S-1/A 1 a2208723zs-1a.htm S-1/A

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As filed with the Securities and Exchange Commission on April 25, 2012

Registration No. 333-176434

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



AMENDMENT NO. 3
to
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



Community Choice Financial Inc.
(Exact name of registrant as specified in its charter)

Ohio
(State of Incorporation)
  6099
(Primary Standard Industrial
Classification Code Number)
  45-1536453
(I.R.S. Employer
Identification No.)

7001 Post Road, Suite 200
Dublin, Ohio 43016
(614) 798-5900

(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

William E. Saunders, Jr.
Chief Executive Officer
7001 Post Road, Suite 200
Dublin, Ohio 43016
(614) 798-5900
(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies to:

Bridgette Roman, Esq.
Senior Vice President, Secretary and
General Counsel
7001 Post Road, Suite 200
Dublin, Ohio 43016
Tel: (614) 798-5900
Fax: (614) 760-4057

 

Christopher M. Kelly, Esq.
Michael J. Solecki, Esq.
John T. Owen, Esq.

Jones Day
222 East 41st Street
New York, NY 10017-6702
Tel: (212) 326-3939
Fax: (212) 755-7306

 

Craig F. Arcella, Esq.
Cravath, Swaine & Moore LLP
825 Eighth Avenue
New York, NY 10019-7475
Tel: (212) 474-1000
Fax: (212) 474-3700



Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.

         If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

         If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

         If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

         If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý
(Do not check if a
smaller reporting company)
  Smaller reporting company o

         The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission acting, pursuant to said Section 8(a), may determine.


The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED APRIL 25, 2012

10,666,667 Shares

GRAPHIC

Community Choice Financial Inc.

Common Shares



        Prior to the offering, there has been no public market for our common shares. The initial public offering price per share is expected to be between $13.00 and $15.00 per share. We have applied to list our common shares on The Nasdaq Global Market under the symbol "CCFI".

        We are selling 10,666,667 common shares.

        The underwriters have an option to purchase a maximum of 1,600,000 additional shares from us and the selling shareholders to cover over-allotments of shares.

        Investing in our common shares involves risks. See "Risk Factors" beginning on page 23.



 
  Price to
Public
  Underwriting
Discounts and
Commissions
  Proceeds to
Company
 

Per Share

  $     $     $    

Total

  $     $     $    

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

        Delivery of the common shares will be made on or about             , 2012.

Joint Book-Running Managers

Credit Suisse

Jefferies

 

Stephens Inc.


Lead Manager

 

Co-Manager
JMP Securities   William Blair & Company

The date of this Prospectus is             , 2012.


TABLE OF CONTENTS

 
  Page  

PROSPECTUS SUMMARY

    1  

RISK FACTORS

    23  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

    46  

CERTAIN FINANCIAL MEASURES AND OTHER INFORMATION

    47  

USE OF PROCEEDS

    48  

DIVIDEND POLICY

    49  

CAPITALIZATION

    50  

DILUTION

    51  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

    52  

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

    55  

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    59  

BUSINESS

    78  

MANAGEMENT

    105  

PRINCIPAL AND SELLING SHAREHOLDERS

    132  

CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS

    134  

DESCRIPTION OF CERTAIN INDEBTEDNESS

    136  

DESCRIPTION OF CAPITAL STOCK

    139  

SHARES ELIGIBLE FOR FUTURE SALE

    143  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS APPLICABLE TO NON-U.S. HOLDERS

    145  

UNDERWRITING

    149  

LEGAL MATTERS

    153  

EXPERTS

    153  

WHERE YOU CAN FIND MORE INFORMATION

    153  

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

    F-1  



        You should rely only on the information contained in this prospectus or in any free writing prospectus prepared by us or to which we have referred you. We have not, the selling shareholders have not, and the underwriters have not, authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.

        Until                        (25 days after the commencement of the offering), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.


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INDUSTRY AND MARKET DATA AND PERFORMANCE DATA

        This prospectus includes information regarding the retail financial services industry and various markets in which we compete. When we refer to our position in the industry, such market position is based on the number of retail stores we operate and not on our revenues or volumes. Where possible, this information is derived from third-party sources that we believe are reliable, including the Federal Deposit Insurance Corporation, or FDIC, Mercator Advisory Group, or Mercator, Stephens Inc., or Stephens, the Federal Reserve Bank of New York, the National Bureau of Economic Research, or NBER, Bretton Woods, Inc., or Bretton Woods, and Financial Service Centers of America, Inc., or FiSCA. In other cases, this information is based on estimates made by our management, based on their industry and market knowledge and information from third-party sources. However, this data is subject to change and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. As a result, you should be aware that market share, ranking and other similar data set forth herein, and estimates and beliefs based on such data, may not be reliable.

        Certain of the industry and market data contained in this prospectus has been derived from research reports produced by Stephens. Stephens is an underwriter in this offering. Research attributed to Stephens in this prospectus has been separately prepared and reviewed by Stephens's independent research analysts.

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PROSPECTUS SUMMARY

        This summary highlights certain information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all the information that may be important to you. For a more complete understanding of our business and this offering, you should read the entire prospectus, including the historical consolidated financial statements and pro forma consolidated statements of operations included elsewhere in this prospectus. You should also carefully consider the matters discussed under "Risk Factors". When we present historical financial information on a "pro forma basis", we provide such information after giving effect to each of the acquisition of CCCS Corporate Holdings, Inc., which we completed in April 2011, and the acquisition of 10 stores in Illinois, which we completed in March 2011, and to each of the offering of our 10.75% senior secured notes due 2019 and the establishment of our $40 million revolving credit facility, each of which we completed in April 2011, and this offering, as described in more detail under "Unaudited Pro Forma Consolidated Financial Information". In this prospectus, unless the context requires otherwise, references to "CCFI", "we", "our", "us" or the "Company" refer to Community Choice Financial Inc. and to our predecessor, CheckSmart, as the context requires.

Overview

        We are a leading retailer of alternative financial services to unbanked and underbanked consumers through a network of 435 retail storefronts across 14 states. We focus on providing a wide range of convenient consumer financial products and services to help customers manage their day-to-day financial needs, including short-term consumer loans, medium-term loans, title loans, check cashing, prepaid debit cards, money transfers, bill payments and money orders. Although the majority of our customers have banking relationships, we believe that our customers use our financial services because they are convenient, easy to understand, and in many instances, more affordable than available alternatives.

        We strive to provide customers with unparalleled customer service in a safe, clean and welcoming environment. Our stores are located in highly visible, accessible locations that allow customers convenient and immediate access to our services. Our professional work environment combines high employee performance standards, incentive-based pay and a wide array of training programs to incentivize our employees to provide superior customer service. We believe that this approach has enabled us to build strong customer loyalty, putting us in a position to expand and continue to capitalize on our innovative product offerings. As a result of our focus on store selection and design and our efforts to provide consistent, high-quality customer service, we have achieved per store revenue and per store Adjusted EBITDA contribution levels that we believe substantially exceed our publicly traded peers. See "Certain Financial Measures and Other Information" for an explanation of how we calculate these metrics and "—Summary Historical Consolidated Financial Data" for a reconciliation of our net income to Adjusted EBITDA.

        We serve the large and growing market of individuals who have limited or no access to traditional sources of consumer credit and financial services. A study conducted by the FDIC published in 2009 indicates 25.6% of U.S. households are either unbanked or underbanked, representing approximately 60 million adults. As traditional financial institutions increase fees for consumer services, such as checking accounts and debit cards, and tighten credit standards as a result of economic and other market driven developments, consumers have looked elsewhere for less expensive and more convenient alternatives to meet their financial needs. According to a recent Federal Reserve Bank of New York report, total consumer credit outstanding has declined over $1.4 trillion since its peak in the third quarter of 2008. This contraction in the supply of consumer credit has resulted in significant unmet demand for consumer loan products.

        For the year ended December 31, 2011, we generated $306.9 million in revenue, $16.9 million in net income and $86.8 million in Adjusted EBITDA. As of December 31, 2011, we had $515.5 million of total assets and $61.3 million of stockholders' equity.

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        Our measurement of comparable store sales growth as of December 31, 2011 includes stores which we operated for the full year of 2011 and which were open for the full year of 2010. As of December 31, 2011 we had 280 stores included in this measurement. These stores achieved comparable sales growth of 7.3% for the year ended December 31, 2011 as compared to the year ended December 31, 2010.

Products and Services

        We offer several convenient, fee-based services to meet the needs of our customers, including short-term consumer loans, medium-term loans, title loans, check cashing, prepaid debit cards, money transfers, bill payments, money orders, international and domestic prepaid phone cards, tax preparation, auto insurance, motor vehicle registration services and other ancillary retail financial services. The following charts reflect the major categories of services that we currently offer and the revenues from these services for the year ended December 31, 2011 as well as the number of store locations we have in each state:

Revenue by Product Group

 

Store Count by State

GRAPHIC

 

GRAPHIC

        Consumer Loans.    We offer a variety of consumer loan products and services. We believe that our customers find our consumer loan products and services to be convenient, transparent and lower-cost alternatives to other, more expensive short-term options, such as incurring returned item fees, credit card late fees, overdraft or overdraft protection fees, utility late payment, disconnect and reconnect fees and other charges imposed by other financing sources when they do not have sufficient funds to cover unexpected expenses or other needs. Our customers often have limited access to more traditional sources of consumer credit, such as credit cards.

        The specific consumer loan products we offer vary by location, but generally include the following types of loans:

    Short-Term Consumer Loans.  One of our primary products is a short-term, small-denomination consumer loan whereby a customer receives immediate cash, typically in exchange for a post-dated personal check or a pre-authorized debit from his or her bank account. We offer this product in 367 of our 435 stores. As the lender, we agree to defer deposit of the check or initiation of the debit from the customer's bank account until the mutually agreed upon due date, which typically falls on the customer's next payday. Principal amounts of our short-term consumer loans can be up to $1,000 and averaged approximately $426 during 2011. Fees charged vary from state to state, generally ranging from $8 to $15 per $100 borrowed. Our short-term consumer loan products are offered in the following 13 of the 14 states in which we operate

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      stores: Alabama, California, Florida, Illinois, Indiana, Kansas, Kentucky, Michigan, Missouri, Ohio, Oregon, Utah and Virginia.

      The following table presents key operating data for our short-term consumer loan products.

 
  Year ended
December 31, 2011
 

Loan volume (in thousands)

  $ 1,543,310  

Number of loans (in thousands)

    3,625  

Average originated loan size

  $ 425.72  

Average originated loan fee

  $ 46.37  

Loan loss provision as a percentage of loan volume

    2.6 %
    Medium-Term Loans.  In meeting our customers' financial needs, we also offer a range of medium-term loans. Principal amounts of medium-term loans typically range from $100 to $2,501 and have maturities between three months and 24 months. These loans vary in their structure in order to conform to the specific regulatory requirements of the various jurisdictions in which they are offered. The loans may have an installment repayment plan or provide for a line of credit with periodic monthly payments. We offer these loans in 164 of our 435 stores in the following three of the 14 states in which we operate stores: California, Illinois and Virginia.

      The following table presents key operating data for our medium-term loan products.

 
  As of
December 31, 2011
 

Principal outstanding(1) (in thousands)

  $ 12,174  

Number of loans outstanding

    20,818  

Average principal outstanding

  $ 584.79  

Average monthly percentage rate

    19.2 %

Allowance as a percentage of finance receivable

    10.6 %

(1)
Loan participations are grouped with medium-term loans in our consolidated financial statements included elsewhere in this prospectus, but excluded from this calculation.
    Title Loans.  Title loans are asset-based loans whereby the customer obtains cash using a vehicle as collateral. We offer this product in 243 of our 435 stores. The amount of funds made available is based on the vehicle's value, and our policies typically authorize loans based on the wholesale value of the vehicle in exchange for a first priority lien on the customer's otherwise unencumbered vehicle title. The customer receives the benefit of immediate cash and retains possession of the vehicle while the loan is outstanding. Our title loans are offered in the following eight of the 14 states in which we operate stores: Alabama, Arizona, California, Illinois, Kansas, Missouri, Utah and Virginia, and we intend to introduce title loans in additional states in the future.

      The following table presents key operating data for our title loan products.

 
  As of
December 31, 2011
 

Principal outstanding (in thousands)

  $ 17,334  

Number of loans outstanding

    15,283  

Average principal outstanding

  $ 1,134.20  

Average monthly percentage rate

    13.3 %

Allowance as a percentage of finance receivable

    5.3 %

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        For the year ended December 31, 2011, short-term consumer loans, medium-term loans, and title loans generated 53.2%, 4.6%, and 6.1%, respectively, of our revenue.

        Check Cashing.    We offer check cashing services in 409 of our 435 stores. Prior to cashing a check, our customer service representatives verify the customer's identification and enter the payee's social security number and the payor's bank account information in our internal, proprietary databases, which match these fields to prior transactions in order to mitigate our risk of loss. Although we have established guidelines for approving check cashing transactions, we do not impose maximum check size restrictions. Subject to appropriate approvals, we accept all forms of checks, including payroll, government, tax refund, insurance, money order, cashiers' and personal checks. Our check cashing fees vary depending upon the amount and type of check cashed, applicable state regulations and local market conditions. Our check cashing services are offered in the following 13 of the 14 states in which we operate stores: Alabama, Arizona, California, Florida, Indiana, Kansas, Kentucky, Michigan, Missouri, Ohio, Oregon, Utah and Virginia.

        The following table presents key operating data for our check cashing business.

 
  Year ended
December 31, 2011
 

Face amount of checks cashed (in thousands)

  $ 2,163,276  

Number of checks cashed (in thousands)

    4,869  

Face amount of average check

  $ 444.26  

Average fee per check

  $ 14.95  

Fee as a percentage of average check size

    3.4 %

Returned check expense (% of face amount)

    0.2 %

        Check cashing accounted for 23.7% of our revenue for the year ended December 31, 2011.

        Prepaid Debit Card Services.    One of our fastest growing businesses is the sale and servicing of prepaid debit cards, which we offer in 430 of our 435 stores. As an agent for a third-party debit card provider, we offer access to reloadable prepaid debit cards with a variety of enhanced features that provide our customers with a convenient and secure method of accessing their funds in a manner that meets their individual needs. The cards are provided by Insight Card Services LLC, successor to Insight LLC, or Insight, and our stores serve as distribution points where customers can purchase cards as well as load funds onto and withdraw funds from their cards. Customers can elect to receive check cashing proceeds on their cards without having to worry about security risks associated with carrying cash. The cards can be used at most places where MasterCard® or Visa® branded debit cards are accepted. These cards offer our customers the ability to direct deposit all or a portion of their payroll checks onto their cards, receive real-time wireless alerts for transactions and account balances, and utilize in-store and online bill payment services. In addition to these basic features available on all of the cards offered in our stores, we offer two additional card options with enhanced features. One of the enhanced feature cards provides, at the customer's option, a lower-cost overdraft protection option compared to the typical overdraft fees charged by traditional banks. The other enhanced card option allows qualifying customers to receive loan proceeds from a state-licensed third-party lender directly onto their cards, which we believe is an innovative feature of these cards. This feature is currently offered in Arizona and certain stores in Ohio, and we may introduce this feature in additional states in the future.

        Since we began offering Insight cards in April 2010, we have experienced substantial growth in our prepaid debit card business. Active Insight accounts, which we define as accounts reflecting any activity during the preceding 90 days, had grown to 140,970 as of December 31, 2011, an increase of over 62% from December 31, 2010. We are paid certain agent fees from Insight that are based on monthly card fees, overdraft charges, interchange fees and ATM access fees. In addition, we earn fees from the sale of prepaid debit cards and are required to pre-fund certain card activity when customers load funds onto their cards. Our pre-funding obligation arises as a result of the time lag between when customers

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load funds onto their cards in our stores and when funds are subsequently remitted to the banks that issue the cards. We also are required to pre-fund amounts in order to fund our obligation to purchase loan participations when our Arizona customers receive loan proceeds from a third-party lender onto their cards and in relation to negative card balances our customers may experience. The following table presents key operating data for our prepaid debit card services business as of December 31, 2011:

 
  As of
December 31, 2011
 

Active card holders in network (in thousands)

    141.0  

Active direct deposit customers (in thousands)

    33.2  

        Prepaid debit card services accounted for 6.5% of our revenue for the year ended December 31, 2011.

        Other Products and Services.    Introducing new products into our markets has historically created profitable revenue expansion. Other products and services that we currently offer through our stores include money transfer, bill payment, and international and prepaid phone cards. Additionally, we piloted a new tax preparation offering during the first quarter of 2011 and an automotive insurance program in the fourth quarter of 2011. Neither of these new products had a material impact on our 2011 financial results, but the offerings were well received by our customers and we believe these offerings represent an example of an avenue for growth in future years. These other products and services provide revenues and help drive additional traffic to our stores, resulting in increased volume across all of our product offerings. Other products and services accounted for 5.9% of our revenue for the year ended December 31, 2011.

Historical Acquisitions

        California Acquisition.    On April 29, 2011, we acquired CCCS, an alternative financial services business with similar product offerings as CheckSmart. CheckSmart, together with CCCS and certain other parties, executed an agreement and plan of merger, under which CCFI, a newly formed holding company, acquired all outstanding shares of both CheckSmart and CCCS. We refer to this transaction as the California Acquisition. In connection with consummating the California Acquisition, we also issued $395 million in aggregate principal amount of our 10.75% senior secured notes due 2019, which we refer to as our senior notes, and entered into a $40 million senior secured revolving credit facility, which we refer to as our revolving credit facility.

        Other Acquisitions.    Since August 2009, we have also acquired:

    10 stores in Illinois, which we acquired on March 21, 2011 in an asset purchase transaction. We refer to this transaction as the Illinois Acquisition.

    19 stores in Alabama, which we acquired in March 2010. We refer to this transaction as the Alabama Acquisition.

    Eight stores in Michigan, which we acquired in August 2009. We refer to this transaction as the Michigan Acquisition.

        Following these acquisitions, we have successfully integrated our expanded product offerings and retailing strategies at acquired stores. The stores acquired in the Alabama and Michigan Acquisitions, both owned and operated for the full year of 2011, experienced revenue growth in excess of 26% in 2011. We have invested significant resources in building a scalable company-wide platform in areas such as collections, call center operations, information technology, legal, compliance and accounting in order to quickly and successfully integrate acquired stores into our existing business.

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Recent and Pending Acquisitions

        We have recently completed one investment, one acquisition, and have one additional acquisition pending that we believe will allow us to further expand our product offerings and the locations in which we offer our products.

        Insight Investment.    We acquired a 22.5% stake in Insight Holding Company LLC, or Insight Holding, in November 2011. Insight Holding is the parent company of Insight Cards Services LLC, the program manager for the Insight Card that is offered through our retail locations.

        DFS Acquisition.    On April 1, 2012 we acquired all of the equity interests of Direct Financial Solutions, LLC and its subsidiaries, or DFS, as well as three other affiliated entities, Direct Financial Solutions of UK Limited and its subsidiary Cash Central UK Limited, or DFS UK, DFS Direct Financial Solutions of Canada, Inc., or DFS Canada, and Reliant Software Inc., all of which we collectively refer to as the DFS Companies. The purchase price was approximately $22 million, subject to a post-closing working capital adjustment.

        DFS offers short-term loans to consumers via the Internet under a state-licensed model in compliance with the applicable laws of the jurisdiction of its customers.

        Currently, DFS offers loans, under a state-law based model, to residents of Alabama, Alaska, California, Delaware, Hawaii, Idaho, Kansas, Louisiana, Minnesota, Missouri, Nevada, North Dakota, Rhode Island, South Dakota, Utah, Washington, Wyoming, and Wisconsin, and operates as a Credit Access Business in Texas, through which it offers loans originated by an unaffiliated, third-party lender. In addition, DFS UK offers loans in the United Kingdom. DFS Canada does not currently offer any loans.

        As of April 1, 2012, DFS had 76 employees, including part-time employees, primarily located at DFS's corporate headquarters in North Logan, Utah, which manages the loan underwriting, collections, information technology, and other aspects of the DFS business. Unless stated otherwise, information in this prospectus regarding our business does not give effect to the acquisition of DFS.

        Through our acquisition of DFS, we gain access to a scalable Internet-based revenue opportunity. We believe this additional retail channel will enable us to efficiently reach consumers not fully served by our existing retail locations. Our objective will be to accelerate the growth of DFS through incremental capital, application of retailing strategies and an expansion of its product offerings.

        For the year ended December 31, 2011, based on DFS's unaudited financial information provided to us by the seller, DFS reported revenues and EBITDA of approximately $22.7 million and $3.5 million, respectively.

        Florida Acquisition.    On April 22, 2012, we signed a definitive purchase agreement to acquire the assets of a retail consumer finance operator in the state of Florida. This retail consumer finance company operates over 30 stores in South Florida markets. The purchase price will be $45.5 million, subject to certain closing adjustments, and we expect to close this transaction in the second fiscal quarter of 2012, though our obligation to close is conditioned on completion of this offering. For 2011, based on unaudited financial information provided to us by the seller, the company reported revenues and EBITDA of approximately $20.5 million and $7.2 million, respectively. We believe this potential acquisition, or the Florida Acquisition, represents an attractive growth opportunity in what we view as a stable market. We believe we will be able to enhance the contribution of the acquired stores through a combination of implementing our prepaid card program and applying our retail strategies.

        We remain in active dialogue with numerous potential acquisition targets. Our historic growth has included acquisitions, which have provided additional revenue through increasing the number of our retail locations, and growth from implementing our business plan and product offerings in newly acquired stores. We plan to continue to execute on this strategy in the future.

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INDUSTRY OVERVIEW

        We operate in a segment of the financial services industry that serves unbanked and underbanked consumers in need of convenient and immediate access to cash and other financial products and services, often referred to as "alternative financial services". Our industry provides services to an estimated 60 million unbanked and underbanked consumers in the United States. Products and services offered by this industry segment include various types of short-term loans (including payday loans, title loans, small installment loans, internet loans and pawn loans), medium-term loans, check cashing, prepaid card products, rent-to-own products, bill payment services, tax preparation, money orders and money transfers. Consumers who use these services are often underserved by banks and other traditional financial institutions and referred to as "unbanked" or "underbanked" consumers.

        We believe that consumers seek our industry's services for numerous reasons, including because they often:

    prefer and trust the simplicity, transparency and convenience of our products;

    may have a dislike or distrust of banks due to confusing and complicated fee structures that are not uncommon for traditional bank products;

    require access to financial services outside of normal banking hours;

    have an immediate need for cash for sudden financial challenges and unexpected expenses;

    have been rejected for or are unable to access traditional banking or other credit services;

    seek an alternative to the high cost of bank overdraft fees, credit card and other late payment fees and utility late payment, disconnect and reconnection fees; and

    wish to avoid potential negative credit consequences of missed payments with traditional creditors.

        Demand in our industry has been fueled by several demographic and socioeconomic trends, including an overall increase in the population and stagnant to declining growth in the household income for working-class individuals. In addition, many banks have reduced or eliminated services that working-class consumers require, due to the higher costs associated with serving these consumers and increased regulatory and compliance costs. The necessity for our products was highlighted by a recent paper from the NBER, which found that half of the Americans surveyed reported that it is unlikely that they would be able to gather $2,000 to cover a financial emergency, even if given a month to obtain funds. As a result of these trends, a significant number of retailers in other industries have begun to offer financial services to these consumers. The providers of these services are fragmented and range from specialty finance stores to retail stores in other industries that offer ancillary financial services.

        We believe that the markets in which we operate are highly fragmented. Stephens estimates that short-term consumer lenders generated approximately $40.0 billion of domestic transaction volume in 2010 from approximately 19,500 storefronts and 150 online lenders. According to Stephens, only seven industry participants have more than 500 storefront locations, and the largest 15 operators account for less than 51% of the storefronts in the United States. FiSCA estimated that in 2007 there were approximately 13,000 check-cashing and other fee-based financial service locations in the United States that cashed approximately $58.0 billion in aggregate face amount of checks.

