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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2007

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -----------------------------------------------------------------------------------------

for the transition period from  to

Commission File Number 000-50840



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QC
HOLDINGS, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Kansas                                                         |  | 48-1209939                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|9401 Indian Creek Parkway, Suite 1500    |  |           
|Overland Park, Kansas                    |  | 66210     
|(Address of principal executive offices) |  | (Zip Code)

(913) 234-5000

(Registrants telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)



---

Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.    Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated
filer (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer ̈Accelerated filer  x    Non-accelerated filer ̈

Indicate by check mark whether the registrant is a shell company (as defined
by Rule 12b-2 of the Exchange Act).    Yes ̈No  x

The number of shares outstanding of the registrants common stock, as of October 31, 2007:

Common Stock $0.01 per share par value  18,959,921 Shares



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##### Table of Contents

QC HOLDINGS, INC.

Form 10-Q

September 30, 2007

Index



|                                                                                              |  |                                                                                                                                    |  |     
|--------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                              |  |                                                                                                                                    |  | Page
|PART IFINANCIAL INFORMATION                                                                  |  |                                                                                                                                   
|                                                                                              | 
|Item 1. Financial Statements                                                                  |  |                                                                                                                                   
|                                                                                              |  |                                                                                                                                   
|                                                                                              |  | Introductory Comments                                                                                                              |  | 1   
|                                                                                              |  |                                                                                                                                   
|                                                                                              |  | Consolidated Balance Sheets - December 31, 2006 and September 30, 2007                                                             |  | 2   
|                                                                                              |  |                                                                                                                                   
|                                                                                              |  | Consolidated Statements of Income - Three and Nine Months Ended September 30, 2006 and 2007                                        |  | 3   
|                                                                                              |  |                                                                                                                                   
|                                                                                              |  | Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2006 and 2007                                              |  | 4   
|                                                                                              |  |                                                                                                                                   
|                                                                                              |  | Consolidated Statements of Changes in Stockholders Equity - Year Ended December 31, 2006 and Nine Months Ended September 30, 2007 |  | 5   
|                                                                                              |  |                                                                                                                                   
|                                                                                              |  | Notes to Consolidated Financial Statements                                                                                         |  | 6   
|                                                                                              |  |                                                                                                                                   
|                                                                                              |  | Computation of Basic and Diluted Earnings per Share                                                                                |  | 7   
|                                                                                              | 
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 16                                                                                                                                
|                                                                                              | 
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                            |  | 29                                                                                                                                
|                                                                                              | 
|Item 4. Controls and Procedures                                                               |  | 29                                                                                                                                
|                                                                                              | 
|PART IIOTHER INFORMATION                                                                     |  |                                                                                                                                   
|                                                                                              | 
|Item 1. Legal Proceedings                                                                     |  | 30                                                                                                                                
|                                                                                              | 
|Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 30                                                                                                                                
|                                                                                              | 
|Item 6. Exhibits                                                                              |  | 30                                                                                                                                
|                                                                                              | 
|SIGNATURES                                                                                    |  | 31                                                                                                                                



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##### Table of Contents

QC HOLDINGS, INC.

FORM 10-Q

SEPTEMBER 30, 2007

PART IFINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

INTRODUCTORY COMMENTS

The consolidated financial statements included in this report have been prepared by QC
Holdings, Inc. (the Company or QC), without audit, under the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted under those rules and regulations, although the Company believes that the disclosures are adequate to enable a reasonable understanding of the information presented. These
consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto, as well as Managements Discussion and Analysis of Financial Condition and Results of Operations, included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2006. Results for the three and nine months ended September 30, 2007 are not necessarily indicative of the results expected for the full year 2007.



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##### Table of Contents

QC HOLDINGS, INC. AND SUBSIDIARIES

Consolidated
Balance Sheets

(in thousands, except share and per share amounts)



|                                                                                                                                                                                                                 |  |                  |         |   |                   |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                                                                                                                                                 |  | December 31,2006 |         |   | September 30,2007 |  
|                                                                                                                                                                                                                 |  |                  |         |   | Unaudited         |  
|ASSETS                                                                                                                                                                                                           |  |                  |         |   |                   |   |         |  
|                                                                                                                                                                                                                 |  |                 
|Current assets:                                                                                                                                                                                                  |  |                  |         |   |                   |   |         |  
|Cash and cash equivalents                                                                                                                                                                                        |  | $                | 23,446  |   |                   | $ | 23,124  |  
|Loans receivable, less allowance for losses of $2,982 at December 31, 2006 and $3,591 at September 30, 2007                                                                                                      |  |                  | 66,018  |   |                   |   | 65,854  |  
|Prepaid expenses and other current assets                                                                                                                                                                        |  |                  | 3,028   |   |                   |   | 3,308   |  
|                                                                                                                                                                                                                 |  |                  |         |   |                   |   |         |  
|Total current assets                                                                                                                                                                                             |  |                  | 92,492  |   |                   |   | 92,286  |  
|                                                                                                                                                                                                                 |  |                 
|Property and equipment, net                                                                                                                                                                                      |  |                  | 31,311  |   |                   |   | 27,205  |  
|                                                                                                                                                                                                                 |  |                 
|Goodwill                                                                                                                                                                                                         |  |                  | 14,492  |   |                   |   | 16,081  |  
|Other assets, net                                                                                                                                                                                                |  |                  | 4,652   |   |                   |   | 4,716   |  
|                                                                                                                                                                                                                 |  |                  |         |   |                   |   |         |  
|Total assets                                                                                                                                                                                                     |  | $                | 142,947 |   |                   | $ | 140,288 |  
|                                                                                                                                                                                                                 |  |                  |         |   |                   |   |         |  
|                                                                                                                                                                                                                 |  |                 
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                             |  |                  |         |   |                   |   |         |  
|                                                                                                                                                                                                                 |  |                 
|Current liabilities:                                                                                                                                                                                             |  |                  |         |   |                   |   |         |  
|Accounts payable                                                                                                                                                                                                 |  | $                | 909     |   |                   | $ | 1,027   |  
|Accrued expenses and other liabilities                                                                                                                                                                           |  |                  | 3,233   |   |                   |   | 4,193   |  
|Accrued compensation and benefits                                                                                                                                                                                |  |                  | 5,668   |   |                   |   | 7,595   |  
|Deferred revenue                                                                                                                                                                                                 |  |                  | 4,558   |   |                   |   | 4,568   |  
|Income taxes payable                                                                                                                                                                                             |  |                  | 531     |   |                   |   |         |  
|Dividends payable                                                                                                                                                                                                |  |                  | 1,975   |   |                   |   |         |  
|Debt due within one year                                                                                                                                                                                         |  |                  | 16,300  |   |                   |   | 15,500  |  
|Deferred income taxes                                                                                                                                                                                            |  |                  | 1,742   |   |                   |   | 1,419   |  
|                                                                                                                                                                                                                 |  |                  |         |   |                   |   |         |  
|Total current liabilities                                                                                                                                                                                        |  |                  | 34,916  |   |                   |   | 34,302  |  
|                                                                                                                                                                                                                 |  |                 
|Deferred income taxes                                                                                                                                                                                            |  |                  | 2,645   |   |                   |   | 1,758   |  
|Other non-current liabilities                                                                                                                                                                                    |  |                  | 598     |   |                   |   | 873     |  
|                                                                                                                                                                                                                 |  |                  |         |   |                   |   |         |  
|Total liabilities                                                                                                                                                                                                |  |                  | 38,159  |   |                   |   | 36,933  |  
|                                                                                                                                                                                                                 |  |                  |         |   |                   |   |         |  
|Commitments and contingencies                                                                                                                                                                                    |  |                  |         |   |                   |   |         |  
|                                                                                                                                                                                                                 |  |                 
|Stockholders' equity:                                                                                                                                                                                            |  |                  |         |   |                   |   |         |  
|Common stock, $0.01 par value: 75,000,000 shares authorized; 20,700,250 shares issued and 19,501,300 outstanding at December 31, 2006;
20,700,250 shares issued and 18,959,693 outstanding at September 30, 2007 |  |                  | 207     |   |                   |   | 207     |  
|Additional paid-in capital                                                                                                                                                                                       |  |                  | 70,227  |   |                   |   | 70,079  |  
|Retained earnings                                                                                                                                                                                                |  |                  | 49,284  |   |                   |   | 56,302  |  
|Treasury stock, at cost                                                                                                                                                                                          |  |                  | (14,930 | ) |                   |   | (23,233 | )
|                                                                                                                                                                                                                 |  |                  |         |   |                   |   |         |  
|Total stockholders' equity                                                                                                                                                                                       |  |                  | 104,788 |   |                   |   | 103,355 |  
|                                                                                                                                                                                                                 |  |                  |         |   |                   |   |         |  
|Total liabilities and stockholders' equity                                                                                                                                                                       |  | $                | 142,947 |   |                   | $ | 140,288 |  
|                                                                                                                                                                                                                 |  |                  |         |   |                   |   |         |  

The accompanying notes are an integral part of these consolidated financial statements.



Page 2



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##### Table of Contents

QC HOLDINGS, INC. AND SUBSIDIARIES

Consolidated
Statements of Income

(in thousands, except per share amounts)

(Unaudited)



|                                                      |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |        
|----------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------- | - |  | - | -------
|                                                      |  | Three Months EndedSeptember 30, |        |   | Nine Months EndedSeptember 30,
|                                                      |  | 2006                            |        |   | 2007                           |   |        | 2006 |  |   | 2007   
|Revenues                                              |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |        
|Payday loan fees                                      |  | $                               | 40,132 |   |                                | $ | 48,890 |      |  | $ | 109,532 |   |  | $ | 134,778
|Other                                                 |  |                                 | 5,214  |   |                                |   | 7,658  |      |  |   | 14,013  |   |  |   | 21,533 
|                                                      |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |        
|Total revenues                                        |  |                                 | 45,346 |   |                                |   | 56,548 |      |  |   | 123,545 |   |  |   | 156,311
|                                                      |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |        
|Branch expenses                                       |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |        
|Salaries and benefits                                 |  |                                 | 10,969 |   |                                |   | 11,285 |      |  |   | 32,537  |   |  |   | 34,595 
|Provision for losses                                  |  |                                 | 11,193 |   |                                |   | 17,520 |      |  |   | 25,816  |   |  |   | 38,200 
|Occupancy                                             |  |                                 | 6,177  |   |                                |   | 6,238  |      |  |   | 17,178  |   |  |   | 20,293 
|Depreciation and amortization                         |  |                                 | 1,209  |   |                                |   | 1,188  |      |  |   | 3,700   |   |  |   | 3,624  
|Other                                                 |  |                                 | 4,042  |   |                                |   | 3,807  |      |  |   | 11,061  |   |  |   | 11,113 
|                                                      |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |        
|Total branch expenses                                 |  |                                 | 33,590 |   |                                |   | 40,038 |      |  |   | 90,292  |   |  |   | 107,825
|                                                      |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |        
|Branch gross profit                                   |  |                                 | 11,756 |   |                                |   | 16,510 |      |  |   | 33,253  |   |  |   | 48,486 
|                                                      |  |                                 |        |  
|Regional expenses                                     |  |                                 | 2,863  |   |                                |   | 3,277  |      |  |   | 8,979   |   |  |   | 9,513  
|Corporate expenses                                    |  |                                 | 4,366  |   |                                |   | 5,389  |      |  |   | 14,513  |   |  |   | 16,781 
|Depreciation and amortization                         |  |                                 | 340    |   |                                |   | 582    |      |  |   | 978     |   |  |   | 1,631  
|Interest expense (income), net                        |  |                                 | (38    | ) |                                |   | 202    |      |  |   | (315    | ) |  |   | 372    
|Other expense, net                                    |  |                                 | 6      |   |                                |   | (27    | )    |  |   | 199     |   |  |   | 2,046  
|                                                      |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |        
|Income before taxes                                   |  |                                 | 4,219  |   |                                |   | 7,087  |      |  |   | 8,899   |   |  |   | 18,143 
|Provision for income taxes                            |  |                                 | 1,688  |   |                                |   | 2,804  |      |  |   | 3,579   |   |  |   | 7,209  
|                                                      |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |        
|Net income                                            |  | $                               | 2,531  |   |                                | $ | 4,283  |      |  | $ | 5,320   |   |  | $ | 10,934 
|                                                      |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |        
|Weighted average number of common shares outstanding: |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |        
|Basic                                                 |  |                                 | 19,752 |   |                                |   | 19,109 |      |  |   | 20,166  |   |  |   | 19,368 
|Diluted                                               |  |                                 | 20,474 |   |                                |   | 19,653 |      |  |   | 20,884  |   |  |   | 19,888 
|                                                      |  |                                 |        |  
|Earnings per share:                                   |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |        
|Basic                                                 |  | $                               | 0.13   |   |                                | $ | 0.22   |      |  | $ | 0.26    |   |  | $ | 0.56   
|Diluted                                               |  | $                               | 0.12   |   |                                | $ | 0.22   |      |  | $ | 0.25    |   |  | $ | 0.55   

The accompanying notes are an integral part of these consolidated financial statements.



