CURO Group Holdings Corp.
Q1 2021 Earnings Call Transcript

Published: 8 May 2021

[Operator:]

Hello, and welcome to the CURO Holdings First Quarter of 2021 Earnings Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I'd now like to turn the conference over to Matthew Keating, Investor Relations. Mr. Keating, Please go ahead.

[Matthew Keating:]

Thank you, and good morning, everyone. After the market closed yesterday, CURO released results for the first quarter of 2021, which are available on the investor section of our website at ir.curo.com. With me on today's call are CURO's Chief Executive Officer, Don Gayhardt; President and Chief Operating Officer, Bill Baker; Chief Financial Officer, Roger Dean; and Chief Accounting Officer, Dave Strano. This call is being webcast and will be archived on the Investor section of our website.

[Don Gayhardt:]

Thanks, Matt. Good morning, and thank you for joining us today. I'll start with the good news that our Board doubled our quarterly dividend to an annual rate of $0.44 per share and authorized a $50 million share repurchase program based on our strong first quarter earnings and continued robust cash and liquidity position. Like the second half of 2020, our Q1 2021 results in Canada demonstrated meaningfully lower impacts from COVID-19 than did our U.S. operations. We delivered quarterly sequential loan balance growth for Canada Direct Lending of $13.4 million or 4.1% despite seasonal customer behavior that typically reduces loan balances in the first quarter.

[Roger Dean:]

Thanks, John, and good morning. While Don covered some of the consolidated and segment highlights, I'll provide more color on the details. Canada Direct Lending loan balances increased 24.4% year-over-year, including a $79 million increase in revolving line of credit balances, offset by an $11.6 million decline in installment balances, primarily due to COVID impacts. Our revolving line of credit book in Canada Direct Lending increased 32.9% year-over-year with related revenue up 18.5%. Sequential growth continued to be strong at 4.1% versus the fourth quarter of 2020. As Don mentioned earlier, a loan book mix shift resulted in revenue that was basically flat year-over-year in Canada, but net revenue for the Canada Direct Lending segment increased 56%, largely due to a 370 basis point improvement in the net charge off rate year-over-year. Despite COVID-19 impacts, Canada Direct Lending posted quarterly adjusted EBITDA of $25.8 million. That's more than a three times increase year-over-year. In the U.S., the impact of COVID-19 remained more pronounced in the first quarter with revenue down 38.5% from the prior year and adjusted EBITDA down $18.2 million or 31.7%. U.S. loan balances and revenue decreased 36.6% and 38.5%, respectively year-over-year, primarily due to the impact of COVID and some additional effects from the runoff of the California and Virginia portfolios. Just a reminder that we ceased originating installment loans in California on January 1, 2020, and revolving line of credit loans in Virginia on January 1, 2021, because of statutory changes. Excluding California and Virginia, U.S. loan balances finished down $67.8 million or 27.9% year-over-year. Loss rates in the U S improved 850 basis points year-over-year, which, along with the aforementioned sequential decline in loan balances, drove a 69.7% reduction in the provision for loan losses. The resulting $25.3 million decline in net revenue translated to an $18.2 million decline in U.S. adjusted EBITDA with net revenue declines mitigated by lower advertising costs and expense management. Consolidated adjusted EBITDA came in at $63.8 million, down just $2 million or 3.1% as revenue declines from lower loan balances were offset by lower provision for loan loss and cost reductions. As a result, Q1 adjusted earnings per share was $0.69 cents for the quarter. I'll expand a little bit on keep on the trends and key drivers. First, demand and loan volume. Pages 5 and 6 of our supplemental earnings presentation recap the weekly trends through last week, indexed to the weekend ended March 7, 2020, for the Canadian Direct Lending and U.S. segments. In Canada, application volumes, approval rates and origination have been stable this year, and you'll see that we didn't have the seasonal decline in application volume that we saw in March of last year. In the U.S., trends for March and April application volumes, approval rates and origination track similarly to the same weeks a year ago if you keep in mind that this year's stimulus hit in mid-March and last year's stimulus hit in mid-April. We finished April, 2021 with loan balances in Canada flat and the U.S. down just modestly from quarter end. As we move through the first quarter, the percentage of loans originated to new customers decreased to an average of 10.5%. That's down from 13.6% in the fourth quarter of 2020 and flat to the first quarter of 2020. Second, I'll talk about delinquency and credit trends. Staying on Pages 5 and 6 of our earnings supplement and looking at weekly delinquency trends by bucket, through April, 2021, both countries continued to see stable and historically low delinquencies. Our first quarter net charge operates improved 370 basis points in Canada Direct Lending and 850 basis points in the U.S. compared to the prior year. Third, just a moment on the provision for loan losses. Moving to Page 8 of our earnings supplement deck, allowance coverage rates declined from the fourth quarter, more so in Canada, on sustained improvement in net charge-off rates and low delinquency levels. The adjustments to allowance coverage and the sequential decline and loan balances in the U.S. resulted in provisions for loan losses for the U.S. and Canada that were less than net charge-offs by $13.6 million and $3.7 million, respectively. Loans modified under our customer care program made up 5.9% of our company-owned installment balances in the U S at the end of first quarter, which is down from 6.6% at the end of the fourth quarter of 2020. We ended the first quarter with $135.4 million in cash and $233.2 million of liquidity, including undrawn capacity on revolving credit facilities. When the Katapult transaction closes, we estimate we'll receive another $130 million or so of cash before taxes. While we continue to see areas to invest in the growth of our business, we are also pleased to expand the ways in which we directly return capital to shareholders that Don highlighted earlier. This concludes our prepared remarks, and we'll now ask the operator to begin Q&A.