        We anticipate consolidation within the industry will continue as a result of numerous factors, including:

    economies of scale available to larger operators;

    adoption of technology to better serve customers and control large store networks;

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    increased licensing, zoning and other regulatory requirements; and

    the inability of smaller operators to form the alliances necessary to deliver new products and adapt to changes in the regulatory environment.

        The prepaid debit card space is one of the most rapidly growing segments of our industry. Mercator's analysis of the prepaid debit card industry indicates that $28.6 billion was loaded onto general-purpose reloadable cards during 2009, a 47% growth rate from 2008, and estimates that the total general-purpose reloadable card market will grow at a compound annual growth rate of 63% from 2007 to 2013, reaching an estimated $201.9 billion in load volume by 2013. A March 2011 study conducted by Bretton Woods concluded that the opening of reloadable prepaid debit card accounts may surpass the opening of new checking accounts in the coming years as a result of the fact that prepaid debit cards, particularly when combined with direct deposit, will in many instances be less expensive for consumers than traditional checking accounts.

        We take an active leadership role in numerous trade organizations that represent our industry's interests and promote best practices within the industry, including the Community Financial Services Association of America, FiSCA, the National Branded Prepaid Card Association and the American Association of Responsible Auto Lenders.


OUR STRENGTHS

        We believe the following strengths differentiate us from our competitors in the marketplace and will enable us to maintain our position as a leading retailer in the alternative financial services industry.

        Leading Market Position with Industry Leading Operating Metrics.    We are one of the largest operators in our industry. We operate 435 stores across 14 states, in an industry that remains highly fragmented. As a result of our focus on store selection and design and our efforts to provide consistent, high-quality customer service, we have achieved per store revenue and per store Adjusted EBITDA contribution levels that we believe substantially exceed our publicly traded peers. For the year ended December 31, 2011, we generated revenue per store of over $795,000, with each store contributing, on average, more than $227,000 to Adjusted EBITDA. We estimate that these figures are approximately 1.7 to 3.2 times and 1.4 to 4.3 times, respectively, those of our publicly traded peers over the same period. For an explanation of how we calculate these figures, see "Certain Financial Measures and Other Information".

        Proven History of Successful Acquisition Integration.    We have invested significant resources in building a scalable company-wide platform in areas such as collections, call center operations, information technology, and legal and compliance, in order to successfully integrate acquired companies and stores into our business. This scalable infrastructure and proven acquisition platform has allowed us to integrate acquired businesses and stores efficiently and implement our unique retail focus to grow revenue. For example, we have been able to integrate our existing product offerings and customer service-oriented approach to significantly increase store-level revenues following the acquisition of 19 stores in the Alabama Acquisition and eight stores in the Michigan Acquisition. Our stores in the Michigan market experienced 26.4% revenue growth for the year ended December 31, 2011 as compared to the year ended December 31, 2010. Our stores in the Alabama market experienced 34.4% revenue growth for the year ended December 31, 2011 as compared to the same period in 2010. In both California and Illinois, we have introduced our enhanced service offerings following those acquisitions. Revenues from the stores acquired in the California Acquisition grew 9.8% during the fourth quarter of 2011 as compared to the fourth quarter of 2010. In the acquired Illinois stores, we have focused on growing customer count in 2011 following the implementation of a new lending statute in Illinois that resulted in a decline in revenue.

        Best-in-Class Customer Service.    We believe that our retailing competency and our focus on and reputation for superior customer service have been key drivers of our success. We seek to consistently

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deliver fast, professional service with courteous, personalized treatment designed to ensure that customers feel valued and respected. Our superior customer service culture is primarily the result of the following:

    Convenient store layout, locations and hours.  Our stores are generally designed to maximize customer traffic and privacy while minimizing customer wait time. Our stores typically have five to seven teller stations, which allow us to serve multiple customers simultaneously and reduce customer wait time. We seek to place our stores in locations that are easily accessible, have ample parking and are in areas of high commercial traffic. We use highly visible signage to attract customers and reinforce brand recognition. Our management believes that our stores are typically open longer hours than those of our publicly traded peers and that we have more 24-hour stores than any of our publicly traded peers. Our stores are typically open from 8 a.m. to 8 p.m., Monday through Saturday, and 11 a.m. to 5 p.m. on Sunday, and 26 of our stores are open 24 hours per day.

    Highly Trained and Long-Tenured Employees.  We dedicate significant resources to training and retaining our employees, resulting in what we believe is meaningfully lower employee turnover compared to our peers. Our branch employees are trained and incentivized to be efficient and helpful in meeting customer needs. We believe our approach promotes customer trust and, ultimately, customer loyalty. All of our district and regional managers have experience working in our stores, where they gained operational expertise and local market awareness, which we believe translates into the ability to make and implement appropriate strategic and operational decisions. We maintain an internal, centralized collections department that is staffed with personnel who specialize in collection activities. Our centralized collections model allows store-level employees to focus on customer service while leaving collections activities to dedicated and skilled professionals. We have designed an incentive-based compensation structure that we believe keeps our branch employees, managers and collections specialists properly motivated.

        Diversified Revenue Mix.    We operate a scalable business model with significant product and geographic diversification across our operating platform. Our diverse product offerings allow us to better serve our customers by providing a solution that fits their particular financial needs.

        In 2011, newly piloted offerings included a revamped tax preparation service which, in most states in which it was offered, was coupled with a lending feature, and an automotive insurance product. In addition to product expansion, we have focused on channel expansion. During 2011, we expanded our call-center capabilities to enable direct-to-consumer marketing. The acquisition of DFS provides us with an Internet channel to serve customers.

        Track Record of Flexible and Innovative Execution.    Historically, we have proactively and successfully responded to legislative developments in the jurisdictions in which we operate and have continued to offer innovative products that meet our customers' financial needs. In states where the market has been impacted by disruptive legislative developments, we have generally been able to utilize our execution capabilities to modify and introduce products that comply with the applicable legislative frameworks but preserve, to the greatest extent possible, our financial performance. We have not exited any geographic markets as a result of regulatory changes, although we have ceased offering short-term loans to members of the U.S. military as a result of Department of Defense regulations and to residents of Arizona as a result of a change in the law in Arizona. Despite recent changes in the regulatory regimes in a number of the states in which we operate, from 2009 to 2011, we grew revenue and Adjusted EBITDA at compound annual growth rates of 23.1% and 21.3%, respectively.

        Scalable IT Infrastructure and Compliance Focus.    We have committed significant resources to develop a scalable technology platform capable of supporting significant growth. Our point-of-sale, or POS, systems and collections and accounting systems interface with each other, allowing close monitoring of store performance and collections while also providing real-time reporting capabilities.

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Our IT infrastructure enables us to centrally control and implement changes to consumer loan agreement terms or Truth-in-Lending disclosures required by statutory or regulatory developments. We utilize our scalable IT infrastructure with robust internal compliance systems and audit teams, which regularly evaluate each store to confirm strict adherence to applicable laws and regulations and test store-based systems that are in place to detect and prevent fraudulent activities. Our Chief Compliance and Technology Officer serves as an executive level officer and is actively involved in the process of developing new products and bringing them to market. The acquisition of DFS, an e-commerce company, provides us additional scalable IT competencies, including systematic risk-management tools, which can be applied across our business.

        Experienced and Innovative Management Team.    Our management team consists of individuals highly experienced in the short-term consumer loan, check cashing and prepaid debit card industries, as well as other financial and retail-based businesses. Ted Saunders, our Chief Executive Officer, who has been with us for 5 years and was promoted from Chief Financial Officer to Chief Executive Officer in 2008, has managed all areas of operations and finance during his tenure. Kyle Hanson, our President, has been with us for 13 years and was previously a District Manager, Regional Manager and then our Vice-President of Store Operations before assuming his current position. Our Chief Compliance and Technology Officer, Chad Streff, has been with us for 10 years. Michael Durbin, our Chief Financial Officer, joined us in 2008. Additionally, since its initial investment in 2006, Diamond Castle Holdings LLC, or Diamond Castle, and its board designees have provided us with valuable operational and strategic experience and insight. Our Chairman, Gene Lockhart, has substantial experience in retail financial services and card products and services, having previously served as President of the Global Retail Bank at Bank of America, President and Chief Executive Officer of MasterCard International and Chairman of NetSpend Corporation.


GROWTH STRATEGY

        Our goal is to be the provider of choice for retail consumer finance products in each of the markets in which we operate. Our strategy is to capitalize on our competitive strengths to increase our revenues, profitability and cash flow through (1) advancing our retail strategies with innovative products and services, (2) executing on strategic accretive acquisitions and organic growth and (3) continuing to diversify through product, geographic and retail channel expansion.

        Advancing our retail strategies with innovative products and services.    We believe we achieve superior per store metrics by successfully executing customer-centric retailing. In striving to satisfy our customers' financial service needs, we continue to expand our product and service offerings. This expansion in products and services is evident in the growth of title loans, which represented 6.1% of revenue in 2011 versus only 3.5% in 2009, and in the growth of prepaid debit card products and services, which represented 6.5% of revenue in 2011 versus only 1.0% in 2009. The launch of prepaid debit card products in our stores, which offer an increasingly popular alternative to cash for our customers, has been highly successful to date, and we anticipate positioning our card products as a central platform to address our customers' wide range of financial needs. In addition, during 2011, we successfully piloted a tax preparation service, which was coupled with a lending feature in most states in which it was offered, and began piloting an automotive insurance product. We intend to continue to evaluate and offer new products and services to meet the needs of our customers and to increase customer loyalty and our market share. We believe that our retailing expertise, together with our scalable infrastructure, provide us with the ability to innovate in product development by introducing new products or adapting and evolving current products and services to respond to consumer demand or potential regulatory changes.

        Executing on strategic accretive acquisitions and organic growth.    We believe that opportunistic and strategic accretive acquisitions of stores, loan portfolios and customer lists will allow us to continue to expand into new markets, increase our presence in existing markets and grow transaction volume in

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existing stores. CCCS is a recent example of an acquisition that we believe positions us for continued growth. The combination of CCCS with CheckSmart provided us with a unique opportunity to expand our market presence in California through an established platform that shared many of CheckSmart's operating practices and philosophies, including a customer service-oriented retail business model, diverse product offerings, attractive and prominent real estate and comprehensive information technology infrastructure. We believe the California market offers a stable regulatory environment for our products and services, as California's enabling legislation has remained substantially unchanged since its passage 15 years ago. In combining CCCS's 114 Northern California stores with CheckSmart's existing 17 Northern California stores, we believe we are the alternative financial services market leader in Northern California by store count, with a combined population of approximately 14.3 million in the Northern California markets we serve. We have introduced elements of CheckSmart's retail model within CCCS's operations. In December of 2011, we completed the consolidation of the corporate headquarters facility to achieve operational efficiencies. Revenues from the stores acquired in the California Acquisition grew 9.8% during the fourth quarter of 2011 as compared to the fourth quarter of 2010. We also anticipate introducing certain other of our best practices at existing CCCS stores in order to enhance further the CCCS store base, particularly in the areas of consumer lending and prepaid debit card products. We believe that we will be able to further increase store volume in CCCS stores, bringing store-level performance closer to the performance we have historically experienced across the rest of our store portfolio.

        The market in which we operate is fragmented. We believe compliance demands and competitive pressures will continue to encourage weaker competitors to exit the market. We intend to continue to expand our network of stores opportunistically through strategic acquisitions in our current markets, as well as in new domestic and, possibly, international markets. In the past, we have opportunistically acquired loan portfolios and customer lists from small competitors, and we will continue to evaluate these opportunities in the future as an efficient means of growing transaction volume in our existing stores and delivering our full suite of services to a broader customer base. We believe that our scalable infrastructure and acquisition platform enables us to successfully integrate and improve the operations of stores that we acquire. At the stores we acquired in Alabama and Michigan, we were able to substantially improve store level operating profit during the first year following each acquisition. For the year ended December 31, 2011, the revenues from the stores acquired through the Michigan and Alabama Acquisitions increased by more than 26% compared to the prior year. We intend to use our experience in implementing best practices to continue to improve the financial performance of acquired stores.

        In select markets that we believe represent unique growth opportunities, we will continue to open new stores. These will typically be to fill-in markets, to improve our market presence or to pursue niche opportunities.

        Continuing to diversify through product, geographic, and retail channel expansion.    The segment of the market we serve is large and growing. The National Bureau of Economic Research reports that half of the Americans surveyed reported that it is unlikely they would be able to gather $2,000 to cover a financial emergency, even if given a month to obtain funds. We believe there is an opportunity to provide these potential customers with multiple financial products and services through the channel of their preference. At December 31, 2008, we operated through 252 retail branches in 11 states. At December 31, 2011, we operated through 435 retail branches in 14 states, serviced customers through a

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call center and delivered products through a prepaid card offered by Insight. Our objective is to continue to expand the products and services we offer this growing market segment as well as the geography and channels through which they are offered, as evidenced by our acquisition of the DFS Companies.


OUR LARGEST SHAREHOLDER

        Founded in 2004, Diamond Castle is a leading private equity investment firm with over $1.85 billion of capital under management. The Diamond Castle partners have an established history of successful investing at DLJ Merchant Banking Partners dating back to the early 1990s. The firm invests across a range of industries, with particular focus on the financial services, energy and power, and healthcare sectors. The Community Choice Financial investment was led by Gene Lockhart, the former Chairman of Financial Institutions at Diamond Castle, President of the Global Retail Bank at Bank of America, CEO of MasterCard International and Chairman of NetSpend Corporation. In addition to Community Choice Financial, Diamond Castle's current portfolio of companies includes Alterra Capital, EverBank Financial, Beacon Health Strategies, Managed Health Care Associates, KDC Solar and Professional Directional. Upon completion of this offering, Diamond Castle will beneficially own approximately 25.8% of our outstanding common shares, or approximately 20.8% of our outstanding common shares if the underwriters fully exercise their overallotment option.


CORPORATE INFORMATION

        Community Choice Financial Inc. was formed on April 6, 2011 under the laws of the State of Ohio by the shareholders of CheckSmart Financial Holdings Inc. to be the holding company of CheckSmart Financial Holdings Corp. and to acquire the ownership interests of CCCS Corporate Holdings, Inc. through a merger. CCFI acquired CCCS through a merger on April 29, 2011. As of December 31, 2011, we owned and operated 435 stores in 14 states. We are primarily engaged in the business of providing consumer retail financial services and have grown from 179 stores in April 2006, when Diamond Castle purchased a majority interest in CheckSmart.

        Our corporate offices are located at 7001 Post Road, Suite 200, Dublin, Ohio 43016. Our telephone number is (614) 798-5900 and our website is located at www.ccfi.com. Information appearing on or accessible through our website is not part of this prospectus.

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THE OFFERING

Common shares offered by us

  10,666,667 common shares

Common shares to be outstanding after this offering

 

18,648,203 common shares

Option to purchase additional shares

 

We and the selling shareholders have granted the underwriters an option for a period of 30 days to purchase up to an aggregate of an additional 1,600,000 common shares.

Use of proceeds

 

We estimate that the net proceeds to us of this offering, after deducting the underwriting discount and estimated offering expenses, will be approximately $137.1 million. We intend to use the net proceeds to fund acquisitions, including the Florida Acquisition, to pay a termination fee of approximately $5.8 million under our management agreement and for general corporate purposes, which may include redeeming up to $39.5 million aggregate principal amount of our senior notes. We will not receive any of the proceeds from the sale of common shares by the selling shareholders in connection with any exercise of the underwriters' overallotment option. However, we will receive net proceeds of approximately $2.6 million if the underwriters exercise their overallotment option in full, prior to giving effect to the payment of $5.2 million to management referred to under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments". See "Use of Proceeds".

Dividend policy

 

We do not expect to pay dividends on our common shares in the foreseeable future. Our future decisions concerning the payment of dividends on our common shares will depend upon our results of operations, financial condition, contractual obligations, business prospects and capital expenditure plans, as well as any other factors that our board of directors may consider relevant. See "Dividend Policy".

Proposed Nasdaq Global Market symbol

 

We have applied to list our common shares on The Nasdaq Global Market under the symbol "CCFI".

Risk factors

 

See "Risk Factors" beginning on page 23 and other information included in this prospectus for a discussion of factors you should carefully consider before deciding whether to invest in our common shares.

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        Unless otherwise indicated, this prospectus:

    assumes no exercise of the underwriters' option to purchase up to an aggregate of            additional common shares from us and the selling shareholders;

    assumes an initial public offering price of $14.00 per share, the midpoint of the estimated offering range set forth on the cover of this prospectus;

    reflects a six-for-one share split with respect to our common shares;

    does not reflect a total of 35,130 restricted stock units, which vest automatically upon the completion of this offering;

    does not reflect a total of 1,577,004 common shares underlying employee equity grants; and

    does not reflect 312,768 additional common shares reserved for issuance under our equity compensation plan.

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SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA

        The following table sets forth CCFI's summary historical consolidated financial and other data, as of December 31, 2010 and 2011 and for the years ended December 31, 2009, 2010 and 2011. The summary historical financial and other data as of December 31, 2010 and 2011 and for each of the years ended December 31, 2009, 2010 and 2011 have been derived from, and should be read together with, CCFI's audited historical consolidated financial statements and the accompanying notes included elsewhere in this prospectus.

        You should read the following information in conjunction with "Capitalization" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and CCFI's consolidated financial statements and related notes included elsewhere in this prospectus.

 
  Year Ended December 31,  
(In thousands)
  2009   2010   2011  

Revenues:

                   
 

Finance receivable fees

  $ 136,957   $ 146,059   $ 196,153  
 

Check cashing fees

    53,049     55,930     72,800  
 

Card fees

    2,063     10,731     19,914  
 

Other

    10,614     11,560     18,067  
               
   

Total revenues

    202,683     224,280     306,934  
               

Branch expenses:

                   
 

Salaries and benefits

    34,343     38,759     57,411  
 

Provision for loan losses

    43,463     40,316     65,351  
 

Occupancy

    13,855     14,813     21,216  
 

Depreciation and amortization

    6,613     5,318     5,907  
 

Other

    22,652     27,994     35,515  
               
   

Total branch expenses

    120,926     127,200     185,400  
               
   

Branch gross profit

    81,757     97,080     121,534  
               

Corporate expenses

    31,518     33,940     44,742  

Transaction expense

        237     9,351  

Depreciation and amortization

    568     1,222     2,332  

Interest expense, net

    11,532     8,501     34,334  

Equity investment loss

            415  

Nonoperating income, management fees

    (172 )   (46 )   (46 )
               
   

Income before income taxes and discontinued operations

    38,311     53,226     30,406  

Provision for income taxes

   
14,042
   
19,801
   
13,553
 
               
   

Income from continuing operations

    24,269     33,425     16,853  

Discontinued operations (net of provision (benefit) for income tax of $226, ($1,346) and $0)

   
368
   
(2,196

)
 
 
               
   

Net income

    24,637     31,229     16,853  

Net loss attributable to non-controlling interests

   
   
(252

)
 
(120

)
               
   

Net income attributable to controlling interests

  $ 24,637   $ 31,481   $ 16,973  
               

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  Year Ended December 31,  
(In thousands, except per share and share amounts)
  2009   2010   2011  

Earnings per share—basic

                   
 

Operating income available to controlling interests—per share

  $ 3.95   $ 5.49   $ 2.30  
   

Discontinued operations—per share

    0.06     (0.36 )    
               
 

Net income available to controlling interests—per share

  $ 4.01   $ 5.13   $ 2.30  
               

Earnings per share—diluted

                   
 

Operating income available to controlling interests—per share

  $ 3.88   $ 5.33   $ 2.21  
   

Discontinued operations—per share

    0.06     (0.34 )    
               
 

Net income available to controlling interests—per share

  $ 3.94   $ 4.99   $ 2.21  
               

Weighted average common shares outstanding—basic

    6,139,536     6,139,536     7,380,996  
               

Weighted average common shares outstanding—diluted

    6,251,316     6,314,358     7,686,072  
               

 

 
  Year Ended December 31,  
(In thousands, except for stores data, averages,
percentages or unless otherwise specified)
  2009   2010   2011  

Balance Sheet Data (at period end):

                   

Cash and cash equivalents

  $ 27,959   $ 39,780   $ 65,635  

Finance receivables, net

    66,035     81,337     120,451  

Total assets

    280,476     310,644     515,547  

Total debt

    193,365     188,934     395,000  

Total stockholders' equity

    77,791     109,791     61,314  

Other Operating Data (unaudited):

                   

Number of stores (at period end)

    264     282     435  

Short-term consumer loans data:

                   

Loan volume

  $ 1,162,086   $ 1,237,163   $ 1,543,310  

Number of loans

    2,816     2,956     3,625  

Average new loan size

  $ 412.67   $ 418.53   $ 425.72  

Average new loan fee

  $ 42.79   $ 43.14   $ 46.37  

Loan loss provision

  $ 28,856   $ 27,560   $ 40,636  

Loan loss provision as a percentage of volume

    2.5 %   2.2 %   2.6 %

Check cashing data:

                   

Face amount of checks cashed

  $ 1,309,425   $ 1,442,501   $ 2,163,276  

Number of checks cashed

    3,029     3,292     4,869  

Face amount of average check

  $ 432.08   $ 438.13   $ 444.26  

Average fee per check

  $ 17.51   $ 16.99   $ 14.95  

Returned check expense

  $ 3,058   $ 3,034   $ 5,085  

Returned check expense as a percentage of face amount of checks cashed

    0.2 %   0.2 %   0.2 %

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  Year Ended December 31,  
(In thousands, except for stores data, averages,
percentages or unless otherwise specified)
  2009   2010   2011  

Medium-term loan data:(1)

                   

Principal outstanding

  $ 3,109   $ 3,601   $ 12,174  

Number of loans outstanding

    9,365     10,275     20,818  

Average principal outstanding

  $ 331.97   $ 350.47   $ 584.79  

Average monthly percentage rate

    22.3 %   22.0 %   19.2 %

Allowance as a percentage of finance receivable

    42.7 %   11.7 %   10.6 %

Loan loss provision

  $ 6,708   $ 5,267   $ 11,470  

Title loan data:

                   

Principal outstanding

  $ 6,047   $ 9,541   $ 17,334  

Number of loans outstanding

    6,077     9,597     15,283  

Average principal outstanding

  $ 995.00   $ 994.12   $ 1,134.20  

Average monthly percentage rate

    16.0 %   13.8 %   13.3 %

Allowance as a percentage of finance receivable

    12.1 %   5.3 %   5.3 %

Loss loss provision

  $ 2,970   $ 3,497   $ 5,463  

Overall company data:

                   

Total revenues

  $ 202,683   $ 224,280   $ 306,934  

Loan loss provisions

    41,592     39,358     62,654  

Other ancillary product provisions

    1,871     958     2,697  

Total loan loss provision

  $ 43,463   $ 40,316   $ 65,351  

Total loan loss provision as a percentage of revenue

    21.4 %   18.0 %   21.3 %

Other Financial Data (unaudited):

                   

EBITDA(2)

  $ 57,392   $ 66,071   $ 72,979  

Adjusted EBITDA(2)

    59,421     72,012     86,807  

Capital expenditures

    2,769     1,688     4,261  

(1)
Loan participations are grouped with medium-term loans in our consolidated financial statements included elsewhere in this prospectus, but are excluded from these calculations.

(2)
EBITDA is defined as net income (loss) plus provision for income taxes, net interest expense, and depreciation and amortization. Adjusted EBITDA represents EBITDA as adjusted for certain items described in the table below.


EBITDA is presented because we believe it is useful to investors as a widely accepted financial indicator of our operating performance. We utilize EBITDA frequently in our decision-making because we believe it provides meaningful information regarding our operating performance and facilitates comparisons to our historical operating results.


