Payday Lenders Announce Massive Quarterly Profits
…So Why Is The Trump Administration Planning To Help Pad Them?
WASHINGTON, D.C. — Today, two major payday lending companies and a subprime auto lender – FirstCash, World Acceptance Corporation, and Credit Acceptance Corporation — announced fourth quarter profits collectively exceeding $200 million, undercutting the industry’s complaints that it is too highly regulated to be successful. The earning reports also underscore why the industry needs no special treatment from the Trump/Kraninger-controlled Consumer Financial Protection Bureau (CFPB). And yet reportedly the Trump administration will soon hand the industry a huge gift with a proposal to scrap a commonsense Cordray-era rule requiring payday and car-title lenders to consider a borrower’s ability-to-repay before making a high-interest loan. Without this check in the system, the floodgates will open for millions of consumers – particularly in communities of color – to fall into cycles of debt where borrowers take out new high-interest loans to pay off old loans, over and over again.
“Instead of focusing on protecting consumers, Trump’s CFPB would rather lend a helping hand to the predatory lenders that just posted $200 millions in profits,”said Jeremy Funk, spokesman for Allied Progress. “The industry is clearly doing fine and does not need or deserve payback for the over $2.2 million they contributed to Donald Trump’s inauguration and political committees. Make no mistake: If the administration goes through will rolling back this necessary layer of consumer protection, millions more Americans will fall into the debt trap and the economy will suffer.”
Added Funk: “Only Wall Street could get could excited about payday lenders turning massive profits. We’re talking about an industry whose core business model is to take advantage of desperate people by shaking them down with mafia level interest rates. A thriving payday industry is actually a cause for concern, not celebration. It’s like rooting for Big Tobacco to report sales are up of their harmful product.”
WHAT YOU NEED TO KNOW:
Shady Lenders Continue Earning Millions Off The Backs Of Consumers
Today, Two Payday Lenders And A Subprime Auto Lender Reported Earning Hundreds Of Millions Of Dollars To Their Shareholders.
FirstCash, A Payday Lender, Reported Profits Of Over $48 Million Last Quarter.
FirstCash Reported $48.1 Million In Net Income For The Fiscal Fourth Quarter Of 2018. [GlobalNewswire, “FirstCash Reports Fourth Quarter and Full-Year Earnings Results; Declares Quarterly Dividend and Issues 2019 Earnings Outlook,” Yahoo Finance, 01/31/19]
- FirstCash Also Announced A “$0.25 Per Share Quarterly Cash Dividend To Be Paid In February 2019.” “In addition, the Board of Directors declared a $0.25 per share quarterly cash dividend to be paid in February 2019.” [GlobalNewswire, “FirstCash Reports Fourth Quarter and Full-Year Earnings Results; Declares Quarterly Dividend and Issues 2019 Earnings Outlook,” Yahoo Finance, 01/31/19]
- FirstCash’s “Pre-Tax Profit Margin For The Fourth Quarter Of 2018 Increased To 13.1% Compared To 11.9% In The Prior-Year Quarter.” “The pre-tax profit margin for the fourth quarter of 2018 increased to 13.1% compared to 11.9% in the prior-year quarter, and for the full year increased to 11.5% compared to 9.7% last year. The adjusted pre-tax profit margin, a non-GAAP financial measure, increased to 13.9% for the quarter and 12.0% for the full year, compared to 13.1% and 11.0% for the respective prior-year periods.” [GlobalNewswire, “FirstCash Reports Fourth Quarter and Full-Year Earnings Results; Declares Quarterly Dividend and Issues 2019 Earnings Outlook,” Yahoo Finance, 01/31/19]
- FirstCash Is A “Leading International Pawnshop Operator.” “FirstCash, Inc. is a leading international pawnshop operator with over 2100 locations in twenty six U.S. states, Mexico, El Salvador, Guatemala, and Colombia. Its retail pawn locations buy and sell a wide variety of jewelry, electronics, tools and other merchandise, and make small customer loans secured by pledged personal property.” [“FirstCash, Inc.,” First Cash, accessed 01/31/19]
World Acceptance Corporation, A Payday Lender, Reported Profits Of Over $6.3 Million Last Quarter.
World Acceptance Corporation Reported $6.3 Million In Net Income For The Fiscal Third Quarter Of 2018, Ending December 31, 2018. “World Acceptance Corp. (WRLD) on Thursday reported fiscal third-quarter net income of $6.3 million.” [Associated Press, “World Acceptance: Fiscal 3Q Earnings Snapshot,” Yahoo Finance, 01/31/19]
- In Its Third Quarter Earnings Call, World Acceptance Corporation stated it has “repurchased around 267000 shares.” “Sure, yes. So we have started the buyback program. We bought back — through yesterday we’ve repurchased around 267000 shares and we have a fair amount left on the authorization. So there’s now $48 million left on the authorization and around $50 million of that we can buy back under the current debt terms.” [“World Acceptance Corporation (WRLD) CEO Chad Prashad on Q3 2019 Results – Earnings Call Transcript,” Seeking Alpha, 01/31/19]
- “World Acceptance, one of the nation’s biggest payday lenders, is based in South Carolina and gave Mulvaney thousands of dollars in campaign contributions while he represented the state in Congress.” [“Former payday lender CEO now wants to run the CFPB,” CBS News, 03/06/18]
Credit Acceptance Corporation, A Subprime Auto Lender, Reported Profits Of Over $151 Million.
Credit Acceptance Corporation Reported A Net Income Of $151.9 Million For The Fiscal Fourth Quarter Of 2018. “After considering certain adjustments, net income was $151.9 million or $7.79 per share, down from $177.1 million or $9.10 per share in the prior-year quarter. For full-year 2018, the company reported net income of $574 million or $29.39 per share, up from $470.2 million or $24.04 per share.” [Zacks Equity Research, “Credit Acceptance (CACC) Q4 Earnings Beat, Revenues Rise,” Yahoo Finance, 01/31/19]
- Credit Acceptance Corporation “Offer[s] Automobile Dealers Financing Programs To Help Them Sell Vehicles To Consumers, Regardless Of Their Credit History.” “Since 1972, Credit Acceptance has offered automobile dealers financing programs to help them sell vehicles to consumers, regardless of their credit history. These programs are offered through a nationwide network of automobile dealers who benefit from sales of vehicles to consumers who otherwise could not obtain financing; from repeat and referral sales; and from sales to customers who come into the dealership believing they have credit issues, but qualify for traditional financing. [“About Credit Acceptance,” Credit Acceptance, accessed 01/31/19]
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