Cash America quarterly profit higher than estimates

Payday lender Cash America International Inc. reported on April 23 better-than-expected earnings in the first quarter, boosted by higher revenue from U.S. and Mexican pawn operations and lower loan losses on its short-term cash advance product.

The Fort Worth-based pawn shop operator reported a net income of $23.9 million, or 79 cents a share, for the first quarter, compared with $25.8 million, or 86 cents a share, a year ago.

Analysts expected the company to earn 77 cents per share.

Total revenue rose 7 percent to $268.1 million, compared to $250.9 million in 2008. Revenue from the companyÂ’s pawn segment, which includes finance and service charges on pawn loans and proceeds from the sale of merchandise, increased 14 percent to $182.7 million from $160 million a year ago.

The revenue gain was partially offset by a decline in the companyÂ’s cash advance product, which posted a 6 percent decrease in total revenue to $80.3 million in the first quarter, compared with $85.5 million in 2008.

The decline in revenue from cash advances was attributed to operations in states impacted by changes in the regulatory governance of loan products.

Daniel R. Feehan, president and chief executive officer of Cash America, said the first quarter results were above the companyÂ’s initial expectations due to the continued growth and development of the Mexican pawn operations and the unexpected continuation of online cash advance offerings in certain states.

“Revenue from pawn loans was up 22 percent because of the higher balances outstanding and portfolio performance, which led the greater earnings results in this segment,” Feehan said in a statement.

Feehan said that as expected, revenue and earnings from the companyÂ’s cash advance segment were adversely affected by rule changes in Ohio, Florida and Pennsylvania.

“The first quarter of 2009 has been a period of significant adjustment which we have handled better than we expected,” he said.

The company forecast second-quarter earnings below market view, saying higher loan demand for the cash advance product could lead to higher loan losses.

Cash America expects to earn 50 to 53 cents per share in the second quarter, against Wall StreetÂ’s expectations of 57 cents per share.

bdillard@bizpress.net