We also use, and we believe investors also benefit from the presentation of, Adjusted EBITDA to assess our operating performance. Adjusted EBITDA excludes net income (loss) attributable to non-controlling interests and certain expenses that we do not consider indicative of our ongoing performance, and therefore we believe that Adjusted EBITDA makes it easier for investors and others to evaluate our results on a normalized basis and to compare our operating results from period to period.


EBITDA and Adjusted EBITDA are not defined under United States generally accepted accounting principles, or GAAP, should not be considered in isolation or as a substitute for measures of our performance prepared in accordance with GAAP and are not indicative of income from operations as determined under GAAP. Because not all companies use identical calculations, the presentation of EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.

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The following table provides an unaudited reconciliation of net income (loss) to EBITDA and Adjusted EBITDA:

 
  Year Ended December 31,  
 
  2009   2010   2011  
 
  (In thousands)
 

Net income

  $ 24,637   $ 31,229   $ 16,853  

Provision for income taxes

    14,042     19,801     13,553  

Interest expense, net

    11,532     8,501     34,334  

Depreciation and amortization (Branch)

    6,613     5,318     5,907  

Depreciation and amortization (Corporate)

    568     1,222     2,332  
               
 

EBITDA

    57,392     66,071     72,979  
               

Discontinued operations(a)

    (368 )   2,196      

Diamond Castle management fee(b)

    833     1,184     1,381  

Diamond Castle collateral fee(c)

        400     107  

Transaction expenses(d)

        237     9,351  

Non-controlling interest(e)

        252      

Non-cash loss(f)

    361         34  

Non-cash compensation(g)

    1,057     338     105  

Ohio DIT tax(h)

    146     105     144  

Non-recurring legal settlement(i)

        900      

Latin Card consolidated loss(j)

        329     911  

Insight Card equity investment loss(k)

            159  

Lease adjustment(l)

            678  

One-time compensation charge(m)

            49  

CCCS corporate closure(n)

            411  

CCCS Integration costs(o)

            498  
               
 

Adjusted EBITDA

  $ 59,421   $ 72,012   $ 86,807  
               

(a)
Reflects results, net of tax, of our discontinued Florida commercial check cashing business. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Discontinued Operations".

(b)
Represents fees paid by us to Diamond Castle. The management agreement will be terminated upon completion of this offering and a termination fee will be paid using a portion of the proceeds from this offering. See "Use of Proceeds" and "Certain Relationships and Related Party Transactions".

(c)
Represents fees paid by us to Diamond Castle with respect to an arrangement of treasury management services.

(d)
Represents legal and due diligence expenses incurred in connection with acquisitions.

(e)
Represents the non-controlling interest's share of a consolidated subsidiary's net loss.

(f)
Represents non-cash loss on properties sold by us.

(g)
Represents non-cash compensation expense incurred in connection with employee equity grants.

(h)
Represents Ohio's Dealer Intangibles tax, which is a replacement for the franchise tax that is not accounted for as income tax in our consolidated financial statements.

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(i)
Represents amounts reserved in connection with the anticipated settlement of litigation in California stemming from employee claims under California law. See "Business—Legal Proceedings".

(j)
Represents results attributable to Latin Card Strategy, LLC, or Latin Card, an entity which we formerly consolidated for purposes of our financial statements prior to March 31, 2011. In May 2011, we decreased our ownership interest in Latin Card to 49% and no longer consolidate the results of this entity for purposes of our financial statements.

(k)
Represents results attributable to the investment in Insight Holding, in which we acquired a 22.5% interest on November 11, 2011.

(l)
Represents non-cash expense recognized for deferred rent as it relates to escalation of rent payments.

(m)
Represents severance payments to CCCS employees terminated as a result of the California Acquisition.

(n)
Represents the lease termination accrual and severance related to closing the CCCS corporate office in December 2011.

(o)
Represents costs for activities directly related to the integration of the California Acquisition, including information technology, accounting and training expenses.

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SUMMARY UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

        The pro forma information set forth below gives effect to the California Acquisition, the Illinois Acquisition, the senior notes offering, the establishment of our revolving credit facility and this offering, as if they had each occurred on January 1, 2011. We have derived the pro forma consolidated financial data for the year ended December 31, 2011 by calculating the historical consolidated financial data for the period ended December 31, 2011 for CCFI and for the period ended April 29, 2011 for CCCS, the date of the California Acquisition, and then applying pro forma adjustments to give effect to such transactions. The pro forma information is unaudited, is for informational purposes only and is not necessarily indicative of what our financial position or results of operations would have been had such transactions been completed as of the dates indicated and does not purport to represent what our results of operations might be for any future period.

        The following summary pro forma consolidated financial data should be read in conjunction with "Selected Historical Consolidated Financial Data", "Unaudited Pro Forma Consolidated Financial Information", "Use of Proceeds", "Management's Discussion and Analysis of Financial Condition and Results of Operations", and the consolidated financial statements of CCFI and CCCS and the accompanying notes thereto included elsewhere in this prospectus.

(In thousands)
  Year Ended
December 31,
2011
 

Revenue:

       

Finance receivable fees

  $ 208,093  

Check cashing fees

    82,272  

Card fees

    20,611  

Other

    21,751  
       
   

Total revenue

    332,727  

Salaries and benefits

    65,286  

Provision for loan losses

    67,832  

Occupancy

    24,207  

Depreciation and amortization

    6,050  

Other

    37,653  
       
     

Total branch expenses

    201,028  
     

Branch gross profit

   
131,699
 

Corporate Expenses

   
45,510
 

Depreciation and amortization

    3,407  

Interest expense, net

    40,706  

Goodwill impairment

    28,986  

Equity investment loss

    415  

Non-operating income, mgmt fees

    (46 )
       
 

Income before taxes and discontinued operations

    12,721  

Provision for income taxes

    4,834  
       

Total net income

    7,887  

Pro Forma EBITDA(1)

   
62,884
 

Pro Forma Adjusted EBITDA(1)

 
$

98,148
 

(1)
Pro Forma EBITDA is defined as pro forma net income plus provision for income taxes, net interest expense, and depreciation and amortization. Pro Forma Adjusted EBITDA represents Pro Forma EBITDA adjusted for certain items described in the table below.

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        EBITDA (including Pro Forma EBITDA) is presented because we believe it is useful to investors as a widely accepted financial indicator of our operating performance. We utilize EBITDA frequently in our decision-making because it provides meaningful information regarding our operating performance and facilitates comparisons to our historical operating results.

        We also use, and we believe investors also benefit from the presentation of, Adjusted EBITDA (including Pro Forma Adjusted EBITDA) to assess our operating performance. Adjusted EBITDA excludes net income (loss) attributable to non-controlling interests and certain expenses that we do not consider indicative of our ongoing performance, and therefore we believe that Adjusted EBITDA makes it easier for investors and others to evaluate our results on a normalized basis and to compare our operating results from period to period.

        Pro Forma EBITDA and Pro Forma Adjusted EBITDA are not defined under GAAP, should not be considered in isolation or as a substitute for measures of our performance prepared in accordance with GAAP and are not indicative of income from operations as determined under GAAP. Because not all companies use identical calculations, the presentation of EBITDA and Adjusted EBITDA (including such measures presented on a Pro Forma basis) may not be comparable to other similarly titled measures of other companies.

        The following table provides an unaudited reconciliation of pro forma net income to Pro Forma EBITDA and Pro Forma Adjusted EBITDA for the year ended December 31, 2011:

(In thousands)
  Year Ended
December 31,
2011
 

Pro Forma Net Income

  $ 7,887  
 

Depreciation and amortization

    9,457  
 

Interest expense, net

    40,706  
 

Provision for income taxes

    4,834  
       

Pro Forma EBITDA

    62,884  

Adjustments to Pro Forma EBITDA

       
 

Latin card(a)

    911  
 

Loss on disposition of assets(b)

    34  
 

Diamond Castle collateral fee(c)

    107  
 

Non-cash compensation(d)

    105  
 

Ohio DIT tax(e)

    144  
 

One-time compensation charges(f)

    49  
 

Insight Card equity investment loss(g)

    159  
 

Lease adjustment(h)

    678  
 

California Acquisition provision adjustment(i)

    1,150  
 

Goodwill and intangible assets impairment(j)

    28,986  
 

CCCS corporate closure(k)

    411  
 

CCCS integration costs(l)

    498  
 

CCCS closure cost savings(m)

    2,032  
       
   

Total Adjustments to EBITDA

    35,264  

Pro Forma Adjusted EBITDA

 
$

98,148
 

(a)
Represents results attributable to Latin Card, an entity which we formerly consolidated for purposes of our financial statements prior to March 31, 2011. In May 2011, we decreased our ownership in Latin Card to 49% and no longer consolidate the results of this entity for purposes of our financial statements.

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(b)
Represents non-cash loss on properties sold by us.

(c)
Represents fees paid by us to Diamond Castle with respect to an arrangement of treasury management services.

(d)
Represents non-cash compensation expense in connection with employee equity grants.

(e)
Represents Ohio's Dealer Intangibles tax, which is replacement for the franchise tax that is not accounted for as income tax in our consolidated financial statements.

(f)
Represents severance payments to CCCS's employees as the result of the California Acquisition.

(g)
Represents equity in investee losses from the date of our investment in Insight Holding to December 31, 2011.

(h)
Represents non-cash expense recognized for deferred rent as it relates to escalation of rent payments.

(i)
Represents a one-time adjustment in connection with the California Acquisition to expense returned checks and loans past due, in each case for CCCS, in order to conform with our accounting policies related to chargeoffs.

(j)
Represents impairments of intangible assets associated with CCCS as of March 31, 2011, comprising a $24.1 million impairment of goodwill and a $4.9 million impairment of trademarks. These impairments were determined using cash flow analysis and other relevant factors and were tested when the California Acquisition value indicated potential impairment.

(k)
Represents the lease termination accrual and severance related to closing the CCCS corporate office in December of 2011.

(l)
Represents costs for activities directly related to the integration of the California Acquisition, including information technology, accounting and training expenses.

(m)
Represents the full-year effect of costs eliminated as a result of closure of CCCS's corporate office. We closed the office on December 31, 2011, eliminating inefficiencies by consolidating these operations into CCFI headquarters in Dublin, Ohio.

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RISK FACTORS

        An investment in our common shares involves a significant degree of risk. Prior to making an investment decision, you should carefully consider, along with other information set forth in this prospectus, the following risk factors. The following risks and uncertainties could materially adversely affect our business, financial condition or operating results. In this event, the trading price of our common shares could decline, and you could lose part or all of your investment.

Risks Related to Our Business

We are subject to regulation at both the state and federal levels that is subject to varying interpretations, and our failure to comply with applicable regulations could result in significant liability to us as well as significant additional costs to bring our business practices into compliance.

        Our business and products are subject to extensive regulation by state, federal and local governments that may impose significant costs or limitations on the way we conduct or expand our business. In general, these regulations are intended to protect consumers and not our shareholders. See "Business—Regulation and Compliance" for a discussion of the regulatory environment in which we operate.

        These regulations include those relating to:

    usury, interest rates and fees;

    deferred presentment/small denomination lending, including terms of loans (such as maximum rates, fees and amounts and minimum durations); limitations on renewals and extensions; and disclosures;

    licensing and posting of fees;

    lending practices, such as Truth-in-Lending;

    unfair, deceptive and abusive acts and practices in consumer transactions;

    check cashing;

    money transmission;

    currency and suspicious activity recording and reporting;

    privacy of personal consumer information; and

    prompt remittance of excess proceeds for the sale of repossessed automobiles in certain states in which we operate as a title lender.

        Most state laws that specifically regulate our products and services establish allowable fees, interest rates and other financial terms. In addition, many states regulate the maximum amount, maturity, frequency and renewal or extension terms of the loans we provide, as well as the number of simultaneous or consecutive loans. The terms of our products and services vary from state to state in order to comply with the specific laws and regulations of those states.

        Our business is also regulated at the federal level. Our lending, like our other activities, is subject to routine oversight by the Federal Trade Commission, or FTC, and, effective July 2011 and as discussed in more detail below, is also subject to supervision by the Consumer Financial Protection Bureau, or CFPB. See "—The Dodd-Frank Act authorizes the newly created CFPB to adopt rules that could potentially have a serious impact on our ability to offer short-term consumer loans and it also empowers the CFPB and state officials to bring enforcement actions against companies that violate federal consumer financial laws."

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        In addition, our lending activities are subject to disclosure and non-discrimination requirements, including under the federal Truth-in-Lending Act, Regulation Z adopted under that Act and the Equal Credit Opportunity Act, as well as requirements governing electronic payments and transactions, including the Electronic Funds Transfer Act. In 2007, the U.S. Congress effectively prohibited lenders from making certain short-term consumer loans to members of the U.S. military, active-duty reservists and National Guard, and their respective dependents. Our operations are also subject to the rules and oversight of the Internal Revenue Service and U.S. Treasury related to the Bank Secrecy Act and other anti-money laundering laws and regulations, as well as the privacy and data security regulations under the Gramm-Leach-Bliley Act.

        Statutes authorizing consumer loans and similar products and services, such as those we provide, typically provide the state agencies that regulate banks and financial institutions or similar state agencies with significant regulatory powers to administer and enforce the law. In most jurisdictions, we are required to apply for a license, file periodic written reports regarding business operations, and undergo comprehensive examinations or audits from time to time to assess our compliance with applicable laws and regulations.

        State attorneys general and financial services regulators scrutinize our products and services and could take actions that may require us to modify, suspend, or cease operations in their respective states. We regularly receive, as part of comprehensive state examinations or audits or otherwise, comments from state attorneys general and financial services regulators about our business operations and compliance with state laws and regulations. These comments sometimes allege violations of, or deficiencies in complying with, applicable laws and regulations. While we have resolved most such allegations promptly and without penalty, we operate in a large number of jurisdictions with varying requirements and we cannot anticipate how state attorneys general and financial services regulators will scrutinize our products and services or the products and services of our industry in the future. If we fail to resolve future allegations satisfactorily, there is a risk that we could be subject to significant penalties, including material fines, or that we may lose our licenses to operate in certain jurisdictions.

        Regulatory authorities and courts have considerable discretion in the way they interpret licensing and other statutes under their jurisdiction and may seek to interpret or enforce existing regulations in new ways. If we fail to observe, or are not able to comply with, applicable legal requirements (as such requirements may be interpreted by courts or regulatory authorities), we may be forced to modify or discontinue certain product service offerings or to invest additional amounts to bring our product service offerings into compliance, which could adversely impact our business, results of operations and financial condition. In addition, in some cases, violation of these laws and regulations could result in fines, penalties and other civil and/or criminal penalties. For example, state laws may require lenders that charge interest at rates considered to be usurious or that otherwise violate the law to pay a penalty equal to the principal and interest due for a given loan or loans or a multiple of the finance charges assessed. Depending on the nature and scope of a violation, fines and other penalties for non-compliance of applicable requirements could be significant and could have a material adverse effect on our business, results of operation and financial condition.

        In states in which we are licensed to operate, we must comply with all applicable license requirements, including those concerning direct or indirect changes in control of the licensed entities. Most states in which we conduct licensed operations impose requirements related to changes in control of licensed entities or changes of officers of licensed entities or of controlling entities of licensed entities. There is a risk that state agencies responsible for licensing our operations may, as a result of this offering, impose unexpected requirements related to the change of control of the Company or its subsidiaries. Any such unexpected requirements in any state, if imposed, could result in delays or limitations on our operations in that state.

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Changes in applicable laws and regulations, including adoption of new laws and regulations, governing consumer protection, lending practices and other aspects of our business could have a significant adverse impact on our business, results of operations, financial condition or ability to meet our obligations, or make the continuance of our current business impractical, unprofitable or impossible.

        We are subject to the risk that the laws and regulations governing our business are subject to change. State legislatures, the U.S. Congress, and various regulatory bodies may adopt legislation, regulations or rules that could negatively affect our results of operations or make the continuance of our current business impractical, unprofitable or impossible.

        For instance, at the federal level, bills were introduced in Congress in 2008 and 2009 that would have placed a federal cap of 36% on the APR applicable to all consumer loan transactions. Another bill directed at payday loans would have placed a 15-cent-per-dollar borrowed ($0.15/$1.00) cap on fees for cash advances, banned rollovers (which is a practice that allows consumers to pay a fee to extend the term of a payday or other short-term loan), and required us to offer an extended payment plan that would have severely restricted many of our payday lending products. Consumer advocacy groups and other opponents of payday and title lending are likely to continue their efforts before Congress, state legislatures and, now, the CFPB, to adopt laws or promulgate rules that would severely limit, if not eliminate, such loans.

        Various states have also enacted or considered laws and regulations that could affect our business. Since July 1, 2007, several states in which we operate, including Florida, Illinois, Indiana, Kentucky, Ohio, and Virginia, have enacted laws (or in the case of Arizona, allowed the deferred presentment law to expire) that have impacted our short-term consumer loan business by adversely modifying or eliminating our ability to offer the loan products we previously offered in our stores in those jurisdictions. Recent state legislation has included the adoption of maximum APRs at rates well below a rate at which short-term consumer lending is profitable, the implementation of statewide consumer databases combined with the adoption of rules limiting the maximum number of payday or other short-term consumer loans any one customer can have outstanding at one time or in the course of a given period of time, the adoption of mandatory cooling-off periods for consumer borrowers and the implementation of mandatory and frequently cost-free installment repayment plan options for borrowers who request them, who default on their loans or who claim an inability to repay their loans.

        In addition, under statutory authority, state regulators have broad discretionary power and may impose new licensing requirements, interpret or enforce existing regulatory requirements in different ways or issue new administrative rules, even if not contained in state statutes, that affect the way we do business and may force us to terminate or modify our operations in particular states or affect our ability to renew licenses we hold. Regulators may also impose rules that are generally adverse to our industry. Any new licensing requirements or rules, or new interpretations of existing licensing requirements or rules, or our failure to follow licensing requirements or rules could have a material adverse effect on our business, prospects, results of operations and financial condition.

        We cannot currently assess the likelihood of the enactment of any future unfavorable federal or state legislation or regulations. We cannot assure you that further legislative or regulatory initiatives will not be enacted that would severely restrict, prohibit or eliminate our ability to offer small denomination loan products to consumers. Future legislative or regulatory actions could entail reductions of the fees and interest that we are currently allowed to charge, limitations on loan amounts, lengthening of the minimum loan term and reductions in the number of loans a consumer may have outstanding at one time or over a stated period of time or could entail prohibitions against rollovers, consumer loan transactions or other services we offer. Such changes could have a material adverse impact on our business prospects, result of operations, financial condition and cash flows or could make the continuance of our current business impractical, unprofitable or impossible and therefore could impair our ability to meet our obligations and to continue current operations. Moreover, similar actions by

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states or by foreign countries in which we do not currently operate could limit our opportunities to pursue our growth strategies. As we develop new services, we may become subject to additional federal and state regulations.

As a result of our acquisition of DFS, we are subject to additional regulatory requirements and our failure to comply with such regulation could result in significant liability and materially adversely affect our business.

        As a result of our acquisition of DFS, we are now offering loans to consumers over the Internet through the DFS Companies. In most cases, DFS's subsidiaries are licensed by the jurisdiction in which they offer loans. In the event a state does not have licensing requirements for entities that have no physical presence in the state, the loans are offered under DFS's home state license in Delaware. DFS offers loans to residents of Alabama, Alaska, California, Delaware, Hawaii, Idaho, Kansas, Louisiana, Minnesota, Missouri, Nevada, North Dakota, Rhode Island, South Dakota, Utah, Washington, Wyoming and Wisconsin. In addition, DFS operates as a credit access business in Texas, through which it offers loans originated by an unaffiliated third-party lender. Further, DFS also offers loans in the United Kingdom through DFS UK and is able to offer loans through a Canadian entity, though it does not currently do so. While we have not previously offered loans in many of these jurisdictions, as a result of the acquisition of DFS, we are subject to the regulatory requirements of such jurisdictions, and our failure to comply with such regulations could subject us to significant liability and result in a material adverse effect on our business.

        In addition, DFS relies heavily on the use of lead generators or providers as a source of first-time borrowers. The CFPB has indicated its intention to examine compliance with federal laws and regulations and to scrutinize the flow of non-public, private consumer information between lead generators and lead buyers, such as DFS. The use of such lead generators could subject us to additional regulatory cost and expense and, if DFS's ability to use lead generators were to be impaired, DFS's business could be materially adversely affected and we may not realize the expected benefits of our acquisition of DFS.

        Further, borrowers repay loans made by DFS in the United States through automated clearing house funds transfer authorizations. Borrowers repay loans made by DFS in the United Kingdom by way of authorizations to process the repayment charge to the borrower's debit card. The CFPB has indicated its intention to scrutinize the electronic transfers of funds to repay certain small denomination loans. If DFS were to be restricted in its ability to rely on such funds transfers, its business could be materially adversely affected and we may not realize the expected benefits of our acquisition of DFS.

Short-term consumer lending, including payday lending, is highly controversial and has been criticized as being predatory by certain advocacy groups, legislators, regulators, media organizations and other parties.

        A significant portion of our revenue and net income comes from loan interest and fees on payday or similar short-term consumer loans and from services we provide our customers. The short-term consumer loans we make typically involve APRs exceeding 395%. Consumer advocacy groups and media reports often focus on the costs to a consumer for small denomination loans and claim that such loans can trap borrowers in a "cycle of debt" and claim further that they are predatory or abusive. While we believe that these loans provide substantial benefits when responsibly utilized, the controversy surrounding this activity may result in our and the industry being subject to the threat of adverse legislation, regulation or litigation motivated by such critics. Such legislation, regulation or litigation could have a material adverse effect on our business, results of operations and financial condition or could make the continuance of our current business impractical, unprofitable or impossible. In addition, if this negative characterization of small consumer loans becomes increasingly accepted by consumers, demand for these loan products could significantly decrease, which could have a material adverse effect

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on our business, results of operations and financial condition. Further, media coverage and public statements that assert some form of inappropriateness in our products and services can lower employee morale, make it more difficult for us to attract and retain qualified employees, management and directors, divert management attention and increase expense.

The Dodd-Frank Act authorizes the newly created CFPB to adopt rules that could potentially have a serious impact on our ability to offer short-term consumer loans and it also empowers the CFPB and state officials to bring enforcement actions against companies that violate federal consumer financial laws.

        Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or Dodd-Frank or the Dodd-Frank Act, created the CFPB. The CFPB became operational in July 2011, and on January 4, 2012, Richard Cordray was installed as its director. The CFPB has regulatory, supervisory and enforcement powers over providers of consumer financial products and services, including explicit supervisory authority to examine and require registration of payday lenders. Although it has not yet done so, the CFPB now has the authority to adopt rules describing specified acts and practices as being "unfair", "deceptive" or "abusive," and hence unlawful. In addition, the CFPB has issued examination procedures for, and has begun conducting examinations of, payday lenders, evidencing the CFPB's intention to exercise the powers afforded it. The CFPB has informed us that it will begin an examination of us in late April 2012. Though we expect that this examination will be similar to those conducted by other regulators with which we work, the CFPB has never examined us before and has only very recently begun conducting examinations at all. Accordingly, we can provide no assurances as to the process, scope or results of their examination of us and how their examination of us or others will impact us directly or their rulemaking. Some consumer advocacy groups have suggested that payday and title lending should be a regulatory priority. In addition, some consumer advocacy groups have suggested that certain aspects of payday loans are "abusive" and therefore such loans should be declared unlawful. Accordingly, it is possible that at some time in the future the CFPB could propose and adopt rules making such lending services materially less profitable or impractical, forcing us to modify or terminate certain product offerings, including payday and/or title loans. The CFPB could also adopt rules imposing new and potentially burdensome requirements and limitations with respect to our other lines of business. Any of these potential rules discussed in this paragraph could have a material adverse effect on our business, results of operation and financial condition or could make the continuance of our current business impractical, unprofitable or impossible.