[Operator:]

And the first question comes from John Hecht from Jefferies.

[John Hecht:]

First question is just related to -- I'm just trying to think about the mix of the business as we kind of move to the next couple of quarters. You mentioned kind of the expected slowdown in Canada given the implementation of lockdowns for the time being, but Flexiti still has got a lot of momentum. I mean can -- I assume Flexiti can still grow through this next temporary period of time? Or should we think that the entire platform of Canada will be temporarily impacted by these lockdowns?

[Don Gayhardt:]

John, it's Don. I'll kind of take the first swing at that one. So it's really sort of fluid. Canada had done a terrific job sort of managing through the pandemic -- I mean just a relative -- it's an interesting relevant point. If you look at total employment in Canada -- so Canada -- the total employment base in Canada pre-COVID was 19.3 million. That fell to about 16.3 million during sort of the depth of the pandemic in the last spring. But at March 31, it was back to 18.8 million. So almost a full recovery in total employment. In the U.S., we were at 152 million employed in February of '20. That fell to 100 -- sorry, that's up by 30 million. And then we -- but we're back to 144 million. So from 152 million to 132 million, we're back to 144 million. It's only about 60% recovery. We still need 8 million more. And again, this is as at the end of March. So the hiring pace in the U.S. looks very strong. But on a relative basis, just Canada has basically recovered everything, had recovered everything as of March 31, and the U.S. still had maybe 40% of the kind of COVID losses to recover. So we still -- but there's a spike. And I was looking at -- and particularly in Alberta and D.C., the numbers are as high as they are anywhere in kind of North America. It sort of feels like, given where the vaccination rates are, that it ought to be something that is managed and the lockdowns can be removed fairly quickly, in which case, we feel like our -- the -- both the overall business -- and again, we're going to be comping for -- if you look at sort of 2Q, we'll be comping off of weak numbers from last year. So we should get really strong growth in Canada in the Direct Lending piece of the business. We feel like Flexiti the way they've been growing, and as we mentioned, the -- we had said in our earnings release or we -- or the release when we bought Flexiti, they're expecting kind of roughly 50% origination growth in '21 over '20. They grew about -- for the -- again, we only owned it for the last couple of weeks of the first quarter, but if you look at their whole first quarter, they grew about 69%. So they're off to a really good start. It's -- we've seen a little bit of impact in kind of the weekly numbers there. But assuming that this is a fairly short-lived phenomenon and given where the vaccination rates are it ought to -- and just public health in general in Canada, it ought to be pretty short-lived. We feel like our Direct Lending business has been a really good second quarter and a really strong full year, and I think Flexiti is on a path to hit their targets that we talked about. And the big -- the gating element for Flexiti is going to be, to the extent they have additional merchant, add additional bigger merchants. And they're in conversations on a bunch of possibilities there. So hopefully, we'll be able to come back in the not too distant future and talk about some merchant wins there, which will kick up the Flexiti originations and revenue ramp. And probably, we said before, those are a little dilutive to earnings in the near term just because the provision build and some on borrowing costs, et cetera. So I would say, all in all, I know it's a long answer to a short question, but I think all in all, we expect our second quarter with the strength in Canada Direct Lending comping off of COVID periods last year, the addition of Flexiti, they hit their targets and the U.S. starting to comp off of COVID numbers again, we should be in a position to report at least kind of revenue that's kind of flattish, maybe up a little bit. But starts a trajectory where with all those things continuing to improve that you get real good revenue growth in the consolidated business in the back half of the year.

