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Press Release: CURO Group Holdings Corp. -4-

· 02/04/2021 16:00
2020 2019 (dollars in thousands, Fourth Third Second First Fourth unaudited) Quarter Quarter Quarter Quarter Quarter ----------------------- --------- --------- --------- --------- --------- Unsecured Installment loans: Revenue - Company Owned $ 36,387 $ 31,168 $ 33,405 $ 55,569 $ 63,428 Provision for losses - Company Owned 16,506 9,647 12,932 26,182 33,183 --------- --------- --------- --------- --------- Net revenue - Company Owned $ 19,881 $ 21,521 $ 20,473 $ 29,387 $ 30,245 ========= ========= ========= ========= ========= Net charge-offs - Company Owned $ 11,308 $ 9,595 $ 23,110 $ 32,775 $ 35,729 Revenue - Guaranteed by the Company (1) $ 42,401 $ 36,240 $ 37,024 $ 66,840 $ 72,183 Provision for losses - Guaranteed by the Company (1) 22,535 14,884 11,418 26,338 34,858 --------- --------- --------- --------- --------- Net revenue - Guaranteed by the Company (1) $ 19,866 $ 21,356 $ 25,606 $ 40,502 $ 37,325 ========= ========= ========= ========= ========= Net charge-offs - Guaranteed by the Company (1) $ 21,505 $ 13,882 $ 15,432 $ 27,749 $ 34,486 Unsecured Installment gross combined loans receivable: Company Owned $ 102,425 $ 84,959 $ 81,601 $ 123,118 $ 160,782 Guaranteed by the Company (1) 43,175 38,822 33,082 54,097 74,317 --------- --------- --------- --------- --------- Unsecured Installment gross combined loans receivable (1)(2) $ 145,600 $ 123,781 $ 114,683 $ 177,215 $ 235,099 ========= ========= ========= ========= ========= Average gross loans receivable: Average Unsecured Installment gross loans receivable - Company Owned (3) $ 93,692 $ 83,280 $ 102,360 $ 141,950 $ 167,636 Average Unsecured Installment gross loans receivable - Guaranteed by the Company (1)(3) $ 40,999 $ 35,952 $ 43,590 $ 64,207 $ 72,511 Allowance for loan losses and CSO liability for losses: Unsecured Installment Allowance for loan losses (4) $ 24,073 $ 18,859 $ 18,451 $ 28,965 $ 35,587 Unsecured Installment CSO liability for losses (1)(4) $ 7,160 $ 6,130 $ 5,128 $ 9,142 $ 10,553 Unsecured Installment Allowance for loan losses as a percentage of Unsecured Installment gross loans receivable 23.5% 22.2% 22.6% 23.5% 22.1% Unsecured Installment CSO liability for losses as a percentage of Unsecured Installment gross loans Guaranteed by the Company (1) 16.6% 15.8% 15.5% 16.9% 14.2% Unsecured Installment past-due balances: Unsecured Installment gross loans receivable - Company Owned $ 24,190 $ 17,942 $ 17,766 $ 34,966 $ 43,100 Unsecured Installment gross loans - Guaranteed by the Company (1) $ 6,079 $ 5,953 $ 4,019 $ 9,232 $ 12,477 Past-due Unsecured Installment Company Owned gross loans receivable -- percentage 23.6% 21.1% 21.8% 28.4% 26.8% Past-due Unsecured Installment gross loans Guaranteed by the Company -- percentage (1) 14.1% 15.3% 12.1% 17.1% 16.8% Unsecured Installment other information: Originations - Company Owned $ 66,502 $ 49,833 $ 24,444 $ 55,941 $ 87,080 Originations - Guaranteed by the Company (1) $ 57,053 $ 51,433 $ 33,700 $ 64,836 $ 91,004 Unsecured Installment ratios: NCO rate - Company Owned (5) 12.1% 11.5% 22.6% 23.1% 21.3% NCO rate - Guaranteed by the Company (1)(5) 52.5% 38.6% 35.4% 43.2% 47.6% ----------------------- --------- --------- --------- --------- --------- (1) Includes loans originated by third-party lenders through CSO programs, which are not included in the Condensed Consolidated Financial Statements. (2) Non-GAAP measure. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures." (3) Average gross loans receivable calculated as average of beginning of quarter and end of quarter gross loans receivable. (4) We report Allowance for loan losses as a contra-asset reducing gross loans receivable and the CSO liability for losses as a liability on the Condensed Consolidated Balance Sheets. (5) We calculate NCO rate as NCOs divided by Average gross loans receivables.