        In addition to Dodd-Frank's grant of regulatory and supervisory powers to the CFPB, Dodd-Frank gives the CFPB authority to pursue administrative proceedings or litigation for violations of federal consumer financial laws (including the CFPB's own rules). In these proceedings, the CFPB can obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief) and monetary penalties ranging from $5,000 per day for ordinary violations of federal consumer financial laws to $25,000 per day for reckless violations and $1 million per day for knowing violations. Also, where a company has violated Title X of Dodd-Frank or CFPB regulations under Title X, Dodd-Frank empowers state attorneys general and state regulators to bring civil actions for the kind of cease and desist orders available to the CFPB (but not for civil penalties). If the CFPB or one or more state officials believe we have violated the foregoing laws or regulations, they could exercise their enforcement powers in ways that would have a material adverse effect on us.

Some of our (and our competitors') lending practices in certain states have become or may become the subject of regulatory scrutiny and/or litigation. An unfavorable outcome in ongoing or future litigation could force us to discontinue these business practices and/or make monetary payments. This could have a material adverse effect on our business, financial condition and results of operations.

        In most cases, our lending companies make short-term loans without any involvement of either affiliated or unaffiliated third parties. In Ohio and Arizona, however, our customers receive financial

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services through us from multiple parties. In Ohio, one of our companies makes loans at the highest rate permitted by applicable law and disburses loan proceeds in the form of money orders. One of our other companies, sharing the same office, at the borrower's election cashes these money orders for a fee. In Arizona (and to a limited extent in Ohio), we market prepaid debit cards and lines of credit offered by a licensed lender unaffiliated with us. If a customer obtains both a prepaid debit card and a line of credit, loan funds can be disbursed in multiple ways at the borrower's election, including: (1) a card load, if and when the borrower seeks to make a card purchase but has insufficient funds on the card; (2) a card load at the borrower's request in advance of a transaction; and (3) a check mailed to the borrower at his or her request. The lender charges the borrower the highest interest rate permitted by applicable law on their lines of credit and the card program manager charges cardholders separate monthly, transaction, load and other fees charged for their cards.

        While we believe that these multiple-party programs are lawful, they entail heightened legal risk when compared to our single-party loan programs. In an effort to prohibit programs similar to our Ohio program, in 2010 the Ohio Department of Commerce, Division of Financial Institutions, or the Ohio Division, adopted a rule (which was judicially declared invalid) and entered an order against another lender in regulatory enforcement proceedings (which order was vacated by the same judge that overturned the Ohio Division rule). The Ohio Division waived its right to appeal and agreed to terminate and/or not commence any regulatory proceedings challenging this practice. While this may mitigate the risk in Ohio under the current statutory and regulatory structure, if we adopted a similar program elsewhere, if there was a change in law in Ohio or if other pending litigation in Ohio successfully advances arguments that are contrary to those of the Ohio Division's currently stated position, we could be forced to discontinue charging fees for cashing money orders or checks that disburse the proceeds of loans we make and we could also become subject to private class action litigation with respect to fees collected under the current version of the program. This could have a material adverse effect on our business, financial condition and results of operations. See "Business—Legal Proceedings—Ohio Third-Party Litigation". Additionally, in the event of class action litigation and/or regulatory action in Arizona, a similar material adverse effect on our business, financial condition and results of operations could result.

Judicial decisions, CFPB rule-making or amendments to the Federal Arbitration Act could render the arbitration agreements we use illegal or unenforceable.

        We include pre-dispute arbitration provisions in our loan agreements. These provisions are designed to allow us to resolve any customer disputes through individual arbitration rather than in court. Our arbitration agreements contain certain consumer-friendly features, including terms that require in-person arbitration to take place in locations convenient for the consumer and provide consumers the option to pursue a claim in small claims court. However, our arbitration provisions explicitly provide that all arbitrations will be conducted on an individual and not on a class basis. Thus, our arbitration agreements, if enforced, have the effect of shielding us from class action liability. They do not generally have any impact on regulatory enforcement proceedings.

        We take the position that the Federal Arbitration Act requires the enforcement in accordance with the terms of arbitration agreements containing class action waivers of the type we use. While many courts, particularly federal courts, have agreed with this argument in cases involving other parties, an increasing number of courts, including courts in California, Missouri, Washington, New Jersey, and a number of other states, have concluded that arbitration agreements with class action waivers are "unconscionable" and hence unenforceable, particularly where a small dollar amount is in controversy on an individual basis.

        In April 2011, the U.S. Supreme Court ruled in the AT&T Mobility v. Concepcion case that consumer arbitration agreements meeting certain specifications are enforceable. Because our arbitration agreements differ in several respects from the agreement at issue in that case, this potentially limits the

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precedential effect of the decision on our business. In addition, Congress has considered legislation that would generally limit or prohibit mandatory pre-dispute arbitration in consumer contracts and has adopted such a prohibition with respect to certain mortgage loans and also certain consumer loans to members of the military on active duty and their dependents. Further, Dodd-Frank directs the CFPB to study consumer arbitration and report to Congress, and it authorizes the CFPB to adopt rules limiting or prohibiting consumer arbitration, consistent with the results of its study. Any such rule would apply to arbitration agreements entered into more than six months after the final rule becomes effective (and not to prior arbitration agreements).

        Any judicial decisions, legislation or other rules or regulations that impair our ability to enter into and enforce pre-dispute consumer arbitration agreements could significantly increase our exposure to class action litigation as well as litigation in plaintiff-friendly jurisdictions. Such litigation could have a material adverse effect on our business, results of operations and financial condition.

Provisions of Dodd-Frank limiting interchange fees on debit cards could reduce the appeal of debit cards we distribute and/or limit revenues we receive from our debit card activities.

        Dodd-Frank contains provisions that require the Federal Reserve Board to adopt rules that would sharply limit the interchange fees that large depository institutions (those that, together with their affiliates, have at least $10 billion of assets) can charge retailers who accept debit cards they issue. On June 29, 2011, the Federal Reserve Board set the interchange fee applicable to debit card transactions at 21 cents per transaction. While the statute does not apply to smaller entities, it is possible, and perhaps likely, that Visa, MasterCard and other debit card networks will continue their current practice of establishing the same interchange fees for all issuers or will establish interchange fees for exempt entities at levels significantly below current levels. If this happens, we would expect the issuer and processor of our debit cards to attempt to recover lost interchange revenues by imposing new or higher charges on cardholders and by seeking to capture a greater percentage of card revenues from us. Additional charges on debit cardholders could discourage use of debit cards for consumer transactions, and in either event, our revenues from prepaid debit card distribution would likely decline, perhaps materially.

Changes in local rules and regulations such as local zoning ordinances could negatively impact our business, results of operations and financial condition.

        In addition to state and federal laws and regulations, our business is subject to various local rules and regulations, such as local zoning regulations and permit licensing. Local jurisdictions' efforts to restrict the business of alternative financial services providers through the use of local zoning and permit laws have been on the rise. Any actions taken in the future by local zoning boards or other local governing bodies to require special use permits for, or impose other restrictions on, our ability to provide products and services could adversely affect our ability to expand our operations or force us to attempt to relocate existing stores.

Potential litigation and regulatory proceedings could have a material adverse impact on our business, results of operations and financial condition in future periods.

        We could become subject to lawsuits, regulatory proceedings or class actions challenging the legality of our lending practices. An adverse ruling in any proceeding of this type could force us to refund fees and/or interest collected, refund the principal amount of advances, pay triple or other multiple damages, pay monetary penalties and/or modify or terminate operations in particular states or nationwide. Defense of any lawsuit, even if successful, could require substantial time and attention of our senior management that would otherwise be spent on other aspects of our business and could require the expenditure of significant amounts for legal fees and other related costs. Settlement of lawsuits may also result in significant payments and modifications to our operations. For example, in

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December 2010, we reserved $0.9 million in connection with the pending settlements of lawsuits alleging violations of the California wage laws related to meal periods and rest breaks. See "Business—Legal Proceedings—California Settlement". Adverse interpretations of the law in proceedings in which we are not currently a party could also have a material adverse effect on our business, results of operations and financial condition. To protect us from potential legal and regulatory liability, we rely, in part, on the maintenance of the legal separation, or corporate veil, of our operating subsidiaries. If a court or regulatory body were to determine that such corporate veil is invalid, our business could be materially affected. For a more detailed description of the lawsuits, regulatory proceedings and potential settlements we are currently subject to, see "Business—Legal Proceedings".

A significant portion of our revenue is generated by our stores in Ohio and California and a limited number of other states.

        Approximately 35.8% of our stores are located in California, 22.8% of our stores are located in Ohio, 9.9% of our stores are located in Arizona and 5.1% of our stores are located in Virginia. In addition, if we complete the Florida Acquisition, approximately 10.1% of our stores would be located in Florida. As a result, if any of the events noted in this "Risk Factors" section were to occur with respect to our stores in these states, including changes in the regulatory environment, or if the economic conditions in any of these states were to worsen, any such event could significantly reduce our revenue and cash flow and materially adversely affect our business, results of operations and financial condition.

Our revenue and net income from check cashing services may be materially adversely affected if the number of consumer check cashing transactions decreases as a result of technological development or in response to changes in the tax preparation industry.

        For the fiscal years ended December 31, 2009, 2010 and 2011, approximately 26.2%, 24.9% and 23.7% of our revenues were generated from the check cashing business, respectively. For the year ended December 31, 2011, on a pro forma basis, approximately 29.0% of our revenues were generated from the check cashing business. Recently, there has been increasing penetration of electronic banking services into the check cashing and money transfer industry, including the increasing adoption of prepaid debit cards, direct deposit of payroll checks, electronic payroll payments, electronic transfers of government benefits, electronic transfers using on-line banking and other payment platforms. A recent study by the Federal Reserve Board suggests that payments through electronic transfers are displacing a portion of the paper checks traditionally cashed in our stores by our customers. Employers are increasingly making payroll payments available through direct deposit or onto prepaid debit cards. In addition, state and federal assistance programs are increasingly delivering benefits either through direct deposit programs or prepaid debit cards, and the federal government has announced initiatives to transition the disbursement of some federal tax refunds to prepaid debit cards. For example, in April 2011, the State of California stopped issuing paper checks to benefits recipients, which adversely affected our check cashing revenue in that state. Moreover, the rise of on-line payment systems that allow for electronic check and credit card payments to be made directly to individuals has further contributed to the decline in this market. To the extent that checks received by our customer base are replaced with such electronic transfers or electronic transfer systems developed in the future, both the demand for our check cashing services and our revenues from our check cashing business could decrease. In addition, a significant part of our business involves the cashing of tax refund checks. Recent changes in the tax preparation industry, including tax preparers offering prepaid debit cards as an alternative to tax refund checks and a decrease in the number of tax preparers offering refund anticipation loans (which are typically disbursed by checks at the offices of the tax preparer) could cause the number of tax refund checks we cash to decline, which could have a material adverse effect on our financial condition and results of operations.

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If our estimates of our loan losses are not adequate to absorb actual losses, our financial condition and results of operations could be adversely affected.

        We utilize a variety of underwriting criteria, actively monitor the performance of our loan portfolio and maintain an allowance for losses on loans we underwrite (including fees and interest) at a level estimated to be adequate to absorb credit losses inherent in our loan receivables portfolio. To estimate the appropriate level of loan loss reserves, we consider known and relevant internal and external factors that affect loan collectability, including the total amount of loans outstanding, historical loans charge-offs, our current collection patterns and current economic trends. Our methodology for establishing our allowance for doubtful accounts and our provision for loan losses is based in large part on our historic loss experience. If customer behavior changes as a result of economic conditions and if we are unable to predict how the widespread loss of jobs, housing foreclosures and general economic uncertainty may affect our loan loss allowance, our provision may be inadequate. In addition, our shift in mix to more medium-term loans will result in a higher provision for loan losses as a result of the nature of medium-term loans as compared to short term loans, and, as this is a relatively new product for us, our provision for loan losses may be inadequate to cover losses on medium-term loans. At December 31, 2010, our loan loss allowance was $3.4 million, and in 2010 we had a net charge off of $38.4 million related to losses on our loans. As of December 31, 2011, our loan loss allowance was $5.6 million, and in 2011 we had a net charge off of $55.3 million related to losses on our loans. Our loan loss allowance, however, is an estimate, and if actual loan losses are materially greater than our loan loss allowance, our financial condition and results of operations could be adversely affected.

The failure of third parties who provide products, services or support to us to maintain their products, services or support could disrupt our operations or result in a loss of revenue.

        We are reliant on third parties to provide certain products, services and support that is material to our business. In the event such parties become unwilling or unable to continue to provide such products, services or support to us, our business operations could be disrupted and our revenue could be materially and adversely affected. For example:

    In select markets, an optional feature available to customers who purchase prepaid debit cards is the ability to have a third-party lender direct loan proceeds onto the cards. In the event that this lender terminates this relationship or becomes unwilling or unable to fund short-term consumer loans to our customers, and there is not an alternative third-party lender willing to make short-term consumer loans to our customers on substantially similar terms, our revenue related to the sale and usage of prepaid debit cards could be materially and adversely affected.

    Our prepaid debit card business depends on our agreements for related services with Insight. If any disruption in this relationship occurs, our revenue generated as an agent for Insight's product offerings and one of the central focuses for our future growth strategy may be adversely affected.

    Our money transfer and money order business depends on our agreements for such services with Western Union and MoneyGram. If any disruption in these relationships occurs, our revenue generated from our money order and money transfer product offerings may be adversely affected. Approximately $1.5 million in 2009, $1.3 million in 2010 and $4.9 million in 2011, or 0.8%, 0.6% and 1.6%, respectively, of our total revenue for the years ended December 31, 2009, 2010 and 2011, was related to our money transfer and money order services, respectively.

    We also have product and support agreements with various other third-party vendors and suppliers. If a third-party provider fails to provide its product or service or to maintain its quality and consistency, we could lose customers and related revenue from those products or services, or we could experience a disruption in our operations, any of which may adversely affect our business, results of operations and financial condition.

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Our current and future business growth strategy involves new store acquisitions, and our failure to manage our growth or integrate or manage newly acquired stores may adversely affect our business, results of operations and financial condition.

        Our growth strategy provides for our continued expansion through the acquisition of new stores. The acquisition of additional stores may impose costs on us and subject us to numerous risks, including:

    costs associated with identification of stores to be acquired and negotiation of acceptable lease terms;

    exposure to new or unexpected changes to existing regulations as we enter new geographic markets;

    costs associated with, and consequences related to our failure to obtain, necessary regulatory approvals, including state licensing approvals for change-of-control;

    integration of acquired operations or businesses, including the transition to our information technology systems;

    the loss of key employees from acquired businesses;

    diversion of management's attention from our core business;

    incurrence of additional indebtedness (if necessary to finance acquisitions);

    assumption of contingent liabilities;

    the potential impairment of acquired assets;

    the possibility that tax authorities may challenge the tax treatment of future and past acquisitions;

    incurrence of significant immediate write-offs; and

    performance which may not meet expectations.

        We opened or acquired 21 stores in 2010. In 2011, we acquired 10 stores in Illinois in connection with the Illinois Acquisition, 141 stores in connection with the California Acquisition and we opened two other locations. Our continued growth is dependent upon a number of factors, including the availability of adequate financing and suitable store locations, acquisition opportunities and experienced management employees, the ability to obtain any required government permits and licenses and other factors, some of which are beyond our control. We cannot assure you that we will be able to expand our business successfully through additional store acquisitions. Our failure to successfully expand, manage or complete the integration of new stores or acquired businesses may adversely affect our business, results of operations and financial condition.

We may not realize the expected benefits of the recent or pending acquisitions because of integration difficulties and other challenges.

        The success of any acquisitions will depend, in part, on our ability to integrate the acquired business with our business and our ability to increase their store-level performance in line with our historical store-level performance. The integration process may be complex, costly and time-consuming and may not result in the anticipated improvements to store-level performance. The difficulties of integrating the operation of a business may include, among others:

    failure to implement our business plan for the combined business;

    failure to achieve expected synergies or cost savings;

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    unanticipated issues in integrating information, technology and other systems;

    unanticipated challenges in implementing our short-term consumer lending practices in acquired stores or in marketing loan products to their existing customers;

    unanticipated changes in applicable laws and regulations; and

    unanticipated issues, expenses and liabilities.

        We may not accomplish the integration of the acquired business smoothly, successfully or with the anticipated costs or time frame. The diversion of the attention of management from our operations to the integration effort and any difficulties encountered in combining operations could prevent us from realizing the full benefits anticipated to result from the acquisition and could adversely affect our business.

The acquisition of DFS has resulted in a new line of business for us that could be difficult to integrate, disrupt our business or harm our results of operations.

        We have never provided Internet loan products. The acquisition of DFS provides us with a new line of business offering loan products over the Internet. The process of integrating the acquired business, technology and service component into our business and operations, or our entry into a line of business in which we are inexperienced, may result in unforeseen operating difficulties and expenditures. We are relying on DFS's existing management team's experience and expertise in providing Internet loan products as we expand into this new line of business. If we were to lose the services of a significant portion of this management team, this line of business and our financial results could be adversely affected. In developing this line of business, we may invest significant time and resources and devote significant attention of management that would otherwise be focused on development of our existing business, which may affect our results of operations, and we may not be able to take full advantage of the business opportunities available to us as we expand this new line of business. Additionally, we may experience difficulties with technological changes in the Internet lending business. Moreover, we will be subject to regulations in connection with doing business and offering loan products over the Internet, with which we do not have experience. Failure to successfully manage these risks in the development and implementation of this new line of business could have a material adverse effect on our business, financial condition and results of operations.

We are subject to impairment risk.

        At December 31, 2011, we had goodwill totaling $256.0 million on our consolidated balance sheet, all of which represents the excess of costs paid to acquire assets and liabilities over the fair value of those assets and liabilities. Accounting for goodwill requires significant management estimates and judgment. Events may occur in the future and we may not realize the value of our goodwill. Management performs reviews annually and when events or circumstances warrant a review of the carrying values of the goodwill to determine whether events and circumstances indicate that an impairment in value may have occurred. A variety of factors could cause the carrying value of our goodwill to become impaired. Should a review indicate impairment, a write-down of the carrying value of our goodwill would occur, resulting in a non-cash charge, which would adversely affect our results of operations.

We may not be successful at entering new businesses or broadening the scope of our existing product and service offerings.

        We may enter into new businesses that are adjacent or complementary to our existing businesses and that broaden the scope of our existing product and service offerings. For example, we have recently

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entered the business of offering loan products over the Internet through the acquisition of DFS. We may not achieve our expected growth if we are not successful in entering these new businesses or in broadening the scope of our existing product and service offerings. In addition, entering new businesses and broadening the scope of our existing product and service offerings may require significant upfront expenditures that we may not be able to recoup in the future. These efforts may also divert management's attention and expose us to new risks and regulations. As a result, entering businesses and broadening the scope of our existing product and service offerings may have a material adverse effect on our business, results of operations and financial condition.

Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations under our senior notes or other indebtedness.

        We have a significant amount of indebtedness. As of December 31, 2011, our outstanding senior indebtedness was approximately $395 million, all of which was secured indebtedness, and we had availability of $40 million under our revolving credit facility, and our Alabama subsidiary's borrowing availability under its secured credit facility was $7 million.

        Our substantial indebtedness could have important consequences to you. For example, it could:

    make it more difficult for us to satisfy our obligations with respect to our senior notes and our other indebtedness;

    require us to dedicate a substantial portion of our cash flow from operations to payments of principal and interest on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, business development, acquisitions, general corporate or other purposes;

    increase our vulnerability to and limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

    increase our vulnerability to general adverse economic and industry conditions;

    restrict us from making strategic acquisitions or cause us to make non-strategic divestitures;

    place us at a competitive disadvantage compared to our competitors that have less debt; and

    limit our ability to refinance our indebtedness, including our senior notes, or to obtain additional debt or equity financing for working capital, capital expenditures, business development, debt service requirements, acquisitions and general corporate or other purposes.

        We expect to use cash flow from operations and borrowings under our revolving credit facilities to meet our current and future financial obligations, including funding our operations, debt service requirements, small acquisitions and capital expenditures. Our ability to make these payments depends on our future performance, which will be affected by financial, business, economic and other factors, many of which we cannot control. Our business may not generate sufficient cash flow from operations in the future, which could result in our being unable to repay indebtedness or to fund other liquidity needs.

Risks of leverage and debt service requirements may hamper our ability to operate and grow our revenues.

        Our debt-to-equity ratio is high due to the requirement of borrowing funds to continue operations. High leverage creates risks, including the risk of default under our revolving credit facility or our senior notes. The interest expense associated with our debt burden may be substantial and may create a significant drain on our future cash flow. These payments may also place us at a disadvantage relative

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to other better capitalized competitors and increase the impact of competitive pressures within our markets. For more information regarding the impact of our substantial indebtedness, please see "—Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations under our senior notes or other indebtedness." As of December 31, 2011, our total debt was $395.0 million and our negative tangible capital was $198.2 million.

Despite our current level of indebtedness, we may still be able to incur substantial additional indebtedness. This could exacerbate the risks associated with our substantial indebtedness.

        We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of the indenture governing our senior notes and the agreement governing our revolving credit facility limit, but do not prohibit, us or our subsidiaries from incurring additional indebtedness. If we incur any additional indebtedness the holders of that indebtedness will be entitled to share ratably with our other secured and unsecured creditors in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding-up of our business prior to any recovery by our shareholders. This may have the effect of reducing the amount of proceeds paid to you in such an event. If new indebtedness, including under our revolving credit facilities, is added to our current debt levels, the related risks that we and our subsidiaries now face could intensify, especially with respect to the demands on our liquidity as a result of increased interest commitments.

Covenants in our debt agreements restrict our business in many ways.

        The indenture governing our senior notes and the agreement governing our revolving credit facility contain various covenants that, subject to certain exceptions, including customary baskets, generally limit our ability and our subsidiaries' ability to, among other things:

    incur or assume liens or additional debt or provide guarantees in respect of obligations of other persons;

    issue redeemable stock and preferred stock;

    pay dividends or distributions or redeem or repurchase capital stock;

    prepay, redeem or repurchase debt;

    make loans and investments;

    enter into agreements that restrict distributions from our subsidiaries;

    sell assets and capital stock of our subsidiaries;

    engage in certain transactions with affiliates; and

    consolidate or merge with or into, or sell substantially all of our assets to, another person.

        As of the end of any fiscal quarter for which we have borrowings outstanding under our revolving credit facility, we must have a leverage ratio, defined as consolidated total indebtedness less excess cash, divided by EBITDA for the trailing twelve months, equal to or less than 5.0 to 1. In calculating the leverage ratio, we calculate EBITDA and excess cash, which were $98.4 million and $43.3 million, respectively, for the twelve months ended and as of December 31, 2011, pursuant to the terms of our revolving credit facility. EBITDA is calculated under our revolving credit facility in substantially the same manner as Pro Forma Adjusted EBITDA is calculated as set forth under the heading "Prospectus Summary—Summary Unaudited Pro Forma Consolidated Financial Information". However, EBITDA, as calculated under our revolving credit facility, does not include an add-back for $678,000 of lease

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adjustments, which is included in the calculation of Pro Forma Adjusted EBITDA, but includes $946,000 of additional corporate allocations in connection with the integration of CCCS, which are excluded from the calculation of Pro Forma Adjusted EBITDA. Excess cash under our revolving credit facility is an amount equal to our and our restricted subsidiaries' cash and cash equivalents minus (i) funds in accounts used for taxes or payments to employees and other fiduciary funds and (ii) an amount equal to the product of $50,000 multiplied by the number of stores we own and operate. As of December 31, 2011, our leverage ratio was 3.6 to 1. A breach of any of these covenants would limit our ability to borrow funds under our revolving credit facility and could result in a default under the revolving credit facility and/or the senior notes. Upon the occurrence of an event of default under our revolving credit facility or our senior notes, the lenders or the holders of our senior notes, as the case may be, could elect to declare all amounts outstanding under the applicable indebtedness to be immediately due and payable and the lenders could terminate all commitments to extend further credit under our revolving credit facility. If we were unable to repay those amounts, the lenders and holders of our senior notes could proceed against the collateral granted to them to secure that indebtedness. We have pledged substantially all of our assets as collateral under the revolving credit facility and as security for our senior notes. If the lenders under our revolving credit facility accelerate the repayment of borrowings or the holders of our senior notes accelerate repayment of our senior notes, we may not have sufficient assets to repay the amounts outstanding under our indebtedness. See "Description of Certain Indebtedness".