[John Hecht:]

Okay. That's super helpful color. I appreciate that. Second is credit is really strong. I mean if you look at delinquency trends across the board, they're strong, suggesting the pipeline is strong. Your approval rates still suggest though that you're being somewhat cautious as well. At what point in time do you get comfort to start, call it, opening up the funnel a little bit to help drive some of that growth?

[Roger Dean:]

Yes. I'll start, and I'll start and let Bill -- just, John, recall that those approval rates are also a function of the fact that all of our customers got so much cash between some of that this time of the year in March and February because the tax refunds approval rates would be low anyway, stimulus even exacerbated that. But -- and just -- I think it just means that we're just -- the quality of the applications aren't as good, and Bill can expand on that.

[Bill Baker:]

Yes, I certainly think that that's part of it. The other part that you have to look at is the change in mix. As we've talked about before, there certainly has been stronger demand to our online properties. And just inherently in the business, you have slightly lower approval rates online than in branch. So just that mix shift over the last 12 months is the other thing that has impacted it, but we continue to make progress by state, by product in getting back to the year-over-year approval rates but expect that to continue.

[John Hecht:]

Okay. And then my final question is -- I mean you guys have done -- obviously, you've increased your capital return quite a bit with the dividend hike and the buyback. But you're going to get more cash soon with the transaction of Katapult, a fairly high revenue -- or excuse me, cash-generating business. But then you also have these growth channels and growth platforms as things normalize. Just kind of at a higher level, how do we think about your, call it, capital return program policies over the next several quarters with that backdrop?

[Don Gayhardt:]

Yes. John, I think we feel really good about in terms of the dividend, obviously, doubling it. We still feel like if you look at that, the dividend rate sort of just the cash, the rate relative to sort of net income plus the available cash we have and liquidity we have, we feel that's a number we can easily sustain. And then -- and we're trying to sort of balance capital return, both on the dividend front and the buyback front. I think we said -- I was looking at -- somebody asked this last quarter, "So what do you think about debt versus capital return versus debt paydown, et cetera, and in the context of Katapult?" And I think I answered the question that, "Well, we're going to wait until Katapult is actually done before we sort of move on any of that stuff." And given the timing of that, and my answer is kind of the same, I think we -- there's some variability in terms of potentially how much cash we get out of the destacking there. And I guess we'd like to sort of see where that all plays out before we sort of go further in terms of capital returns. But we're -- you also made the point in terms of investment stuff, both in organic opportunities and we continue to look at a number of M&A strategic investment opportunities. And I think trying to balance having enough dry powder to move quickly on some of those opportunities versus both equity and equity returns and managing the right side of the balance sheet from a debt perspective. That's going to be a kind of a quarter-to-quarter program for us. But I think we'll wait to see Katapult closed, hopefully, here by the end of this quarter and start to think more about some of those plans.

[Operator:]

And the next question comes from John Rowan with Janney.

[John Rowan:]

So the -- it looks like Flexiti's loan portfolio, if I'm just going back to the initial investor presentation, was down from $208 million to $266 million from December 31. Is that correct? And if so, is that seasonality or just the COVID impacts that you guys cited earlier in the presentation?

[Roger Dean:]

I'm sorry, John, what were those numbers?

[John Rowan:]

So if I go back to like the Flexiti deal presentation, it looked like as of 12/31, you were showing them with $266 million loan portfolio. But in today's deck, you're showing it at $208 million.

[Roger Dean:]

The CAD 266 million was Canadian.

[Don Gayhardt:]

Canadian, yes.

[John Rowan:]

Okay, I got it. So it was converted then.

[Roger Dean:]

It's U.S. today. And John, the other thing is that the gross loans -- those are gross loan balances at 12/31. The acquired portfolio, we had a market-to-market base. We fair valued it. And the loan loss -- basically, the loan loss allowance became discount. So you're looking at a discount or a net loan balance on an acquired basis versus a gross loan balance in the investor presentation. So.

[John Rowan:]

Yes. I just want to make sure it wasn't tied to the -- any type of seasonality or the weakness.

[Roger Dean:]

No, no, no they're still.

[John Rowan:]

From COVID that you guys sold about earlier.

[Roger Dean:]

No, no, they actually saw higher first quarter loan growth, both sequentially and year-over-year than their internal -- than the internal budgets at Flexiti.

