Cash Store Financial releases Second Quarter and Six Month Results; records
achieved in revenue and branch operating income; earnings per share up 39
percent

EDMONTON , Jan. 27 /CNW/ - The Cash Store Financial Services Inc. ("Cash Store Financial") today announced results for the three and six months ended December 31, 2009 .

    
    Highlights for the second quarter (table of results at end of release)

    -   Record quarterly revenue of $42.3 million, up 14.3% from
        $37.0 million in the same quarter last year.

    -   Record branch operating income of $15.8 million, up 17.0%, compared
        to $13.5 million in the same quarter last year.

    -   Earnings per share (diluted) up 39.1% to $0.32 from $0.23 in the same
        quarter last year.

    -   Net income up 27.9% to $5.5 million, compared to $4.3 million for the
        same quarter last year.

    -   EBITA up 45.2% to $10.6 million compared to $7.3 million for the same
        quarter last year.

    -   Same branch quarterly revenues for the 383 locations open since the
        beginning of the second quarter of fiscal 2009 increased 7.3% to
        $99,900.

    -   Branch count was 469 up 54 net new branches from 415 at December 31,
        2008. 18 net new branches opened in the quarter.

    -   Dividend of $0.10 payable February 25, 2010, to shareholders of
        record on February 10, 2010.

    Highlights for the six months ended December 31, 2009

    -   Record revenue of $83.9 million, up 12.6% from $74.5 million in the
        same period last year.

    -   Record branch operating income of $31.5 million, up 12.1%, compared
        to $28.1 million in the same period last year.

    -   Record earnings per share, (diluted) up 20.4% to $0.65 from $0.54 for
        the same period last year.

    -   Record net income, up 7.8% to $11.1 million, compared to
        $10.3 million for the same period last year.

    -   Record EBITA, up 17.6% to $21.4 million compared to $18.2 million for
        the same period last year.

    -   Same branch revenues for the 372 locations open since the beginning
        of the first quarter of fiscal 2009 increased 6.2% to $203,300.

    -   Repurchase of 387,799 common shares at a cost of $3.3 million at an
        average price of $8.60.
    

Mr. Gordon Reykdal , Chairman and CEO commented: "The second quarter was notable for the achievement of record levels in revenue and branch operating income, and growth in diluted earnings per share of 39% relative to the same quarter last year. The Company continued its aggressive expansion with an increase of 18 net new branches in the quarter, for a total increase of 54 branches relative to the close of last year's second quarter. We will continue to expand at a rate of 18 to 20 branches per quarter through fiscal 2010. As a result, there will be a slight drag on earnings from new branch start-up losses. This expansion positions the Company for sustained long-term revenue and income growth."

Mr. Reykdal further commented: "Our long-term strategy is to diversify revenue through new products and expansion into international markets. Within the third quarter we expect to offer Canadian Deposit Insurance Corporation insured bank accounts, through an agency agreement with DirectCash Bank. We expect to realize new revenue and bottom line growth through Cash Store Financial's 20% interest in RTF Financial Holdings Inc., a company that offers micro-loans via a SMS text-based lending platform, currently operating in Finland and Sweden and with expansion into the Netherlands , Denmark and other European countries in the near future".

Mr. Reykdal added: "Many provinces have recently implemented consumer protection measures for the payday loan industry. These measures will and have included rate caps and a ban on rollovers. Eighty-percent of our branches are located in British Columbia, Alberta, Ontario and Nova Scotia. Regulation of the industry in these provinces has been fully implemented with the exception of Alberta which will be fully implemented by the end of the third quarter. This is a welcome development that demonstrates to capital markets that the industry is now supported by a high degree of regulatory certainty and that the industry's long-term stability has been secured. To date our experience has been that we have been able to accommodate new industry rules, we have not experienced any material negative impacts as a result of regulation and we do not anticipate negative impacts in the future. The Company has accommodated regulation more effectively than some competitors and there has been industry consolidation as a result. Regulation has positioned the Company to lend its own capital, which will lead to reduced costs. We believe that industry regulation will encourage previously untapped consumer segments to enter the market and offer new revenue opportunities. We continue to view regulation as a positive for the Company and expect the benefits to accrue over the long-term."

Mr. Reykdal concluded: "We have declared a quarterly dividend of $0.10 , an increase of $0.035 , or 54%, over the same quarter last year. This dividend is payable on February 25, 2010 , to shareholders of record on February 10, 2010 . For the six month period ending December 31, 2009 , the Company made dividend payments totalling $4.0 million ."

