LOANS RECEIVABLE AND REVENUE

6 Months Ended

Jun. 30, 2021

Receivables [Abstract]

LOANS RECEIVABLE AND REVENUE

LOANS RECEIVABLE AND REVENUEAs a result of COVID-19, CURO's customers and its overall credit performance continue to be impacted through the three and six months ended June 30, 2021. Throughout much of 2020 and the first half of 2021, the U.S. and Canadian governments instituted several initiatives to ease the personal burden of the pandemic, including various federal and provincial financial aid and economic stimulus programs. During the second half of 2020, consumer demand gradually increased, reflecting both the gradual lifting of certain regions' stay-at-home and self-quarantine orders in response to the pandemic's easing and the expiration of governmental stimulus programs. Subsequently, a new round of government stimulus payments in the U.S. resulted in a decrease in loan balances and allowance for loan losses as of June 30, 2021. With stimulus programs running off in the U.S. and continued demand in Canada for loan products, loan balances have increased sequentially as of June 30, 2021. The Company has maintained its historical allowance approach, but has adjusted estimates for changes in past-due gross loans receivable due to market conditions and as of June 30, 2021, has reduced allowance as a percentage of receivables as a result of recent market trends. The estimates

and assumptions used to determine an appropriate allowance for loan losses and liability for losses on CSO lender-owned consumer loans are those that are available through the filing of this Form 10-Q and which are indicative of conditions as of June 30, 2021.

Additionally, as a result of COVID-19, the Company enhanced its Customer Care Program and began modifying loans for borrowers that experienced financial distress, as described in more detail in Note 1, "Summary of Significant Accounting Policies and Nature of Operations" and the "—TDR Loans Receivable" tables below.

Revenue and Receivable Characteristics by Product

Revolving LOC revenues include interest income on outstanding revolving balances, MDR related to Canada POS Lending, and other usage or maintenance fees as permitted by underlying statutes. Unsecured and Secured Installment revenue includes interest income and non-sufficient-funds or returned-items fees on late or defaulted payments on past-due loans, known as late fees. Late fees comprise less than 1.0% of Installment revenues. Single-Pay revenues represent deferred presentment or other fees as defined by the underlying state, provincial or national regulations. Ancillary revenue includes revenue from a number of ancillary financial products such as check cashing, proprietary general-purpose reloadable prepaid debit cards (Opt+), demand deposit accounts (Revolve Finance), credit protection insurance in the Canadian market, retail installment sales and money transfer services.

The following table summarizes revenue by product (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revolving LOC	$	68,036	$	56,736	$	130,771	$	127,718
Unsecured Installment	64,783		70,429		141,177		192,838
Secured Installment	12,821		19,401		27,848		45,687
Single-Pay	23,763		22,732		48,730		67,889
Total Installment	101,367		112,562		217,755		306,414
Ancillary	18,290		13,211		35,718		29,183
Total revenue(1)	$	187,693	$	182,509	$	384,244	$	463,315
(1) Includes revenue from CSO programs of $34.9 million and $37.8 million for the three months ended June 30, 2021 and 2020, respectively, and $76.4 million and $105.8 million for the six months ended June 30, 2021 and 2020.

The following tables summarize loans receivable by product and the related delinquent loans receivable (in thousands):

	June 30, 2021
	Revolving LOC		Unsecured Installment		Secured Installment		Single-Pay(1)		Total Installment - Company Owned		Total
Current loans receivable	$	562,497	$	65,603	$	31,824	$	38,760	$	136,187	$	698,684
Delinquent loans receivable	43,933		21,035		5,576		—		26,611		70,544
Total loans receivable	606,430		86,638		37,400		38,760		162,798		769,228
Less: allowance for losses	(44,848)		(16,701)		(3,880)		(2,432)		(23,013)		(67,861)
Loans receivable, net	$	561,582	$	69,937	$	33,520	$	36,328	$	139,785	$	701,367
(1) Of the $38.8 million of Single-Pay receivables, $10.0 million relate to mandated extended payment options for certain Canada Single-Pay loans.

