the higher rate of losses
as a percentage of consumer loan fees is that the loan yield for line of credit accounts is typically lower than the short-
term loan products offered by the Company.
The following table includes information related only to the Company’s line of credit account product and
shows the Company’s loss experience trends for line of credit accounts for 2013 and 2012 (dollars in thousands):
2013
Line of credit accounts:
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Consumer loan loss provision $ 6,553 $ 9,919 $ 25,140 $ 32,694
Charge-offs (net of recoveries) 9,596 7,334 13,855 24,844
Average consumer loan balance(a) $ 39,828 $ 47,513 $ 78,839 $ 112,704
Line of credit account ratios:
Consumer loan loss provision as a % of
average consumer loan balance(a) 16.5% 20.9% 31.9% 29.0%
Charge-offs (net of recoveries) as a % of
average consumer loan balance(a) 24.1% 15.4% 17.6% 22.0%
Consumer loan loss provision as a % of consumer loan
fees 28.2% 35.1% 49.8% 47.7%
Allowance for losses as a % of average consumer loan
balance(a) 20.2% 22.4% 27.8% 26.4%
(
a
)
The average consumer loan balance for line of credit accounts is the simple average of the beginning and ending consumer loan balance
for line of credit accounts.