Changes in credit ratings issued by statistical rating organizations could adversely affect our costs of financing.

        Credit rating agencies rate our indebtedness based on factors that include our operating results, actions that we take, their view of the general outlook for our industry and their view of the general outlook for the economy. Actions taken by the rating agencies can include maintaining, upgrading or downgrading the current rating or placing us on a watch list for possible future downgrading. Downgrading the credit rating of our indebtedness or placing us on a watch list for possible future downgrading could limit our ability to access the capital markets to meet liquidity needs and refinance maturing liabilities or increase the interest rates and our cost of financing.

If we lose key management or are unable to attract and retain the talent required for our business, our operating results and growth could suffer.

        Our future success depends to a significant degree upon the members of our senior management. The loss of the services of members of senior management could harm our business and prospects for future development. Our continued growth also will depend upon our ability to attract and retain additional skilled management personnel. If we are unable to attract and retain the requisite personnel, our business, results of operations and financial condition may be adversely affected.

We are dependent on hiring an adequate number of hourly employees to run our business and are subject to government regulations concerning these and our other employees, including minimum wage laws.

        Our workforce is comprised primarily of employees who work on an hourly basis. In certain areas where we operate, there is significant competition for employees. Our ability to continue to expand our operations depends on our ability to attract, train and retain a large and growing number of qualified employees. The lack of availability of an adequate number of hourly employees or increase in wages and benefits to current employees could adversely affect our operations. We are subject to applicable rules and regulations relating to our relationship with our employees, including the U.S. Fair Labor Standards Act, the U.S. Immigration Reform and Control Act of 1986 and various federal and state laws governing various matters including minimum wage and break requirements, exempt status classification, health benefits, unemployment and employment taxes and overtime and working conditions. Legislative increases in the federal minimum wage, as well as increases in additional labor

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cost components, such as employee benefit costs, workers' compensation insurance rates, compliance costs and fines, as well as the cost of litigation in connection with these regulations, would increase our labor costs. Furthermore, if we are unable to locate, attract, train or retain qualified personnel, or if our costs of labor increase significantly, our business, results of operations and financial condition may be adversely affected.

Competition in the retail financial services industry is intense and could cause us to lose market share and revenue.

        The industry in which we operate has low barriers to entry and is highly fragmented and very competitive. In addition, we believe that the market will become more competitive as the industry continues to consolidate. We compete with other check cashing stores, short-term consumer lenders, internet lenders, mass merchandisers, grocery stores, banks, savings and loan institutions, other financial services entities and other retail businesses that cash checks, offer short-term consumer loans, sell money orders, provide money transfer services or offer similar products and services. Some of our competitors have larger and more established customer bases, and substantially greater financial, marketing and other resources, than we do. For example, Walmart offers a general-purpose reloadable prepaid debit card and also offers check cashing services, money transfers and bill payments through its "Money Centers" in select locations. In addition, short-term consumer loans are increasingly being offered by local banks and employee credit unions. Our stores also face competition from automated check cashing machines deployed in supermarkets, convenience stores and other venues by large financial services organizations. In addition, our competitors may operate, or begin to operate, under business models less focused on legal and regulatory compliance than ours, which could put us at a competitive disadvantage. We cannot assure you that we will be able to compete successfully against any or all of our current or future competitors. As a result, we could lose market share and our revenue could decline, thereby affecting our ability to generate sufficient cash flow to service our indebtedness and fund our operations.

Our competitors' use of other business models could put us at a competitive disadvantage and have a material adverse effect on our business.

        We operate our business pursuant to the laws and regulations of the states in which our stores are located, including compliance with the maximum fees allowed and other limitations, and we are licensed in every state in which we lend. Some of our competitors, especially internet lenders, operate using other business models, including a "single-state model" where the lender is generally licensed in one state and follows only the laws and regulations of that state regardless of the state in which the customer resides and the lending transaction takes place, an "offshore model" where the lender is not licensed in any U.S. state and does not typically comply with any particular state's laws or regulations and a "tribal model" where the lender follows the laws of a Native American tribe regardless of the state in which the lender is located, the customer resides and the lending transaction takes place. Competitors using these models may have higher revenue per customer and significantly less burdensome compliance requirements, among other advantages. Additionally, negative perceptions about these models could cause legislators or regulators to pursue additional industry restrictions that could affect the business model under which we operate, which could have a material adverse effect on our business, prospects, results of operations and financial condition.

A reduction in demand for our products and services and failure by us to adapt to such reduction could adversely affect our business and results of operations.

        The demand for a particular product or service we offer may be reduced due to a variety of factors, such as regulatory restrictions that decrease customer access to particular products, the availability of competing products or changes in customers' preferences or financial conditions. Should

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we fail to adapt to significant changes in our customers' demand for, or access to, our products or services, our revenues could decrease significantly and our operations could be harmed. Even if we do make changes to existing products or services or introduce new products or services to fulfill customer demand, customers may resist or may reject such products or services. Moreover, the effect of any product change on the results of our business may not be fully ascertainable until the change has been in effect for some time and by that time it may be too late to make further modifications to such product or service without causing further harm to our business, results of operations and financial condition.

Demand for our products and services is sensitive to the level of transactions effected by our customers, and accordingly, our revenues could be affected negatively by a general economic slowdown.

        A significant portion of our revenue is derived from cashing checks and consumer lending. Revenues from check cashing and consumer lending accounted for 24.9% and 65.2%, respectively, of our total revenue for the year ended December 31, 2010 and 23.7% and 63.9%, respectively, of our total revenue for the year ended December 31, 2011. An economic slowdown could cause deterioration in the performance of our loan portfolio and in consumer demand for our financial products and services. For example, a significant portion of our check cashing business is generated by cashing payroll checks and any prolonged economic downturn or increase in unemployment could have a material adverse effect on such business. In addition, reduced consumer confidence and spending may decrease the demand for our other products and services. Also, any changes in economic factors that adversely affect consumer transactions and employment could reduce the volume of transactions that we process and have an adverse effect on our business, results of operations and financial condition.

Our future growth and financial success will be harmed if there is a decline in the use of prepaid debit cards as a payment mechanism or if there are adverse developments with respect to the prepaid debit card services industry in general.

        Our business strategy is dependent, in part, upon the general growth in demand for prepaid debit cards. As the market for prepaid debit card services matures, consumers may find prepaid debit cards to be less attractive than traditional bank solutions. Further, other alternatives to prepaid debit cards may develop and limit the growth of, or cause a decline in the demand for, prepaid debit cards. In addition, negative publicity surrounding other prepaid debit card services providers could impact our business and prospects for growth to the extent it adversely impacts the perception of prepaid debit card services industry among consumers. If consumers do not continue to increase their usage of prepaid debit card services, our operating revenues may remain at current levels or decline. Predictions by industry analysts and others concerning the growth of prepaid debit card services as an electronic payment mechanism, including those in this prospectus, may overstate the growth of an industry, segment or category, and you should not place undue reliance upon them. The projected growth may not occur or may occur more slowly than estimated. If consumer acceptance of prepaid debit card services does not continue to develop or develops more slowly than expected or if there is a shift in the mix of payment forms, such as cash, credit cards, traditional debit cards and prepaid debit cards, away from our products and services, it could have a material adverse effect on our business, results of operations and financial condition.

The pro forma financial information in this prospectus may not be reflective of our operating results and financial condition following the California Acquisition and related transactions.

        The pro forma financial information included in this prospectus is derived from our and CCCS's separate historical audited and unaudited consolidated financial statements, as well as from certain internal, unaudited financial statements relating to our acquired stores in Illinois that were provided by the sellers in connection with those acquisitions. The preparation of this pro forma information is based

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upon available information and certain assumptions and estimates that we believe are reasonable. This pro forma information may not necessarily reflect what our results of operations and financial position would have been had the California Acquisition and related transactions and the Illinois Acquisition occurred during the periods presented or what our results of operations and financial position will be in the future. Additionally, the pro forma information reflects financial information for our Alabama and Illinois acquired stores for the periods prior to when we acquired them, and we cannot assure you that this financial information is accurate.

Disruptions in the credit markets may negatively impact the availability and cost of our short-term borrowings, which could adversely affect our results of operations, cash flows and financial condition.

        If our cash flow from operations is not sufficient to fund our working capital and other liquidity needs, we may need to rely on the banking and credit markets to meet our financial commitments and short-term liquidity needs. Disruptions in the capital and credit markets, as have been experienced since 2008, could adversely affect our ability to draw on our revolving credit facility. Our access to funds under that credit facility is dependent on the ability of the banks that are parties to the facility to meet their funding commitments. Those banks may not be able to meet their funding commitments to us if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests from us and other borrowers within a short period of time. In addition, the effects of the global recession and its effects on our operations could cause us to have difficulties in complying with the terms of our revolving credit facility.

        Longer-term disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives, or failures of significant financial institutions could adversely affect our ability to refinance our outstanding indebtedness on favorable terms, if at all. The lack of availability under, and the inability to subsequently refinance, our indebtedness could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged. Such measures could include deferring capital expenditures, including acquisitions, and reducing or eliminating other discretionary uses of cash.

Our revenue and net income from check cashing services may be materially adversely affected if the number and amount of checks we cash that go uncollected significantly increases.

        When we cash a check, we assume the risk that we will be unable to collect from the check payor. We may not be able to collect from check payors as a result of a payor having insufficient funds in the account on which a check was drawn, stop payment orders issued by a payor or check fraud. If the number or amount of checks we cash that are uncollected increases significantly, our business, results of operations and financial condition may be materially adversely affected.

Any disruption in the availability or the security of our information systems or the Internet lending platform that we acquired from DFS or fraudulent activity could adversely affect our operations or subject us to significant liability or increased regulation.

        We depend on our information technology infrastructure to achieve our business objectives. Our information systems include POS systems in our stores and a management information system. Our personal computer-based POS systems are fully operational in all stores. The management information system is designed to provide summary and detailed information to our regional and corporate managers at any time through the Internet. In addition, this system is designed to manage our credit risk and to permit us to maintain adequate cash inventory, reconcile cash balances on a daily basis and report revenues and expenses to our headquarters. Moreover, in connection with our acquisition of DFS, we will begin offering loans and other products through our Internet lending platform. Any disruption in the availability of our information systems or Internet lending platform could adversely affect our business, results of operations and financial condition.

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        Furthermore, a security breach of our information systems or Internet lending platform could also interrupt or damage our operations or harm our reputation, and could subject us to significant liability if confidential customer information is misappropriated. Despite the implementation of significant security measures, our information systems and Internet lending platform may still be vulnerable to physical break-ins, computer viruses, programming errors, telecommunications failure or lost connectivity, attacks by third parties or similar disruptive problems. If confidential information belonging to our customers or business partners is misappropriated from our information systems or over the Internet, the owners of such information could sue us, asserting that we did not take adequate precautions to safeguard our systems and confidential data. Any breach of our security measures could damage our reputation and cause us to lose customers and revenue, result in the unintentional disclosure of company and customer information, and require us to incur significant expense to eliminate these problems, address related data security concerns and pay damages to third parties including customers.

        In addition, criminals are using increasingly sophisticated methods to engage in illegal activities such as fraud. Over the past several years, we and others in our industry have had customers and former customers contacted by unknown criminals making telephone calls attempting to collect debt, purportedly on our behalf. These criminals are often successful in fraudulently inducing payments to them. Increased fraud involving our products and services or affecting our customers could lead to litigation, significantly increased expenses, reputational damage, reduced use and acceptance of our products and services or new regulations and compliance obligations, which could have a material adverse effect on our business, prospects, results of operations and financial condition.

Our business may suffer if our trademarks or service marks are infringed.

        We rely on trademarks and service marks to protect our various brand names in our markets. Many of these trademarks and service marks have been a key part of establishing our business in the communities in which we operate. We believe these trademarks and service marks have significant value and are important to the marketing of our services. We cannot assure you that the steps we have taken or will take to protect our proprietary rights will be adequate to prevent misappropriation of our rights or the use by others of features based upon, or otherwise similar to, ours. In addition, although we believe we have the right to use our trademarks and service marks, we cannot assure you that our trademarks and service marks do not or will not violate the proprietary rights of others, that our trademarks and service marks will be upheld if challenged, or that we will not be prevented from using our trademarks and service marks, any of which occurrences could harm our business.

Part of our business is seasonal, which causes our revenue to fluctuate and may adversely affect our ability to service our debt.

        Our business is seasonal due to the impact of our customers cashing their tax refund checks with us and using the related proceeds in connection with our other products and services, such as prepaid debit cards. Also, our consumer loan business declines slightly in the first calendar quarter as a result of customers' receipt of tax refund checks. If our revenue were to fall substantially below what we would normally expect during certain periods, our annual financial results would be adversely impacted, as would our ability to service our debt.

Because we maintain a significant supply of cash in our stores, we may be subject to cash shortages due to robbery, employee errors and theft.

        Since our business requires us to maintain a significant supply of cash in each of our stores, we are subject to the risk of cash shortages resulting from robberies, as well as employee errors and theft. Although we have implemented various procedures and programs to reduce these risks, provide security, systems and processes for our employees and facilities, we cannot assure you that robberies,

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employee errors and theft will not occur. The extent of these cash shortages could increase as we expand the nature and scope of our products and services. Any such cash shortages could adversely affect our business, results of operations and financial condition.

If our insurance coverage limits are inadequate to cover our liabilities, or increases in our insurance costs continue to increase or we suffer losses due to one or more of our insurance carriers defaulting on their obligations, our financial condition and results of operations could be materially adversely affected.

        As a result of the liability risks inherent in our lines of business we maintain liability insurance intended to cover various types of property, casualty and other risks. The types and amounts of insurance that we obtain vary from time to time, depending on availability, cost and our decisions with respect to risk retention. The policies are subject to deductibles and exclusions that result in our retention of a level of risk on a self-insured basis. Our insurance policies are subject to annual renewal. The coverage limits of our insurance policies may not be adequate, and we may not be able to obtain liability insurance in the future on acceptable terms or at all. In addition, our insurance premiums may be subject to increases in the future, which increases may be material. Furthermore, the losses that are insured through commercial insurance are subject to the credit risk of those insurance companies. While we believe our commercial insurance providers are currently credit worthy, we cannot assure you that such insurance companies will remain so in the future. Inadequate insurance coverage limits, increases in our insurance costs or losses suffered due to one or more of our insurance carriers defaulting on their obligations, could have a material adverse effect on our financial condition and results of operations.

Our operations could be subject to natural disasters and other business disruptions, which could adversely impact our future revenue and financial condition and increase our costs and expenses.

        Our operations could be subject to natural disasters and other business disruptions, which could adversely impact our future revenue and financial condition and increase our costs and expenses. For example, the occurrence and threat of terrorist attacks may directly or indirectly affect economic conditions, which could in turn adversely affect demand for our services. In the event of a major natural or man-made disaster, such as hurricanes, floods, fires or earthquakes, we could experience loss of life of our employees, destruction of facilities or business interruptions, any of which could materially adversely affect us. More generally, any of these events could cause consumer confidence and spending to decrease or result in increased volatility in the U.S. economy and worldwide financial markets. Any of these occurrences could have a material adverse effect on our business, results of operations and financial condition.

Adverse real estate market fluctuations could affect our profits.

        We lease all of our store locations. A significant rise in overall lease costs may result in an increase in our store occupancy costs as we open new locations and renew leases for existing locations.

Risks Related to this Offering, the Securities Markets and Ownership of our Common Shares

There is no existing market for our common shares, and a trading market that will provide our shareholders with adequate liquidity may not develop.

        Prior to this offering, there has been no public market for our common shares. An active trading market for our common shares may never develop or be sustained, which could depress the market price of our common shares and could affect your ability to sell your common shares. In the event that the number of common shares to be sold in this offering is decreased, liquidity could be adversely affected even further. Shareholders may not be able to resell their shares at or above the initial public offering price. Additionally, the lack of liquidity may result in wide bid-ask spreads, contribute to significant fluctuations in the market price of our common shares and limit the number of investors who are able to buy our common shares.

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The price of our common shares may fluctuate significantly, and shareholders could lose all or part of their investment.

        The initial public offering price for our common shares will be determined by negotiations between us and the representative of the underwriters and may bear no relationship to the price at which our common shares will trade following the completion of this offering. The market price of our common shares may decline below the initial public offering price. The market price of our common shares following this offering is likely to be highly volatile and may be influenced by many factors, some of which are beyond our control, including:

    our quarterly or annual earnings or those of other companies in our industry;

    changes in accounting standards, policies, guidance, interpretations or principles;

    general economic conditions;

    the failure of securities analysts to cover our shares after this offering or changes in financial estimates by analysts;

    future sales of our common shares; and

    other factors described in this "Risk Factors" section.

After this offering, Diamond Castle will continue to have substantial influence over us, and their interests in our business may be different from yours.

        Upon completion of this offering, Diamond Castle will beneficially own approximately 25.8% of our outstanding common shares, or approximately 20.8% of our outstanding common shares if the underwriters fully exercise their overallotment option. Diamond Castle will, for the foreseeable future, have significant influence over our reporting and corporate management and affairs, and virtually all matters requiring shareholder approval. In particular, Diamond Castle will be able to exert a significant degree of influence over the election of directors and actions to be taken by us and our board of directors, including amendments to our articles of incorporation and code of regulations and approval of significant corporate transactions, including mergers and sales of substantially all of our assets. The directors so elected will have the authority, subject to the terms of our indebtedness and Ohio law, to issue additional shares, implement share repurchase programs, declare dividends and make other decisions. It is possible that the interests of Diamond Castle may in some circumstances conflict with our interests and the interests of our other shareholders, including you. For example, Diamond Castle may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in its judgment, could enhance the value of its investment, even through such transactions might involve risks to you as a holder of our common shares or that could depress our share price. See "Certain Relationships and Related-Party Transactions" and "Principal and Selling Shareholders".

Reports published by securities or industry analysts, including projected results contained in those reports that exceed our actual results, could adversely affect our share price and trading volume.

        We currently expect securities research analysts, including those affiliated with our underwriters, to establish and publish their own quarterly projections regarding our operating results. These projections may vary widely from one another and may not accurately predict the results we actually achieve. Our share price may decline if we fail to meet securities research analysts' projections. Similarly, if one or more of the analysts who covers us downgrades our shares or publishes inaccurate or unfavorable research about our business, our share price could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, our share price or trading volume could decline. Additionally, while we expect securities research analyst coverage, if no securities or industry analysts commence coverage of us, the trading price of our shares and the trading volume could decline.

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Future sales of common shares by existing shareholders could depress the market price of our common shares.

        If our existing shareholders sell, or indicate an intent to sell, substantial amounts of our common shares in the public market after the 180-day contractual lock-up period and other legal restrictions on resale discussed in this prospectus lapse, the trading price of our common shares could decline significantly and could decline below the initial public offering price. Upon completion of this offering, we will have approximately 18,648,203 common shares outstanding, assuming no exercise of the underwriters' overallotment option. Credit Suisse Securities (USA) LLC may, in its sole discretion, permit our executive officers, directors, employees and current shareholders to sell shares prior to the expiration of the lock-up agreements.

        After the lock-up agreements pertaining to this offering expire, an additional 7,981,536 shares will be eligible for sale in the public market, 6,147,750 of which are held by directors, executive officers and other affiliates and will be subject to volume limitations under Rule 144 under the Securities Act and substantially all of which will be subject to registration rights. In addition, the 1,577,004 shares underlying outstanding employee equity awards and the 312,768 shares reserved for future issuance under our equity compensation plan will become eligible for sale in the public market in the future, subject to certain legal and contractual limitations. If these additional shares are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common shares could decline substantially.

The availability of our common shares for sale in the future could reduce the market price of our common shares.

        In the future, we may issue additional securities to raise capital. We may also acquire interests in other companies by using a combination of cash and our common shares or just our common shares. We may also issue securities convertible into our common shares. Any of these events may dilute your ownership interest in our company and have an adverse impact on the price of our common shares. In addition, sales of a substantial amount of our common shares in the public market, or the perception that these sales may occur, could reduce the market price of our common shares. This could also impair our ability to raise additional capital through the sale of our securities.

We do not intend to pay dividends in the foreseeable future.

        For the foreseeable future, we intend to retain any earnings to finance the development of our business, and we do not anticipate paying any cash dividends on our common shares. Any future determination to pay dividends will be at the discretion of our board of directors and will be dependent upon then-existing conditions, including our operating results and financial condition, capital requirements, contractual restrictions, business prospects and other factors that our board of directors considers relevant. Accordingly, investors must rely on sales of their common shares after price appreciation, which may never occur, as the only way to realize a return on their investment.

Anti-takeover provisions contained in our articles of incorporation and code of regulations, as well as provisions of Ohio law, could impair a takeover attempt.

        Our articles of incorporation and code of regulations provisions may have the effect of delaying, deferring or discouraging a prospective acquiror from making a tender offer for our shares or otherwise attempting to obtain control of us. To the extent that these provisions discourage takeover attempts, they could deprive shareholders of opportunities to realize takeover premiums for their shares. Moreover, these provisions could discourage accumulations of large blocks of common shares, thus depriving shareholders of any advantages which large accumulations of shares might provide.

        As an Ohio corporation, we will also be subject to provisions of Ohio law, including Chapter 1704 of the Ohio Revised Code. Chapter 1704 of the Ohio Revised Code prevents shareholders holding more than 10% of the voting power of our outstanding common shares from engaging in certain

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business combinations unless the business combination was approved in advance by our board of directors, is approved by the holders of at least 662/3% of our outstanding common shares, including shares representing at least a majority of voting shares that are not beneficially owned by the shareholder engaging in the transaction, or satisfies statutory conditions relating to the fairness of the consideration to be received by our shareholders.

        Any provision of our articles of incorporation or our code of regulations or Ohio law that has the effect of delaying or deterring a change in control could limit the opportunity for our shareholders to receive a premium for their common shares and could also affect the price that some investors are willing to pay for our common shares.

Our board of directors can issue, without shareholder approval, preferred shares with voting and conversion rights that could adversely affect the voting power of the holders of common shares.

        Our board of directors can issue, without shareholder approval, preferred shares with voting and conversion rights that could adversely affect the voting power of the holders of common shares and reduce the likelihood that such holders will receive dividend payments or payments upon liquidation. Such issuance could have the effect of decreasing the market price of the common shares. Our ability to issue certain types of preferred shares is restricted by the terms of the indenture governing our senior notes and the agreement governing our revolving credit facility. See "—Covenants in our debt instruments restrict our business in many ways." The issuance of preferred shares or even the ability to issue preferred shares could also have the effect of delaying, deterring or preventing a change of control or other corporate action.

You will experience immediate and substantial dilution.

        The initial public offering price will be substantially higher than the net tangible book value of each outstanding common share immediately after this offering. If you purchase common shares in this offering, you will suffer immediate and substantial dilution. The dilution will be $17.28 per share in the net tangible book value of the common shares from the expected initial public offering price. In addition, if outstanding options to purchase our common shares are exercised, there could be further dilution.

Our board of directors and management will have broad discretion over the use of the proceeds we receive in this offering and might not apply the proceeds in ways that increase the value of your investment.

