Another Payday Lender Leaving Oregon

The company said the 45 Oregon stores had made no profit for the six months ending June 30th.

(SPARTANBURG, S.C.) - Advance America, Cash Advance Centers, Inc., announced late Friday that it has decided to close 31 centers in Pennsylvania and 45 centers in Oregon.

Additionally, the Company has decided to close 27 underperforming centers in various other states.

Commenting on today's announcement, the Company's President and Chief Executive Officer Ken Compton said, "We believe that the decision to close these centers is in the best interest of our stockholders and does not reflect negatively on the financial strength of our overall business model. In Pennsylvania, the uncertain timetable for a ruling on our appeal prompted us to reduce the number of centers there in an effort to control costs. In Oregon, our decision to close our centers is the direct result of a new law that has already prompted most of our competitors to close. Unfortunately, as a result of this new law, consumers will now be left with one less option when they find themselves in need of small amounts of short-term credit. Finally, we have decided to close certain additional centers that have not attained a satisfactory level of performance."

In July, the Company announced that the Commonwealth Court of Pennsylvania issued a ruling directing the Company's subsidiary in Pennsylvania to immediately suspend its current operations and discontinue its "Choice Line of Credit".

As a result of the Commonwealth Court's ruling, the Company immediately ceased providing its line of credit in Pennsylvania.

The Company has decided to close 31 of its 98 centers in Pennsylvania but maintain leases on the remaining 67 centers while it evaluates alternatives to service customers in that state.

The Company expects to make a decision regarding the balance of the Pennsylvania centers over the next several months.

Pennsylvania was the Company's 6th largest state in terms of revenue in the quarter ended June 30th, 2007, and had the highest revenue growth of any state when compared to the prior year.

As previously stated in its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30th, 2007, the Company estimates that net revenues will be reduced by approximately $3.0 million for each month that it is not able to operate in Pennsylvania.

Furthermore, total center expenses have historically averaged approximately $1.2 million per month in Pennsylvania.

During the months of August and September, the Company continued to incur normal business expenses with no revenue in Pennsylvania.

On July 1st, 2007, legislation in Oregon became effective that limits fees and interest on all consumer loans.

As a result of this legislation, the Company has determined that it is no longer economically viable to continue to operate in Oregon and intends to close all 45 of its centers in the state.

The centers in Oregon generated no center gross profit for the six months ended June 30th, 2007.

The Company has also decided to close 27 of its underperforming centers in various other states.

The majority of these centers have been opened for at least two years and have not achieved acceptable financial performance.

For the six months ended June 30th, 2007, these centers were collectively losing $0.7 million.

The Company expects to write-down most of the value of its receivables in Pennsylvania and Oregon and accrue for the anticipated costs of closing the centers in Pennsylvania, Oregon, and the 27 underperforming centers, including lease termination costs and employee severance.

As of September 15th, 2007, the net receivable balance in Pennsylvania and Oregon was approximately $10.8 million, for which the ability to collect has not been determined.

In addition, we anticipate incurring approximately $4.6 million in center closing costs for the Pennsylvania, Oregon, and 27 underperforming centers.

The Company does not believe these center closings will result in any impairment to goodwill.

The Company anticipates that the majority of these charges will be incurred during the current fiscal quarter.

Additionally, if the Company later determines that it is in the best interest of its stockholders to close the remaining 67 centers in Pennsylvania, we would expect to record an additional charge of approximately $1.5 million to close those centers.

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Dave September 26, 2007 7:07 am (Pacific time)

Now people that need money will have to go to real loan sharks. Why did people use payday lenders in the first place? The hubris and avarice of do gooders never ceases to amaze me. They are so blindly conceited they believe they know how to cure the world's ills. Poor people who want money they don't have will always find someone to give it to them regardless of the law. The new Oregon laws simply drive those poor souls to the underground economy instead of allowing them to go to a regulated business. Why not give full grown adults a hall monitor to approve or disprove of all their actions and end all social problems?