[John Rowan:]

Okay. And then you gave -- the Canadian adjusted EBITDA figure, what was that again for 1Q?

[Don Gayhardt:]

Yes. On Direct Lending, right?

[John Rowan:]

Okay. Are you going to continue.

[Don Gayhardt:]

Direct Lending business because it didn't include -- and they're in the release. It didn't include the -- Flexiti will be a separate. We'll give Direct Lending, which is our cash lending indirect business, and then we'll give Flexiti separately as a.

[John Rowan:]

I know you guys aren't -- didn't give guidance here. One of the items that you don't always update guidance on is the Canadian adjusted EBITDA. The last look that we had on that was about $85 million. Is that still a target? Is that -- I mean, you haven't updated that in a while. So I'm just trying to look at how realistic that target still is for Canada in 2021.

[Don Gayhardt:]

Yes. So John, that would be if you look at sort of direct lending, what we call Canada Direct Lending, that's the comp is where is that business trending versus that $85 million comp. So -- and I think we feel really good about that number. I think -- but to your point, given where we are on sort of the lockdowns and just a more sort of -- it's just a more fluid situation in terms of kind of coming out of COVID than I think we have in the states, we just probably don't have as much visibility on the economy sort of completely opening up there given what's happened over the last -- so I think we're prepared to sort of stand by the $85 million adjusted EBITDA number for the direct lending business, and we'll look forward to sort of updating that. And hopefully, as we talk next quarter, all this more recent lockdown COVID surge in Canada is in the rearview mirror, and we have the same kind of visibility on the economic progress there that we have in the States.

[John Rowan:]

And the $10 million -- if I'm not mistaken, it was $10 million of Flexiti dilution for 2021, is that still about right?

[Don Gayhardt:]

Yes, that's -- I think it's still -- that number is -- yes, there's no -- remember, I just said to the extent there are additional merchant wins in 2021, which we hope to have, those are those -- that number may actually get diluted. But it will be because we're -- the business is going to see an addition of merchants, which will kick up the origination growth and the revenue growth and the long -- obviously, the long-term value. So there may be some short-term dilution to that number if they get more merchant wins.

[John Rowan:]

Okay. And then can you remind me how much was the earn-out portion of the equity that you're going to get in FinServ?

[Don Gayhardt:]

So it was 3 million shares that are equally split between the stock trades above 12 and then the other -- half of the bucket is the stock trades about 12 for -- I think it's a month after closing versus -- and then the other bucket is above 14 post closing. That's all.

[John Rowan:]

Okay. So it's 1.5 million above 12 and another 1.5 million above 14.

[Don Gayhardt:]

Yes.

[John Rowan:]

Okay. And then just lastly, Roger, I didn't get this down, I was trying to add it up quickly. You mentioned the differential in net charge-offs versus provision. Was it $17 million? Is that correct? I thought I heard two different numbers, just to make sure I got it -- that correct.

[Roger Dean:]

Yes. Yes, I gave the numbers in both -- for both the U.S. and Canada, but that was the total, yes.

[John Rowan:]

That was the total, $17 million?

[Roger Dean:]

If you look at our tables now, John, it's a lot easier to figure that out than it used to be.

[John Rowan:]

Okay. All right. I'll take a look. But I just wanted to make sure because I was adding the two numbers.

[Operator:]

And the next question comes from Bob Napoli of William Blair.

[Spencer James:]

Can you guys hear me?

[Bill Baker:]

Yes.

[Don Gayhardt:]

Yes.

[Spencer James:]

This is Spencer on for Bob. I just want to follow up briefly on the weekly loan approval rate question. You mentioned part of it was due to the mix shift to digital applications. How has the mix shift of digital versus in-store trended compared to Q3 and Q4? And how much of the weekly applications is due to that digital mix?

[Bill Baker:]

Yes. This is Bill. So it's a good question, and there are some differences between the U.S. and Canada. I'll start with Canada. If you just look at what's happening there, I think both are being impacted by the lockdowns. But even before we went to the lockdowns, the mix in Canada was still very heavy on the branch side of things. So it's a bit muted up there as far as what the mix is. In the U.S., we've certainly seen an uptick in weekly applications, both across the U.S. stores and the U.S. internet lending business. But I would say that the online business is outpacing on customers and applications by about twofold at this point. So we certainly are seeing some better demand there. But we'd expect the stores to continue to improve as well, to Don's point, as people get back to work and some of the health impacts of the pandemic fade away.