Page 3



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##### Table of Contents

QC HOLDINGS, INC. AND SUBSIDIARIES

Consolidated
Statements of Cash Flows

(in thousands)

(Unaudited)



|                                                                                            |  |                                |         |   |      |   |         |  
|------------------------------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                                                                            |  | Nine Months EndedSeptember 30, |        
|                                                                                            |  | 2006                           |         |   | 2007 |  
|Cash flows from operating activities                                                        |  |                                |         |   |      |   |         |  
|Net income                                                                                  |  | $                              | 5,320   |   |      | $ | 10,934  |  
|Adjustments to reconcile net income to net cash provided by operating activities:           |  |                                |         |   |      |   |         |  
|Depreciation and amortization                                                               |  |                                | 4,678   |   |      |   | 5,255   |  
|Provision for losses                                                                        |  |                                | 25,816  |   |      |   | 38,200  |  
|Deferred income taxes                                                                       |  |                                | (290    | ) |      |   | (1,141  | )
|Loss on disposal of property and equipment                                                  |  |                                | 199     |   |      |   | 2,046   |  
|Other, net                                                                                  |  |                                | 66      |   |      |   |         |  
|Stock-based compensation                                                                    |  |                                | 959     |   |      |   | 1,673   |  
|Stock option income tax benefits                                                            |  |                                | (685    | ) |      |   | (1,111  | )
|Changes in operating assets and liabilities:                                                |  |                                |         |   |      |   |         |  
|Loans receivable, net                                                                       |  |                                | (26,680 | ) |      |   | (36,683 | )
|Prepaid expenses and other assets                                                           |  |                                | (115    | ) |      |   | (209    | )
|Other assets                                                                                |  |                                | (621    | ) |      |   | (89     | )
|Accounts payable                                                                            |  |                                | (129    | ) |      |   | 118     |  
|Accrued expenses, other liabilities, accrued compensation and benefits and deferred revenue |  |                                | 4,026   |   |      |   | 2,702   |  
|Income taxes                                                                                |  |                                | (721    | ) |      |   | 547     |  
|Other non-current liabilities                                                               |  |                                | (104    | ) |      |   | 181     |  
|                                                                                            |  |                                |         |   |      |   |         |  
|Net operating                                                                               |  |                                | 11,719  |   |      |   | 22,423  |  
|                                                                                            |  |                                |         |   |      |   |         |  
|Cash flows from investing activities                                                        |  |                                |         |   |      |   |         |  
|Purchase of property and equipment                                                          |  |                                | (4,611  | ) |      |   | (2,360  | )
|Proceeds from sale of property and equipment                                                |  |                                | 108     |   |      |   | 71      |  
|Acquisition costs                                                                           |  |                                |         |   |      |   | (3,641  | )
|                                                                                            |  |                                |         |   |      |   |         |  
|Net investing                                                                               |  |                                | (4,503  | ) |      |   | (5,930  | )
|                                                                                            |  |                                |         |   |      |   |         |  
|Cash flows from financing activities                                                        |  |                                |         |   |      |   |         |  
|Borrowings under credit facility                                                            |  |                                |         |   |      |   | 15,500  |  
|Repayments under credit facility                                                            |  |                                |         |   |      |   | (16,300 | )
|Dividends to stockholders                                                                   |  |                                |         |   |      |   | (5,891  | )
|Repurchase of common stock                                                                  |  |                                | (16,544 | ) |      |   | (11,978 | )
|Exercise of stock options                                                                   |  |                                | 598     |   |      |   | 743     |  
|Excess tax benefits from stock-based payment arrangements                                   |  |                                | 685     |   |      |   | 1,111   |  
|Credit facility fees                                                                        |  |                                | 338     |   |      |   |         |  
|                                                                                            |  |                                |         |   |      |   |         |  
|Net financing                                                                               |  |                                | (14,923 | ) |      |   | (16,815 | )
|                                                                                            |  |                                |         |   |      |   |         |  
|Cash and cash equivalents                                                                   |  |                                |         |   |      |   |         |  
|Net decrease                                                                                |  |                                | (7,707  | ) |      |   | (322    | )
|At beginning of year                                                                        |  |                                | 31,640  |   |      |   | 23,446  |  
|                                                                                            |  |                                |         |   |      |   |         |  
|At end of period                                                                            |  | $                              | 23,933  |   |      | $ | 23,124  |  
|                                                                                            |  |                                |         |   |      |   |         |  
|Supplementary schedule of cash flow information                                             |  |                                |         |   |      |   |         |  
|Cash paid during the period for                                                             |  |                                |         |   |      |   |         |  
|Interest                                                                                    |  | $                              | 283     |   |      | $ | 625     |  
|Income taxes                                                                                |  |                                | 3,600   |   |      |   | 7,883   |  

The accompanying notes are an integral part of these consolidated financial statements.



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##### Table of Contents

QC HOLDINGS, INC. AND SUBSIDIARIES

Consolidated
Statements of Changes in Stockholders Equity

(in thousands, except share amounts)



|                                        |  |                   |   |  |             |     |                          |   |        |                  |  |   |               |   |  |                          |         |   |  |   |         |  
|--------------------------------------- |  | ----------------- | - |  | ----------- | --- | ------------------------ | - | ------ | ---------------- |  | - | ------------- | - |  | ------------------------ | ------- | - |  | - | ------- | -
|                                        |  | Outstandingshares |   |  | Commonstock |     | Additionalpaid-incapital |   |        | Retainedearnings |  |   | Treasurystock |   |  | Totalstockholders'equity |        
|Balance, December 31, 2005              |  | 20,432,850        |   |  | $           | 207 |                          | $ | 71,687 |                  |  | $ | 42,050        |   |  | $                        | (3,128  | ) |  | $ | 110,816 |  
|Net income                              |  |                   |   |  |             |     |                          |   |        |                  |  |   | 9,209         |   |  |                          |         |   |  |   | 9,209   |  
|Common stock repurchases                |  | (1,316,800        | ) |  |             |     |                          |   |        |                  |  |   |               |   |  |                          | (16,544 | ) |  |   | (16,544 | )
|Dividends to stockholders               |  |                   |   |  |             |     |                          |   |        |                  |  |   | (1,975        | ) |  |                          |         |   |  |   | (1,975  | )
|Stock-based compensation expense        |  |                   |   |  |             |     |                          |   | 1,234  |                  |  |   |               |   |  |                          |         |   |  |   | 1,234   |  
|Stock option exercises                  |  | 385,250           |   |  |             |     |                          |   | (3,916 | )                |  |   |               |   |  |                          | 4,742   |   |  |   | 826     |  
|Tax impact of stock-based compensation  |  |                   |   |  |             |     |                          |   | 1,156  |                  |  |   |               |   |  |                          |         |   |  |   | 1,156   |  
|Other, net                              |  |                   |   |  |             |     |                          |   | 66     |                  |  |   |               |   |  |                          |         |   |  |   | 66      |  
|                                        |  |                   |   |  |             |     |                          |   |        |                  |  |   |               |   |  |                          |         |   |  |   |         |  
|Balance, December 31, 2006              |  | 19,501,300        |   |  |             | 207 |                          |   | 70,227 |                  |  |   | 49,284        |   |  |                          | (14,930 | ) |  |   | 104,788 |  
|Net income                              |  |                   |   |  |             |     |                          |   |        |                  |  |   | 10,934        |   |  |                          |         |   |  |   | 10,934  |  
|Common stock repurchases                |  | (831,698          | ) |  |             |     |                          |   |        |                  |  |   |               |   |  |                          | (11,978 | ) |  |   | (11,978 | )
|Dividends to stockholders               |  |                   |   |  |             |     |                          |   |        |                  |  |   | (3,916        | ) |  |                          |         |   |  |   | (3,916  | )
|Issuance of restricted stock awards     |  | 26,305            |   |  |             |     |                          |   | (328   | )                |  |   |               |   |  |                          | 328     |   |  |   |        |  
|Stock-based compensation expense        |  |                   |   |  |             |     |                          |   | 1,673  |                  |  |   |               |   |  |                          |         |   |  |   | 1,673   |  
|Stock option exercises                  |  | 263,786           |   |  |             |     |                          |   | (2,604 | )                |  |   |               |   |  |                          | 3,347   |   |  |   | 743     |  
|Tax impact of stock-based compensation  |  |                   |   |  |             |     |                          |   | 1,111  |                  |  |   |               |   |  |                          |         |   |  |   | 1,111   |  
|                                        |  |                   |   |  |             |     |                          |   |        |                  |  |   |               |   |  |                          |         |   |  |   |         |  
|Balance, September 30, 2007 (Unaudited) |  | 18,959,693        |   |  | $           | 207 |                          | $ | 70,079 |                  |  | $ | 56,302        |   |  | $                        | (23,233 | ) |  | $ | 103,355 |  
|                                        |  |                   |   |  |             |     |                          |   |        |                  |  |   |               |   |  |                          |         |   |  |   |         |  

The accompanying notes are an integral part of these consolidated financial statements.



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QC HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1  The Company and Basis of Presentation

Business.The accompanying unaudited interim consolidated financial statements include the accounts of QC Holdings, Inc. and its wholly-owned
subsidiaries, QC Financial Services, Inc., QC Auto Services, Inc., QC Loan Services, Inc. and QC E-Services, Inc. (collectively, the Company). QC Financial Services, Inc. is the 100% owner of QC Financial Services of California, Inc., Financial
Services of North Carolina, Inc., QC Financial Services of Texas, Inc., Express Check Advance of South Carolina, LLC, QC Advance, Inc., Cash Title Loans, Inc. and QC Properties, LLC.

QC Holdings, Inc. has provided various retail consumer financial products and services throughout its 23-year history. Since 1998, the Company has been
primarily engaged in the business of providing short-term consumer loans, known as payday loans, with principal values that typically range from $100 to $500. Payday loans provide customers with cash in exchange for a promissory note with a maturity
of generally two to three weeks and supported by that customers personal check for the aggregate amount of the cash advanced plus a fee. The fee varies from state to state, based on applicable regulations, and generally ranges from $15 to $20
per $100 borrowed. To repay the cash advance, customers may redeem their check by paying cash or they may allow the check to be presented to the bank for collection.

The Company also provides other consumer financial products and services, such as installment loans, credit services, check cashing services, title loans, money transfers and money orders. All of the Companys
loans and other services are subject to state regulation, which vary from state to state, as well as to federal and local regulation, where applicable. As of September 30, 2007, the Company operated 592 branches with locations in Alabama,
Arizona, California, Colorado, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, South Carolina, Texas, Utah, Virginia, Washington and Wisconsin.

On July 1, 2007, a new law went into effect in Oregon that caps the interest rate that may be charged on a payday loan to 36% per annum. As a
result of the new regulation, the Company closed its eight branches in Oregon during third quarter 2007. During first quarter 2007, the Company closed 31 of its lower performing branches in various states (the majority of which were consolidated
into nearby branches) and terminated the de novo process on eight branches that never opened. In accordance with accounting principles generally accepted in the United States (GAAP), the Company recorded approximately $3.5 million in pre-tax charges
during the nine months ended September 30, 2007, as a result of these closings. The charges included $1.8 million in losses for disposal of assets, $1.6 million in occupancy costs for lease terminations and other related occupancy costs and
$82,000 in other costs. See additional information in Note 4.

Basis of Presentation. The consolidated financial statements of QC
Holdings, Inc. included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to enable a reasonable understanding of the information
presented. The Consolidated Balance Sheet as of December 31, 2006 was derived from the audited financial statements of the Company, but does not include all disclosures required by GAAP. These consolidated financial statements should be read in
conjunction with the Companys audited financial statements and the notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2006.



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In the opinion of the Companys management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of normal closing procedures) necessary to present fairly the financial position of the Company and its subsidiary companies as of December 31, 2006 and September 30, 2007, and the results of
operations and cash flows for the three months and nine months ended September 30, 2006 and 2007, in conformity with GAAP.

Certain
amounts in the prior years consolidated financial statements have been reclassified to conform to the current year presentation. The results of operations for the three and nine months ended September 30, 2007 are not necessarily
indicative of the results to be expected for the full year 2007.

Note 2  Accounting Developments

In June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes(FIN
48). FIN 48 is an interpretation of FASB Statement No. 109, Accounting for Income Taxes and it seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. FIN
48 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and also provides guidance on de-recognition, classification,
interest and penalties, accounting in interim periods, disclosure, and transition. The Company adopted FIN 48 on January 1, 2007. See additional information in Note 9.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities (SFAS 159). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate
volatility in reported earnings caused by measuring related assets and liabilities using different measurement techniques. SFAS 159 requires additional disclosures related to fair value measurements included in the entitys financial
statements. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company is currently assessing the impact of SFAS 159 on its consolidated financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurement (SFAS 157). SFAS 157
establishes a common definition for fair value to be applied to generally accepted accounting principles guidance requiring use of fair value, establishes a framework for measuring fair value, and expands disclosure about such fair value
measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently assessing the impact of SFAS 157 on its consolidated financial statements.

Note 3  Earnings Per Share

Basic and diluted
earnings per share are computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the year. The computation of diluted earnings per share gives effect to all dilutive potential
common shares that were outstanding during the year. The effect of stock options and unvested restricted stock represent the only differences between the weighted average shares used for the basic earnings per share computation compared to the
diluted earnings per share computation for each period presented.



