QC Holdings, Inc. Reports 2016 Results

OVERLAND PARK, Kan., March 31, 2017 -- QC Holdings, Inc. (OTC PINK:QCCO) reported a net loss of $16.8 million and revenues of $117.2 million for the year ended December 31, 2016. Net loss totaled $1.0 million and revenues totaled $135.5 million for the year ended December 31, 2015.

The year ended December 31, 2016 includes charges of: i) $2.7 million due to a loan loss reserve for a business-to-business receivable; ii) $1.6 million related to recording additional loan loss reserve, severance and lease liability costs as part of the closure of the company’s branches in Washington, South Carolina and Virginia during the second half of 2016; and iii) $800,000 in severance and other costs. In addition, due to the net operating losses incurred for the years ended December 31, 2015 and 2016, the company has determined that it has not met the accounting requirements that would indicate that available loss carry-forwards and deferred tax assets will be recognized in the future. Accordingly, a valuation allowance of $8.5 million has been established at December 31, 2016, which resulted in a net tax charge for 2016.

The year ended December 31, 2015 includes $1.5 million (approximately $900,000 net of income taxes) in accrued costs associated with a tentative settlement of an outstanding legal matter.

The decline in revenues during 2016 compared to 2015 reflects lower interest and fees from the company’s consumer loan products due to competitive pressures as customers explore alternative loan products and distribution channels. In addition, revenues were affected by the third quarter 2016 store swap transaction, whereby the company acquired 33 branches operated in Illinois, Kansas, Missouri and Utah and sold its 98 branches operated in Alabama, Arizona, California, Mississippi and Ohio. Loan loss rates were higher in 2016 versus 2015 as a result of the business-to-business loan reserve, the additional loan loss reserve associated with the closed branches and an increase in losses during the transition and integration of the branches acquired in the store swap.

About QC Holdings, Inc.
Headquartered in Overland Park, Kansas, QC Holdings, Inc. is a leading provider of consumer loans in the United States and Canada. In the United States, QC offers various products, including single-pay, installment and title loans, check cashing, debit cards and money transfer services, through 276 branches in 14 states at December 31, 2016 (after consideration of branches to be closed in Virginia). In Canada, the company, through its subsidiary Direct Credit Holdings Inc., is engaged in short-term, consumer internet lending in various provinces.

Forward Looking Statement Disclaimer:  This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the company’s current expectations and are subject to a number of risks and uncertainties, which could cause actual results to differ materially from those forward-looking statements. These risks include (1) changes in laws or regulations or governmental interpretations of existing laws and regulations governing consumer protection or short-term lending practices, (2) uncertainties relating to the interpretation, application and promulgation of regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act, including the impact of proposed rulemaking by the Consumer Financial Protection Bureau (CFPB), (3) ballot referendum initiatives by industry opponents to cap the rates and fees that can be charged to customers, (4) uncertainties related to the examination process by the CFPB and indirect rulemaking through the examination process, (5) litigation or regulatory action directed towards us or the short-term consumer loan industry, (6) volatility in our earnings, primarily as a result of fluctuations in loan loss experience and closures of branches, (7) risks associated with our dependence on cash management banking services and the Automated Clearing House for loan collections, (8) negative media reports and public perception of the short-term consumer loan industry and the impact on federal and state legislatures and federal and state regulators, (9) changes in our key management personnel, (10) risks associated with owning and managing non-U.S. businesses, and (11) other various risks. QC will not update any forward-looking statements made in this press release to reflect future events or developments.

(Financial and Statistical Information Follows)

Contact:	 	        
Douglas E. Nickerson  (913-234-5154)		
Chief Financial Officer