32 posts categorized "Consumer finance"


First Cash earnings up 12 percent in first quarter

Arlington-based First Cash Financial Services earned $22.7 million, or 77 cents a share, in the year's first quarter, up 12 percent from a year earlier, on $170 million in revenue. The operator of 830 pawn shops in the U.S. and Mexico said those results included a one-time tax benefit of 12 cents a share. Wall Street analysts' consensus estimate for the quarter, which typically excludes unusual items, was 66 cents a share. First Cash's shares (ticker: FCFS) were virtually unchanged in mid-morning trading.

The company said it closed 37 of its Cash & Go locations that make short-term loans, also called payday loans, during the quarter and will continue to reduce its payday lending activity. In the first quarter payday lending accounted for 6 percent of revenue and is expected to account for less than 5 percent by year's end, said CEO Rick Wessel. The company said payday loan revenue was down 17 percent in the quarter compared to a year earlier and "represents a continuation of regulatory and competitive pressures facing store-based payday lenders, especially in Texas." Profit from the sale of scrap jewelry fell 46 percent as the price of gold fell 21 percent and First Cash' scrap jewelry volume was down 28 percent.

The number of outstanding pawn loans was up 30 percent in the U.S. and up 11 percent in Mexico. Overall, the dollar amount of outstanding pawn loans rose 12 percent, reflecting a smaller average loan value and lower loan values on jewelry-secured pawns.

-- Jim Fuquay







Cash America's shares jump on improved earnings outlook

Shares of Fort Worth-based Cash America International (ticker: CSH) were up nearly 10 percent this morning after the pawn shop operator said first-quarter earnings should top its previous estimates. The company now expects to earn $1.50 to $1.55 a share, up from the $1.25 that was the top of its earlier outlook. Cash America said the improvement is based on lower losses on online consumer loans, better margins on retail sales and operating efficiencies. It expects to discuss its first-quarter earnings with financial analysts the morning of April 24.

Cash America also said its board authorized management to review a spin-off and other strategic alternatives for its online lending unit, Enova International. The company in 2012 withdrew plans for an initial public offering for the unit that had been announced the previous year, when it estimated an IPO could raise up to $500 million. In Thursday's announcement it said a tax-free spin-off of at least 80 percent of Enova's shares, if it takes place, would likely occur in late 2014 or early 2015. It said Enova had revenues last year of $766 million.

"We now think that pursuing a separation of the businesses and management teams into two discrete companies is potentially very beneficial for the operating activities and ongoing strategy of each business," Cash America CEO Dan Feehan said in a prepared release. "As independent companies, both Cash America and Enova would be better positioned to focus on their industry-specific business strategies and the regulatory environments related to the specific products each company offers and to recruit and hire talent oriented to each specialized business discipline."

-- Jim Fuquay



GM Financial getting into prime auto lending

Fort Worth-based GM Financial will start writing auto loans to prime credit quality borrowers this summer, according to a report by The Detroit News. The company, formerly AmeriCredit and acquired by GM Corp. in 2010, has focused on subprime borrowers. The newspaper, citing an interview with GM Financial CEO Dan Berce, said GM dealers had requested the ability to work with a single lender for all their customer financing. About 300 GM dealers who currently use GM Financial to finance their vehicle inventories will be the first to use GM Financial for prime borrowers, Berce says.

-- Jim Fuquay


First Cash shares fall as earnings lag Wall Street estimates

Arlington-based First Cash Financial Services saw its shares fall about 7 percent in early trading after its fourth-quarter 2013 earnings were slightly below financial analysts' consensus estimate and its 2014 forecast was well short of expectations. The operator of U.S. and Mexican pawn shops and other lending services said it earned $24.8 million in the quarter, or 84 cents a share, including the cost of closing 37 check-cashing and payday loan locations at Texas convenience stories. It said it will wind down those operations over the next six months, with CEO Rick Wessel noting that "regulatory and competitive pressures, especially in Texas," led to the decision to reduce exposure to payday loans. He said revenues from payday lending were expected to fall to less than 5 percent of revenue in 2014, compared to less than 7 percent in 2013. First Cash said it expected to earn between $3 and $3.15 a share in 2014, compared to analysts' consensus estimate of $3.38.

Earlier this month Fort Worth-based Cash America also said it was closing a number of Texas payday loan locations, citing city laws restricting their operations.

-- Jim Fuquay


Cash America earnings rise in fourth quarter

Cash America International, the Fort Worth-based operator of pawn shops and other consumer lending outlets, said it earned $27.3 million in the fourth quarter of 2013, or 91 cents a share. That was up from $24.5 million a year earlier. After adjustments for unusual items, the company said it earned $1.01 a share, just ahead of Wall Street's consensus estimate of 99 cents. Cash America's shares (ticker: CSH) were up more than 1percent in early trading.

Included in those unusual items was a $5 million penalty levied by the federal Consumer Financial Protection Bureau related to the company's practices collecting unpaid loans in Ohio. The CFPB found that Cash America mishandled court documents and overcharged military personnel on loans. Also among the charges was $865,000 to cover the cost of closing 28 consumer loan offices in Texas during the quarter. In its outlook for 2014, the company said it expected to earn between $1.15 and $1.25 a share in the year's first quarter, compared to $1.40 a year earlier and analysts' estimates averaging $1.18. It said it  expects to earn $4.20 to $4.40 a share for the full year, compared to adjusted earnings of $4.04 in 2013 and analysts' consensus estimate of $4.27.