	June 30, 2021
	Revolving LOC		Unsecured Installment		Secured Installment		Total Installment - Company Owned		Total
Delinquent loans receivable
0-30 days past due	$	22,288	$	8,474	$	2,835	$	11,309	$	33,597
31-60 days past due	8,659		5,767		1,307		7,074		15,733
61 + days past due	12,986		6,794		1,434		8,228		21,214
Total delinquent loans receivable	$	43,933	$	21,035	$	5,576	$	26,611	$	70,544

	December 31, 2020
	Revolving LOC		Unsecured Installment		Secured Installment		Single-Pay(1)		Total Installment - Company Owned		Total
Current loans receivable	$	321,105	$	78,235	$	40,358	$	43,780	$	162,373	$	483,478
Delinquent loans receivable	37,779		24,190		8,275		—		32,465		70,244
Total loans receivable	358,884		102,425		48,633		43,780		194,838		553,722
Less: allowance for losses	(51,958)		(24,073)		(7,047)		(3,084)		(34,204)		(86,162)
Loans receivable, net	$	306,926	$	78,352	$	41,586	$	40,696	$	160,634	$	467,560
(1) Of the $43.8 million of Single-Pay receivables, $11.2 million relate to mandated extended payment options for certain Canada Single-Pay loans.

	December 31, 2020
	Revolving LOC		Unsecured Installment		Secured Installment		Total Installment - Company Owned		Total
Delinquent loans receivable
0-30 days past due	$	17,517	$	10,361	$	3,764	$	14,125	$	31,642
31-60 days past due	9,276		7,124		2,199		9,323		18,599
61 + days past due	10,986		6,705		2,312		9,017		20,003
Total delinquent loans receivable	$	37,779	$	24,190	$	8,275	$	32,465	$	70,244

The following tables summarize loans Guaranteed by the Company under CSO programs and the related delinquent receivables (in thousands):

	June 30, 2021
	Unsecured Installment		Secured Installment		Total Installment - Guaranteed by the Company
Current loans receivable Guaranteed by the Company	$	29,981	$	658	$	30,639
Delinquent loans receivable Guaranteed by the Company	6,359		95		6,454
Total loans receivable Guaranteed by the Company	36,340		753		37,093
Less: Liability for losses on CSO lender-owned consumer loans	(5,234)		(31)		(5,265)
Loans receivable Guaranteed by the Company, net	$	31,106	$	722	$	31,828

	June 30, 2021
	Unsecured Installment		Secured Installment		Total Installment - Guaranteed by the Company
Delinquent loans receivable
0-30 days past due	$	5,574	$	88	$	5,662
31-60 days past due	625		4		629
61+ days past due	160		3		163
Total delinquent loans receivable	$	6,359	$	95	$	6,454

	December 31, 2020
	Unsecured Installment		Secured Installment		Total Installment - Guaranteed by the Company
Current loans receivable Guaranteed by the Company	$	37,096	$	775	$	37,871
Delinquent loans receivable Guaranteed by the Company	6,079		155		6,234
Total loans receivable Guaranteed by the Company	43,175		930		44,105
Less: Liability for losses on CSO lender-owned consumer loans	(7,160)		(68)		(7,228)
Loans receivable Guaranteed by the Company, net	$	36,015	$	862	$	36,877

	December 31, 2020
	Unsecured Installment		Secured Installment		Total Installment - Guaranteed by the Company
Delinquent loans receivable
0-30 days past due	$	5,435	$	103	$	5,538
31-60 days past due	490		37		527
61 + days past due	154		15		169
Total delinquent loans receivable	$	6,079	$	155	$	6,234

The following tables summarize activity in the ALL and the liability for losses on CSO lender-owned consumer loans in total (in thousands):

