Advance America, Cash Advance Centers (AEA), operates over 2,800 payday loan and cash advance outlets in 35 states. The company also does business in the United Kingdom and Canada, with 12 centers in the U.K. and seven in Canada, respectively. Advance America’s primary customer base is middle-income individuals in search of small denomination loans that the customer must pay back during the next pay period.

Even with the closing of the 30 Arkansas stores, Advance America is still the largest US payday lender. Typically, the firm charges about $15 for every $100 loaned to a customer. Estimates for payday loan volume in the U.S. range from $28 billion to $40 billion. Advance America also closed operations in Oregon and Pennsylvania at the end of last year.

For the six months ended June 30, 2008, total revenues decreased 4.2% to $327.6 million, compared to $342.0 million for same period in 2007. Net income for the first six months of 2008 decreased 35 percent to $24.1 million, or 36 cents a share compared to $37.2 million, or 47 cents a share, for the same period in 2007. Net income for the quarter ended June 30, 2008 decreased 37 percent to $9.3 million, or 14 cents a share, compared to $14.8 million, or 19 cents per share, for the same period in 2007.

Potential investors should note the regulatory environment for payday lenders such as Advance America is unfriendly. The company also had to abandon operations is Georgia and North Carolina in 2007. Despite the closures, Advance America has continued to return value to shareholders as it repurchased $27 million of its shares last year and continues to fund its annual dividend of 50 cents per share. That gives the company a dividend yield of almost 15 percent.

Advance America shares closed at $3.19 on Wednesday and have traded between $2.97 and $10.89 over the past 52 weeks. The company has a market capitalization of almost $195 million.

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