Cash America to close 43 Ohio loan shops

Payday lender and pawn shop operator Cash America International Inc. announced on Nov. 5 that it will close about one-third of its Ohio lending locations, after voters in the state chose to keep payday loan restrictions.

Votes to repeal a portion of OhioÂ’s HB 545 were necessary, said Cash America President and CEO Daniel R. Feehan. The bill calls for an annual rate cap of 28 percent, which is not economically feasible for store front providers of small short-term loans, Feehan said. If the measure had been voted down Tuesday, limits and caps on interest rates would have been cut, allowing lenders to charge rates and fees that amount to a 391 percentage annual percentage rate.

Under the new law, the fee charged on a $100 two-week loan is now reduced to $1.08, less than 10 cents a day.

“There is no way to sustain a viable store front business by offering small, short-term unsecured consumer credit at this rate,” said Feehan, in a statement.

The Fort Worth-based company said 43 locations operating under the trade name Cashland are slated to close in the next few months, affecting about 150 jobs.

Cash America plans to book $2.5 million in charges for the closings but said that will not affect its prior profit forecast.

On Oct. 23, the company reported it expects earnings between $3.07 and $3.11 per share, compared with its July view between $3 and $3.20 per share.

Analysts expect earnings of $3.11 per share for 2008 and 2009 earnings of $3.40 per share.

The Cashland locations that remain open will begin offering customers alternative services including short-term unsecured loans governed by a different statue. Most will buy gold and operate as pawn shops.

Cash America, which had 926 locations as of Sept. 30, also said a ballot measure failed in Arizona that would have extended a cash advance statue beyond July 2010.