        Our board of directors and management will have broad discretion to use the net proceeds from this offering and you will be relying on their judgment regarding the application of these remaining proceeds. Our board of directors and management might not apply the net proceeds of this offering in ways that increase the value of your investment. We expect to use the remaining net proceeds from this offering for general corporate purposes, including acquisitions (including the Florida Acquisition) and the repayment of debt, including redeeming up to $39.5 million aggregate principal amount of our senior notes. Until we use the net proceeds from this offering, we plan to invest them, and these investments may not yield a favorable rate of return. If we do not invest or apply the net proceeds from this offering in ways that enhance shareholder value, we may fail to achieve expected financial results, which could cause our share price to decline.

As a result of becoming a public company, we will be obligated to develop and maintain proper and effective internal control over financial reporting. We may not complete our analysis of our internal controls over financial reporting in a timely manner, or these internal controls may not be determined to be effective, which may adversely affect investor confidence in our company and, as a result, the value of our common shares.

        We will be required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for the first fiscal year beginning after the effective date of this offering. This assessment will need to

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include disclosure of any material weaknesses identified by our management in our internal control over financial reporting; however, as an "emerging growth company" under the "Jumpstart Our Business Startups Act", our auditors will not be required to issue an attestation report on our management's assessment of our internal controls until the end of the fiscal year following the fifth anniversary of the date of completion of this offering, so long as we do not otherwise cease to be an "emerging growth company" during that period.

        We are in the very early stages of the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. We and, when required in the future, our independent registered public accounting firm, will be testing our internal controls in connection with the Section 404 requirements and could, as part of that documentation and testing, identify material weaknesses, significant deficiencies or other areas for further attention or improvement. Two significant deficiencies were identified in our internal controls in connection with the preparation of our financial statements and the audit of our financial results for 2011. We have significant deficiencies in our internal controls relating to the preparation and review of our provision for income taxes and certain processes and procedures in respect of our information technology systems. While we intend to remediate these significant deficiencies in our internal controls, there can be no assurances we will successfully do so or that other significant deficiencies or material weaknesses will not be discovered. Implementing any appropriate changes to our internal controls may require specific compliance training for our directors, officers and employees, require the hiring of additional finance, accounting and other personnel, entail substantial costs to modify our existing accounting systems, and take a significant period of time to complete. Such changes may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could materially impair our ability to operate our business. Moreover, effective internal controls are necessary for us to produce reliable financial reports and are important to help prevent fraud.

        If we are unable to assert that our internal control over financial reporting is effective, or if, when required in the future, our auditors are unable to express an opinion on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common shares to decline.

We will incur increased costs as a result of being a publicly traded corporation.

        We have no history operating as a publicly traded corporation. As a publicly traded corporation, we will incur additional legal, accounting and other expenses that we did not incur as a private company. This increase will be due to the increased accounting support services, filing annual, quarterly and other reports with the SEC, increased audit fees, investor relations costs, directors' fees, directors' and officers' insurance, legal fees, stock exchange listing fees and registrar and transfer agent fees, which we expect to incur after the completion of this offering. In addition, we expect that complying with the rules and regulations implemented by the SEC and Nasdaq will increase our legal and financial compliance costs and make activities more time-consuming and costly. For example, as a result of becoming a publicly traded corporation, we are required to have a board containing a majority of independent directors, create additional board committees and adopt policies regarding internal controls and disclosure controls and procedures, including the preparation of reports on internal control over financial reporting. In addition, we will incur additional costs associated with our publicly traded corporation reporting requirements.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements, which reflect management's expectations regarding our future growth, results of operations, operational and financial performance and business prospects and opportunities. All statements, other than statements of historical fact, are forward-looking statements. You can identify such statements because they contain words such as "plans", "expects" or "does not expect", "forecasts", "anticipates" or "does not anticipate", "believes", "intends" and similar expressions or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Although the forward-looking statements contained in this prospectus reflect management's current beliefs based upon information currently available to management and upon assumptions which management believes to be reasonable, actual results may differ materially from those stated in or implied by these forward-looking statements.

        A number of factors could cause actual results, performance or achievements to differ materially from the results expressed or implied in the forward-looking statements, including those listed in the "Risk Factors" section of this prospectus. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. Forward-looking statements necessarily involve significant known and unknown risks, assumptions and uncertainties that may cause our actual results, performance and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things:

    our ability to complete pending acquisitions and successfully integrate newly acquired businesses and stores into our current operations;

    changes in customer demand for our products and services;

    the actions of third parties who offer products and services to or for us;

    regulatory matters affecting our products and services;

    the duration and impact of any economic downturn;

    our ability to effectively compete in the financial services industry and maintain our share of the market;

    the effects of any current or future litigation or regulatory proceedings against us;

    our ability to offer new products and services;

    our ability to compete in light of technological advances;

    our ability to safeguard against employee error and theft;

    our dependence upon key management personnel and executives;

    issues relating to our information systems; and

    the influence of our largest shareholder, Diamond Castle, on our business.

        Although we have attempted to identify important risks and factors that could cause actual actions, events or results to differ materially from those described in or implied by our forward-looking statements, other factors and risks may cause actions, events or results to differ materially from those anticipated, estimated or intended. We cannot assure you that forward-looking statements will prove to be accurate, as actual actions, results and future events could differ materially from those anticipated or implied by such statements. Accordingly, as noted above, readers should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date of this prospectus and, except as required by law, we assume no obligation to update or revise them to reflect new events or circumstances.

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CERTAIN FINANCIAL MEASURES AND OTHER INFORMATION

        Our consumer loan product offerings vary state-by-state, depending on the applicable statutes in each jurisdiction.

        We calculate per store revenue by dividing our total revenue over the applicable period by the average number of stores we operated during a period. We calculate each store's contribution to Adjusted EBITDA by dividing Adjusted EBITDA over the applicable period by the average number of stores we operated during such period. We calculate the average number of stores we operated during a period by adding the number of stores operated on each day of the period and dividing that number by the number of days in such period. Where these metrics are compared to those of our publicly traded competitors, we have calculated them for our competitors using the same method. In calculating Adjusted EBITDA for our competitors we add back to their net income the following, based on the following publicly available financial information: provision for taxes, depreciation and amortization expense, net interest expense and, where applicable, non-cash compensation expense, charges related to one-time legal settlements and losses realized in connection with discontinued operations.

        Revenue and other financial information for our acquired businesses and businesses to be acquired for periods prior to our acquisition of such businesses have been derived from unaudited internal financial information that was provided to us by the sellers in each completed acquisition and pending acquisition. Thus, this information was not subject to our accounting controls and has not been reviewed by our independent accountants, and we cannot assure you that it is accurate.

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USE OF PROCEEDS

        We estimate that the net proceeds from this offering with respect to the shares to be sold by us will be $137.1 million, after deducting the underwriting discount and estimated expenses payable by us in connection with this offering, and assuming a public offering price of $14.00 per share (the midpoint of the price range set forth on the cover of this prospectus), assuming no exercise of the underwriters' overallotment option.

        We will not receive any of the proceeds from the sale of shares by the selling shareholders in connection with any exercise of the underwriters' overallotment option. However, we will receive net proceeds of approximately $2.6 million if the underwriters exercise their overallotment option in full, prior to giving effect to the payment of $5.2 million to management referred to under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments".

        We intend to use the net proceeds received by us to fund acquisitions, including the Florida Acquisition, to pay a termination fee of approximately $5.8 million under our management agreement and for general corporate purposes, which may include redeeming up to $39.5 million aggregate principal amount of our 10.75% senior secured notes due 2019.

        The net proceeds from the offering of the senior notes, together with the initial borrowings under our revolving credit facility and cash on hand, were used to retire $207.2 million of CheckSmart's outstanding debt and $74.1 million of CCCS's outstanding debt, pay a $120.6 million special dividend to our shareholders, and pay a $4.4 million bonus to management.

        We have discussions on an ongoing basis regarding possible acquisitions of businesses complementary to our business. Although we may use a portion of the net proceeds received by us for these kinds of possible acquisitions, no definitive agreements or commitments in this regard currently exist.

        A $1.00 increase (decrease) in the assumed initial public offering price of $14.00 per share would increase (decrease) the net proceeds to us from this offering by $9.9 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us. In addition, an increase or decrease in the number of shares of our common shares sold by us in this offering by 10% would cause the net proceeds received by us from this offering, after deducting the estimated underwriting discount and estimated offering expenses, to increase or decrease by approximately $13.9 million, assuming an initial offering price of $14.00 per common share, which is the midpoint of the estimated range set forth on the cover page of this prospectus.

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DIVIDEND POLICY

        We paid a special dividend of $120.6 million to our shareholders in April 2011 in connection with the offering of our senior notes. Although we have paid a special dividend in the past, we do not expect to pay dividends on our common shares for the foreseeable future. Our future decisions concerning the payment of dividends on our common shares will depend upon our results of operations, financial condition, contractual obligations, business prospects and capital expenditure plans, as well as any other factors that our board of directors may consider relevant. Our ability to pay dividends is subject to covenants contained in the agreement governing our revolving credit facility and the indenture governing our senior notes, subject to certain exceptions, including customary baskets.

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CAPITALIZATION

        The table below shows our cash and cash equivalents and capitalization as of December 31, 2011. The table also shows our cash and cash equivalents and capitalization as adjusted to give effect to this offering, assuming a public offering price of $14.00 per share, and our receipt of the estimated net proceeds of shares sold by us in this offering. You should read the table in conjunction with the information set forth under "Use of Proceeds", "Selected Historical Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus.

 
  As of December 31, 2011  
 
  Actual   As adjusted(1)(2)  

(in thousands)

             

Cash and cash equivalents

  $ 65,635   $ 156,258 (3)(4)
           

Current debt:

             
 

Current portion of long-term debt

         
 

Notes payable

         
           
     

Total current debt

         

Long-term debt:

             
 

Revolving credit facility

         
 

Alabama revolving credit facility

         
 

Senior notes

    395,000     355,500  
           
   

Total long-term debt

    395,000     355,500  
     

Total debt

    395,000     355,500  

Shareholders' equity:

             
 

Preferred shares, $0.01 par value; 3,000 shares authorized, no shares issued and outstanding

         
 

Common shares, $0.01 par value; 300,000 shares authorized, 7,982 shares issued and outstanding actual, 18,648 shares issued and outstanding as adjusted

    80     187  
 

Additional paid-in capital

    113,250     252,296  
 

Accumulated other comprehensive income

         
 

Retained deficit

    (52,016 )   (57,731 )
           
   

Total shareholders' equity

    61,314     194,752  
           
     

Total capitalization

  $ 456,314   $ 550,252  
           

(1)
A $1.00 increase (decrease) in the assumed initial public offering price per share would increase (decrease) each of as adjusted cash and cash equivalents, total shareholders' equity and total capitalization by $9.9 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us.

(2)
Assumes (a) redemption of $39.5 million aggregate principal amount of our senior notes and (b) the vesting of certain equity compensation awards in connection with this offering and associated expense related to such options.

(3)
Assumes the payment of a termination fee of approximately $5.8 million under our management agreement.

(4)
This amount does not give effect to the use of approximately $22 million of cash as payment of the purchase price for the DFS Acquisition or our expected use of $45.5 million as payment of the purchase price for the Florida Acquisition. Giving effect thereto, the amount of cash and cash equivalents would be $88.8 million.

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DILUTION

        Dilution is the amount by which the portion of the offering price paid by the investors purchasing common shares to be sold in this offering exceeds the net tangible book value per common share after the offering. Net tangible book value per common share is determined at any date by subtracting total liabilities from our total assets less our intangible assets and dividing the difference by the number of common shares outstanding at that date.

        Our net tangible book value as of December 31, 2011 was approximately $(198.2) million, or $(24.83) per common share. After giving effect to our receipt of approximately $137.1 million of estimated net proceeds (after deducting the underwriting discount and estimated offering expenses payable by us) from our sale of common shares in this offering based on an assumed initial public offering price of $14.00 per common share, which is the midpoint of the estimated range set forth on the cover page of this prospectus, our adjusted net tangible book value as of December 31, 2011, would have been approximately $(61.1) million, or $(3.28) per common share. This amount represents an immediate increase in net tangible book value of $21.55 per common share to existing shareholders and an immediate dilution of $17.28 per common share to investors purchasing common shares in this offering at the assumed initial public offering price.

        The following table illustrates this dilution on a per share basis:

Assumed initial public offering price per share

  $ 14.00  
 

Net tangible book value per share as of December 31, 2011

  $ (24.83 )
 

Increase per share attributable to new investors

  $ 21.55  

As adjusted net tangible book value per share after this offering

  $ (3.28 )
 

Dilution in as adjusted net tangible book value per share to new investors

  $ 17.28  

        A $1.00 increase (decrease) in the assumed initial public offering price per common share would increase (decrease) our as adjusted net tangible book value by $9.9 million, our as adjusted net tangible book value per share by $0.53 per share and the dilution in as adjusted net tangible book value to new investors in this offering by $0.47 per share, assuming the number of common shares offered by us, as set forth on the cover page of this prospectus, remains the same.

        The following table summarizes on an as adjusted basis as of December 31, 2011, the number of common shares purchased from us, the total contribution paid to us, and the average price per share paid to us by our existing shareholders and to be paid by new investors purchasing common shares from us in this offering. The table is based on an assumed initial public offering price of $14.00 per share before deduction of the underwriting discount and estimated expenses payable by us in connection with this offering:

 
  Shares Purchased   Total Consideration    
 
 
  Average Price
per Share
 
 
  Number   Percent   Amount   Percent  
 
   
   
  (in thousands)
   
   
 

Existing investors

    7,981,536     43 % $ 113,330     43 % $ 14.20  

New investors

    10,666,667     57     149,333     57     14.00  
                         

Total

    18,648,203     100 % $ 262,663     100 %      
                         

        The above discussion and tables assume no exercise of the underwriters' option to purchase up to an aggregate of 1,600,000 additional common shares from us and the selling shareholders.

        If the underwriters exercise their option to purchase additional shares in full and, as a result, management is paid the $5.2 million described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments":

    the percentage of our common shares held by our existing shareholders will decrease to approximately 34.9% of the total outstanding amount of our common shares after this offering;

    the common shares held by new investors will represent approximately 65.1% of the total outstanding amount of our common shares after this offering; and

    there will be an immediate dilution of $17.38 per common share to new investors.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

        The following table sets forth selected historical consolidated financial data as of and for the years ended December 31, 2007, 2008, 2009, 2010 and 2011. The selected historical consolidated financial data as of December 31, 2010 and 2011 and for each of the years ended December 31, 2009, 2010 and 2011 have been derived from, and should be read together with, our audited historical consolidated financial statements and the accompanying notes included elsewhere in this prospectus. The selected historical consolidated financial data as of December 31, 2007, 2008 and 2009 and for each of the years ended December 31, 2007 and 2008 have been derived from CCFI's audited historical consolidated financial statements not included in this prospectus.

        The results of operations for the periods presented below are not necessarily indicative of the results to be expected for any future period. The selected historical financial data should be read together with the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations" (including the discussion therein of critical accounting policies and recent acquisitions) and CCFI's consolidated financial statements and the accompanying notes included elsewhere in this prospectus.

 
  Year Ended December 31,  
(In thousands)
  2007   2008   2009   2010   2011  

Statement of Operations Data:

                               

Finance receivable fees

  $ 138,736   $ 152,732   $ 136,957   $ 146,059   $ 196,153  

Check cashing fees

    23,822     25,634     53,049     55,930     72,800  

Card fees

        1,808     2,063     10,731     19,914  

Other

    11,298     8,845     10,614     11,560     18,067  
                       
 

Total revenues

    173,856     189,019     202,683     224,280     306,934  
                       

Branch expenses:

                               
 

Salaries and benefits

    30,891     33,738     34,343     38,759     57,411  
 

Provision for loan losses

    37,026     37,544     43,463     40,316     65,351  
 

Occupancy

    11,413     13,457     13,855     14,813     21,216  
 

Depreciation and amortization

    5,920     10,422     6,613     5,318     5,907  
 

Other

    21,339     21,420     22,652     27,994     35,515  
                       

Total branch expenses

    106,589     116,581     120,926     127,200     185,400  
                       

Branch gross profit

    67,267     72,438     81,757     97,080     121,534  
                       

Corporate expenses

    29,518     31,795     31,518     33,940     44,742  

Transaction expense

                237     9,351  

Depreciation and amortization

    1,513     1,063     568     1,222     2,332  

Interest expenses, net

    18,421     16,191     11,532     8,501     34,334  

Goodwill impairment

        53,263                

Equity investment loss

                    415  

Non-operating income, management fees

    (104 )   (260 )   (172 )   (46 )   (46 )
                       
 

Income (loss) before provision (benefit) for income taxes, discontinued operations, and extraordinary item

    17,919     (29,614 )   38,311     53,226     30,406  

Provision (benefit) for income taxes

    7,237     (10,635 )   14,042     19,801     13,553  
                       
 

Income (loss) from continuing operations

    10,682     (18,979 )   24,269     33,425     16,853  
 

Discontinued operations(1)

    243     482     368     (2,196 )    
                       
 

Income (loss) before extraordinary item

    10,925     (18,497 )   24,637     31,229     16,853  

Extraordinary item(2)

        3,913              
                       
 

Net income (loss)

    10,925     (22,410 )   24,637     31,229     16,853  

Net loss attributable to non-controlling interests

                (252 )   (120 )
                       

Net income (loss) attributable to controlling interests

  $ 10,925   $ (22,410 ) $ 24,637   $ 31,481   $ 16,973  
                       

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  Year Ended December 31,  
(In thousands, except per share
and share amounts)
  2007   2008   2009   2010   2011  

Earnings per share—basic

                               
 

Operating income (loss) available to controlling interests—per share

  $ 1.74   $ (3.09 ) $ 3.95   $ 5.49   $ 2.30  
   

Discontinued operations—per share

    .04     .08     .06     (.36 )    
   

Extraordinary item—per share

        (.64 )            
                       
 

Net income (loss) available to controlling interests—per share

  $ 1.78   $ (3.65 ) $ 4.01   $ 5.13   $ 2.30  
                       

Earnings per share—diluted

                               
 

Operating income (loss) available to controlling interests—per share

  $ 1.71   $ (3.09 ) $ 3.88   $ 5.33   $ 2.21  
   

Discontinued operations—per share

    .04     .08     .06     (.34 )    
   

Extraordinary item—per share

        (.64 )            
                       
 

Net income (loss) available to controlling interests—per share

  $ 1.75   $ (3.65 ) $ 3.94   $ 4.99   $ 2.21  
                       

Weighted average common shares outstanding—basic

    6,139,536     6,139,536     6,139,536     6,139,536     7,380,996  
                       

Weighted average common shares outstanding—diluted

    6,249,366     6,139,536     6,251,316     6,314,358     7,686,072  
                       

(1)
Discontinued operations is presented net of provision (benefit) for income tax of $151, $299, $226, ($1,346) and $0 for the years ended December 31, 2007, 2008, 2009, 2010 and 2011, respectively.

(2)
Represents cost of ballot initiatives in Ohio and Arizona in 2008.

 
  Year Ended December 31,  
(In thousands, except for store count)
  2007   2008   2009   2010   2011  

Balance Sheet Data (at period end):

                               

Cash and cash equivalents

  $ 25,020   $ 25,883   $ 27,959   $ 39,780   $ 65,635  

Finance receivables, net

    48,620     51,954     66,035     81,337     120,451  

Total assets

    301,412     266,922     280,476     310,644     515,547  

Total debt

    201,714     195,800     193,365     188,934     395,000  

Total stockholders' equity

    72,040     50,768     77,791     109,791     61,314  

Other Operating Data (unaudited):

                               
 

Stores in operation:

                               
   

Beginning of period

    211     256     252     264     282  
   

Acquired

    17         8     19     151  
   

Opened

    28     2     4     2     2  
   

Closed

        6         3      
                       
   

End of period

    256     252     264     282     435  

Capital Expenditures:

                               

Purchases of property and equipment, net

  $ 12,298   $ 2,969   $ 2,769   $ 1,688   $ 4,261  
 

Store acquisition costs:

                               
   

Property and equipment

    957             1,144     7,235  
   

Intangible assets

    440             1,737     3,344  
                       
   

Total capital expenditures

  $ 13,695   $ 2,969   $ 2,769   $ 4,569   $ 14,840  
                       

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  Year Ended December 31,  
(In thousands, except for averages, percentages or unless otherwise specified)
  2007   2008   2009   2010   2011  

Check Cashing Data (unaudited):

                               
 

Face amount of checks cashed

  $ 708,860   $ 821,475   $ 1,309,425   $ 1,442,501   $ 2,163,726  
 

Face amount of average check

  $ 418.01   $ 442.36   $ 432.08   $ 438.13   $ 444.26  
 

Average fee per check

  $ 13.76   $ 13.80   $ 17.51   $ 16.99   $ 14.95  
 

Number of checks cashed

    1,698     1,857     3,029     3,292     4,869  

Returned Check Data (unaudited):

                               
 

Returned check expense

  $ 2,006   $ 1,760   $ 3,058   $ 3,034   $ 5,085  
 

Returned check expense as a percentage of face amount of checks cashed

    0.3 %   0.2 %   0.2 %   0.2 %   0.2 %

Short-Term Consumer Loan Data (unaudited):

                               
 

Loan volume (originations and refinancings)

  $ 1,081,865   $ 1,116,869   $ 1,162,086   $ 1,237,163   $ 1,543,310  
 

Average new loan size

    385.55     382.62     412.67     418.53     425.72  
 

Average new loan fee

    50.24     50.84     42.79     43.14     46.37  
 

Loan loss provision

  $ 34,166   $ 33,849   $ 28,856   $ 27,560   $ 40,636  
 

Loan loss provision as a percentage of loan volume

    3.2 %   3.0 %   2.5 %   2.2 %   2.6 %

Medium-Term Loan Operating Data (unaudited)(1):

                               
 

Principal outstanding

  $   $ 2,995   $ 3,109   $ 3,601   $ 12,174  
 

Number of loans outstanding

        7,525     9,365     10,275     20,818  
 

Average principal outstanding

  $   $ 397.98   $ 331.97   $ 350.47   $ 584.79  
 

Average monthly percentage rate

    0 %   22.03 %   22.3 %   22.0 %   19.2 %
 

Allowance as a percentage of finance receivable

        14.3 %   42.7 %   11.7 %   10.6 %
 

Loan loss provision

  $   $   $ 6,708   $ 5,267   $ 11,470  

Title Loan Operating Data (unaudited):

                               
 

Principal outstanding

  $ 2,205   $ 2,720   $ 6,047   $ 9,541   $ 17,334  
 

Number of loans outstanding

    2,187     3,178     6,077     9,597     15,283  
 

Average principal outstanding

  $ 1,008.42   $ 855.85   $ 995.00   $ 994.12   $ 1,134.20  
 

Average monthly percentage rate

    16.06 %   15.8 %   16.0 %   13.8 %   13.3 %
 

Allowance as a percentage of finance receivable

    4.6 %   5.3 %   12.1 %   5.3 %   5.3 %
 

Loan loss provision

  $ 854   $ 1,209   $ 2,970   $ 3,497   $ 5,463  

Overall Company Data (unaudited):

                               
 

Total revenues

  $ 173,856   $ 189,019   $ 202,683   $ 224,280   $ 306,934  
 

Loan loss provisions

    37,026     36,818     41,592     39,358     62,654  
 

Other ancillary product provisions

        726     1,871     958     2,697  
 

Total loan loss provision

  $ 37,026   $ 37,544   $ 43,463   $ 40,316   $ 65,351  
 

Total loan loss provision as a percentage of revenue

    21.3 %   19.9 %   21.4 %   18.0 %   21.3 %

(1)
Loan participations are grouped with medium-term loans in our consolidated financial statements included elsewhere in this prospectus, but are excluded from these calculations.

