Monday, October 30, 2006

Higher fees on payday cash advances led a 14 percent gain in revenue and a 35 percent increase in profit during the third quarter at Fort Worth-based Cash America International, the country’s largest operator of pawn shops.

According to The Star-Telegram, Cash America said it earned $12.9 million, or 42 cents a share, during the quarter ending Sept. 30. Revenue totaled $165.6 million.

The earnings slightly exceeded Wall Street estimates of 41 cents a share, and the company’s shares gained 60 cents a share, or 1.4 percent, to close at $42.10, a new high. The cash advance company’s shares are up about 80 percent for the year.

Altogether, cash advance payday loan fees rose nearly 20 percent (to $48.4 million), topping the company’s pawn fees of $39.4 million in the same period by 23 percent. Cash America’s payday revenue first exceeded pawn loan charges in the second quarter of 2005 and have continued to outpace the company’s traditional pawn loans, although merchandise sales still account for the largest share of revenue.

Payday advance loan lending also became more important to the company Sept. 15 when Cash America closed its purchase of CashNetUSA, an online payday lender.

CashNetUSA’s approximately $27 million in outstanding payday loans helped Cash America’s payday loan portfolio rise 51 percent compared with a year earlier and will further boost payday fees in the fourth quarter.

In a conference call with financial analysts, President Dan Feehan said continued growth of the online payday loan operation will probably temper the number of brick-and-mortar payday loan stores the company operates.

While Internet-based lending is a small portion of the industry, Feehan said, it is likely to grow strongly because of the convenience and anonymity it offers customers.

This entry was posted on Monday, October 30th, 2006 at 6:16 am and is filed under Texas.