QCCO » Topics » Branch Expense

These excerpts taken from the QCCO 10-K filed Mar 13, 2009.

Branch Expense

Total branch expenses were $157.2 million during 2008 compared to $146.2 million in 2007, an increase of $11.0 million, or 7.5%. Branch-level salaries and benefits increased by $3.0 million to $49.4 million in 2008 versus $46.4 million in 2007, due to an increase in field personnel and higher branch-level benefit costs. The total number of field personnel averaged 1,905 for year ended December 31, 2008 compared to 1,866 in the prior year.

Our provision for losses increased from $53.0 million for the year ended December 31, 2007 to $58.2 million for the year ended December 31, 2008. Our loss ratio was 25.5% during 2008 versus 25.1% during 2007. The small increase reflects a more difficult collections environment during 2008. Our charge-offs as a percentage of revenue were 45.7% during 2008 compared to 47.1% during 2007. Our collection rate was 46.3% in 2008 versus 48.3% in 2007. During 2008, we received approximately $624,000 from the sale of certain payday loan receivables compared to $2.1 million in 2007.

With respect to 2009, we anticipate that the collections environment will continue to be challenging based on the current state of the economy and our expectation that there will a limited market for the sale of payday loan receivables. We also anticipate that our loss ratio could be affected negatively during 2009 due to the introduction of a new product in Virginia and to a lesser extent a new product in Ohio. Our past experience has indicated that the introduction of new products has increased our loss ratio as our customer’s transition to the new product (e.g., installment loans in Illinois and New Mexico).

Comparable branches totaled $54.8 million in loan losses for 2008 compared to $53.6 million in loan losses during 2007. In our comparable branches, the loss ratio was 25.8% during 2008 down from 26.3% for the same branches during 2007.

Occupancy costs were $26.8 million during 2008, compared to $26.7 million in 2007, an increase of $100,000. Occupancy costs as a percentage of revenues decreased from 12.6% in 2007 to 11.8% in 2008. During 2007, we recorded approximately $1.6 million in occupancy costs to reflect lease termination costs and other occupancy related costs in connection with the closure of 34 branches (the majority of which were consolidated into nearby branches), the termination of the de novo process on eight branches that never opened and the decision to close our Oregon branches.

Branch Expense

Total branch expenses were $146.2 million during 2007 compared to $122.6 million in 2006, an increase of $23.6 million, or 19.2%. Branch-level salaries and benefits increased by $2.8 million to $46.4 million in 2007 versus $43.6 million in 2006, due to an increase in field personnel associated with our new branches. The total number of field personnel averaged 1,866 for year ended December 31, 2007 compared to 1,729 in the prior year.

 

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Our provision for losses increased from $36.7 million for the year ended December 31, 2006 to $53.0 million for the year ended December 31, 2007. Our loss ratio was 25.1% during 2007 versus 21.4% during 2006. The less favorable loss experience in 2007 reflects a higher level of charge-offs (partially due to our year-long focus on increasing loan volumes) and a more challenging collection environment as customers manage through the difficult credit, financial and economic environment. Our charge-offs as a percentage of revenue were 47.1% during 2007 compared to 44.3% during 2006. Our collection rate was 48.3% in 2007 versus 53.1% in 2006. During 2007, we received approximately $2.1 million from the sale of certain payday loan receivables compared to $900,000 in 2006.

Comparable branches totaled $46.6 million in loan losses for 2007 compared to $35.1 million in loan losses during 2006. In our comparable branches, the loss ratio was 25.4% during 2007 compared to 21.9% for the same branches during 2006.

Occupancy costs were $26.7 million during 2007, compared to $22.2 million in 2006, an increase of $4.5 million, or 20.3%. Occupancy costs as a percentage of revenues decreased from 13.0% in 2006 to 12.6% in 2007. During 2007, we recorded approximately $1.6 million in occupancy costs to reflect lease termination costs and other occupancy related costs in connection with the closure of 34 branches (the majority of which were consolidated into nearby branches), the termination of the de novo process on eight branches that never opened and the decision to close our Oregon branches.

