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Value Financial Services, Inc., a pawn shop operator, has filed to come public via an IPO under the NASDAQ ticker "VFSI."  The pawn operator lists JMP Securities and Ferris Baker Watts as the underwriters.

Everyone knows what a pawn shop is, and this pawn operator was founded in 1994 and now has 62 stores.  It actually still has quite a bit of room for growth because it only operates with 56 stores in Florida, 4 stores in Tennessee, and 2 stores in Georgia.  It said the average pawn/loan in 2006 was small at $149.00.  In 2004, 2005 and 2006, approximately 78.0%, 78.8% and 77.8%, respectively, of the pawn loans made by the company were redeemed in full or were renewed or extended through the payment of accrued pawn service charges.  These loan rates run from 12.5% to 25% monthly under regulatory guidelines.

This IPO filing claims that pawn shops have grown from 6,900 registered in 1988 to 11,000 in 2007, so with 62 stores this has exponential growth possibilities.  Value Financial Services posted $87.8 million in revenues and $11.7 million in EBITDA for 2006 and in the three months ended March 31, 2007, it generated total revenues of $24.2 million and EBITDA $3.0 million. At March 31, 2007, Value had a total of 91,304 pawn loans outstanding, with a total balance of $13.5 million and an average balance of $218,293 per store.

Jon C. Ogg
August 15, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.