Advance America Posts 7.1 Percent Revenue Growth; Net Income Down Slightly From 2004
Advance America posted strong revenue growth last year while also seeing its net income decline, according to the Spartanburg Herald-Journal.
The Spartanburg, S.C.-based payday loan company reported that it ended 2005 with net revenues of $515 million, up 7.1 percent from 2004. The company earned revenues of $131 million in the fourth quarter, up 0.8 percent from the previous year. Its net income for the year was $63 million, down 3.5 percent from 2004's income of $65.3 million.
Advance America CFO John Hill said revenues were up primarily because of the 361 new stores that opened in 2005. On the flip side, several factors — a forced exit from the North Carolina payday loan market, Hurricanes Katrina and Rita, and new federal banking regulations — had a negative effect on the company's bottom line.
"Without all that stuff, our growth would have been significantly higher," Hill said. "We estimate we lost about $3 million worth of revenue, primarily in Louisiana and Mississippi."
Katrina and Rita caused 128 temporary closings for the company, 13 of which remain closed. Advance America lost revenue during the temporary closures, then lost more because there were no customers to the stores that remained open. Then, in December, the company closed all 117 of its North Carolina stores in compliance with an order from that state's banking commissioner.
The Federal Deposit Insurance Corp. issued new guidance that led Advance America to adopt a different business model in North Carolina, Texas, Michigan, Arkansas and Pennsylvania. In those states, Advance America has switched to offering installment loans, which are easier for borrowers to pay back, and not as profitable as the regular payday advances issued by the agency.