Branch Expense

SIZE="2">Total branch expenses were $157.2 million during 2008 compared to $146.2 million in 2007, an increase of $11.0 million, or 7.5%. Branch-level salaries and benefits increased by $3.0 million to $49.4 million in 2008 versus
$46.4 million in 2007, due to an increase in field personnel and higher branch-level benefit costs. The total number of field personnel averaged 1,905 for year ended December 31, 2008 compared to 1,866 in the prior year.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Our provision for losses increased from $53.0 million for the year ended December 31, 2007 to $58.2 million for the year ended December 31,
2008. Our loss ratio was 25.5% during 2008 versus 25.1% during 2007. The small increase reflects a more difficult collections environment during 2008. Our charge-offs as a percentage of revenue were 45.7% during 2008 compared to 47.1% during 2007.
Our collection rate was 46.3% in 2008 versus 48.3% in 2007. During 2008, we received approximately $624,000 from the sale of certain payday loan receivables compared to $2.1 million in 2007.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">With respect to 2009, we anticipate that the collections environment will continue to be challenging based on the current state of the economy and our
expectation that there will a limited market for the sale of payday loan receivables. We also anticipate that our loss ratio could be affected negatively during 2009 due to the introduction of a new product in Virginia and to a lesser extent a new
product in Ohio. Our past experience has indicated that the introduction of new products has increased our loss ratio as our customer’s transition to the new product (e.g., installment loans in Illinois and New Mexico).

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Comparable branches totaled $54.8 million in loan losses for 2008 compared to $53.6 million in loan losses during 2007. In our comparable branches, the
loss ratio was 25.8% during 2008 down from 26.3% for the same branches during 2007.

Occupancy costs were $26.8 million during 2008,
compared to $26.7 million in 2007, an increase of $100,000. Occupancy costs as a percentage of revenues decreased from 12.6% in 2007 to 11.8% in 2008. During 2007, we recorded approximately $1.6 million in occupancy costs to reflect lease
termination costs and other occupancy related costs in connection with the closure of 34 branches (the majority of which were consolidated into nearby branches), the termination of the de novo process on eight branches that never opened and the
decision to close our Oregon branches.

These excerpts taken from the QCCO 10-K filed Mar 14, 2008.

Branch Expense

Total branch expenses were $124.1 million during 2006 compared to $116.0 million in 2005, an increase of $8.1 million, or 7.0%. Branch-level salaries and benefits increased by $5.9 million to $44.0 million in 2006 versus $38.1 million in 2005, due to an increase in field personnel associated with our new branches. The total number of field personnel averaged 1,729 for year ended December 31, 2006 compared to 1,514 in the prior year.

Our provision for losses for the year ended December 31, 2006 totaled $37.0 million, a 10.6% decline from 2005. Comparable branches totaled $27.4 million in loan losses for 2006 compared to $36.3 million in loan losses during 2005. Our loss ratio was 21.5% during 2006 versus 27.1% during 2005. In our comparable branches, the loss ratio was 20.1% during 2006 compared to 26.0% for the same branches during 2005. The favorable loss experience reflected reduced charge-offs as a result of the ongoing benefits of our loan origination-based verification procedures, as well as improved collections, partially due to the sale of older debt for approximately $900,000. Our collections as a percentage of charge-offs improved to 53.1% during 2006 versus 44.7% during 2005.

Occupancy costs were $22.7 million during 2006, compared to $19.1 million in 2005, an increase of $3.6 million, or 18.8%, due to the addition of branches during 2005. Occupancy costs as a percentage of revenues increased from 12.5% in 2005 to 13.2% in 2006, primarily due to the high number of branches at early stages in the branch lifecycles. Depreciation and amortization increased by $1.0 million due to depreciation associated with capital expenditures for de novo branches. Other expenses increased $2.0 million, primarily due to growth in branches and to a $1.4 million increase in advertising costs during 2006 versus 2005.

Branch Expense

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Total branch expenses were $124.1 million during 2006 compared to $116.0 million in 2005, an increase of $8.1 million, or 7.0%. Branch-level
salaries and benefits increased by $5.9 million to $44.0 million in 2006 versus $38.1 million in 2005, due to an increase in field personnel associated with our new branches. The total number of field personnel averaged 1,729 for year ended
December 31, 2006 compared to 1,514 in the prior year.

Our provision for losses for the year ended December 31, 2006 totaled
$37.0 million, a 10.6% decline from 2005. Comparable branches totaled $27.4 million in loan losses for 2006 compared to $36.3 million in loan losses during 2005. Our loss ratio was 21.5% during 2006 versus 27.1% during 2005. In our comparable
branches, the loss ratio was 20.1% during 2006 compared to 26.0% for the same branches during 2005. The favorable loss experience reflected reduced charge-offs as a result of the ongoing benefits of our loan origination-based verification
procedures, as well as improved collections, partially due to the sale of older debt for approximately $900,000. Our collections as a percentage of charge-offs improved to 53.1% during 2006 versus 44.7% during 2005.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Occupancy costs were $22.7 million during 2006, compared to $19.1 million in 2005, an increase of $3.6 million, or 18.8%, due to the addition of branches
during 2005. Occupancy costs as a percentage of revenues increased from 12.5% in 2005 to 13.2% in 2006, primarily due to the high number of branches at early stages in the branch lifecycles. Depreciation and amortization increased by $1.0 million
due to depreciation associated with capital expenditures for de novo branches. Other expenses increased $2.0 million, primarily due to growth in branches and to a $1.4 million increase in advertising costs during 2006 versus 2005.