-- Jim Fuquay


Texas deregulated electricity rates dip below U.S. average

Electricity rates paid by residential customers in deregulated Texas markets last year were below the national average for the first time in a decade, according to a new report. The Texas Coalition for Affordable Power, which has long criticized deregulation of the state’s retail power market in 2002, said it’s the fourth straight year that electricity prices have fallen. The group said that in 2012, Texas consumers in deregulated markets paid an average of 11.75 cents per kilowatt-hour, compared with 11.88 cents nationally.

“Residential electricity prices under deregulation continue trending in the right direction. But prices are still higher than power customers pay in areas of Texas not subject to deregulation,” said Randy Moravec, TCAP’s executive director. “This analysis shows there’s still plenty of room for improvement under our deregulation law.”

Texas electricity rates shot up along with the cost of natural gas until 2008. Then gas prices plunged, taking electricity prices with them. Natural gas drives the wholesale price of power in the state because gas-fired generators provide the bulk of peak demand. Texas markets that remain regulated and those served by municipal power companies and co-ops don’t follow the same pricing model, and their rates on average were lower than those in deregulated markets, TCAP said.

In 2012, residential customers with regulated, muni and co-op service paid an average of just under 10 cents per kw-h, according to the study. TCAP said the difference between Texas regulated and deregulated rates in 2012 amounted to more than $280 for an average residential customer and $1.5 billion for the entire state.

While consumers in deregulated areas who comparison-shop at PowerToChoose.com can buy power for less, TCAP noted that many consumers have remained with legacy power companies, such as TXU Energy in North Texas. Those providers generally charge more, the study says. TCAP’s study used data from the U.S. Energy Information Administration, which surveys rates paid by customers of utilities and other electricity retailers. TCAP’s members are 168 cities and other governmental buyers of electricity.

-- Jim Fuquay


First Cash to buy 12-store pawn chain in South Carolina

Arlington-based First Cash Financial Services, a large operator of pawn shops in the United States and Mexico, said Monday it agreed to buy a 12-store chain of large pawn stores in the Charleston, S.C., area. Terms were not disclosed. The deal is expected to close by year's end and will give First Cash 18 large-format pawn stores in South Carolina. "The 12 Charleston stores being acquired have well-established locations with significant market share and strong brand awareness in their market," CEO Rick Wessel said in a prepared release. Counting those stores, First Cash has added 100 new locations so far this year, and expects to add between seven and 12 additional locations by the end of the year, the company said. Those include a 19-store Texas chain purchased in June and eight stores in Mexico acquired in September. The company expects to finish the year with more than 900 locations.

-- Jim Fuquay


Cash America to pay $5 million penalty related to loans

Fort Worth-based Cash America International, which in October disclosed that it was being investigated by the Consumer Financial Protection Bureau, said  Wednesday it agreed to pay a $5 million civil penalty to settle charges it mishandled court documents and overcharged military personnel on loans. The CFPB said it's the young agency's first enforcement action against a maker of so-called payday loans -- short-term, high-rate advances to individuals.

Cash America in December 2012 said it would make refunds to about 14,000 Ohio customers that it took to court for nonpayment of their loans. It said at the time the voluntary action, whose cost it estimated at $13.4 million, came after it learned employees "did not prepare some court documents properly in many of its Ohio collections legal proceedings." Wednesday, the company said it had disclosed the actions to the CFPB during the agency's examination of Cash America.

The CFPB said Wednesday that the company has already paid out about $6 million in refunds and agreed to set aside $8 million to cover future claims.  The agency also said Cash America made payday loans at illegal rates to "more than 300 active-duty servicemembers of dependents." The Military Lending Act caps the annual interest rate on loans to servicemembers at 36 percent, whereas payday loans typically carry effective rates several times that. CFPB said the $5 million penalty was based on those violations, as well as actions by Cash America's Enova Financial online lending unit that impeded the agency's investigation. Those actions included limiting information disclosed to investigators about marketing, deleting phone recordings and shredding documents.

-- Jim Fuquay


OmniAmerican loans up, earnings down

Fort Worth-based OmniAmerican Bank said third-quarter earnings dipped 4 percent from a year, to $2.2 million, or 21 cents a share. Its net loans rose 17 percent to $1.45 billion.

The bank on Oct. 9 announced that it trimmed its staff 8 percent, but severance costs related to the cuts won’t appear until its fourth-quarter results. It also said at the time that it plans to exit the indirect auto lending business, in which it buys vehicle loans from dealers.

The bank's increase in loans for the quarter, which amounted to $127 million, came in its commercial loan portfolio, said CEO Tim Carter. “We believe these steps are a critical part of our evolution towards a greater focus on commercial lending, residential real estate lending and retail banking, as part of our plan for success as a full-service, relationship-focused community bank,” Carter said in a prepared release.

-- Jim Fuquay


Cash America shares tumble on lower earnings outlook

Fort Worth-based pawn shop operator Cash America International saw its shares (ticker: CSH) slip more than 10 percent in early trading as its updated fourth-quarter outlook and 2014 outlook came in well below Wall Street expectations. The company said it expected to earn 95 cents to $1.05 a share in the fourth quarter, compared to $1.20 consensus estimate by financial analysts as $1.29 in the same quarter of 2012. It made its first 2014 earning outlook, estimating earnings between $4.20 and $4.40 a share for the year. That compared to an average Wall Street estimate of $4.91 a share.

The company's third-quarter earnings released Thursday were in line with analysts' estimates.  Cash America reported net income of $46.2 million, or $1.52 a share, which included several unusual items, on $438 million in revenue. After adjusting for the unusual items, the company earned $24.3 million, or 80 cents a share, near Wall Street's estimate of 81 cents. In its outlook for the fourth quarter and 2014, the company said it expects "growth in the company's pawn lending business, but its expectations for the balance of 2013 and into 2014 remain below historical growth rates in the pawn lending business." 

-- Jim Fuquay


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