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

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FORM 10-Q

Commission File Number: 001-35537

COMMUNITY CHOICE FINANCIAL INC
(Exact name of registrant as specified in its charter)

(614) 798-5900
(Registrant's telephone number, including area code)

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

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

        Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No 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.

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

        There is no market for the registrant's equity. As of September 30, 2014, there were 8,981,536 shares outstanding.

   

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Table of Contents

Community Choice Financial Inc. and Subsidiaries

Form 10-Q for the Quarterly Period Ended September 30, 2014

Table of Contents

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Table of Contents

Community Choice Financial Inc. and Subsidiaries

Consolidated Balance Sheets

September 30, 2014 and December 31, 2013

(In thousands, except per share data)

   

See Notes to Unaudited Consolidated Financial Statements.

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Table of Contents

Community Choice Financial Inc. and Subsidiaries

Consolidated Statements of Operations

Three Months and Nine months Ended September 30, 2014 and 2013

(In thousands)

(Unaudited)

   

See Notes to Unaudited Consolidated Financial Statements.

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Community Choice Financial Inc. and Subsidiaries

Consolidated Statement of Stockholders' Equity

Nine months Ended September 30, 2014

(Dollars in thousands)

(Unaudited)

   

See Notes to Unaudited Consolidated Financial Statements.

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Table of Contents

Community Choice Financial Inc. and Subsidiaries

Consolidated Statements of Cash Flows

Nine months Ended September 30, 2014 and 2013

(In thousands)

(Unaudited)

   

See Notes to Unaudited Consolidated Financial Statements.

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share data)

Note 1. Ownership, Nature of Business, and Significant Accounting Policies

        Nature of business:    Community Choice Financial Inc. (together with its consolidated subsidiaries, "CCFI" or "the Company") was formed on April 6, 2011, under the laws of the State of Ohio. As of September 30, 2014, the Company owned and operated 532 stores in 15 states and had an internet presence in 24 states. Through its network of retail stores and over the internet, the Company provides customers a variety of financial products and services, including secured and unsecured, short and medium-term loans, check cashing, prepaid debit cards, and other services that address the specific needs of its individual customers.

        A summary of the Company's significant accounting policies follows:

        Basis of presentation:    The accompanying interim unaudited consolidated financial statements of Community Choice Financial Inc. and its subsidiaries have been prepared in accordance with the instructions to Form 10-Q and accounting principles generally accepted in the United States for interim financial information. They do not include all information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. Although management believes that the disclosures are adequate to prevent the information from being misleading, the interim unaudited consolidated financial statements should be read in conjunction with the Company's audited financial statements for the year ended December 31, 2013 in the Company's Form 10-K. In the opinion of the Company's management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company's financial condition, have been included. The results for any interim period are not necessarily indicative of results to be expected for the year ending December 31, 2014.

        Basis of consolidation:    The accompanying consolidated financial statements include the accounts of Community Choice Financial Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company previously determined that Insight Holdings Company, LLC ("Insight Holdings") was a Variable Interest Entity ("VIE") of which the Company was the primary beneficiary. Therefore, the Company consolidated this VIE as of April 1, 2013 until it was sold on May 12, 2014. Insight Holdings has been presented as a discontinued operation for the periods.

        Reclassifications:    Certain amounts reported in the consolidated financial statements for the three months and nine months ended September 30, 2013 have been reclassified to conform to classifications presented in the consolidated financial statements for the three months and nine months ended September 30, 2014, without affecting the previously reported net income or stockholders' equity. Prior periods have been restated in the statement of operations to present Insight Holdings as discontinued operations.

        Use of estimates:    The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to change relate to the determination of the allowance for loan losses, the valuation of goodwill, the valuation of equity method investments, the valuation of stock repurchase

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 1. Ownership, Nature of Business, and Significant Accounting Policies (Continued)

obligations, the value of stock based compensation and the valuation of deferred tax assets and liabilities.

