Advance America, Cash Advance Centers, Inc. (AEA)

Q2 2010 Earnings Conference Call

July 29, 2010 8:00 AM ET

Executives

Jamie Fulmer – Director, IR

Ken Compton – President and CEO

Patrick O'Shaughnessy – EVP and CFO

Analysts

David Burtzlaff – Stephens Inc.

Presentation

Operator

Good day, everyone and welcome to the Advance America, Cash Advance Centers Second Quarter Earnings Results Conference Call. As a reminder this call is being recorded. At this time, for opening remarks and introduction, I’d like to turn the call over to Jamie Fulmer, please go ahead, Sir.

Jamie Fulmer

Good morning. I’d like to remind you that during this call, our comments will include certain forward-looking statements. All comments on this call, other than those relating to our historical information or our current conditions will be forward-looking statements.

For example, any statements regarding our future expenditures and financial performance, our plans for product expansion, our business strategy, our expected developments in the cash advance services industry will be forward-looking statements. In this regard, please keep in mind that our actual future results could differ materially from our expectations as of today and are subject to risks, uncertainties and other factors, many of which may are not within our control or may not be predicted.

For more detailed discussion of some of these factors, please refer to the Risk Factor section of our Annual Report on Form 10K for the year-ended December 31, 2009, and our quarterly report on Form 10-K for the quarter ended March 31, 2010 copies of which is available from the SEC upon request from us or by going to our website at www.advanceamerica.net.

Now, I’d like to turn the call over to our Chief Executive Officer, Ken Compton.

Ken Compton

Good morning and welcome to our second quarter earnings call. Also joining me today is Patrick O’Shaughnessy, our company’s Chief Financial Officer.

Yesterday, the company reported the results of the quarter ended June 30, 2010. Before we discuss these results, I’d like to update you on a few developments since our last call. Yesterday, our Board of Directors approved Advance America’s 23rd consecutive dividends as a public company. This dividend of $0.0625 per share is payable in September 3, 2010 to stockholders of record as of August 24, 2010. Since our December 2004 initial public offering, we’ve returned approximately $379.4 million in cash to our stockholders through the payment of quarterly dividends together with repurchase of shares.

As we have discussed on previous calls, the 2010 legislative session has once again been active on a federal level and several states across the country. Of course, much of the recent attention has centered on the Financial Reform Act of 2010, more commonly referred to as the Dodd-Frank Wall Street Reform and Consumer Protection Act which is originally signed in the law. This law represents a comprehensive overhaul of the nation’s financial system and effects of broad array of kinds of services from Wall Street to Main Street including now offering of cash advance services. It also recognizes the importance of access to small dollar consumer credit. As it specifically relates to the cash advance industry, The Bureau of Financial Protection created by this law, may have a significant impact on the way millions of consumers access credit.

We strongly believe that a competitive, regulated financial environment is in the best interest of customers, so that they can have conscience and legitimacy of personal financial decisions they make. We also believe that a strong regulatory framework is good for reputable lenders such as Advance America, and we hold and hardly support the government’s effort to protect American consumers from unscrupulous lenders who trap consumers in the complex loans that are difficult to understand and riddled with hidden costs.

Since I’ve joined Advance America in 2005, I’ve been constantly amazed that the fundamental lack of understanding that exists about the cash advance product. Each day I rarely see dozens of our articles that mischaracterize our product in any number of ways, whether it is an unfortunate stereotyping of our customers or inaccurate comparisons used to describe our rates and fees. Just last week, the Wall Street Journal and again, today, in the Washington Post, as story suggested that such secured administration had been depositing bad checks (ph) directly into accounts controlled by payday lenders which repay themselves from the bounced checks (ph) before remitting the rest of the money to beneficiaries. This is certainly not a practice that we engage in but is a good example about a cash advance product is also often confused with other credit products not associated with Advance America. Too often, our credit strategies what I call “fuzzy facts” dissuade an all too receptive media in the procurement of vehicle for promulgating misleading information designed to influence public opinion.

Perhaps the best example is the commonly excited pronouncement that there are more cash advance centers in the United States than McDonald’s and Burger Kings combined. While this may be true, I don’t see that as a bad thing. This tired, over-used fact is pointless. There are more bank branches, restaurants and drugstores and Starbucks than McDonald’s. What does that tell you about the value of our product to customers, absolutely nothing.

In the last 12 months alone, this comparison has found its way into the media countless times. From Associated Press to local outlets like the St. Louis Post-Dispatch, this ridiculous talking point from our critics since to find its way into just about every story written about the industry. This ingenious attempt to convince opinion makers that the existence of store-front lenders is bad for consumers and it completely ignores the underlying of simple fact that cash advance storefronts in the United States exist to meet the specific demand of customers. This point is further validated by the simple fact that millions of Americans choose the regulated cash advance product each year over their other alternatives. They use our product responsibly and are satisfied with the service they’ve received, as evidenced by the extremely low number of customer complaints we receive from the state agencies that regulates us across the country. Specifically, Advance America has had less than 30 complaints out of over 4.5 million transactions during the first six months of this year.

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