[Spencer James:]

Okay. That's helpful. And then you guys touched briefly on the longer-term ownership of Katapult. But could you just expand a little bit more on the longer-term plans for that ownership? Maybe as Flexiti evolve time, do you see Katapult naturally -- your owning more of it or less of it over time, just anything along those lines?

[Don Gayhardt:]

Yes, it's Don. I'm going to say what I said before, I mean, number one, it hasn't closed yet. So we want to kind of get that key first step, put that in the rearview mirror. And we'll see. I mean it's obviously the business -- it's a strategic investment. And we have a -- we like the point-of-sale business in the U.S. We like the e-com LTO focus that Katapult has. And obviously, we thought the best way to maximize value for CURO holders was to do the transaction that we announced in December and that will close here hopefully very soon. And I think we'll just have to sort of see how it goes, see how their business continues to perform. We like the team there a lot. We like their prospects. We like the sort of the sector they're in. And what that means for us as a holder over time, it's just too hard to sort of say right now.

[Operator:]

And the next question comes from Vincent Caintic with Stephens.

[Vincent Caintic:]

First question, so appreciate the details on the Flexiti Canadian point-of-sale metrics. But understanding that it was only acquired in March, is there any help you can give us in terms of maybe a full quarter outlook or how you think we should be modeling that in terms of different -- the fees, the provisions and so on that you can help out with?

[Don Gayhardt:]

So I mean, I guess -- so from a top line perspective, I think that when we guided -- when we announced the transaction, we said that we expected a revenue of -- I think, full year revenue in the $45 million to $55 million range for that business. And I think the business is scaling in a way that we feel very good about those numbers. And I mentioned they grew a decent amount in the first -- 69% originations just in the first quarter. The April numbers were actually -- again, you're comping over kind of a lot in the COVID lockdown, but they grew originations over 200% in April. So we feel really good about that kind of the -- call it, the business that we bought and the merchant base that we bought. They've announced some good signings. They just announced a big tire retailer on April 13. So they've announced some good signings. But I think in terms of the overall program, kind of where it sits now, we feel like those revenue numbers, we ought to be building to those revenue numbers on a quarterly basis. So Roger can chime in, so I would expect for the second -- in U.S. dollars, for the second quarter, I think we should be somewhere, Roger, I think, in the $8 million to $9 million range and end it on a quarterly basis and allow it build from there. Maybe Roger can kind of help you fill in out here or maybe offline on sort of the credit stats.

[Roger Dean:]

Yes. No, I think that's right. And Vince, I think the -- we're kind of still getting our -- I think we're all getting our heads around the impacts of the brief, albeit temporary lockdown because. Obviously, Flexiti merchants are affected by that as well. But also there's some timing of the merchants is -- and I can't emphasize enough with the timing of when these big merchants to get onboarded -- it's just like -- it's very similar to Katapult. There's a lot of similarities in the growth curves and things like that. But -- and that's the biggest thing right now that, Vincent, as we move through the quarter, certainly as we move through Q2, I expect that we'll be coming back with some updates that would help you with that question. But it's just a little too soon right now.

[Vincent Caintic:]

Okay. That's very helpful. And then on the Canadian lockdowns, I know they've been handling it better, and your performance has been better in Canada relative to the U.S. Kind of from your experience last time in Canada when they locked down and then the recovery was fairly quick, now that they're locking down this time, if we kind of use a similar thing, I guess, how quickly do you expect a resumption to normal? Or are you already seeing some sort of return to normal?

[Don Gayhardt:]

Yes. So -- go ahead, Bill.

[Bill Baker:]

Yes. I was just going to say, it's still -- they're still very much -- and they actually extended the lockdown. It was originally a 28-day period. Based on caseloads that they saw, they actually extended it. But just anecdotally from our folks that live and work there, again, we're an essential business, but just what we're hearing is that it is -- they're taking it very seriously and encouraging people to stay home and not go to gyms or restaurants. And so I think that there is certainly going to be a lot of demand once the lockdowns cease. And so again, difficult to predict, but I think we would expect a pretty rapid increase similar to what we saw last time, particularly on new customer demand. Our credit line increases have held quite steady for us through this because they're existing customers, and it's much easier for them to go online and just increase their credit line and accept that. I think what we would expect to recovery would be on new loan origination, both in-store and online. And so we're looking forward to that just as much as the folks in Canada are in exiting the lockdown.