        Business segments:    FASB Accounting Standards Codification ("ASC") Topic 280 requires that a public enterprise report a measure of segment profit or loss, certain specific revenue and expense items, segment assets, information about the way operating segments were determined and other items. The Company reports operating segments in accordance with FASB ASC Topic 280. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in determining how to allocate resources and assess performance. The Company operates in two segments: Retail financial services and Internet financial services. The consolidation of Insight Holdings, described further in Note 10, was included in retail financial services.

        Revenue recognition:    Transactions include loans, check cashing, bill payment, money transfer, money order sales, and other miscellaneous products and services. The full amount of the check cashing fee is recognized as revenue at the time of the transaction. Fees and direct costs incurred for the origination of loans are deferred and amortized over the loan period using the interest method. The Company acts in an agency capacity regarding bill payment services, money transfers, card products, and money orders offered and sold at its branches. The Company records the net amount retained as revenue because the supplier is the primary obligor in the arrangement, the amount earned by the Company is fixed, and the supplier is determined to have the ultimate credit risk. Fees and direct costs incurred for the origination of loans are deferred and amortized over the loan period using the interest method.

        Interest and fee income is recognized for all loan products using the interest method.

        As a result of the Company's charge-off policies, accounts are charged-off between 1 and 91 days past due rather than being placed in nonaccrual status.

        Cash and cash equivalents:    Cash and cash equivalents include cash on hand and short-term investments with original maturities of three months or less. At times, the Company may maintain deposits with banks in amounts in excess of federal depository insurance limits, but believes any such amounts do not represent significant credit risk.

        Restricted cash:    Restricted cash includes the carrying amounts of cash and cash equivalent items which are restricted as to withdrawal or usage. Restricted cash represents the funds collected in advance from Insight Holdings and Insight Holding's retail agents that are held at the card issuing bank for future loads to be received from cardholders at point of sale or through electronic funds transfer, and cash used to meet minimum net worth requirements. Effective with the sale of Insight, restricted cash represents only cash used to meet minimum net worth requirements for state licensing.

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

        Short term consumer loan products typically range in size from $100 to $1,000, and are evidenced by a promissory note with a maturity generally fourteen to thirty days with an agreement to defer the presentment of the customer's personal check or ACH authorization for the aggregate amount of the

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 1. Ownership, Nature of Business, and Significant Accounting Policies (Continued)

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% per $100 borrowed, to providing interest at 25% per annum plus origination fees. The customers repay the cash advance by making cash payments or allowing their check or ACH to be presented. For unsecured loans, the risk of repayment primarily relates to the customer's ability to repay the loans.

        In certain states, either in compliance with law or through our following of best practices recommended by the Community Financial Services Association of America ("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 to roughly four payments over eight weeks. If customers do not make these payments, their held check is deposited. Gross loan receivables subject to these repayment plans represented $2,017 of the $212,645 of total receivables at September 30, 2014 and $1,793 of the $189,108 of total receivables at December 31, 2013.

        Medium term loans typically range from $100 to $5,000 and are evidenced by a promissory note with a maturity between three and thirty-six months. These loans vary in their structure to correspond with the regulatory environments where they are offered. The loans are due in installments or provide for a line of credit with periodic monthly payments. For unsecured loans, the risk of repayment primarily relates to the customer's ability to repay the loans.

        Secured loan products typically range in size from $750 to $5,000, and are evidenced by a promissory note with a maturity between thirty days and twenty-four months. The customer grants a right in collateral and the loan may be secured with the lien on the collateral. The risk characteristics of secured loans primarily depend on the markets in which the Company operates and the regulatory requirements of each market. Risks associated with secured financings relate to the ability of the borrower to repay its loans and the value of the collateral underlying the loan should the borrower default on its payments.

        Short-term investments, certificates of deposit:    Short-term investments consist of certificates of deposit with original maturities greater than three months. Short-term investments are recorded at the carrying value, which approximates fair value and interest is recognized as earned.

        Allowance for loan losses:    Provisions for loan losses are charged to income in amounts sufficient to maintain an adequate allowance for loan losses and an adequate accrual for losses related to guaranteed loans processed for third-party lenders. The factors used in assessing the overall adequacy of the allowance for loan losses, the accrual for losses related to guaranteed loans processed for third-party lenders and the resulting provision for loan losses include an evaluation by product by market based on historical loan loss experience and delinquency of certain medium-term loans. The Company evaluates various qualitative factors that may or may not affect the computed initial estimate of the allowance for loan losses, including, among others, overall portfolio quality and current economic conditions. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic conditions.