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

        The following unaudited pro forma consolidated financial information is based on the historical financial statements of CCFI, and CCCS, each included elsewhere in this prospectus, adjusted to give pro forma effect to the California Acquisition, the Illinois Acquisition, the senior notes offering, the establishment of our revolving credit facility and this offering. The unaudited pro forma consolidated statement of income for the year ended December 31, 2011 gives effect to the California Acquisition, the Illinois Acquisition, the senior notes offering, the establishment of our revolving credit facility and this offering as if they were each consummated on January 1, 2011, the first day of our most recently completed fiscal year.

        Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with this unaudited pro forma consolidated financial information. The pro forma adjustments described in the accompanying notes have been made based on available information and, in the opinion of management, are reasonable. The unaudited pro forma consolidated financial information should not be considered indicative of actual results that would have been achieved had these transactions occurred on the date indicated and do not purport to indicate results of operations as of any future date or for any future period. We cannot assure you that the assumptions used in the preparation of the unaudited pro forma consolidated financial information will prove to be correct. The unaudited pro forma consolidated financial information should be read together with the information set forth under the headings "Prospectus Summary—Overview", "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Business", the historical financial statements of CCFI and CCCS and the notes thereto, and the other financial information included elsewhere in this prospectus.

        The acquisition of CCCS by CCFI has been accounted for as a purchase in conformity with Accounting Standards Codification, or ASC, No. 805, Business Combinations, with intangible assets recorded in accordance with ASC No. 350, Intangibles-Goodwill and Other. The excess of the purchase price over the historical basis of the net assets to be acquired has been allocated in the accompanying pro forma condensed consolidated financial information based on management's best estimates of the fair values and certain assumptions that management believes are reasonable.

        The pro forma adjustments related to the Illinois Acquisition are derived from unaudited internal financial information that was provided to us by the seller in the Illinois Acquisition. Thus, this information was not subject to our accounting controls and has not been reviewed by our independent accountants, and we cannot assure you that it is accurate.

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Community Choice Financial Inc.
Unaudited Pro Forma Consolidated Statement of Income
for the Year Ended December 31, 2011

 
  CCFI
2011
  California
Acquisition
Jan 2011 – April 2011
  Illinois
Acquisition
Jan 2011 – March 2011
  Acquisition
Adjustments
  Adjustments
for Senior
Notes
Offering
  Adjustments
Related to
this
Offering
  Total
2011
 

Revenue:

                                           

Finance Receivable Fees

  $ 196,153   $ 10,498   $ 1,442   $   $   $   $ 208,093  

Check Cashing Fees

    72,800     9,472                     82,272  

Card Fees

    19,914     697                     20,611  

Other

    18,067     3,667     17                 21,751  
                               
 

Total Revenue

    306,934     24,334     1,459                 332,727  

Salaries and Benefits

    57,411     7,567     308                 65,286  

Provision for Loan Losses

    65,351     2,468     13                 67,832  

Occupancy

    21,216     2,907     84                 24,207  

Depreciation and Amortization

    5,907     131     12                 6,050  

Other

    35,515     1,953     185                 37,653  
                               
 

Total Branch Expenses

    185,400     15,026     602                 201,028  
 

Branch Gross Profit

    121,534     9,308     857                 131,699  

Corporate Expenses

    54,093     10,146         (17,081 )(a)       (1,648 )(f)   45,510  

Depreciation and Amortization

    2,332     1,119         (44 )(b)           3,407  

Interest Expense, net

    34,334     2,248             8,558 (d)   (4,434 )(g)   40,706  

Goodwill Impairment

        28,986                     28,986  

Equity Investment Loss

    415                         415  

Non-operating Income, mgmt fees

    (46 )                       (46 )
                               
 

Income before taxes

    30,406     (33,191 )   857     17,125     (8,558 )   6,802     12,721  

Provision for Income Taxes

    13,553     (12,613 )   326     4,509     (3,252 )(e)   2,311 (h)   4,834  
                               

Total Net Income

    16,853     (20,578 )   531     12,616     (5,306 )   1,022     7,887  
                               

Basic earnings per share

  $ 2.30                                      
                                           

Diluted earnings per share

  $ 2.21                                      
                                           

Pro forma basic earnings per share

                                      $ .66  
                                           

Pro forma diluted earnings per share

                                      $ .62  
                                           

Weighted average basic shares outstanding

    7,380,996                                      
                                           

Weighted average diluted shares outstanding

    7,686,072                                      
                                           

Pro forma weighted average basic shares outstanding

                                        12,175,131  
                                           

Pro forma weighted average diluted shares outstanding

                                        12,802,572  
                                           

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Community Choice Financial Inc.
Notes to Unaudited Pro Forma Condensed Consolidated
Statement of Income for the Year Ended December 31, 2011

(a)
The $17.1 million adjustment to corporate expenses consists of CCFI's $9.4 million of transaction expenses and CCCS's $7.7 million of transaction expenses. The CCFI transaction expenses relate to the California Acquisition, Illinois Acquisition, the establishment of our revolving credit facility and the offering of our senior notes. The CCCS transaction expenses consist of seller's costs, including equity holder's fees, merger costs, and bonuses and severance payments related to the California Acquisition.

(b)
Reflects a decrease to depreciation and amortization based upon the estimate of the portion of the purchase price for the California Acquisition to be allocated to the fair value of identifiable intangibles of $0.3 million. This is a result of the estimated identifiable intangibles acquired in connection with the California Acquisition being lowered to an amount less than the amount historically recorded by CCCS as of December 31, 2010. Also reflects a charge to depreciation and amortization based upon the estimate of the portion of the purchase price for the Illinois Acquisition to be allocated to the fair value of identifiable intangibles of $0.1 million.

(c)
Reflects federal income tax provision estimated at 38% related to the pro forma adjustments for the California Acquisition and the Illinois Acquisition for the year ended December 31, 2011 and normalization of income taxes paid by CCFI due to transaction expenses.

(d)
Reflects, for 2011, the additional interest expense in connection with our senior notes and our revolving credit facility at annual interest rates of 10.75% and 7.25% (at the alternative base rate as described under "Description of Certain Indebtedness"), respectively, in addition to the amortization of deferred financing fees of $2.1 million and commitment fees related to our revolving credit facility and our Alabama revolving credit facility.

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        The below table assumes that we paid down the $10 million borrowed under the revolving credit facility as of April 30, 2011.

 
  Interest Adjustment  

Senior Notes Outstanding

  $ 395,000  

Annual Interest Rate

    10.75 %

Annual Interest on Senior Notes Outstanding

  $ 42,463  

Revolving Credit Facilities

       
 

Main Revolving Credit Facility

       
   

Total Facility

  $ 40,000  
   

Annual Interest Rate on Amount Drawn

    7.25 %
   

Annual Commitment Fee on Undrawn Amount

    0.75 %
 

Average Outstanding

  $ 3,333  
 

Interest on Amount Drawn

  $ 242  
 

Annual Commitment Fee on Undrawn Amount

  $ 296  
   

Total Annual Interest on Main Revolving Credit Facility

  $ 538  
 

Alabama Revolving Credit Facility

       
   

Total Facility

  $ 7,000  
   

Annual Interest Rate on Amount Drawn

    5.00 %
 

Average Outstanding

  $  
 

Annual Interest on Amount Drawn

  $  
 

Commitment Fees

  $ 20  
   

Total Annual Interest on Alabama Revolving Credit Facility

  $ 20  

Annual Deferred Financing Costs

  $ 2,119  

Total Pro Forma Interest Calculation

  $ 45,140  

Interest Adjustment Calculation

       
 

CCFI 2011 Actual Interest Expense

  $ 34,334  
 

CCCS 2011 Actual Interest Expense

  $ 2,248  
       
   

Total 2011 Actual Interest Paid

  $ 36,582  

Pro Forma Interest Adjustment

  $ 8,558  
(e)
Adjustment reflects the tax effect of the additional interest expense at the estimated effective tax rate of 38%.

(f)
Reflects the elimination of management fees paid by us to Diamond Castle of $1.3 million for the year ended December 31, 2011. Also reflects the elimination of management fees paid by CCCS to Golden Gate Capital of $0.3 million for the period from January 1, 2011 through April 29, 2011.

(g)
Reflects the decrease in interest expense of $4.246 million and amortization of $0.188 million in deferred financing fees after redeeming $39.5 million aggregate principal amount of our senior notes from the proceeds of this offering.

(h)
Reflects the income tax provision estimated at 38% related to the elimination of management fees paid by us and CCCS to Diamond Castle and Golden Gate Capital, respectively, during 2011 and the reduction of interest expense noted in (g).

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion contains management's discussion and analysis of our financial condition and results of operations and should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the "Special Note Regarding Forward Looking Statements" and "Risk Factors" sections of this prospectus. Actual results may differ materially from those contained in any forward-looking statements.

Overview

        We are a leading retail provider of alternative financial services to unbanked and underbanked consumers. Through our network of retail stores, we provide our customers a variety of financial products and services, including short-term consumer loans, medium-term loans, check cashing, prepaid debit cards, title loans and other services that address the specific needs of our individual customers. Through our retail-focused business model, which we refer to as our retail model, we strive to provide our customers with high-quality customer service and immediate access to retail financial services at competitive rates during convenient operating hours. As of December 31, 2011, we operated 435 retail storefront locations across 14 states.

        Over each of the past three years, we increased revenue and Adjusted EBITDA, driven by both organic growth and acquisitions. Our retail business model consists of, among other things, a focus on customer service, incentive-based compensation structures, strategies to increase customer traffic, and an expanding product set to address a larger share of our customers' financial needs. Our overall revenue has expanded as we have executed on our retail model, which has increased incremental revenue from our existing store base, and added store count. We have limited capital expenditure requirements, and our primary store-level operating expenses are occupancy and labor. As part of our retail model, we strive to invest in premier locations and to develop a highly trained and motivated workforce, all with the aim of enhancing the customer's experience in our stores, generating increased store traffic and introducing our customers to our diversified set of products. We have achieved organic growth through increased market share and by expanding our customer relationships through our additional product offerings. Our measurement of comparable store sales growth as of December 31, 2011 includes stores which we operated for the full year of 2011 and which were open for the full year of 2010. As of December 31, 2011 we had 280 stores included in this measurement. These stores achieved comparable sales growth of 7.3% for the year ended December 31, 2011 as compared to the year ended December 31, 2010. Our acquisitions during 2011 included the addition of 10 stores in Illinois and 141 stores in California and Oregon. Our net income during the year ended December 31, 2011, declined as compared to the year ended December 31, 2010, as a result of incremental interest expense and transaction expenses associated with our acquisitions and our recapitalization discussed below under "—Recapitalization".

Factors Affecting Our Results of Operations

Expansion of our Retail Platform

        We believe that our ability to execute on our retail model generates higher per store revenue and contribution to Adjusted EBITDA as compared to our publicly traded peer companies. Our results of operations are heavily impacted by the number of stores we operate and the degree to which we have integrated acquired stores into our operations. We have recently added stores primarily through acquisitions. The results of our internal customer surveys suggest that over 30% of our customers learn about our products and services and come to our stores as a result of a referral. Acquisitions allow us to leverage an established customer base, who continue to use the acquired stores and generate word-

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of-mouth marketing as we implement our retail model at the stores, as a source of referrals. Acquisitions have also provided us an existing market presence which we have been able to build upon through expanding the acquired stores' product offerings. We have had success in deploying this model, as we were able to increase revenue for the year ended December 31, 2011 for our Michigan and Alabama acquired stores, which were acquired in August 2009 and March 2010, respectively, by 26.4% and 34.4%, respectively.

        We have also grown through de novo store openings, which we have undertaken from time to time to increase our market penetration. Specifically, in 2010, following the Alabama Acquisition, we opened two de novo stores in that market to expand our brand presence and capture additional market share. In addition, in 2011 we opened two de novo stores: one in California and one in Ohio.

        Our recent acquisitions include:

    California Acquisition.  On April 29, 2011, we acquired CCCS and its chain of 141 retail stores in California and Oregon. We undertook the California Acquisition as a means of gaining access to several key markets in California, thereby increasing our geographic diversity, and as a means of gaining additional product expertise, specifically related to CCCS's core check cashing competency. We plan to create additional value through the California Acquisition by increasing store profitability throughout CCCS's existing store chain through the execution of our retail model, the introduction of a superior prepaid debit card offering through our Insight program and a focus on growing title lending, medium-term lending, as well as by achieving additional economies of scale through our existing corporate infrastructure.

      We have fully integrated several aspects of CCCS's business and all integration efforts related to the California Acquisition were performed by CCFI employees and were expensed as incurred. We made investments in information technology to bring CCCS's information security, compliance and operational functionality in line with CCFI standards. We capitalized approximately $0.1 million in relation to these investments during 2011. Our results of operations for the year ended December 31, 2011 include the results of the stores acquired in the California Acquisition for the period beginning on April 29, 2011.

    Illinois Acquisition.  On March 21, 2011, we acquired 10 stores in the Chicago metro area for a purchase price of $19.7 million. At the time of their acquisition, these stores offered only lending products. Since the Illinois Acquisition, we have fully integrated their operations and have expanded the products and services offered in these stores to include our Insight prepaid card offering, money orders, bill payment services and title lending, thereby further addressing the financial needs of our customers in the Chicago market.

    Alabama Acquisition.  In March 2010, we completed the acquisition of a 19-store chain in Alabama for a purchase price of $15.9 million. Since the time of the acquisition we have enhanced store productivity and profitability through focusing on customer traffic and branch cost containment. The per store contribution to our operating income from our Alabama stores has increased dramatically since the time of the acquisition.

    Michigan Acquisition.  In August 2009, we completed the acquisition of eight stores in Michigan for a purchase price of $0.5 million. These stores were underperforming at the time of their acquisition and represented an opportunity for us to benefit from our existing Michigan infrastructure to increase revenues and profitability at the acquired stores. Through implementing our retail model and focusing employees on customer service and revenue growth, the per store contribution to our operating income from our acquired Michigan stores has grown substantially since the time of acquisition.

    Insight Holding Company LLC Acquisition.  In November 2011, we purchased a 22.5% interest in Insight Holding, which is the parent company of, among other entities, Insight, for which we are

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      an agent of its prepaid card product. We believe this investment aligns our strategic interests and positions us to participate in the value creation at Insight.

    DFS Acquisition.  On April 1, 2012 we acquired all of the equity interests of the DFS Companies. The purchase price was approximately $22 million, subject to a post-closing working capital adjustment. DFS offers short-term loans to consumers via the Internet under a state-licensed model in compliance with the applicable laws of the jurisdiction of its customers. Through our acquisition of DFS, we gain access to a scalable Internet-based revenue opportunity. We believe this additional retail channel will enable us to efficiently reach consumers not fully served by our existing retail locations. Our objective will be to accelerate the growth of DFS through incremental capital, application of retailing strategies and an expansion of its product offerings.

        In total, our store count increased by 151 stores during 2011 as a result of the California and Illinois Acquisitions. We did not close any stores during 2011 and opened two de novo stores. The chart below sets forth certain information regarding our stores for each of the past three years.

 
  2009   2010   2011  

# of Locations

                   

Beginning of Period

    252     264     282  
 

Acquired

    8     19     151  
 

Opened

    4     2     2  
 

Closed

        3      
               

End of Period

    264     282     435  

        The following table provides the geographic composition of our locations as of December 31, 2010 and December 31, 2011:

 
  December 31,
2010
  December 31,
2011
 

Alabama

    21     21  

Arizona

    43     43  

California

    17     156  

Florida

    10     10  

Indiana

    21     21  

Illinois

        10  

Kansas

    6     6  

Kentucky

    13     13  

Michigan

    14     14  

Missouri

    7     7  

Ohio

    98     99  

Oregon

        3  

Utah

    10     10  

Virginia

    22     22  
           

Total Locations

    282     435  
           

Overall Trends in Consumer Credit

        Our revenues are influenced by trends in the overall market for consumer financial products and services. We believe, as a result of these current trends, our addressable market is growing. A study conducted by the FDIC published in 2009 indicates that 25.6% of U.S. households are either unbanked or underbanked, representing approximately 60 million adults. As traditional financial institutions

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increase fees for consumer services, such as checking accounts and debit cards, and as traditional credit sources tighten credit standards as a result of economic and other market driven developments, consumers have looked elsewhere for less expensive and more convenient alternatives to meet their financial needs. According to a recent Federal Reserve Bank of New York report, total consumer credit outstanding has declined over $1.4 trillion since its peak in the third quarter of 2008. Since the adoption of the Credit Card Accountability, Responsibility and Disclosure Act of 2009, we believe that traditional credit card issuers have tightened their underwriting standards. This contraction in the supply of consumer credit has resulted in significant unmet demand for consumer loan products. We believe this shift has resulted in increased demand for our loan products, as consumers have had their traditional sources of consumer credit reduced or terminated.

Changes in Legislation

        During the last few years, legislation that has required us to alter the manner in which we offer certain products and services has been introduced or adopted in a number of states. See "Business—Regulation and Compliance" for a discussion of the various regulatory regimes applicable to our business and certain recent legislative developments affecting our industry. Some of these legislative and regulatory changes may result in the discontinuation of certain operations, while others may result in less significant short-term or long-term changes, interruptions in revenues and lower operating margins. In order to address market, legislative and regulatory developments, we regularly refine our product offerings and develop new products and services to better serve our customers.

        Recent developments include:

        Virginia.    In Virginia, as a result of changes in legislation in early 2009, we transitioned a significant portion of our customers from cash advance products to an open-ended line of credit.

        Arizona.    As a result of the expiration of the enabling statute for deferred presentment loans in Arizona in mid-2010, we transitioned customers from short-term consumer loans to other loan products, such as title loans and loans from third-party lending offerings, which may be delivered via prepaid debit cards.

        Illinois.    In Illinois, House Bill 537, which created an installment payday loan product with a term of not less than 112 days and not more than 180 days, went into effect on March 21, 2011. We believe the new statute provides legislative stability in the state and that our retail-oriented business model will prove successful with this product.

        In certain states, either in compliance with law or through our following of best practices recommended by the Community Financial Services Association of America, or CFSA, we offer an extended payment plan for all borrowers. This extended payment plan is advertised to all customers where the program is offered, either via pamphlet or by being posted at the store at the time of the loan. This payment plan is available to all customers in these states upon request and is not contingent on the borrower's repayment status or further underwriting standards. The term is extended from an average of approximately 17 days to roughly four payments over eight weeks. If customers do not make these payments, then their held check is deposited. Loan receivables subject to these repayment plans represented $1.4 million of the $131.3 million of total receivables at December 31, 2011.

        We believe that our ability to develop legal and financially viable products and services, as the regulatory environment evolves, is one of our competitive strengths.

New Product Expansion and Trends

        We constantly seek to develop and offer new products in order to address the full range of our customers' financial needs. From 2009 to 2011, revenue from our title loan products has grown 62% on a compound annual basis. During 2011, title loan revenues increased 39% over 2010. In 2010, we introduced a new prepaid card offering to our customers. During 2011, prepaid debit card fees

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increased 86% over 2010. Importantly, we believe the prepaid card solution we offer, specifically when coupled with direct deposit, can serve as a catalyst to a longer-term customer relationship.

        In the first quarter of 2011, we piloted a new tax preparation offering which, in most states in which it was offered, was coupled with a loan product. Its impact on our 2011 financial results was not material, but the offering was well received by our customers, and we believe it represents an example of available avenues for growth in future years via new products. In addition, the acquisition of DFS has allowed us to expand our product offerings to the Internet. Internal surveys support our belief that our customers are interested in additional product offerings. Introducing new products into our markets has historically created profitable revenue expansion. In executing on our retail model, we expect to continue to expand our offerings to meet our customers' financial service needs.

Product Characteristics and Mix

        As we introduce new products throughout our markets and expand our product offerings to meet our customers' needs, the characteristics of our overall loan portfolio shift to reflect the terms of these new products. Our various lending products have different terms, depending on the underlying type of loan product that is offered. Our title loan offerings tend to have longer maturities than our short-term consumer loan offerings, and though loans to a single customer may generate lower finance charges as a result of there being fewer origination events, their increased maturity can result in comparable overall revenue generation over the life of an individual loan. In addition, the shift in mix to more medium-term loans results in a higher loan loss reserve as a result of the nature of medium-term loans as compared to short-term loans. Recently, as we have emphasized our Insight prepaid debit card program, we have increased card fees from individual card purchases, load fees, and commissions related to card activity. We believe that our prepaid debit card revenue, together with the prepaid debit card direct deposit offering, have reduced some of our check cashing fees. We believe, however, that establishing our Insight prepaid debit card as a hub for our customers' financial service needs will lengthen the customer relationship and increase associated revenue over time.

Expenses

        Historically, our operating expenses have primarily related to the operation of our stores, including salaries and benefits for employees, store occupancy costs, loan loss provisions, returns and cash shortages and depreciation of assets. We also incur corporate and other expenses on a company-wide basis, including interest expense and other financing costs related to our indebtedness, advertising, insurance, salaries, benefits, occupancy costs, professional expenses and management fees paid by us to Diamond Castle, which fees will be eliminated upon completion of this offering. Our organization is equipped with acquisition and integration capabilities. Most integration tasks are managed by CCFI employees, the cost of which is expensed as incurred. Acquisitions and integrations often result in moderate temporary increases in expenses related to travel, training and incremental pay for hourly employees involved in integration activities.

        We view our compliance, collections and information technology groups as core competencies. We have invested in each of these areas and believe we will continue to benefit from increased economies of scale as we grow our business with additional future acquisitions. Our efficient corporate cost structure is evident as revenue has grown at a compound annual rate of 23.1% from 2009 to 2011 while corporate expenses have grown at a compound annual growth rate of 19.1% over the same periods and have decreased as a percentage of revenue from 15.6% in 2009 to 14.6% in 2011.

Recapitalization

        Concurrent with the California Acquisition, we issued $395.0 million in senior notes, entered into a new four-year, $40 million revolving credit facility and amended our existing $7.0 million credit facility for our Alabama subsidiary. The proceeds from the senior notes offering, together with $10.0 million of

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proceeds from our new revolving credit facility and $27.7 million of cash on hand were used to complete the California Acquisition, to retire our and CCCS's outstanding credit facility debt and to pay a dividend to our shareholders and pay bonuses to our management. We incurred $24.2 million in related fees and expenses in completing the California Acquisition and the financing related to our recapitalization, of which $15.6 million was directly attributable to other expenses incurred in connection with the financing and was capitalized accordingly. As a result of the increase in the amount of debt in our capital structure following the recapitalization, our interest expense has risen, impacting our results of operations and liquidity. See "Unaudited Pro Forma Consolidated Financial Information", "—Liquidity and Capital Resources", "—Contractual Obligations and Commitments" and "Description of Certain Indebtedness" for further detail.

Discontinued Operations

        In December 2010, we discontinued our commercial check cashing business in Florida. The commercial check cashing business, which provided check cashing services to high-volume check cashers, required significant capital commitments and the underwriting of commercial customer risk. In 2010, we had a significant write-off of a customer receivable and discontinued these operations due to operational considerations. As a result of discontinuing these operations, we recorded a one-time after tax charge of approximately $2.2 million during 2010. This was an isolated business unit, and its closure had no impact on the rest of our Florida operations.

        In August 2010, CCCS decided to close four stores in the state of Washington due primarily to a change in law in Washington that made the business unprofitable. As a result of the closures, CCCS incurred an after tax loss from discontinued operations of $0.5 million.

Critical Accounting Policies

        Consistent with generally accepted accounting principles in the United States, our management makes certain estimates and assumptions to determine the reported amounts of assets, liabilities, revenue and expenses in the process of preparing our financial statements. These estimates and assumptions are based on the best information available to management at the time the estimates or assumptions are made. The most significant estimates made by our management, which management considers critical, include valuation of our net finance receivables, stock based compensation and goodwill and our determination for recording the amount of deferred income tax assets and liabilities, because these estimates and assumptions could change materially as a result of conditions both within and beyond management's control.

