Cabela's 2013 Annual Report Download - page 56

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46
Financial Services Revenue – The following table sets forth the components of our Financial Services
revenue for the years ended:
2012 2011 Increase
(Decrease) %
Change
(Dollars in Thousands)
Interest and fee income $ 301,699 $ 277,242 $ 24,457 8.8%
Interest expense (54,092) (70,303) (16,211) (23.1)
Provision for loan losses (42,760) (39,287) 3,473 8.8
Net interest income, net of provision for loan losses 204,847 167,652 37,195 22.2
Non-interest income:
Interchange income 292,151 267,106 25,045 9.4
Other non-interest income 12,364 13,620 (1,256) (9.2)
Total non-interest income 304,515 280,726 23,789 8.5
Less: Customer rewards costs (189,963) (156,632) 33,331 21.3
Financial Services revenue $ 319,399 $ 291,746 $ 27,653 9.5
Financial Services revenue increased $28 million, or 9.5%, in 2012 compared to 2011. The increase in interest
and fee income of $24 million was due to an increase in credit card loans, partially offset by changes in the mix of
credit card loan balances at each interest rate. Interest expense decreased $16 million due to decreases in interest
rates. The provision for loan losses increased $3 million in 2012 compared to 2011 due to growth in our credit
card loan balances, even though our net charge-off rates and allowance for loan losses decreased. The increase in
interchange income of $25 million was due to an increase in credit card purchases, partially offset by $12.5 million
pursuant to the proposed settlement regarding the Visa litigation. Customer rewards costs increased $33 million
due to an increase in credit card purchases.
The following table sets forth the components of our Financial Services revenue as a percentage of average
managed credit card loans, including any accrued interest and fees, for the years ended:
2012 2011
Interest and fee income 9.7% 10.1%
Interest expense (1.7) (2.6)
Provision for loan losses (1.4) (1.4)
Interchange income 9.4 9.7
Other non-interest income 0.4 0.5
Customer rewards costs (6.1) (5.7)
Financial Services revenue 10.3% 10.6%
Excluding the effect of the $12.5 million adjustment reducing interchange income from the proposed Visa
settlement, interchange income and Financial Services revenue as a percentage of average credit card loans,
including any accrued interest and fees, would have been 9.8% and 10.7%, respectively.