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 1. Ownership, Nature of Business, and Significant Accounting Policies (Continued)

        For short term consumer loans, our policy is to charge off accounts when they become past due. The Company's policy dictates that, where a customer has provided a check or ACH authorization for presentment upon the maturity of a loan, if the customer has not paid off the loan by the due date, the Company will deposit the customer's check or draft the customer's bank account for the amount due. If the check or draft is returned as uncollected, all accrued fees and outstanding principal are charged-off as uncollectible.

        For medium term loans which have a term of one year or less, the Company's policy requires that balances be charged off when accounts are sixty days past due. For medium term loans which have an initial maturity of greater than one year, the Company's policy requires that balances be charged off when accounts are ninety-one days past due. The Company's line of credit products are charged-off on the thirty first day past due.

        For secured loans that are thirty days in duration, the Company's policy requires that balances be charged off when accounts are thirty days past due. For secured loans that have terms ranging from sixty days to one year, the Company's policy dictates that balances be charged off when accounts are sixty days past due. For secured loans that have terms of greater than one year, the Company's policy requires that balances be charged off when accounts are ninety-one days past due.

        Recoveries of amounts previously charged off are recorded to the allowance for loan losses or the accrual for third-party losses in the period in which they are received.

        Card related pre-funding and receivables:    Prior to April 1, 2013, the Company acted as an agent for Insight Holdings marketing prepaid debit cards. Pursuant to the Company's agreement, the Company was required to pre-fund certain card activity. The Company was also the beneficiary of certain receivables resulting from its card sales that relate to the commissions earned from this entity payable according to negotiated terms. On April 1, 2013, the Company extended a line of credit to Insight Holdings and consolidated Insight Holdings. Effective April 1, 2013, the card related prefunding between the Company and Insight Holdings had been eliminated and represented prefunding by Insight Holdings to the banks for card activity. However, when Insight Holdings was sold on May 12, 2014, the prefunding reverted back to the Company acting as an agent and, therefore, required the Company to pre-fund certain card activity.

        Deferred loan origination costs:    Direct costs incurred for the origination of loans, which consist mainly of direct and employee-related costs, are deferred and amortized to loan fee income over the contractual lives of the loans using the interest method. Unamortized amounts are recognized in income at the time that loans are paid in full.

        Goodwill and other intangibles:    Goodwill, or cost in excess of fair value of net assets of the companies acquired, is recorded at its carrying value and is periodically evaluated for impairment. The Company tests the carrying value of goodwill and other intangible assets annually as of December 31 or when the events and circumstances warrant such a review. One of the methods for this review is performed using estimates of future cash flows. 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. Based upon the annual impairment

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 1. Ownership, Nature of Business, and Significant Accounting Policies (Continued)

testing performed by the Company, management has determined that goodwill is not impaired. Changes in estimates of cash flows and fair value, however, could affect the evaluation.

        The Company's other intangible assets consist of non-compete agreements, customer lists, trade names, and internally developed software. Generally, the amounts recorded for non-compete agreements, customer lists and trade names are amortized using the straight-line method over five years and internally developed software is amortized using the straight-line method over three years. The customer list intangibles for DFS and the acquisition of 54 stores in Florida ("Florida Acquisition") are amortized based on the expected customer retention rate on an accelerated method over a period of 3 to 4 years. Amortization expense for the three months ended September 30, 2014 and 2013 were $835 and $1,573, and for the nine months ended September 30, 2014 and 2013 were $3,706 and $5,169, respectively.

        Equity method investments:    Entities and investments over which the Company exercises significant influence over the activities of the entity but which do not meet the requirements for consolidation are accounted for using the equity method of accounting pursuant to ASC 323, whereby the Company records its share of the underlying income or losses of these entities. Intercompany profit arising from transactions with affiliates is eliminated to the extent of its beneficial interest. Equity in losses of equity method investments is not recognized after the carrying value of an investment, including advances and loans, has been reduced to zero, unless guarantees or other funding obligations exist.

