Magazine article American Banker

Affinity's 3Q Results Could Signal Comeback

Magazine article American Banker

Affinity's 3Q Results Could Signal Comeback

Article excerpt

Affinity Technology Group Inc.'s third-quarter results offer evidence that the company may be coming back from the brink, though it still faces considerable challenges.

Its third-quarter losses fell 76% from a year earlier, to $375,000, or 1 cent per share. Its revenues climbed 59%, to $1.1 million.

The Columbia, S.C., electronic commerce company started out with big ambitions, but has been undergoing a major restructuring designed to keep it afloat.

Affinity was founded in 1996 during a wave of e-commerce optimism and raised $60 million in its initial public offering. However, this past February its stock was delisted from the Nasdaq SmallCap Market because its price had stayed below $1 for a year.

Last month its stock, which is now being traded on the OTC Bulletin Board, plummeted to a 52-week low of 5 cents. On Friday the stock closed at 9 cents, up 12.5% from a week earlier. No analysts currently cover the company.

Affinity initially manufactured and sold kiosks that could approve loans and immediately dispense checks for the loan amount. The kiosks were adopted by Bank One Corp., Mellon Bank, and Banco Popular of Puerto Rico, but the ATM-like machines did not bring in the expected return on investment or generate enough new business.

"Consumer acceptance just didn't occur like everyone anticipated," said Joseph Boyle, Affinity's president and chief executive officer, in an interview Thursday following the company's earnings announcement. "We continued to downsize as a result of moving away from the original application service provider model, which just didn't work."

The company has since gotten out of the kiosk business and is struggling to reinvent itself. Now most of its business comes from Surety Mortgage LLC, a three-year-old unit that approves and originates mortgage loans in about an hour. The unit produced 80% of Affinity's third-quarter revenues. …

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