About Cash Store Financial

Cash Store Financial is the only broker of short-term advances and other financial services in Canada publicly traded on the Toronto Stock Exchange (TSX: CSF). Cash Store Financial operates more than 469 branches across Canada under the banners: The Cash Store and Instaloans.

The Cash Store and Instaloans act as brokers to facilitate short-term advances and other financial services to income-earning consumers who may not be able to obtain them from traditional banks. Cash Store Financial also provides a private-label debit card - the Freedom card and a prepaid credit card - the Freedom MasterCard, and other financial services.

Cash Store Financial employs approximately 1,800 associates and is headquartered in Edmonton , Alberta.

    
    Summary Financial Information

    -------------------------------------------------------------------------
    Thousands of dollars,
     except for per share
     amounts and branch
     figures                    Three Months Ended          Six Months Ended
    -------------------------------------------------------------------------
    Consolidated results  December 31  December 31  December 31  December 31
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
         No. of branches          469          415          469          415

    Revenue
      Brokerage              $ 42,281     $ 36,966     $ 83,905     $ 74,259
      Interest income               5           83           19          209
    -------------------------------------------------------------------------
                               42,286       37,049       83,924       74,468
    Branch expenses            21,509       18,935       42,290       37,470
    Retention payments          5,000        4,600       10,100        8,851
    -------------------------------------------------------------------------
    Branch operating income    15,777       13,514       31,534       28,147
    -------------------------------------------------------------------------
    Regional expenses           2,850        2,024        5,207        3,745
    Corporate expenses          3,751        3,691        7,892        7,097
    Other amortization            787          281        1,358          495
    Income before income
     taxes and class action
     settlements                8,389        7,518       17,077       16,810
    Class action settlements      100        1,910          100        1,910
    EBITA                      10,643        7,303       21,366       18,232
    -------------------------------------------------------------------------
    Net income and
     comprehensive income    $  5,467     $  4,292     $ 11,107     $ 10,348
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average number
     of shares
      outstanding - basic      16,758       18,507       16,810       18,971
    Basic earnings per share
      Net income and
       comprehensive income  $   0.33     $   0.23     $   0.67     $   0.55
    Diluted earnings per
     share
      Net income and
       comprehensive income  $   0.32     $   0.23     $   0.65     $   0.54
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Consolidated Balance
     Sheet Information
    Working capital          $ 10,146     $  8,272     $ 10,146     $  8,272
    Total assets               93,776       78,827       93,776       78,827
    Total long-term
     liabilities                3,676        2,231        3,676        2,231
    Total liabilities          22,708       15,804       22,708       15,804
    Shareholders' equity     $ 71,068     $ 63,023     $ 71,068     $ 63,023
    -------------------------------------------------------------------------
    *EBITA - earnings from operations before interest, income taxes, stock-
    based compensation, amortization of capital and intangible assets
    

This News Release contains "forward-looking information" within the meaning of applicable Canadian and United States securities legislation. Forward-looking information includes, but is not limited to, information with respect to our objectives, strategies, operations and financial results, competition as well initiatives to grow revenue or reduce retention payments. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved". In particular this News Release contains forward-looking statements in connection with the Cash Store Financials goals and strategic priorities, introduction of products, share repurchase initiatives and branch openings. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Cash Store Financial, to be materially different from those expressed or implied by such forward-looking information, including, but not limited to, changes in economic and political conditions, legislative or regulatory developments, technological developments, third-party arrangements, competition, litigation, risks associated with but not limited to, market conditions, and other factors described in our Annual Information Form ("AIF") dated August 26, 2009 under the heading "Risk Factors". All material assumptions used in making forward-looking statements are based on management's knowledge of current business conditions and expectations of future business conditions and trends, including our knowledge of the current credit, interest rate and liquidity conditions affecting us and the Canadian economy. Although we believes the assumptions used to make such statements are reasonable at this time and have attempted to identify in our continuous disclosure documents important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Certain material factors or assumptions are applied by us in making forward-looking statements, include without limitation, factors and assumptions regarding our continued ability to fund our payday loan business, rates of customer defaults, relationships with, and payments to, third party lenders, demand for our products, as well as our operating cost structure and current consumer protection regulations. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. We do not undertake to update any forward-looking information, except in accordance with applicable securities laws.

For further information: on Cash Store Financial, please contact: Gordon J. Reykdal, Chairman and Chief Executive Officer, [phone] or Nancy L. Bland, Chief Financial Officer, [phone]