STYLE="margin-top:18px;margin-bottom:0px">Branch Gross Profit

Branch gross profit increased by
$11.3 million, or 30.6%, from $36.9 million in 2005 to $48.2 million in 2006. Branch gross margin, which is branch gross profit as a percentage of revenues, improved to 28.0% in 2006 compared to 24.1% in 2005. The following table summarizes our
branch gross profit by comparable branches and new branches:

 




































































































   Year Ended December 31, 
  2005  2006 
  (in thousands) 

Comparable branches

  $46,908  $52,909 

Branches added in 2005

   (9,032)  (2,957)

Branches added in 2006

    (1,872)

Other (a)

   (961)  74 
         

Total

  $36,915  $48,154 
         

 





(a)2006 includes approximately $900,000 related to the sale of older debt.

FACE="Times New Roman" SIZE="2">The gross margin for comparable branches in 2005 was 33.6% compared to 38.9% in 2006, with the improvements resulting from stronger results in the majority of states and the favorable change in Kansas being partially
offset by reduced gross profit due to the challenges in Illinois discussed above. The 181 branches added during 2005 and the 97 branches added during 2006 reported net losses of $3.0 million and $1.9 million, respectively.

STYLE="margin-top:0px;margin-bottom:0px"> 


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This excerpt taken from the QCCO 10-K filed Mar 14, 2007.

Branch Expense

Total branch expenses were $116.0 million during 2005 compared to $72.3 million in 2004, an increase of $43.7 million, or 60.4%. Salaries and benefits increased by $13.1 million to $38.1 million in 2005 versus $25.0 million in 2004, due to the addition of new personnel to operate the 184 branches that were added in 2005. The total number of field personnel averaged 1,514 for the year ended December 31, 2005 compared to 1,052 in the prior year.

Our provision for losses for the year ended December 31, 2005 totaled $41.4 million, a 69.7% increase over 2004. This rate of increase was higher than revenue growth, resulting in an increase in the loss ratio from 20.7% during 2004 to 27.1% in 2005. The less favorable loss ratio year to year reflects our accelerated rate of unit branch growth during 2005, a favorable experience in first quarter 2004 attributable to the non-recurring tax benefits received by our customers associated with the changes in the income tax laws passed during mid-2003 and other factors during 2005, including a more challenging collections environment as a result of an increase in bankruptcy filings, higher energy prices and increased competition in the lending industry.

Occupancy costs were $19.1 million during 2005, compared to $11.7 million in 2004, an increase of $7.4 million, or 63.2%, due to the addition of branches during 2004 and 2005. Occupancy costs as a percentage of revenues increased from 9.9% in 2004 to 12.5% in 2005, primarily due to the high number of branches at early stages in the branch lifecycles. Depreciation and amortization increased by $2.3 million due to depreciation associated with capital expenditures for de novo branches. Other costs, which include advertising, utilities, and office supplies, increased $4.0 million, or 42.1%, primarily due to growth in branches.

This excerpt taken from the QCCO 10-K filed Mar 14, 2006.

Branch Expense

Total branch expenses were $72.3 million during 2004, compared to $57.7 million in 2003, an increase of $14.6 million, or 25.3%. Salaries and benefits increased by $5.4 million to $25.0 million in 2004 versus $19.6 million in 2003, due to an increase in the number of employees as a result of the growth in new branches and higher bonuses for employees at existing branches in recognition for improvements in branch gross profit. The average number of branch employees during 2004 was 1,020 compared to 789 in the prior year.

Our provision for losses for the year ended December 31, 2004 totaled $24.4 million, a 22.6% increase over 2003. This rate of increase was lower than revenue growth, resulting in a decline in the loss ratio from 21.4% during 2003 to 20.7% in 2004. The improvement in the loss ratio year to year is largely due to favorable experience in first quarter 2004, which we believe was attributable to the non-recurring tax benefits received by our customers associated with the changes in the income tax laws passed during mid-2003.

Occupancy costs increased $1.7 million, or 17.0%, in 2004 compared to 2003 due to the addition of branches during 2003 and 2004. Occupancy costs as a percentage of revenues improved from 10.8% in 2003 to 9.9% in 2004, indicative of the fixed nature of these costs. Depreciation and amortization increased $271,000 due to leasehold improvements associated with the opening of de novo branches, the timing of which occurred in the second half of the year. Other costs, which include advertising, utilities and office supplies, increased $2.7 million, or 39.7%, primarily due to growth in branches.

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