        Management believes that among our significant accounting policies, the following involve a higher degree of judgment:

Finance Receivables, Net

        Finance receivables consist of three categories of receivables, short-term consumer loans, medium-term loans and title loans.

        Short-term consumer loan products provide customers with cash or a money order, typically ranging in size from $100 to $1,000, in exchange for a promissory note with a maturity generally 14 to 30 days with an agreement to defer the presentment of the customer's personal check for the aggregate amount of the advance plus fees. This form of lending is based on applicable laws and regulations which vary by state. Statutes vary from providing fees of 15% to 20%, to providing interest at 25% per annum plus origination fees. The customers repay the cash advance by paying cash or allowing the check to be presented. For unsecured loans, the risk of repayment primarily relates to the customer's ability to repay the loans.

        Medium-term loan products provide customers with cash, typically ranging from $100 to $2,501, in exchange for a promissory note with a maturity between three months and 24 months. These loans vary

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in their structure between the regulatory environments where they are offered. The loans are due in installments or provide for a line of credit with periodic monthly payments. In certain instances we also purchase loan participations in a third-party lender's loan portfolio that are classified as medium-term finance receivables.

        Title loan products provide customers with cash, typically ranging from $750 to $2,500, in exchange for a promissory note with a maturity between 30 days and 24 months. The loan is secured with a lien on the customer's vehicle title. The risk characteristics of secured loans primarily depend on the markets in which we operate and the regulatory requirements of each market. Risks associated with secured financings relate to the ability of the borrower to repay the loan and the value of the collateral underlying the loan should the borrower default on its payments.

        In some instances we maintain debt-purchasing arrangements with third-party lenders. We accrue for this obligation through management's estimation of anticipated purchases based on expected losses in the third-party lender's portfolio. This obligation is recorded as a current liability on our balance sheet.

        Finance receivables, net, on the consolidated balance sheets as of December 31, 2009, 2010 and 2011 were approximately $66.0 million, $81.3 million and $120.5 million, respectively. The allowance for loan losses of $5.4 million, $3.4 million, and $5.6 million as of December 31, 2009, 2010 and 2011 represented 7.6%, 4.0% and 4.5% of finance receivables, net of unearned advance fees, respectively. Finance receivables, net as of December 31, 2009, 2010 and 2011 are as follows (in thousands):

 
  As of December 31,  
 
  2009   2010   2011  

Finance Receivables, net of unearned advance fees

  $ 71,441   $ 84,694   $ 126,077  
 

Less: Allowance for loan losses

    5,406     3,357     5,626  
               

Finance Receivables, Net

  $ 66,035   $ 81,337   $ 120,451  
               

        Net loan charge-offs for the three years ended December 31, 2009, 2010 and 2011 were $37.3 million, $38.4 million and $55.3 million, respectively. The total changes to the allowance for loan losses for the years ended December 31, 2009, 2010 and 2011 were as follows (in thousands):

 
  Year Ended December 31,  
 
  2009   2010   2011  

Allowance for Loan Losses

                   
 

Beginning of Year

  $ 2,451   $ 5,406   $ 3,357  
   

Provisions for Loan Losses

    40,255     36,324     57,569  
   

Charge-offs, net

    (37,300 )   (38,373 )   (55,300 )
               
 

End of Year

  $ 5,406   $ 3,357   $ 5,626  
               

Allowance as Percentage of Finance Receivables, net of unearned advance fees

    7.6 %   4.0 %   4.5 %
               

        The provision for loan losses for the years ended December 31, 2009 and 2010 also includes losses from returned items from check cashing of $3.0 million and $3.1 million, respectively, and card losses of $0.2 million for the year ended December 31, 2010. The provision for loan loss for the year ended December 31, 2011 also includes losses from returned items from check cashing of $5.1 million, loss on tax loans of $0.4 million and card losses of $0.2 million.

Goodwill

        Management evaluates all long-lived assets, including goodwill, for impairment annually as of December 31, or whenever events or changes in business circumstances indicate an asset might be

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impaired. Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets at the date of the acquisition and the excess of purchase price over identified net assets acquired.

        One of the methods that management employs in the review uses estimates of future cash flows from acquired assets. If the carrying value of goodwill or other intangible assets is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the goodwill or intangible assets exceeds its fair value. Management believes that its estimates of future cash flows and fair value are reasonable. Changes in estimates of such cash flows and fair value, however, could impact the estimated value of goodwill.

        There was no impairment loss charged to operations for goodwill during the years ended December 31, 2011 and December 31, 2010.

        During the year ended December 31, 2011, goodwill increased by $117.0 million, due to the California and Illinois Acquisitions.

Income Taxes

        We record income taxes as applicable under generally accepted accounting principles. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is recorded to reduce the deferred tax asset if it is more likely than not that some portion of the asset will not be realized.

        Primarily as a result of Diamond Castle's acquisition of CheckSmart and Golden Gate Capital's acquisition of CCCS, both in 2006, we benefit from a tax shield created through the amortization of the goodwill resulting from those transactions. For tax purposes this goodwill amortizes over a 15-year period from the date of the acquisitions. This resulted in goodwill amortization of $21.0 million for the purposes of our 2011 federal income taxes. Although we have not yet finalized our 2011 tax return, we believe the tax shield of $21.0 million results in cash tax savings of approximately $8.3 million. We expect the corresponding goodwill amortization in 2012 to be $23.0 million, which, at an applicable federal and state tax rate of 38%, would result in cash tax savings of approximately $8.7 million (which amounts do not include goodwill from the DFS Acquisition or any other future acquisitions we may consummate, including the Florida Acquisition, each of which we expect would increase the amount of our goodwill amortization and cash tax savings for 2012 and future years). Under GAAP, our income tax expense for accounting purposes, however, does not reflect the impact of this deduction for the amortization of goodwill. This difference between our cash tax expense and our accrued income tax expense results in the creation of deferred income tax items on our balance sheet.

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Results of Operations

        The following table sets forth key operating data for our operations for the years ended December 31, 2009, 2010 and 2011 (dollars in thousands):

 
  Year Ended December 31,  
 
  2009   Revenue %   2010   Revenue %   2011   Revenue %  

Total Revenues

  $ 202,683     100 % $ 224,280     100 % $ 306,934     100 %

Operating Expenses

                                     
 

Salaries and benefits

    34,343     16.9 %   38,759     17.3 %   57,411     18.7 %
 

Provision for losses

    43,463     21.4 %   40,316     18.0 %   65,351     21.3 %
 

Occupancy

    13,855     6.8 %   14,813     6.6 %   21,216     6.9 %
 

Depreciation and amortization (store-level)

    6,613     3.3 %   5,318     2.4 %   5,907     1.9 %
 

Other operating expenses

    22,652     11.2 %   27,994     12.5 %   35,515     11.6 %
                           

Total Operating Expenses

    120,926     59.7 %   127,200     56.7 %   185,400     60.4 %
                           

Income from Operations

    81,757     40.3 %   97,080     43.3 %   121,534     39.6 %
                           

Corporate and other expenses

                                     
 

Corporate expenses

    30,513     15.1 %   32,710     14.6 %   43,730     14.2 %
 

Transaction expenses

        0.0 %   237     0.1 %   9,351     3.0 %
 

Depreciation and amortization (corporate)

    568     0.3 %   1,222     0.5 %   2,332     0.8 %
 

Interest

    11,532     5.7 %   8,501     3.8 %   34,334     11.2 %
 

Income Tax Expense

    14,042     6.9 %   19,801     8.8 %   13,553     4.4 %
                           

Total corporate and other expenses

    56,655     28.0 %   62,471     27.9 %   103,300     33.7 %
                           

Net income before management fee and discontinued operations

    25,102     12.4 %   34,609     15.4 %   18,234     5.9 %

Sponsor Management Fee

    833     0.4 %   1,184     0.5 %   1,381     0.4 %

Discontinued Operations

    (368 )   (0.2 )%   2,196     1.0 %       0.0 %
                           

Net Income

    24,637     12.2 %   31,229     13.9 %   16,853     5.5 %
                           

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Year Ended December 31, 2011 Compared to Year Ended December 31, 2010

Revenue

 
  Year Ended December 31,  
(dollars in thousands)
  2010   2011   Increase (Decrease)   2010   2011  
 
   
   
   
  (Percent)
  (Percentage of Revenue)
 

Short-term Consumer Loans

  $ 125,815   $ 163,327   $ 37,512     29.8 %   56.0 %   53.2 %

Medium-term Loans

    6,863     14,170     7,307     106.5 %   3.1 %   4.6 %

Check Cashing Fees

    55,930     72,800     16,870     30.2 %   24.9 %   23.7 %

Prepaid Debit Card Services

    10,731     19,914     9,183     85.6 %   4.8 %   6.5 %

Title Loans

    13,381     18,656     5,275     39.4 %   6.0 %   6.1 %

Other Income

    11,560     18,067     6,507     56.3 %   5.2 %   5.9 %
                           

Total Revenue

  $ 224,280   $ 306,934   $ 82,654     36.9 %   100.0 %   100.0 %
                           

        For 2011, total revenue increased by $82.7 million, or 36.9%, compared to 2010. We experienced organic revenue growth in all of the states in which we operated for the 2011 fiscal year, compared with 2010, with the exception of Arizona, where we adjusted our product mix during May 2010 to conform to new regulatory requirements. Revenue from the California Acquisition increased our overall revenue during 2011 by $55.3 million. The Illinois Acquisition, which closed March 21, 2011, contributed $5.1 million to the revenue mix during 2011. We benefitted in 2011 from a full year's contribution from the Alabama Acquisition.

        Excluding Arizona for the effect of the regulatory change, and excluding the two acquisitions that closed during 2011, we achieved organic revenue growth of over 9.9% for the year.

        Revenue generated from short-term consumer loan fees and interest for 2011 increased $37.5 million, or 29.8%, compared to 2010. We grew short-term consumer loan revenue as we integrated the California and Illinois Acquisitions and focused on growing the product organically within each of our other markets. The California Acquisition contributed $29.5 million to short-term consumer loan revenue from the close of the acquisition on April 29, 2011 through December 31, 2011. We achieved organic growth within each of our markets, excluding Arizona, during the 2011 fiscal year compared to 2010.

        As we focus on meeting our customers' financial needs and building longer-term relationships with our customers, we have diversified our revenue mix and increased our medium-term loan offerings. This proactive approach has led to a shift in revenue mix from short-term loans to medium-term loans. Revenue generated from medium-term loans for 2011 increased $7.3 million, or 106.5%, compared to 2010. The California Acquisition contributed $1.3 million to medium-term loan revenue from the close of the acquisition on April 29, 2011, through December 31, 2011. Illinois, following the close of the Illinois Acquisition on March 21, 2011, also contributed to the overall growth in medium-term loan revenue by $4.9 million during 2011.

        Revenue generated from check cashing for 2011 increased $16.9 million, or 30.2%, compared to 2010. The general decline in check cashing was offset by the California Acquisition and a full twelve months of check cashing revenue from the Alabama Acquisition. Although this continues to be an important offering for our company, representing 24% of our revenue, we continue to focus on leveraging check cashing to grow ancillary products and services, including prepaid debit cards.

        Revenue from prepaid debit card services during 2011 increased by $9.2 million, or 85.6%, as customer demand for the prepaid card product offerings grew dramatically. The prepaid debit card products that we offer provide our customers with options, including direct deposit, online bill payment, electronic alerts and, in certain markets, access to a third-party loan, increasing customer contact and integrating our services as a central hub for all our customers' financial service needs. We transitioned

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to Insight's prepaid debit card products in April 2010. In 2011, we actively promoted the cards to our customer base, increasing the number of active card accounts (defined as accounts with activity within the previous 90 days) from approximately 25,900 at the launch of the Insight prepaid card program, to approximately 141,000 in December 2011.

        Following the Alabama Acquisition in 2010, we were able to successfully integrate our title loan product into the stores within that market. This successful integration in 2010 led to significant growth during 2011 compared to 2010. Additionally, the transition of customers in Arizona to title loans, following the regulatory change in May 2010, grew revenue significantly in that market as well. Overall, our other states contributed organic title loan revenue growth during 2011 versus 2010. The additional title loan revenue from the newly-acquired stores in California also contributed to the growth in title loans during 2011. Finally, we began to offer title loans to our customers in the Chicago area through the locations acquired in the Illinois Acquisition during the third quarter of 2011.

Operating Expenses

        The following table sets forth certain information with respect to our operating expenses for the years ended December 31, 2011 and 2010.

 
  Year Ended December 31,  
(dollars in thousands)
  2010   2011   Increase (Decrease)   2010   2011  
 
   
   
   
  (Percent)
  (Percent of Revenue)
 

Salaries and Benefits

  $ 38,759   $ 57,411   $ 18,652     48.1 %   17.3 %   18.7 %

Provision for Loan Losses

    40,316     65,351     25,035     62.1 %   18.0 %   21.3 %

Occupancy

    14,813     21,216     6,403     43.2 %   6.6 %   6.9 %

Depreciation & Amortization (Store-level)

    5,318     5,907     589     11.1 %   2.4 %   1.9 %

Advertising & Marketing

    4,463     4,716     253     5.7 %   2.0 %   1.5 %

Bank Charges

    2,360     2,953     593     25.1 %   1.1 %   1.0 %

Store Supplies

    2,188     2,880     692     31.6 %   1.0 %   0.9 %

Collection Expenses

    2,334     2,665     331     14.2 %   1.0 %   0.9 %

Telecommunications

    2,232     3,788     1,556     69.7 %   1.0 %   1.2 %

Security

    996     1,895     899     90.3 %   0.4 %   0.6 %

License & Other Taxes

    793     1,339     546     68.9 %   0.4 %   0.4 %

Other Operating Expenses

    12,628     15,279     2,651     21.0 %   5.6 %   5.0 %
                           

Total Operating Expenses

    127,200     185,400     58,200     45.8 %   56.7 %   60.4 %
                           

Income from Operations

  $ 97,080   $ 121,534   $ 24,454     25.2 %   43.3 %   39.6 %
                           

        Total operating expenses, which consist primarily of store-related expenses, increased by $58.2 million, or 45.8%, in 2011 as compared to 2010. This overall increase was due primarily to incremental store-level expenses from the 151 stores acquired through the California and Illinois Acquisitions and the full year of expenses from the Alabama Acquisition in 2011. As a percentage of revenue, salaries and benefits increased from 17.3% in 2010 to 18.7% in 2011. This was due largely to employee payroll attributable to the California and Illinois Acquisitions, as these locations were not as productive, with employee salaries resulting in a higher percentage of revenue.

        Occupancy expenses for 2011 also increased from 2010 primarily due to an increase in the number of stores in operation from the California and Illinois Acquisitions, as well as the recognition of a full twelve months of expenses in 2011 from the Alabama Acquisition.

        Provision for loan losses increased during 2011 compared to 2010, due primarily to increased volume as a result of the acquisitions and organic growth. Provision for loan losses increased as a

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percentage of revenue primarily as a result of four factors: (1) the effect of new legislation within the Illinois market, as the state transitioned short-term loan consumers to a state-wide database; (2) the shift in mix to more medium-term loans during the fourth quarter and the higher reserves necessitated by those products; (3) our continued focus on market share expansion, particularly in the California market as we invest in developing new consumer lending relationships; and (4) a continuing weak economy, particularly within the customer demographics we serve, coupled with high gas prices, which creates a challenging collection environment.

        Independent of the acquisitions, telecommunications expenses increased as long distance costs and the costs for other telephone services increased. Other operating expenses were impacted by the growing acceptance of debit and credit cards as a form of electronic repayment and the merchant processing costs which result, and an increase in customer incentive costs associated with transitioning customers into the prepaid card products that we offer and direct deposit.

Corporate and Other Expenses

 
  Year Ended December 31,  
(dollars in thousands)
  2010   2011   Increase (Decrease)   2010   2011  
 
   
   
   
  (Percent)
  (Percent of Revenue)
 

Corporate Expenses

  $ 32,710   $ 43,730   $ 11,020     33.7 %   14.6 %   14.2 %

Transaction Expenses

    237     9,351     9,114     3845.6 %   0.1 %   3.0 %

Depreciation & Amortization (Corporate)

    1,222     2,332     1,110     90.8 %   0.5 %   0.8 %

Sponsor Management Fee

    1,184     1,381     197     16.6 %   0.5 %   0.4 %

Discontinued Operations

    2,196         (2,196 )   (100.0 )%   1.0 %   0.0 %

Interest

    8,501     34,334     25,833     303.9 %   3.8 %   11.2 %

Income Tax Expense

    19,801     13,553     (6,248 )   (31.6 )%   8.8 %   4.4 %
                           

Total Corporate and Other Expenses

    65,851     104,681     38,830     59.0 %   29.4 %   34.1 %
                           

Corporate Expenses

        Corporate expenses increased $11.0 million during 2011, or 33.7%, compared to 2010, reflecting costs incurred with respect to the integration of the acquired operations. Collection expenses at the corporate level increased as we adapted to a broader product set and consolidated the California Acquisition.

        Additionally, to support our prepaid card product and pilot other initiatives, we built a call center during 2011. This investment results in an increase in corporate expenses related to payroll, telephone expenses and transactional expenses. We believe this investment will benefit us as we continue to expand the products and services we offer our customers.

Interest Expense, Net

        Interest expense, net, increased to $34.3 million during 2011 compared to $8.5 million for 2010, or an increase of 303.9%, due to the issuance of our senior notes concurrent with the California Acquisition. See "—Contractual Obligations and Commitments".

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Income Taxes

        Income taxes during 2011 were $13.6 million, as compared to $19.8 million for the same period in 2010. Our annual effective income tax rates in 2011 and 2010 were 44.6% and 37.2%, respectively. The effective income tax rate for 2011 is elevated as the result of non-deductible transaction expenses.

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

Revenue

 
  Year Ended December 31,  
(dollars in thousands)
  2009   2010   Increase
(Decrease)
   
  2009   2010  
 
   
   
   
  (Percent)
  (Percent of Revenue)
 

Short-term Consumer Loans

  $ 122,582   $ 125,815   $ 3,233     2.6 %   60.5 %   56.1 %

Medium-term Loans

    7,235     6,863     (372 )   (5.1 )%   3.6 %   3.1 %

Check Cashing Fees

    53,049     55,930     2,881     5.4 %   26.2 %   24.9 %

Prepaid Debit Card Services

    2,063     10,731     8,668     420.2 %   1.0 %   4.8 %

Title Loans

    7,140     13,381     6,241     87.4 %   3.5 %   6.0 %

Other Income

    10,614     11,560     946     8.9 %   5.2 %   5.2 %
                           

Total Revenue

  $ 202,683   $ 224,280   $ 21,597     10.7 %   100.0 %   100.0 %
                           

        In 2010, total revenue increased by $21.6 million, or 10.7%, compared to 2009. The increase in total revenue was due to both the Alabama Acquisition during the first quarter of 2010, and the follow-on opening of two additional stores in that market. We also achieved organic revenue growth in each state in which we operated in 2010, with the exceptions of Virginia and Arizona, where we adjusted our product mix during the year to conform to new regulatory requirements. We attribute our organic revenue growth in 2010 to favorable demographic trends that increased our target market as well as our successful penetration of our target market. We owned and operated 282 retail service locations as of December 31, 2010, compared to 264 stores as of December 31, 2009.

        Revenue generated from short-term consumer loan fees and interest for 2010 increased $3.2 million, or 2.6%, compared to 2009. Revenue growth across most of our markets was offset by a decrease in lending revenue in Arizona as customers transitioned from short-term consumer loans to other products, such as title loans and prepaid debit cards, and in Virginia, where consumers were adapting to our line of credit offerings. Overall, revenue growth was driven by greater transaction volumes, attributable to successful market penetration, with the average fee per loan made remaining flat.

        The development and introduction of title loans provided our customers with an alternative product to short-term consumer loans as we modified our product offerings in Arizona and Virginia. The increase in title loan fees of $6.2 million was primarily due to the migration of customers to this product within the Arizona and Virginia markets as well as a result of the Alabama Acquisition, where our acquired stores also offered title loans.

        Revenue generated from check cashing for 2010 increased $2.9 million, or 5.4%, compared to 2009. The growth in check cashing from the Alabama Acquisition was offset by the negative impact of macroeconomic weakness and high unemployment in certain markets. Transaction volume growth in 2010 offset a slightly lower average check size, and the average fee per check cashed remained constant. Check cashing was also impacted by consumers' migration towards electronic payment options such as direct deposit.

        Revenue from prepaid debit card services in 2010 increased by $8.7 million, or 420%, compared to 2009, as consumers grew increasingly accepting of the use of prepaid debit cards. Our penetration into the expanding market with Insight's prepaid debit card products, introduced in April 2010, was the primary driver of this revenue growth. In 2010, we actively promoted the benefits of the Insight prepaid debit card offering to our customer base, increasing the number of active card accounts (defined as

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accounts with activity within the previous 90 days) from the beginning of our agreement with Insight in April 2010 to over 87,000 in December 2010.

Operating Expenses

        The following table sets forth certain information with respect to our operating expenses for the years ended December 31, 2010 and 2009.

 
  Year Ended December 31,  
(dollars in thousands)
  2009   2010   Increase
(Decrease)
   
  2009   2010  
 
   
   
   
  (Percent)
  (Percent of Revenue)
 

Salaries and Benefits

  $ 34,343   $ 38,759   $ 4,416     12.9 %   16.9 %   17.3 %

Provision for Loan Losses

    43,463     40,316     (3,147 )   (7.2 )%   21.4 %   18.0 %

Occupancy

    13,855     14,813     958     6.9 %   6.8 %   6.6 %

Depreciation & Amortization (Store-level)

    6,613     5,318     (1,295 )   (19.6 )%   3.3 %   2.4 %

Advertising & Marketing

    4,437     4,463     26     0.6 %   2.2 %   2.0 %

Bank Charges

    2,166     2,360     194     9.0 %   1.1 %   1.1 %

Store Supplies

    1,756     2,188     432     24.6 %   0.9 %   1.0 %

Collection Expenses

    1,709     2,334     625     36.6 %   0.8 %   1.0 %

Telecommunications

    1,888     2,232     344     18.2 %   0.9 %   1.0 %

Security

    846     996     150     17.7 %   0.4 %   0.4 %

License & Other Taxes

    678     793     115     17.0 %   0.3 %   0.4 %

Other Operating Expenses

    9,172     12,628     3,456     37.7 %   4.5 %   5.6 %
                           

Total Operating Expenses

    120,926     127,200     6,274     5.2 %   59.7 %   56.7 %
                           

Income from Operations

  $ 81,757   $ 97,080   $ 15,323     18.7 %   40.3 %   43.3 %
                           

        Total operating expenses, which consist primarily of store-related expenses, increased by $6.3 million, or 5.2%, in 2010 from 2009, but decreased as a percentage of revenue from 59.7% in 2009 to 56.7% in 2010, primarily as a result of a decrease in our provision for loan losses in 2010 as compared to 2009. Expenses for loan loss provisions declined as we benefitted from a restructuring of our Virginia line of credit products to better align with customer needs.

        Salaries and benefits and occupancy expenses for 2010 increased from 2009 due to an increase in the number of stores in operation.

        Security expense increased as a result of the greater number of stores in operation. Bank charges increased due to increased transaction volume. The increase in licenses and other taxes were primarily related to our new products. The increase in collections and other operating expenses reflected the incremental costs associated with new product development and implementation as we adapted to different regulatory requirements, the increase in number of stores under operation through the Alabama Acquisition and expansion in the products and services we offered our customers. Other operating expenses were impacted by an increase in merchant processing charges as a result of the increased frequency with which our customers use debit and credit cards as a form of electronic payment for our products and services. Income from operations expanded in 2010 to 43.3% of revenue versus 40.3% in 2009.

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Corporate and Other Expenses

 
  Year Ended December 31,  
(dollars in thousands)
  2009