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The following table presents the computations of basic and diluted earnings per share for each of the
periods indicated (in thousands, except per share data).



|                                                               |  |                                 |        |                                |   |        |  |      |        |  |   |       
|-------------------------------------------------------------- |  | ------------------------------- | ------ | ------------------------------ | - | ------ |  | ---- | ------ |  | - | ------
|                                                               |  | Three Months EndedSeptember 30, |        | Nine Months EndedSeptember 30,
|                                                               |  | 2006                            |        | 2007                           |   | 2006   |  | 2007
|Net income                                                     |  | $                               | 2,531  |                                | $ | 4,283  |  | $    | 5,320  |  | $ | 10,934
|                                                               |  |                                 |        |                                |   |        |  |      |        |  |   |       
|Weighted average shares outstanding:                           |  |                                 |        |                                |   |        |  |      |        |  |   |       
|                                                               |  |                                 |        |                               
|Weighted average basic common shares outstanding               |  |                                 | 19,752 |                                |   | 19,109 |  |      | 20,166 |  |   | 19,368
|Dilutive effect of stock options and unvested restricted stock |  |                                 | 722    |                                |   | 544    |  |      | 718    |  |   | 520   
|                                                               |  |                                 |        |                                |   |        |  |      |        |  |   |       
|Weighted average diluted common shares outstanding             |  |                                 | 20,474 |                                |   | 19,653 |  |      | 20,884 |  |   | 19,888
|                                                               |  |                                 |        |                                |   |        |  |      |        |  |   |       
|Basic earnings per share:                                      |  | $                               | 0.13   |                                | $ | 0.22   |  | $    | 0.26   |  | $ | 0.56  
|                                                               |  |                                 |        |                                |   |        |  |      |        |  |   |       
|Diluted earnings per share:                                    |  | $                               | 0.12   |                                | $ | 0.22   |  | $    | 0.25   |  | $ | 0.55  
|                                                               |  |                                 |        |                                |   |        |  |      |        |  |   |       

Note 4  Significant Business Transactions

Closure of branches.During third quarter 2007, the Company closed all its branches in Oregon due to a new law that went into effect on
July 1, 2007 that effectively precludes payday loans. In accordance with GAAP, the Company recorded approximately $517,000 in pre-tax charges during second quarter 2007 associated with these closings. The charges included a $373,000 loss for
the disposition of fixed assets, $102,000 for lease terminations and other related occupancy costs, $31,000 in severance and benefit costs and $11,000 for other costs. In the Consolidated Statements of Income, the loss associated with the
disposition of fixed assets is reported as an other expense, the costs associated with the lease terminations are included in occupancy costs and the other costs of $11,000 are included in other branch expenses.

During first half 2007, the Company closed 31 of its lower performing branches in various states (the majority of which were consolidated into nearby
branches) and terminated the de novo process on eight branches that never opened. In accordance with GAAP, the Company recorded approximately $3.0 million in pre-tax charges during first quarter 2007 as a result of these closings. The charges
recorded included $1.5 million loss for the disposition of fixed assets, $1.5 million for lease terminations and other related occupancy costs and $40,000 for other costs. In the Consolidated Statements of Income, the loss associated with the
disposition of fixed assets is reported as an other expense, the costs associated with the lease terminations are occupancy costs and the other costs of $40,000 are included in other branch expenses.

The following table summarizes the accrued costs associated with the closure of branches and the activity related to those charges as of
September 30, 2007 (in thousands).



|                                  |  |                            |   |           |   |            |  |   |                             |   |  |   |    
|--------------------------------- |  | -------------------------- | - | --------- | - | ---------- |  | - | --------------------------- | - |  | - | ---
|                                  |  | Balance atDecember 31,2006 |   | Additions |   | Reductions |  |   | Balance atSeptember 30,2007
|Lease and related occupancy costs |  | $                          |  |           | $ | 1,558      |  | $ | (1,102                      | ) |  | $ | 456
|Severance                         |  |                            |   |           |   | 31         |  |   | (23                         | ) |  |   | 8  
|Other                             |  |                            |   |           |   | 51         |  |   | (51                         | ) |  |   |    
|                                  |  |                            |   |           |   |            |  |   |                             |   |  |   |    
|Total                             |  | $                          |  |           | $ | 1,640      |  | $ | (1,176                      | ) |  | $ | 464
|                                  |  |                            |   |           |   |            |  |   |                             |   |  |   |    

As of September 30, 2007, the balance of $464,000 for accrued costs associated with the
closure of branches is included as a current liability on the Consolidated Balance Sheet as the Company expects that the liabilities for these costs will be settled within one year.



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Acquisitions.During the first nine months of 2007, the Company acquired 13 branches and certain
assets, in four separate acquisitions, for a total of $3.3 million, which included net book value of depreciable assets of approximately $204,000 and loans receivable of approximately $1.4 million. In connection with an acquisition of eight branches
in Missouri, the Company closed six of the branches acquired and transferred the receivable balances to existing locations. The Company used the purchase method of accounting. The excess of the total acquisition cost over the fair value of the net
assets acquired totaled $1.9 million. Of this amount, the Company allocated $1.3 million to goodwill, $388,000 to customer relationships and $206,000 to non-compete agreements. The purchase price allocations with respect to these acquisitions have
been completed. See additional information in Note 8. The pro forma results of operations have not been presented because the results of operations for the Company would not have been materially different from those reported for the first nine
months ended September 30, 2007.

On September 24, 2007, QC Auto Services purchased certain assets from Hart Family Motors, Inc.,
an automotive retailer and related finance company focused exclusively on the buy-here/pay-here segment of the used vehicle market. The purchase price was $375,000, which included net book value of depreciable assets of $50,000. The
Company used the purchase method of accounting. The excess of the total acquisition cost over the fair value of the net assets acquired totaled $325,000, which was allocated to goodwill. The purchase price allocation with respect to this acquisition
has been completed. The pro forma results of operations have not been presented because the results of operations for the Company would not have been materially different from those reported for the first nine months ended September 30, 2007.

On December 1, 2006, the Company acquired all of the issued and outstanding membership interests in Express Check Advance of South
Carolina, LLC (ECA). The results of ECAs operations have been included in the consolidated financial statements since that date. ECA currently operates 50 payday loan branches in South Carolina. As a result of the acquisition, the Company has
established a significant presence in South Carolina. The aggregate purchase price was $16.3 million, net of cash acquired. The acquisition was funded with a draw on the Companys revolving credit facility, which was repaid during first quarter
2007.

Note 5  Allowance for Doubtful Accounts and Provision for Losses

When the Company enters into a payday loan with a customer, the Company records a loan receivable for the amount loaned to the customer plus the fee
charged by the Company, which varies from state to state based on applicable regulations.

The following table summarizes certain data with
respect to the Companys payday loans:



|                                              |  |                                 |        |                                |   |        |  |      |        |  |   |       
|--------------------------------------------- |  | ------------------------------- | ------ | ------------------------------ | - | ------ |  | ---- | ------ |  | - | ------
|                                              |  | Three Months EndedSeptember 30, |        | Nine Months EndedSeptember 30,
|                                              |  | 2006                            |        | 2007                           |   | 2006   |  | 2007
|Average loan to customer (principal plus fee) |  | $                               | 366.12 |                                | $ | 369.68 |  | $    | 362.37 |  | $ | 364.82
|Average fee received by the Company           |  | $                               | 53.32  |                                | $ | 53.96  |  | $    | 53.14  |  | $ | 52.79 
|Average term of the loan (days)               |  |                                 | 15     |                                |   | 16     |  |      | 15     |  |   | 16    

When checks are presented to the bank for payment and returned as uncollected, all accrued fees,
interest and outstanding principal are charged-off as uncollectible, generally within 16 days after their due date. Accordingly, payday loans included in the receivable balance at any given point in time are typically not older than 30 days. These
charge-offs are recorded as expense through the provision for losses. Any recoveries on losses previously charged to expense are recorded as a reduction to the provision for losses in the period recovered. During the nine months ended
September 30, 2007, the Company received approximately $2.0 million from the sale of certain payday loan receivables that the Company had previously charged-off. The sales were recorded as credits to the overall loss provision, which is
consistent with the Companys policy for recording recoveries.

With respect to the loans receivable at the end of each reporting
period, the Company maintains an aggregate allowance for loan losses (including fees and interest) for payday loans, title loans and installment loans



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at levels estimated to be adequate to absorb estimated incurred losses in the respective outstanding loan portfolios. The Company does not specifically
reserve for any individual loan. The Company aggregates payday loans, title loans and installment loans for purposes of computing the loss allowance based on very similar historical averages of uncollectible amounts as a percentage of volume for
each type of loan (generally ranging from 2% to 4% of the total volume). For purposes of the allowance calculation, installment loans are included with payday loans and title loans based on the expectation that the loss experience for installment
loans will be similar to payday loans and title loans. The allowance represents the Companys best estimate of probable losses inherent in the outstanding loan portfolios at each period-end.

The methodology for estimating the allowance for loan losses utilizes a four-step approach, which reflects the short-term nature of the loan portfolio at
each period-end, the historical collection experience in the month following each reporting period-end and any fluctuations in recent general economic conditions. First, the Company computes the loss/volume ratio for the last month of each reporting
period. The loss/volume ratio represents the percentage of aggregate net payday, installment and title loan losses to total payday, installment and title loan volumes during a given period. Second, the Company computes an adjustment to this
percentage to reflect the collections experience in the month immediately following the reporting period-end. To estimate collections experience, the Company computes an average of the change in the loss/volume ratio from the last month of each
reporting period to the immediate subsequent month-end for each of the last three years (excluding the current year). This change is then added to, or subtracted from, the loss/volume ratio computed for the last month of the current reporting period
to derive an experience-adjusted loss/volume ratio. Third, the period-end gross payday, installment and title loans receivable balance is multiplied by the experience-adjusted loss/volume ratio to determine the initial estimate of the allowance for
loan losses. Fourth, the Company reviews and evaluates various qualitative factors that may or may not affect the computed initial estimate of the allowance for loan losses, including, among others, known changes in state regulations or laws,
changes to the Companys business and operating structure, and geographic or demographic developments. As of September 30, 2007, the Company determined that no qualitative adjustment to the allowance for loan losses was necessary.

Using this information, the Company records an adjustment to the allowance for loan losses through the provision for losses.

The following tables summarize the activity in the allowance for loan losses and the provision for losses during the three and nine months ended
September 30, 2006 and 2007 (in thousands):



|                                                                                                                              |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|----------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                                                              |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                                                                                              |  | 2006                            |         |   | 2007                           |   |         | 2006 |  |   | 2007    |  
|Allowance for loan losses                                                                                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|                                                                                                                              |  |                                 |         |  
|Balance, beginning of period                                                                                                  |  | $                               | 1,780   |   |                                | $ | 3,721   |      |  | $ | 1,705   |   |  | $ | 2,982   |  
|Adjustment to provision for losses based on evaluation of outstanding receivables                                             |  |                                 | (153    | ) |                                |   | (130    | )    |  |   | (78     | ) |  |   | 609     |  
|                                                                                                                              |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Balance, end of period                                                                                                        |  | $                               | 1,627   |   |                                | $ | 3,591   |      |  | $ | 1,627   |   |  | $ | 3,591   |  
|                                                                                                                              |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Provision for losses                                                                                                          |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|                                                                                                                              |  |                                 |         |  
|Charged-off to expense                                                                                                        |  | $                               | 21,561  |   |                                | $ | 29,601  |      |  | $ | 55,676  |   |  | $ | 74,005  |  
|Recoveries                                                                                                                    |  |                                 | (10,195 | ) |                                |   | (11,961 | )    |  |   | (29,713 | ) |  |   | (36,444 | )
|Adjustment to provision for losses based on evaluation of outstanding receivables and credit service obligation at period end |  |                                 | (173    | ) |                                |   | (120    | )    |  |   | (147    | ) |  |   | 639     |  
|                                                                                                                              |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Balance, end of period                                                                                                        |  | $                               | 11,193  |   |                                | $ | 17,520  |      |  | $ | 25,816  |   |  | $ | 38,200  |  
|                                                                                                                              |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  



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Note 6  Other Revenues

The components of Other revenues as reported in the statements of income are as follows (in thousands):



|                      |  |                                 |       |                                |   |       |  |      |        |  |   |       
|--------------------- |  | ------------------------------- | ----- | ------------------------------ | - | ----- |  | ---- | ------ |  | - | ------
|                      |  | Three Months EndedSeptember 30, |       | Nine Months EndedSeptember 30,
|                      |  | 2006                            |       | 2007                           |   | 2006  |  | 2007
|Check cashing fees    |  | $                               | 1,407 |                                | $ | 1,333 |  | $    | 5,220  |  | $ | 4,966 
|Title loan fees       |  |                                 | 1,306 |                                |   | 1,026 |  |      | 3,556  |  |   | 3,227 
|Credit service fees   |  |                                 | 913   |                                |   | 2,132 |  |      | 2,397  |  |   | 5,253 
|Installment loan fees |  |                                 | 1,029 |                                |   | 2,509 |  |      | 1,160  |  |   | 6,102 
|Other fees            |  |                                 | 559   |                                |   | 658   |  |      | 1,680  |  |   | 1,985 
|                      |  |                                 |       |                                |   |       |  |      |        |  |   |       
|Total                 |  | $                               | 5,214 |                                | $ | 7,658 |  | $    | 14,013 |  | $ | 21,533
|                      |  |                                 |       |                                |   |       |  |      |        |  |   |       

Note 7  Property and Equipment

Property and equipment consisted of the following (in thousands):



|                                                |  |                  |         |   |                   |   |         |  
|----------------------------------------------- |  | ---------------- | ------- | - | ----------------- | - | ------- | -
|                                                |  | December 31,2006 |         |   | September 30,2007 |  
|Buildings                                       |  | $                | 2,540   |   |                   | $ | 2,540   |  
|Leasehold improvements                          |  |                  | 21,767  |   |                   |   | 20,681  |  
|Furniture and equipment                         |  |                  | 22,124  |   |                   |   | 22,619  |  
|Vehicles                                        |  |                  | 772     |   |                   |   | 863     |  
|                                                |  |                  |         |   |                   |   |         |  
|                                                |  |                  | 47,203  |   |                   |   | 46,703  |  
|Less: Accumulated depreciation and amortization |  |                  | (15,892 | ) |                   |   | (19,498 | )
|                                                |  |                  |         |   |                   |   |         |  
|Total                                           |  | $                | 31,311  |   |                   | $ | 27,205  |  
|                                                |  |                  |         |   |                   |   |         |  

In February 2005, the Company entered into a seven-year lease to relocate its corporate
headquarters to office space in Overland Park, Kansas. As part of the lease agreement, the Company received a tenant allowance from the landlord for leasehold improvements totaling $976,000. The tenant allowance was recorded by the Company as a
deferred rent liability and is being amortized as a reduction of rent expense over the life of the lease. As of December 31, 2006, the balance of the deferred rent liability was approximately $737,000, of which $598,000 is classified as a
non-current liability. As of September 30, 2007, the balance of the deferred rent liability was approximately $632,000 of which $493,000 is classified as a non-current liability.

