Cash America 2013 Annual Report Download - page 107

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Pawn Loan Fees and Service Charges
Consolidated pawn loan balances at 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 in connection with the Mexico Reorganization. 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%, for 2012
compared to the year ended December 31, 2011 (“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. The increase
in average domestic pawn loan balances was partially offset by lower average 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 $26.3 million, or 10.1%, to $288.2 million in 2012
compared to 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
partially due to a higher pawn loan yield as a result of 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.
Foreign Pawn Loan Balances
The average balance of foreign pawn loans outstanding during 2012 decreased by $8.0 million, or 39.8%,
compared to 2011, primarily due to the closure of 148 pawn lending locations associated with the Mexico
Reorganization. In addition, there was a decrease in demand for gold-based pawn loans that was partially offset by an
increase in demand for loans on general merchandise, which were introduced in certain of the Company’s foreign retail
services locations beginning in 2011. Also, during 2012, the Company reduced the loan period from 60 to 45 days,
causing a decrease in loans outstanding. The preceding factors led to lower average foreign pawn loan balances, which
resulted in a decrease in pawn loan fees and service charges of $7.6 million, or 37.3%, to $12.8 million in 2012 from
$20.4 million in 2011. The annualized yield on foreign pawn loan balances increased to 105.9% in 2012 compared to
101.7% in 2011, primarily due to a change in the rates charged on these loans during 2012, a decrease in the maximum
loan term from 60 days to 45 days during 2012 and a higher mix of general merchandise loans, which have a higher
pawn loan yield than jewelry loans. The average amount per loan decreased to $88 in 2012 compared to $103 in 2011,
primarily due to the modification of lending rates and the effect of the change in foreign exchange rates.
Proceeds From Disposition of Merchandise
The following table summarizes the proceeds from the disposition of merchandise and the related profit for the
years ended December 31, 2012 and 2011 (dollars in thousands):
Year Ended December 31,
2012 2011
Retail Commercial Total Retail Commercial Total
Proceeds from disposition $ 391,566 $ 312,201 $ 703,767 $ 358,695 $ 330,189 $ 688,884
Gross profit on disposition $ 144,095 $ 81,493 $ 225,588 $ 137,620 $ 103,647 $ 241,267
Gross profit margin 36.8 % 26.1 % 32.1 % 38.4 % 31.4 % 35.0 %
Percentage of total gross profit 63.9 % 36.1 % 100.0 % 57.0 % 43.0 % 100.0 %