	Three Months Ended June 30, 2021
	Revolving LOC		Unsecured Installment		Secured Installment		Single-Pay		Total Installment		Other		Total
Allowance for loan losses:
Balance, beginning of period	$	44,754	$	20,394	$	5,023	$	2,217	$	27,634	$	—	$	72,388
Charge-offs	(24,487)		(18,812)		(4,384)		(22,107)		(45,303)		(802)		(70,592)
Recoveries	7,280		5,383		2,216		17,574		25,173		378		32,831
Net charge-offs	(17,207)		(13,429)		(2,168)		(4,533)		(20,130)		(424)		(37,761)
Provision for losses	16,672		9,734		1,025		4,727		15,486		424		32,582
Effect of foreign currency translation	629		2		—		21		23		—		652
Balance, end of period	$	44,848	$	16,701	$	3,880	$	2,432	$	23,013	$	—	$	67,861
Liability for losses on CSO lender-owned consumer loans:
Balance, beginning of period	$	—	$	4,670	$	57	$	—	$	4,727	$	—	$	4,727
Decrease in liability	—		(564)		26		—		(538)		—		(538)
Balance, end of period	$	—	$	5,234	$	31	$	—	$	5,265	$	—	$	5,265

	Three Months Ended June 30, 2020
	Revolving LOC		Unsecured Installment		Secured Installment		Single-Pay		Total Installment		Other		Total
Allowance for loan losses:
Balance, beginning of period	$	56,458	$	28,965	$	9,726	$	4,693	$	43,384	$	—	$	99,842
Charge-offs	(37,784)		(30,129)		(11,747)		(21,168)		(63,044)		(750)		(101,578)
Recoveries	6,100		7,019		2,961		21,766		31,746		398		38,244
Net charge-offs	(31,684)		(23,110)		(8,786)		598		(31,298)		(352)		(63,334)
Provision for losses	21,341		12,584		6,943		(2,588)		16,939		352		38,632
Effect of foreign currency translation	1,204		12		—		99		111		—		1,315
Balance, end of period	$	47,319	$	18,451	$	7,883	$	2,802	$	29,136	$	—	$	76,455
Liability for losses on CSO lender-owned consumer loans:
Balance, beginning of period	$	—	$	9,142	$	47	$	—	$	9,189	$	—	$	9,189
Decrease in liability	—		4,014		11		—		4,025		—		4,025
Balance, end of period	$	—	$	5,128	$	36	$	—	$	5,164	$	—	$	5,164

	Six Months Ended June 30, 2021
	Revolving LOC		Unsecured Installment		Secured Installment		Single-Pay		Total Installment		Other		Total
Allowance for loan losses:
Balance, beginning of period	$	51,958	$	24,073	$	7,047	$	3,084	$	34,204	$	—	$	86,162
Charge-offs	(53,201)		(39,937)		(10,727)		(44,040)		(94,704)		(1,656)		(149,561)
Recoveries	14,787		12,000		4,760		38,828		55,588		930		71,305
Net charge-offs	(38,414)		(27,937)		(5,967)		(5,212)		(39,116)		(726)		(78,256)
Provision for losses	30,474		20,559		2,800		4,520		27,879		726		59,079
Effect of foreign currency translation	830		6		—		40		46		—		876
Balance, end of period	$	44,848	$	16,701	$	3,880	$	2,432	$	23,013	$	—	$	67,861
Liability for losses on CSO lender-owned consumer loans:
Balance, beginning of period	$	—	$	7,160	$	68	$	—	$	7,228	$	—	$	7,228
Decrease in liability	—		1,926		37		—		1,963		—		1,963
Balance, end of period	$	—	$	5,234	$	31	$	—	$	5,265	$	—	$	5,265