Note 8  Goodwill and Intangible Assets

Goodwill.The following table summarizes the
changes in the carrying amount of goodwill (in thousands):



|                               |  |                  |        |                   |   |       
|------------------------------ |  | ---------------- | ------ | ----------------- | - | ------
|                               |  | December 31,2006 |        | September 30,2007
|Balance at beginning of period |  | $                | 7,265  |                   | $ | 14,492
|Acquisitions                   |  |                  | 7,227  |                   |   | 1,589 
|                               |  |                  |        |                   |   |       
|Balance at end of period       |  | $                | 14,492 |                   | $ | 16,081
|                               |  |                  |        |                   |   |       

Intangible Assets.Intangible assets at December 31, 2006 and September 30,
2007 include customer relationships, non-compete agreements, trade names and debt financing costs. Customer relationships are amortized using the straight-line method over the weighted average useful lives ranging from 4 to 15 years. Non-compete
agreements are currently amortized using the straight-line method over the term of the agreements, ranging from three to five years. The amount recorded for trade names is considered an indefinite life intangible and is not subject to amortization.
Costs paid to obtain debt financing are amortized over the term of each related debt agreement using the straight-line method, which approximates the effective interest method.



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The following table summarizes intangible assets (in thousands):



|                               |  |                  |       |   |                   |   |       |  
|------------------------------ |  | ---------------- | ----- | - | ----------------- | - | ----- | -
|                               |  | December 31,2006 |       |   | September 30,2007 |  
|Intangible assets:             |  |                  |       |   |                   |   |       |  
|Customer relationships         |  | $                | 1,915 |   |                   | $ | 2,303 |  
|Non-compete agreements         |  |                  | 705   |   |                   |   | 911   |  
|Trade names                    |  |                  | 600   |   |                   |   | 600   |  
|Debt issue costs               |  |                  | 416   |   |                   |   | 416   |  
|Other                          |  |                  | 15    |   |                   |   | 15    |  
|                               |  |                  |       |   |                   |   |       |  
|Gross carrying amount          |  |                  | 3,651 |   |                   |   | 4,245 |  
|Less: Accumulated amortization |  |                  | (208  | ) |                   |   | (838  | )
|                               |  |                  |       |   |                   |   |       |  
|Net intangible assets          |  | $                | 3,443 |   |                   | $ | 3,407 |  
|                               |  |                  |       |   |                   |   |       |  

Note 9  Income taxes

On January 1, 2007, the Company adopted FIN 48. Prior to the adoption of FIN 48, the Company had accrued sufficient liabilities for unrecognized tax benefits under the provisions of Statement of Financial
Accounting Standard No. 5, Accounting for Contingencies and therefore no adjustments to retained earnings were necessary as a result of the implementation of FIN 48. As of December 31, 2006 and September 30, 2007,
the accrued liability for unrecognized tax benefits was approximately $150,000 and $94,000, respectively. As of September 30, 2007, the amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is
approximately $94,000.

The Company records accruals for interest and penalties related to unrecognized tax benefits in interest expense
and operating expense, respectively. As of September 30, 2007, the amount of accrued interest and penalties was approximately $21,000 and $12,000, respectively.

In the ordinary course of business, many transactions occur for which the ultimate tax outcome is uncertain. In addition, respective tax authorities periodically audit our income tax returns. These audits examine our
significant tax filing positions, including the timing and amounts of deductions and the allocation of income among tax jurisdictions. During 2006, the Company settled two open tax years, 2003 and 2004, which were undergoing audit by the United
States Internal Revenue Service. The 2005 and 2006 federal income tax returns are the only open tax years that remain subject to potential future audit. State income tax returns for all years after 1999 are subject to potential future audit by tax
authorities in the Companys state tax jurisdictions.

During third quarter 2007, the Company settled its only outstanding tax audit
with one state jurisdiction. The review board of the state jurisdiction agreed with the Companys petition and withdrew the tax amounts that were assessed under the audit. As a result of the settlement, the Companys FIN 48 liability was
decreased by $56,000 and interest payable was decreased by $27,000.

Note 10  Credit Services Organization

Payday loans are originated by the Company at all of its branches, except branches in Texas. For its locations in Texas, the Company began operating as a
credit service organization (CSO), through one of its subsidiaries, in September 2005. As a CSO, the Company acts as a credit services organization on behalf of consumers in accordance with Texas laws. The Company charges the consumer a fee for
arranging for an unrelated third-party to make a loan to the consumer and for providing related services to the consumer, including a guarantee of the consumers obligation to the third-party lender. The Company also services the loan for the
lender. The CSO fee is recognized ratably over the term of the loan. The Company is not involved in the loan approval process or in determining the loan approval procedures or criteria. As a result, loans made by the lender are not included in the
Companys loans receivable balance and are not reflected in the Consolidated Balance Sheets. As noted above, however, the Company absorbs all risk of loss through its guarantee of the consumers loan from the lender. As of
December 31, 2006 and September 30, 2007, the consumers had total



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loans outstanding with the lender of approximately $2.2 million and $2.8 million, respectively. Because of the economic exposure for potential losses related
to the guarantee of these loans, the Company records a payable to reflect the anticipated losses related to uncollected loans. The payable is recognized at its fair value pursuant to FASB Interpretation No. 45, Guarantors Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.Changes in the liability are recognized through the provision for loan losses on the Consolidated Statements of Income. The balance of the
liability for estimated losses reported in accrued liabilities was approximately $100,000 as of December 31, 2006 and $130,000 at September 30, 2007.

Note 11  Credit Facility

On January 19, 2006, the Company entered into a credit agreement with a syndicate of
banks, which provides for a revolving line of credit (including provisions permitting the issuance of letters of credit) in the aggregate principal amount of up to $45.0 million (the credit facility). The credit facility is guaranteed by each
subsidiary and is secured by all the capital stock of each subsidiary of the Company and all personal property (including, without limitation, all present and future accounts receivable, instruments, deposit accounts, investment property and the
proceeds thereof, and general intangibles including intellectual property). Borrowings under the facility are available based on two types of loans, Base Rate loans or LIBOR Rate loans. Base Rate loans bear interest at the higher of the Prime Rate
or the Federal Funds Rate. LIBOR Rate loans bear interest at rates based on the LIBOR rate for the applicable loan period. The loan period for a LIBOR Rate loan may be one month, two months, three months or six months and the loan may be renewed
upon notice to the agent provided that no default has occurred. The credit facility has a grid that adjusts borrowing costs up or down based upon the Companys leverage ratio. Leverage ratio is defined as the ratio of total debt to EBITDA
(earnings before interest, provision for income taxes, depreciation and amortization and non-cash expenses related to equity-based compensation). An annual facility fee of 0.25% is required on the credit facility. Among other provisions, the Company
has agreed in the credit facility to maintain a fixed charge coverage ratio as of the end of each fiscal quarter of not less than 1.25 to 1, a leverage ratio (defined as the ratio of funded debt to EBITDA, as defined in credit agreement) not greater
than 2.00 to 1, and a minimum consolidated net worth of not less than $81.6 million, plus 75% of the Companys consolidated net income since January 2006. The credit facility expires on January 19, 2009.

On October 17, 2007, the Company executed a second amendment, dated as of September 28, 2007, which amended the financial covenants that affect
the Companys ability to repurchase shares of its common stock and pay dividends on its stock. The amendment also waived any default under the credit agreement (prior to the amendment) as a result of the Companys repurchase of
approximately $4.6 million of its common stock in August 2007. As of September 30, 2007, the Company was in compliance with all debt covenants.

On December 1, 2006, the Company borrowed $16.3 million under the credit facility with a LIBOR Rate loan to fund the acquisition of ECA. The LIBOR Rate loan had a loan term of three months. The weighted average
interest rate on borrowings under the LIBOR Rate loan was 6.87% during first quarter 2007. As of December 31, 2006, the Company had $16.3 million outstanding under the credit facility, which was classified as a current liability on the
Consolidated Balance Sheet due to the short-term nature of the loan term. During first quarter 2007, the Company repaid the $16.3 million that was outstanding as of December 31, 2006.

During the nine months ended September 30, 2007, the Company borrowed $15.5 million under the credit facility to fund its operations. The weighted
average interest rate on borrowings under the LIBOR Rate loan was 6.97% during nine months ended September 30, 2007. As of September 30, 2007, the Company had $15.5 million outstanding under the credit facility, which was classified as a
current liability on the Consolidated Balance Sheet due to the short-term nature of the borrowings.

Note 12  Stockholders Equity

Stock Repurchases. On July 31, 2007, the Companys board of directors increased the authorization limit of the Companys common
stock repurchase program to $40 million. In June 2007, the Companys board of directors extended the program through June 30, 2008. As of September 30, 2007, the Company has repurchased 2.5 million shares at a total cost of
approximately $32.2 million.



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Dividends. On July 31, 2007, the Companys board of directors declared a cash dividend
of $0.10 per common share. The dividend amount of approximately $2.0 million was paid on August 31, 2007 to stockholders of record as of August 15, 2007. Earlier in 2007, the Company paid approximately $3.9 million in dividends.

Note 13  Stock-Based Compensation

Restricted stock grants. During January 2007, the Company granted 84,474 shares of restricted stock to various employees and non-employee directors pursuant to restricted stock agreements. The grants consisted of 71,974 shares
granted to employees that vest equally over four years and 12,500 shares granted to non-employee directors that vested immediately upon grant. The Company estimated that the fair market value of these restricted stock grants was approximately $1.2
million. For the three and nine months ended September 30, 2007, the Company recognized $63,000 and $372,000, respectively, in stock-based compensation expense related to these restricted stock grants. As of September 30, 2007, there was
$841,000 of total unrecognized compensation costs related to the restricted stock grants. The Company expects that these costs will be amortized over a weighted average period of 3.25 years.

A summary of all restricted stock activity under the equity compensation plans for the nine months ended September 30, 2007 is as follows:



|                                       |  |                 |   |  |                                      |      
|-------------------------------------- |  | --------------- | - |  | ------------------------------------ | -----
|                                       |  | RestrictedStock |   |  | WeightedAverage GrantDate Fair Value
|Non-vested balance, January 1, 2007    |  | 98,765          |   |  | $                                    | 13.24
|Granted                                |  | 84,474          |   |  |                                      | 15.69
|Vested                                 |  | (26,305         | ) |  |                                      | 11.90
|Forfeited                              |  | (4,442          | ) |  |                                      | 13.96
|                                       |  |                 |   |  |                                      |      
|Non-vested balance, September 30, 2007 |  | 152,492         |   |  | $                                    | 14.48
|                                       |  |                 |   |  |                                      |      

Note 14  Commitments and Contingencies

Litigation. The Company is subject to various legal proceedings arising from normal business operations. Although there can be no assurances,
based on the information currently available, management believes that it is probable that the ultimate outcome of each of the actions will not have a material adverse effect on the consolidated financial statements. However, an adverse outcome in
any of the actions could have a material adverse effect on the financial results of the Company in the period in which it is recorded.

Missouri.On October 13, 2006, one of the Companys Missouri customers sued the Company in the Circuit Court of St. Louis County, Missouri in a purported class action. The lawsuit alleges violations of the Missouri statute
pertaining to unsecured loans under $500 and the Missouri Merchandising Practices Act. The lawsuit seeks monetary damages and a declaratory judgment that the arbitration agreement with the plaintiff is not enforceable on a variety of theories. The
Company has not filed an answer, but has moved to compel arbitration of this matter. Plaintiff secured the right to have discovery regarding the Companys arbitration provision, however, prior to the courts ruling on the Companys
motion. The court heard oral arguments on the Companys motion in June 2007. The Company is awaiting the courts ruling on the Companys motion to compel arbitration.

North Carolina. On February 8, 2005, the Company, two of its subsidiaries, including its subsidiary doing business in North Carolina, and
Mr. Don Early, the Companys Chairman of the Board and Chief Executive Officer, were sued in Superior Court of New Hanover County, North Carolina in a putative class action lawsuit filed by James B. Torrence, Sr. and Ben Hubert Cline, who
were customers of a Delaware state-chartered bank for whom the Company provided certain services in connection with the banks origination of payday loans in North Carolina, prior to the closing of the Companys North Carolina branches in
fourth quarter 2005. The lawsuit alleges that the Company violated various North Carolina laws, including the North Carolina Consumer Finance Act, the North Carolina Check Cashers Act, the North Carolina Loan Brokers Act, the state unfair trade



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practices statute and the state usury statute, in connection with payday loans made by the bank to the two plaintiffs through the Companys retail
locations in North Carolina. The lawsuit alleges that the Company made the payday loans to the plaintiffs in violation of various state statutes, and that if the Company is not viewed as the actual lenders or makers of the payday loans,
its services to the bank that made the loans violated various North Carolina statutes. Plaintiffs are seeking certification as a class, unspecified monetary damages, and treble damages and attorneys fees under specified North Carolina statutes.
Plaintiffs have not sued the bank in this matter and have specifically stated in the complaint that plaintiffs do not challenge the right of out-of-state banks to enter into loans with North Carolina residents at such rates as the banks home
state may permit, all as authorized by North Carolina and federal law. This case is in the preliminary stages.