[Don Gayhardt:]

And Vincent, much like it is in the States, it's very different province by province. And if -- the part about it that's worrisome is, as you look at like Alberta and Manitoba, and again, Alberta is 10% to 12% of the population, Manitoba is smaller than that, but the cases, they're kind of almost increasing at an increasing rate. But if you look at Ontario, they're -- they've come down from a 7-day average of like 4,500 cases down to 3,500. So they're seeing, in some ways, almost like what we're seeing in the U.S. in terms of the overall declines. But it's very spotty and very different province by province. So that's what makes us a little bit cautious about trying to sort of predict even 30 days out. And by the way, just as something I hope -- I hope this whole conversation -- I can't wait for this conversation to be in the rearview mirror on these calls because we understand it's important, but I think we all look forward to not talking about this anymore. So.

[Vincent Caintic:]

Right. Right. And then the last one for me. So in the -- switching to the U.S., I know we still have stimulus and unemployment benefits. But any update that you're seeing in April in terms of demand, just any trends you're seeing about where maybe demand might perk up again, any signs there?

[Bill Baker:]

Yes. This is Bill. So I think we're seeing -- since kind of the beginning of April, we've seen good sequential growth each week and kind of continuing application demand, both in-store and online. But as I said earlier, we have seen a bit stronger demand online, and it is a little different state by state. But we would hope that, that continues. Credit continues to be very good. So we're really focused on the approval rates. As I said, looking at overall approval rate can be a bit difficult because of the mix shift that we've seen. But when you break it down state by state and product by product, channel by channel, in many cases, we're back to the approval rates a year ago, if not a bit better. So I think we're well positioned from a scoring and underwriting perspective to be ready for the demand as it continues to increase. And I think we're staging the marketing dollars appropriately. As we see more demand out there, we'll market a bit more. But I think we're -- I think we've got a good strategy on how to capture that demand as it continues to come back and increase. But as with all of this, it's very dependent on the health crisis and ensuring that we continue to see the numbers and the country continues to see the numbers go the right way. I think that there's obviously a correlation in demand there. But thus far, I mean, it is encouraging.

[Operator:]

And the next question comes from Moshe Orenbuch with Credit Suisse.

[Moshe Orenbuch:]

Maybe just following up on that, Bill. The issue of demand, is the suppression of demand, the injection, the big dollars, or stimulus? Some have suggested that there's -- these ongoing kind of programs, like how do we think about like when that burns through exactly -- well, not maybe exactly. But is it likely to be largely done in the near term? Or is it going to drag through the next several months?

[Bill Baker:]

Yes. We do our best to monitor that. And I think largely, we feel like the direct impacts of stimulus have really started to burn off and have over the last three or four weeks. What we don't know just what that means from a -- what the customers are saving from a savings perspective and how much was spent to pay down debt or catch up on late bills and things like that. But if you look at tax refund season and the large direct stimulus payment, we think a lot of that has actually burned through. The second part of your question is what we're -- I think what we're all interested to see is that these child tax credit starts to be issued to customers on a monthly basis, what that will do. But that's obviously going to be a smaller amount than these large direct-to-consumer payments from the government. So I think largely, the big numbers on stimulus and tax refunds have largely made their way through the system.

[Moshe Orenbuch:]

Maybe kind of given what has happened in the U.S. and the significant expansion you've had in Canada by comparison, like how do you think about where you're targeting? Are there potential new bank partners? Like could you just talk a little bit about whether it's kind of a state-by-state approach or additional partners and how you're thinking about that?

[Bill Baker:]

Yes. I guess I'll look at -- I'll take the state-by-state approach first, I think that's very much how we look at it now and how we've really always looked at it. And we do see different approval rates and demands state by state, product by product. And I think that's where we -- again, that's where we focus the marketing dollars is where we do see increased demand, and that's by channel as well. If you -- like I said, we have seen better application rates online and just resulting in more loans. On the store side, it's very much state-by-state driven. Single-Pay is certainly much more susceptible to what's happened in the pandemic than some of the longer-term lower-rate products. So that's -- again, that's really how we think about it. And on the partnership side of things, I mean, we're always looking for different kinds of partners and different kinds of products. And we've talked a lot about our interest in near prime as well. We've got a small portfolio in California that we're encouraged with the early results there. Cards continues to be a big focus for us on that side of things as well, and we continue to make investments there and hope to have more to talk about soon.

[Operator:]

And this concludes our question-and-answer session. I would like to turn the conference back over to Don Gayhardt for any closing comments.

[Don Gayhardt:]

Yes. Great. Thanks, everybody, for joining us today. We look forward to talking to you after our second quarter release. Have a good day. Bye.

[Operator:]

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.