        On April 1, 2013, the Company extended a line of credit to Insight Holdings. The Company consolidated Insight Holdings as of April 1, 2013 as the Company determined that it is the primary beneficiary of the variable interest entity and the equity method of accounting was discontinued. Subsequently on May 12, 2014, Insight Holdings was sold to a third party and was de-consolidated.

        Deferred debt issuance costs:    Deferred debt issuance costs are amortized on the interest method of accounting over the life of the related note payable agreement. Amortization is included as a component of interest expense in the consolidated statements of operations.

        Deferred revenue:    The Company's deferred revenue is comprised of an upfront fee received under agency agreements to offer wire transfer services at the Company's branches. The deferred revenue is recognized over the contract period on a straight-line basis.

        Deferred rent:    The Company leases premises under agreements which provide for periodic increases over the lease term. Accordingly, timing differences between the amount paid for rent and the amount expensed are recorded in accounts payable and accrued liabilities in the accompanying consolidated balance sheets.

        Self-Insurance Liability:    The Company is self-insured for employee medical benefits subject to certain loss limitations. The incurred but not reported liability ("IBNR") represents an estimate of the cost of unreported claims based on historical claims reporting. The Company monitors the continued reasonableness of the assumptions and methods used to estimate the IBNR liability each reporting period.

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 1. Ownership, Nature of Business, and Significant Accounting Policies (Continued)

        Advertising and marketing costs:    Costs incurred for producing and communicating advertising, and marketing over the internet are charged to operations when incurred or the first time advertising takes place. Advertising and marketing expense for the three months ended September 30, 2014 and 2013 was $5,823 and $6,108, and for the nine months ended September 30, 2014 and 2013 were $13,938 and $11,852 respectively. Corporate level advertising and marketing expense for the three months ended September 30, 2014 and 2013 were $393 and $147 and for the nine months ended September 30, 2014 and 2013 were $992 and $234, respectively.

        Operating expenses:    The direct costs incurred in operating the Company's operations have been classified as operating expenses. Operating expenses include salaries and benefits of operations employees, internet operations, provision for loan losses, rent and other occupancy costs, depreciation and amortization of branch property and equipment, armored services and security costs, and other direct costs. District and regional managers' salaries are included in corporate expenses. Insight Holdings activity is included in corporate expenses.

        Discontinued operations:    Effective May 12, 2014, Insight Holdings was sold to a third party and its consolidated operations have been classified as discontinued operations on the Consolidated Statement of Operations. As discussed in Note 14, Insight Holdings is treated as a discontinued operation and prior periods have been adjusted on the statement of operations.

        Preopening costs:    New store preopening costs are expensed when incurred.

        Impairment of long-lived assets:    The Company evaluates all long- lived assets for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Impairment is recognized when the carrying amount of these assets cannot be recovered by the undiscounted net cash flows they will generate.

        Income taxes:    Deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. Income tax expense represents current tax obligations and the change in deferred tax assets and liabilities.

        The Company recognizes the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has greater than 50% likelihood of being realized upon ultimate settlement. Interest and penalties on income taxes are charged to income tax expense.

        Governmental regulation:    The Company is subject to various state and federal laws and regulations, which are subject to change and which may impose significant costs or limitations on the way the Company conducts or expands its business. Certain limitations include, among other things, imposed limits on fee rates and other charges, the number of loans to a customer, a cooling-off period, the number of permitted rollovers and required licensing and qualification.