There are three similar
purported class action lawsuits filed in North Carolina against three other companies unrelated to the Company. In December 2005, the judge in those three cases (1) granted the defendants motions to stay the purported class action
lawsuits and to compel arbitration in accordance with the terms of the arbitration provisions contained in the consumer loan contracts, (2) ruled that the class action waivers in those consumer loan contracts are valid, and (3) denied
plaintiffs motions for class certifications. The plaintiffs in those three cases, who are represented by the same law firms as the plaintiffs in the case filed against the Company, have appealed that ruling. The judge handling the lawsuit
against the Company in North Carolina is the same judge who issued these three orders in December 2005. The Company has not had a ruling on the similar pending motions by the plaintiffs and the Company in its North Carolina case. There is a stay in
the North Carolina lawsuit, pending the outcome of the appeal in the other three North Carolina cases concerning the enforceability of the arbitration provision in the consumer contracts. Accordingly, there will be no ruling on the Companys
motion to enforce arbitration in North Carolina during the pendency of that appeal. In January 2007, the North Carolina Supreme Court heard the appeal in the three companion cases, although it is unknown when the court will issue its ruling.

Note 15  Certain Concentrations of Risk

The Company is subject to regulation by federal and state governments, that affects the products and services provided by the Company, particularly payday loans. As of September 30, 2007, the Company offered payday loans and related
products in 24 states throughout the United States. The level and type of regulation of payday loans varies greatly from state to state, ranging from states with no specific payday lending legislation to other states with very strict guidelines and
requirements.

Company branches located in the states of Missouri, California, Arizona, South Carolina, Kansas and Illinois represented
approximately 24%, 13%, 8%, 7%, 5% and 5%, respectively, of total revenues for the nine months ended September 30, 2007. To the extent that laws and regulations are passed that affect the Companys ability to offer payday loans or the
manner by which the Company offers its payday loans in any one of these states, the Companys financial position, results of operations and cash flows could be affected.

Note 16  Subsequent Events

Dividend. On October 30, 2007, the
Companys board of directors declared a cash dividend of $0.10 per common share. The dividend is payable on November 19, 2007 to stockholders of record as of November 12, 2007. The Company estimates that the total amount of the
dividend will be approximately $2 million.



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

FORWARD-LOOKING STATEMENTS

The discussion below includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 regarding, among other things, our plans, strategies and prospects, both business and financial. All statements other than statements of current or historical fact contained in this
discussion are forward-looking statements. The words believe, expect, anticipate, should, would, could, plan, will, may, intend,
estimate, potential, continue or similar expressions or the negative of these terms are intended to identify forward-looking statements.

These forward-looking statements are based on our 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 payday lending
practices, (2) litigation or regulatory action directed towards us or the payday loan industry, (3) volatility in our earnings, primarily as a result of fluctuations in loan loss experience and the rate of growth in unit branches,
(4) negative media reports and public perception of the payday loan industry and the impact on federal and state legislatures and federal and state regulators, (5) changes in our key management personnel, (6) integration risks and
costs associated with contemplated and completed acquisitions, and (7) the other risks detailed under Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2006 filed with the Securities
and Exchange Commission.In light of these risks, uncertainties and assumptions, the forward-looking statements in this report may not occur, and actual results could differ materially from those anticipated or implied in the forward-looking
statements. When investors consider these forward-looking statements, they should keep in mind the risk factors and other cautionary statements in this discussion.

Our forward-looking statements speak only as of the date they are made. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or
otherwise.

The discussion in this item is intended to clarify and focus on our results of operations, certain changes in financial
position, liquidity, capital structure and business developments for the periods covered by the consolidated financial statements included under Item 1 of this Form 10-Q. This discussion should be read in conjunction with these consolidated
financial statements, the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2006, and the related notes thereto and is qualified by reference thereto.

EXECUTIVE SUMMARY

We operate primarily through our
wholly-owned subsidiaries, QC Financial Services, Inc, QC Auto Services, Inc., QC Loan Services, Inc. and QC E-Services, Inc. QC Financial Services, Inc. is the 100% owner of QC Financial Services of California, Inc., Financial Services of North
Carolina, Inc., QC Financial Services of Texas, Inc., Express Check Advance of South Carolina, LLC, QC Advance, Inc., Cash Title Loans, Inc. and QC Properties, LLC.

We derive our revenues primarily by providing short-term consumer loans, known as payday loans, which represents approximately 86% of our total revenues for the nine months ended September 30, 2007. We also earn
fees for various other financial services, such as installment loans, credit services, check cashing services, title loans, money transfers and money orders. We operated 592 branches in 24 states at September 30, 2007. In all but one of these
states, Texas, we fund our payday loans directly to the customer and receive a fee. Fees charged to customers vary from state to state, generally ranging from $15 to $20 per $100 borrowed, and in most cases, are limited by state law.



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In Texas, through one of our subsidiaries, we operate as a CSO on behalf of consumers in accordance with
Texas laws. We charge the consumer a CSO fee for arranging for an unrelated third-party to make a loan to the consumer and for providing related services to the consumer, including a guarantee of the consumers obligation to the third-party
lender. In Illinois and New Mexico, we offer an installment loan product, which is an amortizing loan generally over 4 to 12 months with principal amounts ranging between $300 and $1,000.

Our expenses primarily relate to the operations of our branch network. The most significant expenses include salaries and benefits for our branch
employees, provisions for losses and occupancy expense for our leased real estate. Regional and corporate expenses, including compensation of employees, professional fees and equity award expenses, are our other primary costs.

We evaluate our branches based on revenue growth, gross profit contributions and loss ratio (which is losses as a percentage of revenues), with
consideration given to the length of time the branch has been open and its geographic location. We evaluate changes in comparable branch metrics on a routine basis to assess operating efficiency. We define comparable branches as those branches that
are open during the full periods for which a comparison is being made. For example, comparable branches for the quarterly analysis as of September 30, 2007 have been open at least 15 months on that date. We monitor newer branches for their
progress to profitability and rate of loan growth.

With respect to our cost structure, salaries and benefits are one of our largest costs
and are driven primarily by the addition of branches throughout the year and growth in loan volumes. Our provision for losses is also a significant expense. If a customers check is returned by the bank as uncollected, we make an immediate
charge-off to the provision for losses for the amount of the customers loan, which includes accrued fees and interest. Any recoveries on amounts previously charged off are recorded as a reduction to the provision for losses in the period
recovered. We have experienced seasonality in our operations, with the first and fourth quarters typically being our strongest periods as a result of broader economic factors, such as holiday spending habits at the end of each year and income tax
refunds during the first quarter.

According to the Community Financial Services Association of America (CFSA), industry analysts estimate
that the industry has grown to approximately 24,000 payday loan branches in the United States and these branches extend approximately $40 billion in short-term credit to millions of middle-class households that experience cash-flow shortfalls
between paydays. We believe our industry is highly fragmented as 10 companies operate approximately 8,500 branches in the United States.

The growth of the payday loan industry has followed, and continues to be significantly affected by, increasing acceptance of payday lending by state legislatures. We actively monitor and evaluate regulatory initiatives in each of the states
and nationally, and are closely involved with the efforts of the CFSA. To the extent that states enact legislation that negatively impacts payday lending, whether through preclusion, fee reduction or loan caps, our business could be adversely
affected.

With this fragmentation and industry growth, we believe there are opportunities to expand through acquisitions and new branch
openings. We are actively identifying possible branch locations in numerous states in which we currently operate and evaluating the regulatory environment and market potential in the various states in which we currently do not have branches. As we
consider acquisitions and open new branches, there are various execution risks associated with any such transactions. The following table sets forth our growth through de novo branch openings and branch acquisitions since January 1, 2002.



|                                      |  |      |   |  |      |   |  |      |   |  |      |   |  |      |   |  |                   |  
|------------------------------------- |  | ---- | - |  | ---- | - |  | ---- | - |  | ---- | - |  | ---- | - |  | ----------------- | -
|                                      |  | 2002 |   |  | 2003 |   |  | 2004 |   |  | 2005 |   |  | 2006 |   |  | September 30,2007 |  
|Beginning branch locations            |  | 204  |   |  | 258  |   |  | 294  |   |  | 371  |   |  | 532  |   |  | 613               |  
|De novo branches opened during period |  | 55   |   |  | 45   |   |  | 54   |   |  | 174  |   |  | 46   |   |  | 16                |  
|Acquired branches during period       |  | 6    |   |  |      |   |  | 29   |   |  | 10   |   |  | 51   |   |  | 13                |  
|Branches closed during period         |  | (7   | ) |  | (9   | ) |  | (6   | ) |  | (23  | ) |  | (16  | ) |  | (50               | )
|                                      |  |      |   |  |      |   |  |      |   |  |      |   |  |      |   |  |                   |  
|Ending branch locations               |  | 258  |   |  | 294  |   |  | 371  |   |  | 532  |   |  | 613  |   |  | 592               |  
|                                      |  |      |   |  |      |   |  |      |   |  |      |   |  |      |   |  |                   |  



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Generally, branch closings have been associated with negative changes in the regulation environment and
acquired branches that overlapped existing locations or that were located in areas where we believed long-term potential was minimal. We review the financial metrics of each branch to determine if trends exist with respect to declining loan volumes
and revenues that might require the closing of the branch. In those instances, we evaluate the need to close the branch based on several factors, including the length of time the branch has been open, geographic location, competitive environment,
proximity to another one of our branches and long-term market potential.

In July 2007, a new law went into effect in Oregon that caps the
interest rate that may be charged on a payday loan to 36% per annum. As a result of the new regulation, we closed our eight branches in Oregon during the third quarter 2007. In addition, we closed 31 of our lower performing branches in various
states during first quarter 2007 (the majority of which were consolidated into nearby branches) and we terminated the de novo process on eight branches that never opened. As a result of these closings, we recorded approximately $3.5 million in
pre-tax charges for the nine months ended September 30, 2007.

Recent Accounting Developments

On January 1, 2007, we adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes(FIN 48). FIN 48
is an interpretation of FASB Statement No. 109, Accounting for Income Taxes and it seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. FIN 48 prescribes
a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and also provides guidance on de-recognition, classification, interest and
penalties, accounting in interim periods, disclosure, and transition.

In February 2007, the FASB issued Statement of Financial Accounting
Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS 159). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to
improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities using different measurement techniques. SFAS 159 requires additional disclosures
related to fair value measurements included in the entitys financial statements. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company is currently assessing the impact
of SFAS 159 on its consolidated financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157, Fair Value Measurement, (SFAS 157). SFAS 157 establishes a common definition for fair value to be applied to generally accepted accounting principles guidance requiring use of fair value, establishes a framework for measuring
fair value, and expands disclosure about such fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. We are currently assessing the impact of SFAS 157 on our consolidated financial statements.



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RESULTS OF OPERATIONS

Three Months Ended September 30, 2007 Compared with the Three Months Ended September 30, 2006

The
following table sets forth our results of operations for the three months ended September 30, 2007 compared to the three months ended September 30, 2006:



|                               |  |                                 |        |   |                                 |   |        |      |  |       |      |  |       |   
|------------------------------ |  | ------------------------------- | ------ | - | ------------------------------- | - | ------ | ---- |  | ----- | ---- |  | ----- | --
|                               |  | Three Months EndedSeptember 30, |        |   | Three Months EndedSeptember 30, |  
|                               |  | 2006                            |        |   | 2007                            |   |        | 2006 |  |       | 2007 | 
|                               |  | (in thousands)                  |        |   | (percentage of revenues)        |  
|Revenues                       |  |                                 |        |   |                                 |   |        |      |  |       |      |  |       |   
|Payday loan fees               |  | $                               | 40,132 |   |                                 | $ | 48,890 |      |  | 88.5  | %    |  | 86.5  | % 
|Other                          |  |                                 | 5,214  |   |                                 |   | 7,658  |      |  | 11.5  | %    |  | 13.5  | % 
|                               |  |                                 |        |   |                                 |   |        |      |  |       |      |  |       |   
|Total revenues                 |  |                                 | 45,346 |   |                                 |   | 56,548 |      |  | 100.0 | %    |  | 100.0 | % 
|                               |  |                                 |        |   |                                 |   |        |      |  |       |      |  |       |   
|Branch expenses                |  |                                 |        |   |                                 |   |        |      |  |       |      |  |       |   
|Salaries and benefits          |  |                                 | 10,969 |   |                                 |   | 11,285 |      |  | 24.2  | %    |  | 20.0  | % 
|Provision for losses           |  |                                 | 11,193 |   |                                 |   | 17,520 |      |  | 24.7  | %    |  | 31.0  | % 
|Occupancy                      |  |                                 | 6,177  |   |                                 |   | 6,238  |      |  | 13.6  | %    |  | 11.0  | % 
|Depreciation and amortization  |  |                                 | 1,209  |   |                                 |   | 1,188  |      |  | 2.7   | %    |  | 2.1   | % 
|Other                          |  |                                 | 4,042  |   |                                 |   | 3,807  |      |  | 8.9   | %    |  | 6.7   | % 
|                               |  |                                 |        |   |                                 |   |        |      |  |       |      |  |       |   
|Total branch expenses          |  |                                 | 33,590 |   |                                 |   | 40,038 |      |  | 74.1  | %    |  | 70.8  | % 
|                               |  |                                 |        |   |                                 |   |        |      |  |       |      |  |       |   
|Branch gross profit            |  |                                 | 11,756 |   |                                 |   | 16,510 |      |  | 25.9  | %    |  | 29.2  | % 
|                               |  |                                 |        |  
|Regional expenses              |  |                                 | 2,863  |   |                                 |   | 3,277  |      |  | 6.3   | %    |  | 5.8   | % 
|Corporate expenses             |  |                                 | 4,366  |   |                                 |   | 5,389  |      |  | 9.6   | %    |  | 9.5   | % 
|Depreciation and amortization  |  |                                 | 340    |   |                                 |   | 582    |      |  | 0.8   | %    |  | 1.0   | % 
|Interest expense (income), net |  |                                 | (38    | ) |                                 |   | 202    |      |  | (0.1  | )%   |  | 0.4   | % 
|Other expense, net             |  |                                 | 6      |   |                                 |   | (27    | )    |  | 0.0   | %    |  | (0.0  | )%
|                               |  |                                 |        |   |                                 |   |        |      |  |       |      |  |       |   
|Income before taxes            |  |                                 | 4,219  |   |                                 |   | 7,087  |      |  | 9.3   | %    |  | 12.5  | % 
|Provision for income taxes     |  |                                 | 1,688  |   |                                 |   | 2,804  |      |  | 3.7   | %    |  | 4.9   | % 
|                               |  |                                 |        |   |                                 |   |        |      |  |       |      |  |       |   
|Net income                     |  | $                               | 2,531  |   |                                 | $ | 4,283  |      |  | 5.6   | %    |  | 7.6   | % 
|                               |  |                                 |        |   |                                 |   |        |      |  |       |      |  |       |   

