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QC Holdings Inc. Reports Operating Results (10-Q)

August 06, 2012 | About:

10qk

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QC Holdings Inc. (QCCO) filed Quarterly Report for the period ended 2012-06-30.

Qc Holdings, Inc. has a market cap of $55.4 million; its shares were traded at around $3.43 with a P/E ratio of 4.6 and P/S ratio of 0.3. The dividend yield of Qc Holdings, Inc. stocks is 6.2%. Qc Holdings, Inc. had an annual average earning growth of 9.5% over the past 10 years.

Highlight of Business Operations:

Revenues from our payday loan product represent our largest source of revenues and were approximately 67.1% of total revenues for the three months ended June 30, 2012. With respect to payday loan volume, we originated approximately $204.6 million in loans during second quarter 2012, which was an increase of 4.0% from the $196.7 million during 2011. This increase is primarily attributable to the inclusion of volume from Direct Credit. The average payday loan (including fee) totaled $381.58 in second quarter 2012 versus $375.09 during second quarter 2011. Average fees received from customers per loan increased from $56.75 in second quarter 2011 to $57.31 in second quarter 2012. In our Financial Services branches, our average fee rate per $100 for second quarter 2012 was $17.44 compared to $17.83 in 2011.

The provision for losses increased from $10.0 million in second quarter 2011 to $10.2 million during second quarter 2012. Our loss ratio was 23.4% in both second quarter 2011 and second quarter 2012. Our charge-offs as a percentage of revenue were 35.7% during second quarter 2012 compared to 35.9% during second quarter 2011. Our collections as a percentage of charge-offs were 43.6% during second quarter 2012 compared to 45.2% during second quarter 2011. In addition, we received cash of approximately $164,000 from the sale of certain payday loan receivables during second quarter 2012 that had previously been written off compared to $75,000 during second quarter 2011.

Revenues from our payday loan product represent our largest source of revenues and were approximately 66.7% of total revenues for the six months ended June 30, 2012. With respect to payday loan volume, we originated approximately $470.1 million in loans during six months ended June 30, 2012, which was an increase of 22.8% from the $382.9 million during the same period in 2011. This increase is primarily attributable to the inclusion of volume from Direct Credit. The average payday loan (including fee) totaled $382.31 during first six months of 2012 versus $375.71 in comparable 2011. Average fees received from customers per loan increased from $56.93 during first six months of 2011 to $57.63 during first six months of 2012. In our Financial Services branches, our average fee rate per $100 for the first six months of 2012 was $17.52 compared to $17.86 in 2011.

The provision for losses increased from $14.7 for the six months ended June 30, 2011 to $16.0 million for the six months ended June 30, 2012. Our loss ratio was 16.8% during first six months of 2011 versus 17.8% during first six months of 2012. The increase in the loss ratio from 2011 to 2012 was primarily attributable to the inclusion of Direct Credit and a lower collection rate of returned items. Our charge-offs as a percentage of revenue were 35.6% during six months ended June 30, 2012 compared to 35.2% during the same period in 2011. Our collections as a percentage of charge-offs were 49.1% during first six months of 2012 compared to 52.7% during first six months of 2011. In addition, we received cash of approximately $280,000 from the sale of certain payday loan receivables during first six months of 2012 that had previously been written off as well as $280,000 during the same period in 2011.

In March 2011, a new payday law became effective in Illinois that imposes customer usage restrictions that will negatively affect revenues and profitability. This type of customer restriction, when passed in other states such as Washington, South Carolina and Kentucky, has resulted in a 30% to 60% decline in annual revenues and a more significant decline in gross profit, depending on the types of alternative products that competitors may offer within the state. The Illinois law provides for an overlap of the previous lending approach with loans issued under the new law for a period of one year, which will likely extend the time period over which the negative effects of the new law will occur. During 2011, our revenues declined by $2.4 million and our gross profit declined by $2.2 million. For the six months ended June 30, 2012, revenues and gross profit from Illinois declined by $2.2 million and $1.5 million from the same period in the prior year. We anticipate that for full year 2012, our revenues from Illinois will decline by approximately $2.0 million to $3.0 million and gross profit to decline by $1.5 million to $2.0 million, compared to 2011 as a result of this law change. Prior to the change in Illinois payday loan law, branches in Illinois accounted for more than 5% of our revenues and gross profits.

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