David Scharf

David Scharf sought clarification on whether the Q1 origination outlook factors in a larger-than-normal refund season, the assumption for year-over-year loss rates under fair value, and how CECL's macro layer translates to day one fair value marks.

Answer

VP, Head of FP&A, and Investor Relations Artem Nalivayko stated it's difficult to factor in refund season specifics, but confirmed larger refunds lead to higher payments and potentially temporary shifts in credit demand. He indicated an assumption of stable annual loss rates (ANCLs) for the year, despite increasing duration from new products, and no major shift in those numbers. Artem Nalivayko explained that under fair value, qualitative reserves are not explicitly layered in as with CECL, and they will not speculate on future economic stress for reserving.

In a follow-up, David Scharf of JMP Securities sought clarification on the timeline for entering Peru and Colombia, the expected combined tax rate, and the future of the remaining non-pawn operations.

Answer

Chairman and CEO Rick Wessel clarified that Colombia is the top priority for a de novo entry and estimated a pro forma tax rate of 34-35%. President and CEO Brent Stuart added that non-pawn operations would be a de minimis part of the business going forward (around 6% of revenue) and would be maintained but not expanded.