The following table sets forth selected financial and statistical information for the three months
ended September 30, 2006 and 2007:



|                                              |  |                                 |         |      |   |         |  
|--------------------------------------------- |  | ------------------------------- | ------- | ---- | - | ------- | -
|                                              |  | Three Months EndedSeptember 30, |        
|                                              |  | 2006                            |         | 2007 |  
|Other Information:                            |  |                                 |         |      |   |         |  
|Payday loan volume (in thousands)             |  | $                               | 278,407 |      | $ | 342,962 |  
|Average revenue per branch                    |  |                                 | 81,265  |      |   | 94,879  |  
|                                              |  |                                
|Average loan size (principal plus fee)        |  | $                               | 366.12  |      | $ | 369.68  |  
|Average fees per loan                         |  |                                 | 53.32   |      |   | 53.96   |  
|                                              |  |                                
|Branch Information:                           |  |                                 |         |      |   |         |  
|Number of branches, beginning of period       |  |                                 | 551     |      |   | 599     |  
|De novo branches opened                       |  |                                 | 13      |      |   | 2       |  
|Acquired branches                             |  |                                 |         |      |   |         |  
|Branches closed                               |  |                                 |         |      |   | (9      | )
|                                              |  |                                 |         |      |   |         |  
|Number of branches, end of period             |  |                                 | 564     |      |   | 592     |  
|                                              |  |                                 |         |      |   |         |  
|Average number of branches open during period |  |                                 | 558     |      |   | 596     |  
|                                              |  |                                 |         |      |   |         |  



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|                                                                   |  |                                 |        |      |   |        
|------------------------------------------------------------------ |  | ------------------------------- | ------ | ---- | - | -------
|                                                                   |  | Three Months EndedSeptember 30,
|                                                                   |  | 2006                            |        | 2007
|Comparable Branch Information (a):                                 |  |                                 |        |      |   |        
|Total revenues generated by all comparable branches (in thousands) |  | $                               | 43,560 |      | $ | 51,015 
|Total number of comparable branches                                |  |                                 | 500    |      |   | 500    
|Average revenue per comparable branch                              |  | $                               | 87,120 |      | $ | 102,030

---

|(a) | Comparable branches are those branches that were open for all of the two periods being compared, which means the 15 months since June 30, 2006.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------

Net income.For the three months ended September 30, 2007, net income was $4.3 million compared to $2.5 million for the same period in 2006.
A discussion of the various components of net income follows.

Revenues.For the three months ended September 30, 2007,
revenues were $56.5 million, a 24.7% increase from $45.3 million during the three months ended September 30, 2006. The growth in revenues was primarily a result of higher payday loan volume, which reflects increases in the number of branches,
the number of customer transactions and average loan size. We originated approximately $343.0 million through payday loans during third quarter 2007, which was an increase of 23.2% over the $278.4 million during third quarter 2006. The average loan
(including fee) totaled $369.68 in third quarter 2007 versus $366.12 during third quarter 2006. Average fees received from customers per loan increased from $53.32 in third quarter 2006 to $53.96 in third quarter 2007 due to a higher average loan
principal and a slight increase in the average fee rate. Our average fee rate per $100.00 for third quarter 2007 was $17.09 compared to $17.05 in third quarter 2006.

We anticipate that our average fee rate may decline in 2008 as rates are modified based on changing legislation or regulation and as we enter into or expand in states that have lower fee structures. In March 2007, New
Mexico adopted legislation (effective November 2007) that will reduce the maximum fee that may be charged to a customer from $20.00 per $100.00 borrowed to $15.50 per $100.00 borrowed. In addition, the new legislation restricts the total number of
loans a customer may have and prohibits immediate loan renewals. We expect that this legislation will reduce payday loan revenue by approximately $3 to $4 million during 2008. This decline, however, will be partially offset from revenues from our
installment loan product, which we launched in September 2007.

One manner by which we evaluate our branches is revenue growth, with
consideration given to the length of time the branch has been open. We define comparable branches as those branches that are open during the full periods for which a comparison is being made. For example, comparable branches for the quarterly
analysis as of September 30, 2007 have been open at least 15 months. The following table provides a summary of our revenues by comparable branches and new branches:



|                                                              |  |                                 |        |      |   |       
|------------------------------------------------------------- |  | ------------------------------- | ------ | ---- | - | ------
|                                                              |  | Three Months EndedSeptember 30,
|                                                              |  | 2006                            |        | 2007
|                                                              |  | (in thousands)                 
|Comparable branches                                           |  | $                               | 43,560 |      | $ | 51,015
|Branches opened in 2006 (not included as a comparable branch) |  |                                 | 49     |      |   | 4,190 
|Branches opened in 2007                                       |  |                                 |        |      |   | 1,270 
|Other (a)                                                     |  |                                 | 1,737  |      |   | 73    
|                                                              |  |                                 |        |      |   |       
|Total                                                         |  | $                               | 45,346 |      | $ | 56,548
|                                                              |  |                                 |        |      |   |       

---

|(a) | For the three months ended September 30, 2006, amount represents primarily closed branches
|--- | ------------------------------------------------------------------------------------------

Our revenues from comparable branches increased by $7.4 million, from $43.6 million during third quarter 2006 to $51.0 million in third quarter 2007.
This increase is primarily attributable to the acceleration of revenues from our branches opened during 2005 and to growth in the installment loan product in our Illinois branches. Revenues from our 2005 group of branches improved 53.3% to $11.5
million for the third quarter 2007 versus $7.5 million in third quarter 2006.



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Revenues in third quarter 2007 also include approximately $4.2 million from branches added during the
last six months of 2006, including the 50 South Carolina branches acquired in December 2006.

Revenues from check cashing, title loans, CSO
fees, installment loans and other sources totaled $7.7 million during third quarter 2007, up approximately $2.5 million from the $5.2 million in the comparable prior year quarter. The following table summarizes other revenues:



|                      |  |                                 |       |                                 |   |       |  |      |      |  |      |  
|--------------------- |  | ------------------------------- | ----- | ------------------------------- | - | ----- |  | ---- | ---- |  | ---- | -
|                      |  | Three Months EndedSeptember 30, |       | Three Months EndedSeptember 30, |  
|                      |  | 2006                            |       | 2007                            |   | 2006  |  |      | 2007 | 
|                      |  | (in thousands)                  |       | (percentage of revenues)        |  
|Check cashing fees    |  | $                               | 1,407 |                                 | $ | 1,333 |  | 3.1  | %    |  | 2.3  | %
|Title loan fees       |  |                                 | 1,306 |                                 |   | 1,026 |  | 2.9  | %    |  | 1.8  | %
|Credit service fees   |  |                                 | 913   |                                 |   | 2,132 |  | 2.0  | %    |  | 3.8  | %
|Installment loan fees |  |                                 | 1,029 |                                 |   | 2,509 |  | 2.3  | %    |  | 4.4  | %
|Other fees            |  |                                 | 559   |                                 |   | 658   |  | 1.2  | %    |  | 1.2  | %
|                      |  |                                 |       |                                 |   |       |  |      |      |  |      |  
|Total                 |  | $                               | 5,214 |                                 | $ | 7,658 |  | 11.5 | %    |  | 13.5 | %
|                      |  |                                 |       |                                 |   |       |  |      |      |  |      |  

The decline in check cashing fees as a percentage of revenues is due to a higher rate of growth in
payday and installment loan revenues. The revenue increases in credit services fees and installment loans reflects the addition of new product offerings as credit services were offered in our Texas branches beginning in September 2005 and
installment loans were offered in our Illinois branches beginning in second quarter 2006.

During 2008 and the remainder of 2007, we
believe the growth rate in comparable branch revenue will be particularly affected by: (i) the benefits resulting from the aging of our 2005 group of branches; (ii) the negative effects resulting from the federal guidelines that
effectively ban payday lending to members of the military, which could reduce our annual revenues by approximately $2 million to $3 million; and (iii) the new legislation adopted in New Mexico (effective November 2007) that will reduce the fee
rate from $20.00 per $100.00 to $15.50 per $100.00 borrowed and place restrictions on the number of loans a customer may have in New Mexico.

Branch Expenses.Total branch expenses increased $6.4 million or 19.0%, from $33.6 million during third quarter 2006 to $40.0 million in third quarter 2007. This increase reflects the operating expenses associated with the 50
branches acquired in December 2006, substantially offset by a reduction in expenses from branches that were closed/consolidated during 2007 and by controlled spending at existing branches.

Branch-level salaries and benefits increased by $316,000 for the three months ended September 30, 2007 compared to the same period in the prior year
primarily as a result of a 4.4% increase in field personnel associated with our new branches.

The provision for losses increased from
$11.2 million in third quarter 2006 to $17.5 million during third quarter 2007. Our loss ratio was 31.0% in third quarter 2007 versus 24.7% in third quarter 2006. The less favorable loss ratio quarter-to-quarter reflects our year-long focus on
increasing loan volumes, as well as a more challenging collection environment as creditors compete for customer debt repayments. Our charge-offs as a percentage of revenue were 52.3% during third quarter 2007 compared to 47.5% during third quarter
2006. Our collections as a percentage of charge-offs were 40.4% during third quarter 2007 compared to 47.3% during third quarter 2006. We received approximately $128,000 from the sale of certain payday loan receivables during third quarter 2007 that
had previously been written off.

Comparable branches totaled $15.4 million in loan losses during third quarter 2007, while branches opened
during the last half of 2006 and the first nine months of 2007 had approximately $2.5 million in loan losses. In our comparable branches, the loss ratio was 30.1% during third quarter 2007 compared to 25.1% during third quarter 2006.



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##### Table of Contents

Occupancy costs were $6.2 million in third quarter 2006 and $6.2 million in third quarter 2007. Occupancy
costs as a percentage of revenues declined from 13.6% in third quarter 2006 to 11.0% in third quarter 2007 due to the revenue increases quarter-to-quarter.

Branch Gross Profit.Branch gross profit increased from $11.8 million in third quarter 2006 to $16.5 million in third quarter 2007. Branch gross margin, which is branch gross profit as a percentage of revenues,
increased from 25.9% during third quarter 2006 to 29.2% during third quarter 2007. The following table summarizes our branch gross profit by comparable branches and new branches.



|                                                              |  |                                 |        |   |      |   |        |  
|------------------------------------------------------------- |  | ------------------------------- | ------ | - | ---- | - | ------ | -
|                                                              |  | Three Months EndedSeptember 30, |       
|                                                              |  | 2006                            |        |   | 2007 |  
|                                                              |  | (in thousands)                  |       
|Comparable branches                                           |  | $                               | 13,042 |   |      | $ | 15,753 |  
|Branches opened in 2006 (not included as a comparable branch) |  |                                 | (331   | ) |      |   | 538    |  
|Branches opened in 2007                                       |  |                                 |        |   |      |   | (224   | )
|Other (a)                                                     |  |                                 | (955   | ) |      |   | 443    |  
|                                                              |  |                                 |        |   |      |   |        |  
|Total                                                         |  | $                               | 11,756 |   |      | $ | 16,510 |  
|                                                              |  |                                 |        |   |      |   |        |  

---

|(a) | represents primarily closed branches and corporate collections
|--- | --------------------------------------------------------------

Comparable branches during third quarter 2007 reported a gross margin of 30.9% versus 29.9% in third quarter 2006, with the improvements resulting from stronger results in the majority of states. The 69 branches added during the last six
months of 2006 reported a gross profit of $538,000, the majority of which is from the 50 South Carolina branches acquired in December 2006.