	Six Months Ended June 30, 2020
	Revolving LOC		Unsecured Installment		Secured Installment		Single-Pay		Total Installment		Other		Total
Allowance for loan losses:
Balance, beginning of period	$	55,074	$	35,587	$	10,305	$	5,869	$	51,761	$	—	$	106,835
Charge-offs	(81,293)		(68,687)		(24,857)		(61,689)		(155,233)		(2,028)		(238,554)
Recoveries	12,511		12,802		5,870		51,770		70,442		977		83,930
Net charge-offs	(68,782)		(55,885)		(18,987)		(9,919)		(84,791)		(1,051)		(154,624)
Provision for losses	62,332		38,766		16,565		7,051		62,382		1,051		125,765
Effect of foreign currency translation	(1,305)		(17)		—		(199)		(216)		—		(1,521)
Balance, end of period	$	47,319	$	18,451	$	7,883	$	2,802	$	29,136	$	—	$	76,455
Liability for losses on CSO lender-owned consumer loans:
Balance, beginning of period	$	—	$	10,553	$	70	$	—	$	10,623	$	—	$	10,623
Decrease in liability	—		5,425		34		—		5,459		—		5,459
Balance, end of period	$	—	$	5,128	$	36	$	—	$	5,164	$	—	$	5,164

As of June 30, 2021, Revolving LOC and Installment loans classified as nonaccrual were $4.2 million and $5.1 million, respectively. As of December 31, 2020, Revolving LOC and Installment loans classified as nonaccrual were $4.4 million and $6.2 million, respectively. The Company's loans receivable inherently considers nonaccrual loans in its estimate of the ALL as delinquencies are a primary input into the Company's roll rate-based model.

TDR Loans Receivable

In certain circumstances, the Company modifies the terms of its loans receivable for borrowers. Under U.S. GAAP, a modification of loans receivable terms is considered a TDR if the borrower is experiencing financial difficulty and the Company grants a concession to the borrower it would not have otherwise granted under the terms of the original agreement. In response to COVID-19, the Company established an enhanced Customer Care Program in 2020, which enables its team members to provide relief to customers in various ways, ranging from due date changes, interest or fee forgiveness, payment waivers or extended payment plans, depending on a customer’s individual circumstances. The Company modifies loans only if it believes the customer has the ability to pay under the restructured terms. The Company continues to accrue and collect interest on these loans in accordance with the restructured terms.

The Company records its ALL related to TDRs by discounting the estimated cash flows associated with the respective TDR at the effective interest rate immediately after the loan modification and records any difference between the discounted cash flows and the carrying value as an allowance adjustment. A loan that has been classified as a TDR remains so classified until the loan is paid off or charged off. A TDR is charged off consistent with the Company's policies for the related loan product. For additional information on the Company's loss recognition policy, see the 2020 Form 10-K.

The table below presents TDRs, which are related to the Customer Care Program implemented in response to COVID-19, included in gross loans receivable and the impairment included in the ALL (in thousands):

	As of June 30, 2021		As of December 31, 2020
Current TDR gross receivables	$	12,137	$	13,563
Delinquent TDR gross receivables	4,293		6,309
Total TDR gross receivables	16,430		19,872
Less: Impairment included in the allowance for loan losses	(2,455)		(3,482)
Less: Additional allowance	(3,130)		(4,497)
Outstanding TDR receivables, net of impairment	$	10,845	$	11,893

The tables below reflect loans modified and classified as TDRs during the periods presented (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Pre-modification TDR loans receivable	$	3,504	$	24,069	$	8,367	$	24,069
Post-modification TDR loans receivable	3,197		21,390		7,472		21,390
Total concessions included in gross charge-offs	$	307	$	2,679	$	895	$	2,679

There were $3.3 million and $0.9 million of loans classified as TDRs that were charged off and included as a reduction in the ALL during the three months ended June 30, 2021 and 2020, respectively, and $8.1 million and $0.9 million during the six months ended June 30, 2021 and 2020, respectively. The Company had commitments to lend additional funds of approximately $2.0 million to customers with available and unfunded Revolving LOC loans classified as TDRs as of June 30, 2021.

The table below presents the Company's average outstanding TDR loans receivable, interest income recognized on TDR loans and number of TDR loans for the periods presented (dollars in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Average outstanding TDR loans receivable	$	16,967	$	20,864	$	17,936	$	20,864
Interest income recognized	4,604		4,396		10,122		4,396
Number of TDR loans(1)	2,468		21,512		6,248		21,512
(1) Presented in ones