Unsecured Installment loans in California were $23.6 million, or 23.0%, of total Company Owned Unsecured Installment loans as of December 31, 2020, a decrease of $47.8 million from December 31, 2019. Sequentially, California Unsecured Installment loans decreased $3.8 million. Excluding California, Company Owned Unsecured Installment loans receivable decreased $10.6 million, or 11.8%, from the prior-year period, while revenues for the three months ended December 31, 2020 decreased $11.0 million, or 28.4%, compared to the prior-year period, due to COVID-19 Impacts. Sequentially, excluding California, Company Owned Unsecured Installment revenue and related loans receivable increased $7.2 million, or 33.5% and $21.2 million, or 36.8%, respectively, from September 30, 2020. The receivable increase was due to normal seasonality, reduced quarantine and stay-at-home orders and less government stimulus during the fourth quarter.

The Unsecured Installment quarterly NCO rate improved approximately 920 bps year-over-year, as a result of COVID-19 Impacts. Sequentially, the quarterly NCO rate increased from 11.5% in the third quarter to 12.1% in the fourth quarter of 2020 on higher new customer origination mix and expansion into new states.

The Unsecured Installment allowance coverage increased year-over-year, from 22.1% as of December 31, 2019, to 23.5% as of December 31, 2020, as a result of certain loan modifications under the Customer Care Program, which were classified as TDRs. Loans classified as TDRs are included within Company Owned gross loans receivable. Amounts waived on these loans are immediately charged-off and the impairment for these loans is included within the Allowance for loan losses. Determination of the impairment for TDRs includes an estimate of their lifetime losses, which is greater than estimated incurred losses at a point in time. TDRs increased our total Unsecured Installment allowance coverage by nearly 100 bps from the allowance coverage that would have otherwise been required. Sequentially, the allowance coverage increased from 22.2% to 23.5%, as a result of moderately higher past-due balances from 21.1% to 23.6%, due largely to growth in new geographical markets, as well as the aforementioned increase in the NCO rate.

Unsecured Installment Loans - Guaranteed by the Company

Unsecured Installment loans Guaranteed by the Company declined $31.1 million year over year, primarily due to COVID-19 Impacts. Sequentially, Unsecured Installment loans Guaranteed by the Company increased $4.4 million, or 11.2%, due to normal seasonality, reduced quarantine and stay-at-home orders and less government stimulus during the fourth quarter.

NCO rates for Unsecured Installment loans Guaranteed by the Company increased year over year from 47.6% to 52.5%, and sequentially from 38.6% to 52.5%, as new customer volume improved and origination mix shifted online. The CSO liability for losses as a percentage of loans Guaranteed by the Company increased year-over-year from 14.2% to 16.6% as of December 31, 2020 due primarily to an increased liability for certain loans modified under the Customer Care Program. Sequentially, past-due balances as a percent of gross loans receivable decreased from 15.3% to 14.1%. The CSO liability for losses increased from 15.8% to 16.6% during the three months ended December 31, 2020, as a result of the aforementioned increase in NCO rate.

Secured Installment Loans

Secured Installment revenue and the related gross combined loans receivable for the three months ended December 31, 2020 decreased 41.6% and 45.2%, respectively, compared to the prior-year period. The decreases were due to COVID-19 Impacts and regulatory changes in California that were effective January 1, 2020. California accounted for $13.7 million, or 27.6%, of total Secured Installment gross combined loans receivable as of December 31, 2020, as compared to $36.5 million, or 40.4%, as of December 31, 2019, a decrease of $22.8 million, year over year. Excluding California, Secured Installment loans receivable decreased $18.0 million, or 33.5%, from the prior-year period, while revenues decreased $6.6 million, or 33.1%, year over year, due to COVID-19 Impacts.

The Secured Installment NCO rate improved 440 bps compared to the prior-year period. Secured Installment Allowance for loan losses and CSO liability for losses as a percentage of Secured Installment gross combined loans receivable increased from 11.5% as of December 31, 2019 to 14.4% as of December 31, 2020. The increase was primarily attributable to the classification of certain loan modifications under the Customer Care Program as TDRs, partially offset by the impact of lower past-due receivables as of December 31, 2020. TDRs increased our total Secured Installment allowance coverage by 270 bps from the allowance coverage that would otherwise have been required. Despite the sequential increase in past-due Secured Installment gross combined loans receivable, the Secured Installment Allowance for loan losses and CSO liability for losses as a percentage of Secured Installment gross combined loans receivable remained flat at 14.4% due to sustained favorable trends in NCOs throughout 2020.

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February 04, 2021 16:00 ET (21:00 GMT)