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 1. Ownership, Nature of Business, and Significant Accounting Policies (Continued)

        Although states provide the primary regulatory framework under which the Company offers consumer loans, certain federal laws also impact the business. The Company's consumer loans are subject to federal laws and regulations, including the Truth-in-Lending Act ("TILA"), the Equal Credit Opportunity Act ("ECOA"), the Fair Credit Reporting Act ("FCRA"), the Gramm-Leach-Bliley Act ("GLBA"), the Bank Secrecy Act, the Money Laundering Control Act of 1986, the Money Laundering Suppression Act of 1994, and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (the "PATRIOT Act"), "Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ("Dodd-Frank"), and the regulations, if any, promulgated for each. Among other things, these laws require disclosure of the principal terms of each transaction to every customer, prohibit misleading advertising, protect against discriminatory lending practices, proscribe unfair credit practices and prohibit creditors from discriminating against credit applicants on the basis of race, sex, age or marital status. The GLBA and its implementing regulations generally require the Company to protect the confidentiality of its customers' nonpublic personal information and to disclose to the Company's customers its privacy policy and practices. In addition to state regulatory examinations that assess the Company's compliance with state and federal laws and regulations, the Consumer Financial Protection Bureau ("CFPB") and the Internal Revenue Service periodically examine and will continue to periodically examine the Company's compliance with the federal laws noted above and the regulations promulgated under those laws.

        Fair value of financial instruments:    Financial assets and liabilities measured at fair value are grouped in three levels. The levels prioritize the inputs used to measure the fair value of the assets or liabilities. These levels are:

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Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.



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Level 2—Inputs other than quoted prices that are observable for assets and liabilities, either directly or indirectly. These inputs include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are less attractive.



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Level 3—Unobservable inputs for assets and liabilities reflecting the reporting entity's own assumptions.

        The Company follows the provisions of the ASC 820-10, which applies to all assets and liabilities that are being measured and reported on a fair value basis. ASC 820-10 requires disclosure that establishes a framework for measuring fair value within generally accepted accounting principles and expands disclosure about fair value measurements. This standard enables a reader of consolidated financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The standard requires that assets and liabilities carried at fair value be classified and disclosed in one of the three categories.

        In determining the appropriate levels, the Company performed a detailed analysis of the assets and liabilities that are subject to ASC 820-10. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3. The Company's financial instruments consist primarily of cash and cash equivalents, finance receivables, short-term investments, and lines of credit. For all such instruments, other than senior secured notes,

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 1. Ownership, Nature of Business, and Significant Accounting Policies (Continued)

notes payable, and stock repurchase obligation at September 30, 2014 and December 31, 2013, the carrying amounts in the consolidated financial statements approximate their fair values. Our finance receivables are short term in nature and are originated at prevailing market rates. Our lines of credit bear interest at current market rates.

        The fair value of our 10.75% senior secured notes due 2019 (the "2019 notes") and our 12.75% senior secured notes due 2020 (the "2020 notes") were determined based on market yield on trades of the notes at the end of that reporting period.

        The fair value of related party Florida seller notes payable was determined based on applicable market yields of similar debt and the fair value of the stock repurchase obligation was determined based on a probability-adjusted Black Scholes option valuation model.

 

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 1. Ownership, Nature of Business, and Significant Accounting Policies (Continued)

        Recent Accounting Pronouncements In April 2014, the Financial Accounting Standards Board issued ASU No. 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360)" ("ASU 2014-08"). The amendments in ASU 2014-08 require that a disposal representing a strategic shift that has (or will have) a major effect on an entity's financial results or a business activity classified as held for sale should be reported as discontinued operations. The amendments also expand the disclosure requirements for discontinued operations and add new disclosures for individually significant dispositions that do not qualify as discontinued operations. The amendments are effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2014 (early adoption is permitted only for disposals that have not been previously reported). The Company does not expect ASU 2014-08 to have a material effect on the Company's current financial position, results of operations or financial statement disclosures; however, it may impact the reporting of future discontinued operations if and when they occur.

        In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is not permitted. The Company does not expect ASU 2014-09 to have a material effect on the Company's current financial position or results of operations, however, it may impact the reporting of future financial statement disclosures.

Note 2. Finance Receivables, Credit Quality Information and Allowance for Loan Losses

        Finance receivables representing amounts due from customers for advances at September 30, 2014 and December 31, 2013 consisted of the following:

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 2. Finance Receivables, Credit Quality Information and Allowance for Loan Losses (Continued)

        Changes in the allowance for the loan losses by product type for the three months ended September 30, 2014, are as follows:

        The provision for loan losses for the three months ended September 30, 2014 also includes losses from returned items from check cashing of $2,471 and is net of debt sales of $1,495.

