QC Holdings, Inc. (NASDAQ: QCCO) reported income from continuing operations of $5.5 million and revenues of $48.8 million for first quarter 2010.

“Given the negative effects associated with the unfavorable law changes in Washington and South Carolina, we are pleased to have produced a solid result in first quarter 2010,” said QC Chairman and Chief Executive Officer Don Early. “Although we experienced modest revenue declines in several states, it appears the leveling of the broader economy has provided some stability to our customer base. Similar to the final three quarters of 2009, our loss experience improved versus the comparable prior period, helping to mitigate some of the revenue decline.”

Items of note for the first quarter included:
  • Income from continuing operations of $5.5 million, or $0.30 per diluted share, compared to $6.5 million, or $0.36 per diluted share, in first quarter 2009;
  • Revenues of $48.8 million compared to $54.5 million in first quarter 2009;
  • A loss ratio of 12.7% versus 15.5% in prior year’s first quarter; and
  • Adjusted EBITDA, which is earnings before interest, taxes, depreciation, amortization, charges related to stock options and restricted stock awards, and non-cash gains or losses associated with property disposition, of $12.0 million compared to $14.4 million in prior year’s first quarter.

The three months ended March 31, 2010 and 2009 include discontinued operations relating to branches that were closed during each period. Schedules reconciling adjusted EBITDA to income from continuing operations for the three months ended March 31, 2010 and 2009 are provided below.

Revenues declined $5.7 million, or 10.5%, quarter-to-quarter. This decline is primarily due to lower payday loan volumes resulting from unfavorable law changes effective January 1, 2010 in Washington and South Carolina that unnecessarily restrict customer access to payday loans. Another component of the decline relates to Virginia, where the company discontinued its open-end credit product offering during second quarter 2009 and re-introduced the payday loan product. The payday loan volumes in Virginia have not returned to historical levels, largely due to the various restrictions on customer borrowing contained in the existing law. A 9.1% improvement in automotive sales and interest revenues partially offset these declines.