Cash America 2009 Annual Report Download - page 7

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Cash America should head and how
to navigate the journey. If we wind up
someplace else, we will have fallen victim
to either poor execution or shortsighted
government interference; it won’t be for
lack of vision or thoughtful planning.
In last year’s annual message to
you, I first introduced my theory that the
worldwide recession surfacing in 2007
had launched a real and lasting change
in the provision of consumer credit. Gone
are the days of the daily mailbox delivery
of pre-approved credit cards with $10,000
limits for your children and domestic
animals. Market forces – particularly
driven by the mismatch of pricing and
risk in the subprime mortgage market –
have led to a retrenchment in credit
modeling and a resulting contraction
of available credit.
Government intervention in the
form of new rules and regulations
has accelerated the transition and
exacerbated its effects. Recently
passed federal legislation in the U.S.
covering credit cards and overdraft
protection will likely result in the
unintended consequence of driving
millions of consumers from their
long-standing “banked” status into the
unfamiliar ranks of the “underbanked.”
Consequently, I argue that those
with the most experience serving the
underbanked stand to gain a significant
share of consumers.
I am hesitant to characterize this
shift as permanent, as I have painfully
learned in my long career that very little
permanence exists in the business world.
I do believe the transition of consumer
status will be gradual, and the greatest
opportunity will develop as the general
economy recovers to pre-recession
employment and consumer confidence
levels. Even then, I don’t expect consumers
to return to their old borrow-and-spend
habits. I suspect the impact of the recession
will leave a lasting imprint on the psyche
of the consumer, and the recent reversal
we have seen in the 25-year decline of
the personal savings rate will likely be
sustainable for the foreseeable future.
I also expect the nomadic crowd will
be seeking credit options that appear
different than the products currently
offered to the underbanked. These
customers will astutely recognize that new
options will likely be more expensive, but
I doubt they will anxiously embrace the
products offered by the industry over the
past 25 years. Those companies currently
serving the underbanked will be foolish
to assume otherwise. Innovation driven
by technology and sophisticated data
management will be the key to meeting
the needs of the new marketplace.
Our current demographic base
of customers is not going away, and
we will continue to leverage our skill
and experience to enhance the value
proposition for those customers in both
the U.S. and new international markets.
At the same time, we will invest in new
technologies and product development in
positioning ourselves to fill the void for
newly disenfranchised bank customers.
Navigating the minefield of nagging
government interference will be an
integral part of the journey, and we are
prepared for that challenge.
The opportunity for us to leverage
the cash flow strength of our legacy
business as we redefine ourselves for
the new realities of the consumer credit
market has invigorated our already highly
charged organization. I have argued for
some time that Cash America enjoys a
competitive advantage in the pursuit
of an evolving marketplace. Some of
our competitors can match individual
strengths of our organization, but I find
none that can match the breadth of our
strategic presence – a presence that
includes a dominant and expanding
position for secured consumer lending,
robust multiple delivery channels,
innovative research and development
capabilities, international diversification
and a highly experienced management
team. This combination provides us a
significant edge in creating new value
on your behalf.
Thank you for the confidence and trust
you have placed in us.
Daniel R. Feehan
Chief Executive Officer and President
February 2010
3
Cash America International, Inc.