        Changes in the allowance for the loan losses by product type for the nine months ended September 30, 2014, are as follows:

        The provision for loan losses for the nine months ended September 30, 2014 also includes losses from returned items from check cashing of $6,027 and is net of debt sales of $1,646.

        Changes in the allowance for the loan losses by product type for the three months ended September 30, 2013 are as follows:

        The provision for loan losses for the three months ended September 30, 2013, also includes losses from returned items from check cashing of $2,342.

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 2. Finance Receivables, Credit Quality Information and Allowance for Loan Losses (Continued)

        Changes in the allowance for the loan losses by product type for the nine months ended September 30, 2013, are as follows:

        The provision for loan losses for the nine months ended September 30, 2013 also includes losses from returned items from check cashing of $5,913.

        Changes in the accrual for third-party lender losses for the three months and nine months ended September 30, 2014, and 2013 were as follows:

        The Company has subsidiaries that facilitate third party lender loans. Total gross finance receivables for which the Company has recorded an accrual for third-party lender losses totaled $8,724 and $9,228 at September 30, 2014 and December 31, 2013, respectively, and the corresponding guaranteed consumer loans are disclosed as an off-balance sheet arrangement.

        The Company considers the near term repayment performance of finance receivables as its primary credit quality indicator. The Company performs credit checks through consumer reporting agencies on certain loans. If a third-party lender provides the advance, the applicable third-party lender decides whether to approve the cash advance and establishes all of the underwriting criteria and terms, conditions, and features of the customer agreements.

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 2. Finance Receivables, Credit Quality Information and Allowance for Loan Losses (Continued)

        The aging of receivables at September 30, 2014 and December 31, 2013, are as follows:

Note 3. Related Party Transactions and Balances

        Quarterly fees are paid to affiliates of several stockholders in consideration for ongoing management and other advisory services provided to the Company and its subsidiaries. Total fees pursuant to this agreement for the three months ended September 30, 2014 and 2013 were $329 and $306, and for the nine months ended September 30, 2014 and 2013 were $969 and $993, respectively.

        The Company's senior management has access to use of an aircraft owned by a related party. The Company rents the aircraft from this related party for Company business. Total rent for usage of the aircraft for the three months ended September 30, 2014 and 2013 were $10 and $43, and for the nine months ended September 30, 2014 and 2013 were $78 and $43, respectively, and are included with corporate expenses on the consolidated statements of operations for the respective periods.

        In May, 2013, the Company entered into an agreement with a limited liability company owned by a related party. Pursuant to the terms of the agreement, the Company exchanged a 25% interest in an aircraft it owned for a 25% interest in an aircraft owned by the limited liability company. Subsequently, the Company sold the interest it received in the exchange to an unrelated party and recognized a gain on the transactions of $28.

        Certain retail locations of the Company are owned by related parties and leased from the related parties. Related party rent for the three months ended September 30, 2014 and 2013 were $275 and $268, and for the nine months ended September 30, 2014 and 2013 were $834 and $818, respectively, and are included with occupancy expense on the consolidated statements of operations for the respective periods.

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 3. Related Party Transactions and Balances (Continued)

        A non-guarantor subsidiary of the Company issued a series of related party Florida seller notes as a portion of the consideration to acquire 54 stores in the Florida market. These notes have been classified as a related party transaction because the sellers in the Florida Acquisition, and recipients of the notes, became shareholders of the Company.

Note 4. Goodwill and Other Intangible Assets

        The following table summarizes goodwill and other intangible assets as of September 30, 2014 and December 31, 2013:

        The Company conducted its annual test for impairment of goodwill as of December 31, 2013 for both the Retail financial and Internet financial services segments which resulted in no impairment of goodwill. The methodology for determining the fair value was a combination of quoted market prices, prices of comparable businesses, discounted cash flows and other valuation techniques.

        The Company performed a subsequent goodwill impairment test for the retail services segment as required when a portion of the segment is sold. This resulted in no impairment of goodwill as of May 12, 2014.

