Cash America 2013 Annual Report Download - page 117

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92
Installment Loans
For installment loans, the consumer loan loss provision as a percentage of average combined consumer loan
balance is more consistent throughout the year. Due to the scheduled monthly or bi-weekly payments that are inherent
with installment loans, the Company does not experience the higher levels of repayments in the first quarter for these
loans as it experiences with short-term loans and to a lesser extent, line of credit accounts.
Consumer loan loss provision as a percentage of consumer loan fees are generally higher for the installment loan
product because the highest level of default is exhibited in the early stages of the loan, while revenue is recognized over
the term of the loan. In addition, installment loans typically have a higher average amount per loan. As a result,
particularly in periods of higher growth for the installment loan portfolio, which has been the case in recent years, the
consumer loan loss provision as a percentage of consumer loan fees typically is higher for this product than for the
Company's short-term consumer loan products and line of credit accounts. Another factor contributing to the higher rate
of losses as a percentage of fees is that the loan yield for installment loans is typically lower than the short-term loan
products offered by the Company.
The following tables include information related only to the Company’s installment loan product and show the
Company’s loss experience trends for installment loans for 2012 and 2011 (dollars in thousands):
2012
Installment loans:
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Consumer loan loss provision $ 14,416 $ 16,651 $ 23,179 $ 24,930
Charge-offs (net of recoveries) 12,153 12,005 15,843 23,385
Installment loan average loan balance:(a)
Company owned $ 72,396 $ 82,365 $ 102,291 $ 124,060
Guaranteed by the Company(b) 6,734 6,170 6,502 8,051
Combined average consumer loan balance (c) $ 79,130 $ 88,535 $ 108,793 $ 132,111
Installment loan ratios:
Consumer loan loss provision as a % of
combined average consumer loan balance(a)(c) 18.2% 18.8% 21.3% 18.9%
Charge-offs (net of recoveries) as a % of
combined average consumer loan balance(a)(c) 15.4% 13.6% 14.6% 17.7%
Consumer loan loss provision as a % of consumer loan
fees 58.7% 58.4% 59.2% 54.2%
Allowance and liability for losses as a % of combined
average consumer loan balance(a)(c) 19.8% 22.9% 25.4% 22.1%
(
a
)
The average consumer loan balance for installment loans is the simple average of the beginning and ending consumer loan balance for
installment loans.
(b
)
Represents loans originated by third-party lenders through the CSO programs, which are not included in the Company's financial
statements.
(
c
)
Non-GAAP measure.