Neal Feldman September 24, 2007 11:41 am (Pacific time)

Oh my heart just bleeds for the poor loan sharks who cannot make money hand over fist destroying people's lives (they can still make money just not as obscene amounts) ... I welcome the return of anti usury laws. How to REALLY get rid of these kinds of parasites? Savings! Like in the old days. You should always have at least six months living expenses in savings. (unfortunately if you are on Disability etc you are prevented from doing so by government 'resources' rules that punish you for being fiscally responsible but that is another topic entirely). If you do this then you will almost never need any such payday loan or title loan. But everyone loves to spend every penny they get and then some on 'EZ Pay plans'. Ah well...

Carla September 23, 2007 6:31 pm (Pacific time)

A non sequitur here, Henry, but I have to tip my hat to you. Your postings are typically intelligent and thoughtful; I enjoy reading them. :)

Henry Ruark September 23, 2007 3:05 pm (Pacific time)

Carla et al: Understand and appreciate yrs re "individual responsibility", from years in education and some special psychological and other training, too. But learned from allathat that many-such are actually sick persons needing proper intervention for good of society, and avoidance of very heavy costs confounded as consequence of usury when allowed --which is why ALL religions around world now and for centuries have both deplored it and either barred or controlled it heavily. In rational, responsible action we can do much more than we do --which is why now Oregon has acted, as many other states have done before us. Capitalism, at least in theory, supposedly operates on self-destruction via market forces, which do surely include such consequences as we are finding here.

Carla September 23, 2007 2:03 pm (Pacific time)

This should get me plenty of hate mail, as every posting that I make advocating personal responsibility does. People are not, generally, fools. People who go to these payday lenders are, in my opinion, those who have the right to make bad decisions, and should abide by the consequences. It's not the fault of the payday lenders that they're vultures to whom people turn over their money. It's the same situation with the disgusting people to whom Vic refers; nobody's forcing them to gamble away their family's food and rent money. People with no self-discipline or self-respect are just that. There will alway be opportunities for them to demonstrate their lack of character.

Jerry September 23, 2007 11:53 am (Pacific time)

Good riddance is the reality. These types of businesses are litle less than vultures, taking from the weak - meaning poorest and neediest. It is sad that oregon remains one of the few states that has no real usury laws. Look at credit card companies information and read the fine print. You will see the states listed where they cannot charge exorbitant rates. One of those is our neighbor, Washington State. Oregon credit papers always show a limitation of interest rates in Washington because of the close proximity to us. Oregon has NO limit on loans except for the piece of crap legislation that limited the cash loan places. That piece of legislation did not go nearly far enough. Businesses such as United Finance will ocntinue to thrive because they accept high risk people at outrageous rates. People seem to never look at the interest rate - they only look at the monthly payment amount. Of course, when we see those signs that say "Credit offered to anyone,' they never tell you the interest rate - only that your monthly payment is affordable. As to video poker, lottery and such gambling issues, there will always be gambling whether controlled by the state or by private people. Kind of like prostitution - it may be forced to change locations but it will not go away.

JACQUE September 23, 2007 9:02 am (Pacific time)

It is about time, too many people use these business and they are "used" with the high interest that is charged. You can go to Credit unions and other places that don't milk you for the almightly $ and that is what it is "milked dry."

DD877 September 23, 2007 8:35 am (Pacific time)

Right On Roy. Keep it up. It is good to know that there a folks like you still around.

Roy September 22, 2007 10:35 am (Pacific time)

Let me tell you something alright? Leading up to the time that we had to take out a cash loan, we didn't see anything but negative remarks from others online about the cash loan industry. We ended up almost losing our car because we waited. At the last minute, we borrowed $400 from cashloancity.com and I really believe it is the only thing "at the time" that saved us. I understand that there's a problem with some people abusing this industry and crying about it later, but what about the people that really need it and pay it back on time? We're even getting ready to have a positive mark on our credit because of it. Why are the people that never need this type of loan the same people that keep others from being able to get one?

Vic September 22, 2007 8:47 am (Pacific time)

Good riddance indeed. Now we should consider getting video poker machines out of bars. I have seen people who are supposed to be raising families dump their entire paycheck into video poker in the space of an hour.My experience is that those who can afford it least tend to do it the most. I know we are responsible for our own choices, but under that logic, heroin should be legal and available to adults.

Leonardo September 22, 2007 6:21 am (Pacific time)

Good riddance.

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