        Intangible amortization expense for the three months ended September 30, 2014 and 2013 were $835 and $1,573, and for the nine months ended September 30, 2014 and 2013 were $3,706 and $5,169, respectively.

        Intangible assets for Insight Holdings were $15,923 at the date of sale in May of 2014.

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 5. Pledged Assets and Debt

        Senior secured notes payable at September 30, 2014 and December 31, 2013 consisted of the following:

        The indentures governing the 2019 notes and the 2020 notes each contains certain covenants and events of default, including limitations on the Company's ability to incur additional indebtedness, pay dividends on or make other distributions or repurchase its capital stock, make certain investments, enter into certain types of transactions with affiliates, create liens and sell certain assets or merge with or into other companies. The agreement governing the Company's revolving credit facility contains restrictive covenants that limit its ability to incur additional indebtedness, pay dividends on or make other distributions or repurchase the Company's capital stock, make certain investments, enter into certain types of transactions with affiliates, create liens and sell certain assets or merge with or into other companies, in each case to the same extent as the indentures governing the Company's notes. In addition, the agreement governing the Company's revolving credit facility contains a consolidated total net leverage ratio covenant, which will be tested at the time of any borrowing under the facility and on a quarterly basis when any loans are outstanding. As of September 30, 2014, the Company was in compliance with these covenants.

        Lines of credit at September 30, 2014 and December 31, 2013 consisted of the following:

        The 4-year, $40,000 revolving credit facility, at the Company's option, bears interest at either (a) LIBOR plus a margin of 5.00% or (b) an alternative base rate (determined as the greatest of the prime rate, the federal funds effective rate plus 0.50% or 1-month LIBOR plus 1.00%) plus a margin of 4.00%, and will mature on April 29, 2015. The 1-month LIBOR rate was 0.15% and 0.17% at

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 5. Pledged Assets and Debt (Continued)

September 30, 2014 and December 31, 2013, respectively, and the prime rate was 3.25% at September 30, 2014 and December 31, 2013. The weighted average interest rate of our revolving credit borrowings during the nine months ended September 30, 2014 was 6.14%.

        Non-guarantor notes payable at September 30, 2014, and December 31, 2013, consisted of the following:

        A non-guarantor subsidiary of the Company issued a series of related party Florida seller notes as a portion of the consideration to acquire 54 stores in the Florida market. These notes have been classified as related party due to the sellers in the Florida Acquisition, and recipients of the notes, becoming shareholders of the Company through the transaction. The related party Florida seller notes were originally recorded at a fair value of $17,223 using an estimated market interest rate of 12.75%. The discount of $1,277 is being amortized over the life of the related party Florida seller notes as a component of interest expense. The amortization of discount was $57 and $96 for the three months ended September 30, 2014 and 2013, and was $164 and $368 for the nine months ended September 30, 2014 and 2013, respectively.

        The related party Florida seller notes are secured by the assets of the non-guarantor subsidiary. The indenture governing the Company's non-guarantor secured related party Florida seller notes due 2016 contains covenants that limit the ability of the Company's non-guarantor subsidiaries party thereto to create liens, declare or pay any dividend or distribution, incur debt, and transfer or otherwise dispose of substantially all of its current assets. These covenants are evaluated for compliance quarterly beginning on December 31, 2012 and the Company remains in compliance. The related party Florida seller notes contain certain covenants and provisions which are enforceable upon the non-guarantor subsidiary party thereto. The related party Florida seller notes are non-recourse to the Company and the guarantor subsidiaries.

        On November 1, 2013, the Company entered into an amendment to the related party Florida seller notes. Pursuant to this amendment, the non-guarantor subsidiary pre-paid $2,500 of the principal payments originally scheduled to be paid during 2014. In addition, for a payment of $500, such non-guarantor subsidiary settled in full, the $1,500 note with the resulting gain being recognized as an equity adjustment. The $8,000 and $9,000 notes were further amended to provide the non-guarantor subsidiary the option to prepay the notes at a 20.00% discount through September 30, 2014, or at a 15.00% discount from October 1, 2014 through September 30, 2015.