Regional and Corporate Expenses.Regional and corporate expenses increased from $7.2 million in the third quarter 2006 to $8.7 million during third quarter 2007. The higher level of expenses in third quarter 2007 reflects higher
equity award compensation for grants made in December 2006 and January 2007 and salaries associated with a 4.2% increase in the average number of home office and regional personnel quarter-to-quarter.

Income Tax Provision. The effective income tax rate during third quarter 2007 was 39.6% compared to 40.0% in prior years third quarter.



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Nine Months Ended September 30, 2007 Compared with the Nine Months Ended September 30, 2006

The following table sets forth our results of operations for the nine months ended September 30, 2007 compared to the nine
months ended September 30, 2006:



|                               |  |                                |         |                                |      |   |         |  |       |      |  |       |  
|------------------------------ |  | ------------------------------ | ------- | ------------------------------ | ---- | - | ------- |  | ----- | ---- |  | ----- | -
|                               |  | Nine Months EndedSeptember 30, |         | Nine Months EndedSeptember 30, |     
|                               |  | 2006                           |         |                                | 2007 |   | 2006    |  |       | 2007 | 
|                               |  | (in thousands)                 |         | (percentage of revenues)       |     
|Revenues                       |  |                                |         |                                |      |   |         |  |       |      |  |       |  
|Payday loan fees               |  | $                              | 109,532 |                                |      | $ | 134,778 |  | 88.7  | %    |  | 86.2  | %
|Other                          |  |                                | 14,013  |                                |      |   | 21,533  |  | 11.3  | %    |  | 13.8  | %
|                               |  |                                |         |                                |      |   |         |  |       |      |  |       |  
|Total revenues                 |  |                                | 123,545 |                                |      |   | 156,311 |  | 100.0 | %    |  | 100.0 | %
|                               |  |                                |         |                                |      |   |         |  |       |      |  |       |  
|Branch expenses                |  |                                |         |                                |      |   |         |  |       |      |  |       |  
|Salaries and benefits          |  |                                | 32,537  |                                |      |   | 34,595  |  | 26.3  | %    |  | 22.1  | %
|Provision for losses           |  |                                | 25,816  |                                |      |   | 38,200  |  | 20.9  | %    |  | 24.4  | %
|Occupancy                      |  |                                | 17,178  |                                |      |   | 20,293  |  | 13.9  | %    |  | 13.0  | %
|Depreciation and amortization  |  |                                | 3,700   |                                |      |   | 3,624   |  | 3.0   | %    |  | 2.3   | %
|Other                          |  |                                | 11,061  |                                |      |   | 11,113  |  | 9.0   | %    |  | 7.2   | %
|                               |  |                                |         |                                |      |   |         |  |       |      |  |       |  
|Total branch expenses          |  |                                | 90,292  |                                |      |   | 107,825 |  | 73.1  | %    |  | 69.0  | %
|                               |  |                                |         |                                |      |   |         |  |       |      |  |       |  
|Branch gross profit            |  |                                | 33,253  |                                |      |   | 48,486  |  | 26.9  | %    |  | 31.0  | %
|                               |  |                                |         |                               
|Regional expenses              |  |                                | 8,979   |                                |      |   | 9,513   |  | 7.3   | %    |  | 6.1   | %
|Corporate expenses             |  |                                | 14,513  |                                |      |   | 16,781  |  | 11.7  | %    |  | 10.7  | %
|Depreciation and amortization  |  |                                | 978     |                                |      |   | 1,631   |  | 0.8   | %    |  | 1.0   | %
|Interest expense (income), net |  |                                | (315    | )                              |      |   | 372     |  | (0.3  | )%   |  | 0.2   | %
|Other expense, net             |  |                                | 199     |                                |      |   | 2,046   |  | 0.2   | %    |  | 1.4   | %
|                               |  |                                |         |                                |      |   |         |  |       |      |  |       |  
|Income before taxes            |  |                                | 8,899   |                                |      |   | 18,143  |  | 7.2   | %    |  | 11.6  | %
|Provision for income taxes     |  |                                | 3,579   |                                |      |   | 7,209   |  | 2.9   | %    |  | 4.6   | %
|                               |  |                                |         |                                |      |   |         |  |       |      |  |       |  
|Net income                     |  | $                              | 5,320   |                                |      | $ | 10,934  |  | 4.3   | %    |  | 7.0   | %
|                               |  |                                |         |                                |      |   |         |  |       |      |  |       |  

The following table sets forth selected financial and statistical information for the nine months
ended September 30, 2006 and 2007:



|                                              |  |                                |         |   |      |   |         |  
|--------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                              |  | Nine Months EndedSeptember 30, |        
|                                              |  | 2006                           |         |   | 2007 |  
|Other Information:                            |  |                                |         |   |      |   |         |  
|Payday loan volume (in thousands)             |  | $                              | 761,108 |   |      | $ | 920,056 |  
|Average revenue per branch                    |  |                                | 225,447 |   |      |   | 259,222 |  
|                                              |  |                               
|Average loan size (principal plus fee)        |  | $                              | 362.37  |   |      | $ | 364.82  |  
|Average fees per loan                         |  |                                | 53.14   |   |      |   | 52.79   |  
|                                              |  |                               
|Branch Information:                           |  |                                |         |   |      |   |         |  
|Number of branches, beginning of period       |  |                                | 532     |   |      |   | 613     |  
|De novo branches opened                       |  |                                | 40      |   |      |   | 16      |  
|Acquired branches                             |  |                                |         |   |      |   | 13      |  
|Branches closed                               |  |                                | (8      | ) |      |   | (50     | )
|                                              |  |                                |         |   |      |   |         |  
|Number of branches, end of period             |  |                                | 564     |   |      |   | 592     |  
|                                              |  |                                |         |   |      |   |         |  
|Average number of branches open during period |  |                                | 548     |   |      |   | 603     |  
|                                              |  |                                |         |   |      |   |         |  



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##### Table of Contents

|                                                                   |  |                                |         |      |   |        
|------------------------------------------------------------------ |  | ------------------------------ | ------- | ---- | - | -------
|                                                                   |  | Nine Months EndedSeptember 30,
|                                                                   |  | 2006                           |         | 2007
|Comparable Branch Information (a):                                 |  |                                |         |      |   |        
|Total revenues generated by all comparable branches (in thousands) |  | $                              | 116,722 |      | $ | 136,197
|Total number of comparable branches                                |  |                                | 474     |      |   | 474    
|Average revenue per comparable branch                              |  | $                              | 246,249 |      | $ | 287,335

---

|(a) | Comparable branches are those branches that were open for all of the two periods being compared, which means the 21 months since December 31, 2005.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------

Income from continuing operations.For the nine months ended September 30, 2007, net income was $10.9 million compared to $5.3 million for
the same period in 2006. A discussion of the various components of net income follows.

Revenues.For the nine months ended
September 30, 2007, revenues were $156.3 million, a 26.6% increase from $123.5 million during the nine months ended September 30, 2006. The increase in revenues was primarily a result of higher payday loan volume, which reflects increases
in the number of branches, the number of customer transactions and average loan size. We originated approximately $920.1 million through payday loans during the nine months ended September 30, 2007, which was an increase of 20.9% over the
$761.1 million during the same period in the prior year. The average loan (including fee) totaled $364.82 during the first nine months of 2007 versus $362.37 in comparable 2006. Average fees received from customers per loan declined from $53.14 in
first nine months of 2006 to $52.79 in comparable 2007 due to legislative and regulatory changes affecting rates and to a decline in the fee rate as loan volumes increase in newer branches located in states that have lower fee structures, partially
offset by a higher average loan principal. Our average fee rate per $100.00 for the first nine months 2007 was $16.92 compared to $17.18 for the same period in 2006.

As noted in the quarterly discussion, we anticipate that our average fee rate may continue to decline in 2008 and the remainder of 2007 as rates are modified based on changing legislation or regulation and as we enter
into or expand in states that have lower fee structures.

One manner by which we evaluate our branches is revenue growth, with
consideration given to the length of time the branch has been open. We define comparable branches as those branches that are open during the full periods for which a comparison is being made. For example, comparable branches for the year-to-date
analysis as of September 30, 2007 have been open at least 21 months. The following table provides a summary of our revenues by comparable branches and new branches:



|                        |  |                                |         |      |   |        
|----------------------- |  | ------------------------------ | ------- | ---- | - | -------
|                        |  | Nine Months EndedSeptember 30,
|                        |  | 2006                           |         | 2007
|                        |  | (in thousands)                
|Comparable branches     |  | $                              | 116,722 |      | $ | 136,197
|Branches opened in 2006 |  |                                | 1,592   |      |   | 16,140 
|Branches opened in 2007 |  |                                |         |      |   | 2,094  
|Other (a)               |  |                                | 5,231   |      |   | 1,880  
|                        |  |                                |         |      |   |        
|Total                   |  | $                              | 123,545 |      | $ | 156,311
|                        |  |                                |         |      |   |        

---

|(a) | represents primarily closed branches
|--- | ------------------------------------



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##### Table of Contents

Revenues for comparable branches increased 16.7%, or $19.5 million, to $136.2 million for the nine months
ended September 30, 2007. This increase is primarily attributable to the benefits resulting from the continuing development of our branches opened in 2005 and to growth in the installment loan product in our Illinois branches. Revenues from our
branches opened during 2005 improved 58.9% to $30.5 million for the nine months ended September 30, 2007 compared to $19.2 million for the nine months ended September 30, 2006. Revenues from branches added during 2006, including the 50
branches acquired in South Carolina, totaled $16.1 million for the nine months ended September 30, 2007.

Revenues from check cashing,
title loans, CSO fees, installment loans and other sources totaled $14.0 million and $21.5 for the nine months ended September 30, 2006 and 2007, respectively. The following table summarizes other revenues:



|                      |  |                                |        |                                |   |        |  |      |      |  |      |  
|--------------------- |  | ------------------------------ | ------ | ------------------------------ | - | ------ |  | ---- | ---- |  | ---- | -
|                      |  | Nine Months EndedSeptember 30, |        | Nine Months EndedSeptember 30, |  
|                      |  | 2006                           |        | 2007                           |   | 2006   |  |      | 2007 | 
|                      |  | (in thousands)                 |        | (percentage of revenues)       |  
|Check cashing fees    |  | $                              | 5,220  |                                | $ | 4,966  |  | 4.2  | %    |  | 3.2  | %
|Title loan fees       |  |                                | 3,556  |                                |   | 3,227  |  | 2.9  | %    |  | 2.1  | %
|Credit service fees   |  |                                | 2,397  |                                |   | 5,253  |  | 1.9  | %    |  | 3.4  | %
|Installment loan fees |  |                                | 1,160  |                                |   | 6,102  |  | 0.9  | %    |  | 3.9  | %
|Other fees            |  |                                | 1,680  |                                |   | 1,985  |  | 1.4  | %    |  | 1.2  | %
|                      |  |                                |        |                                |   |        |  |      |      |  |      |  
|Total                 |  | $                              | 14,013 |                                | $ | 21,533 |  | 11.3 | %    |  | 13.8 | %
|                      |  |                                |        |                                |   |        |  |      |      |  |      |  

As noted in the quarterly discussion, the decline in check cashing fees as a percentage of
revenues reflects a higher rate of growth in payday loan revenues. The revenue increases in credit services fees and installment loans reflects the addition of new product offerings as credit services were offered in our Texas branches beginning in
September 2005 and installment loans were offered in our Illinois branches beginning in second quarter 2006.

Branch Expenses.Total
branch expenses increased $17.5 million, or 19.4%, from $90.3 million during the first nine months of 2006 to $107.8 million in the first nine months of 2007. Branch-level salaries and benefits increased by $2.1 million for the nine months ended
September 30, 2007 compared to the same period in the prior year primarily due to an increase in field personnel associated with our new branches. The total number of field personnel averaged 1,711 for the nine months ended September 30,
2006 compared to 1,821 for the nine months ended September 30, 2007, an increase of 6.4%.

The provision for losses increased from
$25.8 million for the nine months ended September 30, 2006 to $38.2 million during the nine months ended September 30, 2007. Our loss ratio was 24.4% for the nine months ended September 30, 2007 versus 20.9% for the nine months ended
September 30, 2006. The less favorable loss experience in 2007 reflects a higher level of charge-offs and lower collection rate during 2007 for the reasons noted in the quarterly discussion above. Our charge-offs as a percentage of revenue were
47.3% during the nine months ended September 30, 2007 compared to 45.1% in the same period of the prior year. Our collections as a percentage of charge-offs were 49.2% for the nine months ended September 30, 2007 compared to 53.4% during
the same period in 2006. In addition, we received approximately $2.0 million from the sale of certain payday loan receivables during the nine months ended September 30, 2007.

Comparable branches totaled $34.0 million in loan losses for the first nine months of 2007 compared to $24.4 million in loan losses for the first nine
months of 2006. In our comparable branches, the loss ratio was 25.0% for the nine months ended September 30, 2007 compared to 20.9% for the same period in 2006.



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##### Table of Contents

Occupancy costs increased from $17.2 million for the nine months ended September 30, 2006 to $20.3
million in the current year period. Occupancy costs as a percentage of revenues were 13.0% for the nine months ended September 30, 2007 and 13.9% for the same period in the prior year. In connection with the closure of 31 branches during the
first quarter 2007 (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, we recorded approximately $1.6 million in
occupancy costs during the nine months ended September 30, 2007 to reflect lease termination costs and other occupancy related costs.

