Local payday lender will delist from Nasdaq; stock price plummets

Nasdaq

Payday lender QC Holdings Inc. saw its stock plummet as much as 52 percent on news that it decided to voluntarily delist its stock from Nasdaq and trade instead on the Pink Sheets.

The Overland Park-based company (Nasdaq: QCCO) said the delisting will be effective Feb. 11, but shareholders weren’t waiting until then, starting a stampede toward the exit sign. The stock price closed at $1.20 on Friday and opened at $1.12 on Monday morning. The stock then dropped as low as 57 cents before stabilizing around 65 cents by 2 p.m. CST. It traded for $1.67 a share one year ago.
Trading volume reached more than 215,000 at 1:21 p.m. CST — more than 34 times higher than the three-month average of 6,250.
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The board of directors said the decision to delist came after careful consideration.

“Factors the board of directors considered include the cost savings that will occur as a result of the elimination of the company’s obligation to file reports with the (Securities and Exchange Commission), the avoidance of additional accounting, audit, legal and other costs and management’s attention devoted to compliance with the requirements of the Sarbanes-Oxley Act of 2002, the historically low daily trading volume in the company’s shares, and the benefit of allowing management to focus on the long-term development of our core business,” the company wrote in a filing with the SEC.

The delisting announcement comes two months after QC Holdings posted bad news in its third-quarter earnings report. The company posted a loss of $1.49 million in the third quarter, down from profit of $226,000 during the same period a year earlier. Revenue was down 12.4 percent in the past year to $34.48 million.

“The decline is attributable to competitive pressures as customers explore alternative loan products and distribution channels,” the company wrote.

QC Holdings faces increasing pressure as more states create laws reining in interest rates on short-term lending. The federal government also created the Consumer Financial Protection Bureau, which is creating new rules and adding compliance costs for the business from the federal level.

The company also frequently faces lawsuits. Corporate expenses were up 19.6 percent in the third quarter, mainly due to the company setting aside $1.5 million to pay a tentative legal settlement.

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