Branch Gross Profit.Branch gross profit increased by $15.2 million, or 45.6%, from $33.3 million for the nine months ended September 30, 2006 to $48.5 million for the nine months ended September 30, 2007. Branch gross
margin, which is branch gross profit as a percentage of revenues, increased from 26.9% for the nine months ended September 30, 2006 to 31.0% for the nine months ended September 30, 2007. The following table summarizes our branch gross
profit by comparable branches and new branches.



|                        |  |                                |        |   |      |   |        |  
|----------------------- |  | ------------------------------ | ------ | - | ---- | - | ------ | -
|                        |  | Nine Months EndedSeptember 30, |       
|                        |  | 2006                           |        |   | 2007 |  
|                        |  | (in thousands)                 |       
|Comparable branches     |  | $                              | 36,872 |   |      | $ | 46,899 |  
|Branches opened in 2006 |  |                                | (1,867 | ) |      |   | 2,221  |  
|Branches opened in 2007 |  |                                |        |   |      |   | (648   | )
|Other (a)               |  |                                | (1,752 | ) |      |   | 14     |  
|                        |  |                                |        |   |      |   |        |  
|Total                   |  | $                              | 33,253 |   |      | $ | 48,486 |  
|                        |  |                                |        |   |      |   |        |  

---

|(a) | represents primarily closed branches
|--- | ------------------------------------

Comparable branches
for the nine months ended September 30, 2007 reported a gross margin of 34.4% versus 31.6% in the comparable prior year period, with the improvements resulting from stronger results in the majority of states. The 95 branches added during the
2006 reported a gross profit of $2.2 million. Note that the gross losses during the nine months ended September 30, 2006 for the branches opened in 2006 related to de novo branches only, whereas the gross profit during 2007 include the results
from the 50 branches acquired in South Carolina in December 2006.

Regional and Corporate Expenses.Regional and corporate expenses
increased $2.8 million from $23.5 million during the nine months ended September 30, 2006 to $26.3 million in the current year period. The higher level of expenses in 2007 is attributable to equity award compensation, salaries associated with
an 7.0% increase in the average number of home office and regional personnel from September 30, 2006 and approximately $750,000 in advertising for public awareness expenditures during first quarter 2007.

Interest and Other Expenses.Net interest expense totaled $372,000 during the nine months ended September 30, 2007 compared to net interest
income of $315,000 during the nine months ended September 30, 2006. This change period-to-period reflects the borrowing of $15.5 million to fund operations during 2007, while during 2006, we had invested cash. Other expenses during the nine
months ended September 30, 2007 was higher than the same period in 2006 as a result of losses on the disposal of assets during 2007 related to the closure of branches.

Income Tax Provision. The effective income tax rate for the nine months ended September 30, 2007 was 39.7% compared to 40.2% for the nine
months ended September 30, 2006.



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LIQUIDITY AND CAPITAL RESOURCES

Summary cash flow data is as follows (in thousands):



|                                             |  |                                |         |   |      |   |         |  
|-------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                             |  | Nine Months EndedSeptember 30, |        
|                                             |  | 2006                           |         |   | 2007 |  
|Cash flows provided by (used for):           |  |                                |         |   |      |   |         |  
|Operating activities                         |  | $                              | 11,719  |   |      | $ | 22,423  |  
|Investing activities                         |  |                                | (4,503  | ) |      |   | (5,930  | )
|Financing activities                         |  |                                | (14,923 | ) |      |   | (16,815 | )
|                                             |  |                                |         |   |      |   |         |  
|Net decrease in cash and cash equivalents    |  |                                | (7,707  | ) |      |   | (322    | )
|                                             |  |                               
|Cash and cash equivalents, beginning of year |  |                                | 31,640  |   |      |   | 23,446  |  
|                                             |  |                                |         |   |      |   |         |  
|Cash and cash equivalents, end of period     |  | $                              | 23,933  |   |      | $ | 23,124  |  
|                                             |  |                                |         |   |      |   |         |  

Cash Flow Discussion. Our primary source of liquidity is cash provided by operations. In
addition, we entered into a credit agreement on January 19, 2006, which provides a three-year revolving line of credit for borrowings up to $45.0 million (the credit facility). As of September 30, 2007, there was $15.5 million outstanding
under the credit facility.

Net cash provided by operating activities for the nine months ended September 30, 2007 was $22.4 million,
approximately $10.7 million higher than the $11.7 million in comparable 2006. This increase is primarily attributable to higher net income during first nine months 2007, plus certain non-cash charges associated with the branch closings during 2007.

Net cash used by investing activities for the nine months ended September 30, 2007 was $5.9 million, which primarily consisted of
approximately $2.4 million for capital expenditures and approximately $3.6 million in acquisition costs. The capital expenditures included $353,000 to open de novo branches in 2007, $939,000 for renovations to existing and acquired branches,
$930,000 for technology and other furnishings at the corporate office, and approximately $140,000 for other expenditures. Net cash used by investing activities for the nine months ended September 30, 2006 was $4.5 million, which primarily
consisted of capital expenditures. The capital expenditures included $1.6 million to open 40 de novo branches in 2006, $1.7 million for renovations to existing and acquired branches, $524,000 for tenant improvements, furnishings and technology for
the new corporate office space, $402,000 for branches not yet open as of September 30, 2006, $400,000 for the purchase of a building in St. Louis, Missouri that is used as a branch location and other expenditures.

Cash used for financing activities for the nine months ended September 30, 2007 was $16.8 million, which primarily consisted of $16.3 million in
repayments of indebtedness under the credit facility, dividend payments to stockholders totaling $5.9 million and share repurchases of approximately 832,000 shares of our common stock for $12.0 million. These items were partially offset by proceeds
received from borrowings under our credit facility totaling $15.5 million to fund operations and proceeds received from the exercise of stock options by employees. During the nine months ended September 30, 2006, cash outflows were $14.9
million, which primarily consisted of the repurchase 1.3 million shares of our common stock for approximately $16.5 million partially offset by proceeds from the exercise of stock options by employees.

Future Capital Requirements.We believe that our available cash, expected cash flows from operations and borrowings available under our credit
facility will be sufficient to fund our liquidity and capital expenditure requirements for the foreseeable future. Expected future uses of cash include funding of anticipated increases in payday and installment loans, dividend payments, common stock
repurchases, financing of new branch expansion and acquisitions and, if amounts are borrowed under the credit facility, debt repayments and interest payments on the outstanding debt.



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On October 30, 2007, our board of directors declared a cash dividend of $0.10 per common share. The
dividend is payable on November 19, 2007 to stockholders of record as of November 12, 2007. We estimate that the total amount of the dividend will be approximately $2.0 million, which will be funded from available cash.

The level of cash required to operate a particular branch varies based on the products and services provided by that branch. For each branch location,
cash is comprised of: (i) a certain amount of cash needed in the branch location; (ii) an operating reserve amount at the local bank used by that branch; and (iii) in-transit amounts within the banking system. As a general guideline,
a typical branch offering only payday loans requires an average cash balance of approximately $10,000 to $15,000, while a branch that also includes check cashing and other products requires an average of approximately $35,000 to $45,000.

As part of our business strategy, we intend to open de novo branches and consider acquisitions in existing and new markets. During 2005 and 2006, we
were able to achieve de novo unit branch growth of 46.9% and 8.6%, respectively. In addition, we acquired 10 branches and 51 branches in 2005 and 2006, respectively. During the first nine months of 2007, we opened 16 branches and acquired 13
branches. In connection with one of our acquisitions, we elected to close six of the branches acquired and transfer the receivable balances to our existing branch locations. During the fourth quarter of 2007, we expect to open approximately 5
additional branches. We believe our current cash position and our expected cash flow from operations should provide the capital needed to fund this level of growth, assuming no material acquisitions.

The capital costs of opening a de novo branch include leasehold improvements, signage, computer equipment and security systems, and the costs vary
depending on the branch size, location and the services being offered. In fiscal 2006, we opened 46 de novo branches. The average cost of capital expenditures for these new branches was approximately $56,000 per branch.

Common Stock Repurchase Program. In July 2007, our board of directors increased the authorization limit of the Companys common stock
repurchase program to $40 million. In June 2007, our board of directors extended the program through June 30, 2008. As of September 30, 2007, we have repurchased 2.5 million shares at a total cost of approximately $32.2 million.

Concentration of Risk. Our branches located in the states of Missouri, California, Arizona, South Carolina, Kansas and Illinois
represented approximately 24%, 13%, 8%, 7%, 5% and 5%, respectively, of total revenues for the nine months ended September 30, 2007. To the extent that laws and regulations are passed that affect our ability to offer payday loans or the manner
by which we offer our payday loans in any one of those states, our financial position, results of operations and cash flows could be affected.

Seasonality

Our business is seasonal due to fluctuating demand for payday loans during the year. Historically, we have
experienced our highest demand for payday loans in January and in the fourth calendar quarter. As a result of the receipt by customers of their income tax refunds, demand for payday loans has historically declined in the balance of the first quarter
of each calendar year and the first month of the second quarter. Our loss ratio historically fluctuates with these changes in payday loan demand, with a higher loss ratio in the second and third quarters of each calendar year and a lower loss ratio
in the first and fourth quarters of each calendar year. Due to the seasonality of our business, results of operations for any quarter are not necessarily indicative of the results of operations that may be achieved for the full year.



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Off-Balance Sheet Arrangements

In September 2005, we began operating through a subsidiary as a CSO in our Texas branches. As a CSO, we act as a credit services organization on behalf of consumers in accordance with Texas laws. We charge the
consumer a fee for arranging for an unrelated third-party lender to make a loan to the consumer and for providing related services to the consumer, including a guarantee of the consumers obligation to the third-party lender. We also service
the loan for the lender. We are not involved in the loan approval process or in determining the loan approval procedures or criteria, and we will not acquire or own any participation interest in the loans. Consequently, loans made by the lender will
not be included in our loans receivable balance and will not be reflected in the Consolidated Balance Sheet. Under the agreement with the current lender, however, we absorb all risk of loss through our guarantee of the consumers loan from the
lender. As of December 31, 2006, and September 30, 2007, consumers had total loans outstanding with the lender of approximately $2.2 million and $2.8 million, respectively. Because of the economic exposure for potential losses related to
the guarantee of these loans, we record a payable to reflect the anticipated losses related to uncollected loans. The payable is recognized at its fair value pursuant to FIN 45, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others.Changes in the liability are recognized through the provision for loan losses in our Consolidated Statements of Income. The balance of the liability for estimated losses
reported in accrued liabilities was approximately $100,000 as of December 31, 2006 and $130,000 as of September 30, 2007.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

We have had no significant changes in our Quantitative and Qualitative Disclosures About Market Risk from that previously reported in our Annual Report on Form 10-K for the year ended December 31, 2006.



|Item 4. | Controls and Procedures
|------- | -----------------------

We maintain a system of
disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be timely disclosed, is accumulated and communicated to management in a timely fashion. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls
and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report, have concluded that our disclosure controls and procedures are
effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and
principal financial officer, as appropriate to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commissions rules and forms.

Our internal control over financial reporting (as defined in
Exchange Act Rule 13a-15(f)) is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting. However, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.



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PART IIOTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

The Company and a former
customer in New Mexico, who sued the Company in a purported class action lawsuit, settled the case for an immaterial amount, and the case was dismissed with prejudice in the third quarter 2007. There have been no other material developments in the
third quarter 2007 in any cases material to the Company as reported in our 2006 Annual Report on Form 10-K.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

Issuer Purchases of Equity Securities.The following table sets forth certain information about the shares of common stock we repurchased during the third quarter 2007.



|                           |  |                               |  |                            |       |                                                                   |         |                                                                                  |   |           
|-------------------------- |  | ----------------------------- |  | -------------------------- | ----- | ----------------------------------------------------------------- | ------- | -------------------------------------------------------------------------------- | - | ----------
|Period                     |  | TotalNumber ofSharesPurchased |  | AveragePrice PaidPer Share |       | Total Numberof SharesPurchased asPart of PubliclyAnnouncedProgram |         | MaximumApproximateDollar Value ofShares that MayYet BePurchased Underthe
Program
|July 1  July 31           |  |                              |  | $                          |      |                                                                   |        |                                                                                  | $ | 12,493,807
|August 1  August 31       |  | 327,742                       |  |                            | 14.10 |                                                                   | 327,742 |                                                                                  |   | 7,873,159 
|September 1  September 30 |  |                              |  |                            |      |                                                                   |        |                                                                                  |   |          
|                           |  |                               |  |                            |       |                                                                   |         |                                                                                  |   |           
|Total                      |  | 327,742                       |  | $                          | 14.10 |                                                                   | 327,742 |                                                                                  | $ | 7,873,159 
|                           |  |                               |  |                            |       |                                                                   |         |                                                                                  |   |           

On July 31, 2007, our board of directors increased our $30 million common stock
repurchase program to $40 million. As of September 30, 2007, we have repurchased 2.5 million shares at a total cost of approximately $32.2 million.



|Item 6. | Exhibits
|------- | --------



|     |  |                                                                                                                                                         
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|31.1 |  | Certification of Chief Executive Officer under Rule 13-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                      
|     | 
|31.2 |  | Certification of Chief Financial Officer under Rule 13-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                      
|     | 
|32.1 |  | Certification of Chief Executive Officer pursuant to Section 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|     | 
|32.2 |  | Certification of Chief Financial Officer pursuant to Section 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized and in the capacities indicated on November 8, 2007.



QC Holdings, Inc./s/ Darrin J. AndersenDarrin J. AndersenPresident and Chief Operating Officer/s/ Douglas E. NickersonDouglas E. NickersonChief Financial Officer(Principal Financial and Accounting Officer)




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