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 5. Pledged Assets and Debt (Continued)

        On December 20, 2013 and June 19, 2014 the Company created non-guarantor subsidiaries in order to acquire loans from the retail and internet portfolios. The non-guarantor subsidiaries funding came from a note payable to finance the loan acquisitions.

        On July 19, 2014, a guarantor subsidiary of the Company entered in to a term note for the acquisition of a share of an airplane.

        The subsidiary notes payable at September 30, 2014 and December 31, 2013 consisted of the following:

        The 1-year, $8,100 term note, currently bears interest monthly at 17.00% per annum and was 20.00% per annum prior to the adjustment date of June 20, 2014.

        The 2-year, $25,000 revolving credit facility, bears interest monthly at 16.50% per annum.

        The 5-year, $1,425 term note, bears interest monthly at 4.25% per annum.

        The mortgage note payable, bears interest at 4.95%, was refinanced on January 21, 2014 and was de-consolidated with the sale of Insight Holdings on May 12, 2014. The outstanding balance at September 30, 2014 and December 31, 2013 consisted of the following:

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 6. Accounts Payable and Accrued Liabilities

        Accounts payable and accrued liabilities at September 30, 2014 and December 31, 2013 consisted of the following:

Note 7. Operating and Capital Lease Commitments and Total Rental Expense

        The Company leases its facilities under various non-cancelable agreements, which require various minimum annual rentals and may also require the payment of normal common area maintenance on the properties. The total minimum rental commitment at September 30, 2014, is due as follows:

        Rental expense totaled $7,781 and $7,300 for the three months ended September 30, 2014 and 2013, and $22,721 and $20,786 for the nine months ended September 30, 2014 and 2013, respectively.

Note 8. Concentrations of Credit Risks

        The Company's portfolio of finance receivables is with customers living in thirty-two states and consequently such customers' ability to honor their contracts may be affected by economic conditions in

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 8. Concentrations of Credit Risks (Continued)

these areas. Additionally, the Company is subject to regulation by federal and state governments that affect the products and services provided by the Company. To the extent that laws and regulations are passed that affect the Company's ability to offer loans or similar products in any of the states in which it operates, the Company's financial position could be adversely affected. The following table summarizes the allocation of the portfolio balance by state at September 30, 2014 and December 31, 2013:

        The other retail segment states are: Illinois, Indiana, Kansas, Kentucky, Michigan, Missouri, Oregon, Tennessee, and Utah.

        The other internet segment states are: Alaska, Delaware, Hawaii, Idaho, Illinois, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Nevada, New Mexico, North Dakota, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Washington, Wisconsin, and Wyoming.

Note 9. Contingencies

        From time-to-time the Company is a defendant in various lawsuits and administrative proceedings wherein certain amounts are claimed or violations of law or regulations are asserted. In the opinion of the Company's management, these claims are without substantial merit and should not result in judgments which in the aggregate would have a material adverse effect on the Company's financial statements.

Note 10. Business Combinations

Retail Financial Services

        On April 1, 2013, the Company extended a line of credit to Insight Holdings. The Company determined that the line of credit represents financial support constituting a variable interest and the Company was the primary beneficiary. As a result of these determinations, the Company consolidated Insight Holdings as of April 1, 2013. No additional consideration was transferred in order to effect the consolidation and no consolidation-related costs were incurred.

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 10. Business Combinations (Continued)

        The following table summarizes the fair value of the assets and liabilities at the date of consolidation:

        At April 1, 2013, the Company's carrying value of its investment in Insight Holdings was $6,317. The difference between the Company's consolidation-date fair value of $6,594 and carrying value of $6,317 resulted in a gain of $277 and is recorded as part of the gain on equity method investments on the consolidated statements of operations for the nine months ended September 30, 2013.

        Effective May 12, 2014, Insight Holdings was sold to a third party and is treated as a discontinued operation. See Note 14.

Note 11. Stock Based Compensation

        On May 1, 2006, the Company adopted the 2006 Management Equity Incentive Plan (the "Plan") pursuant to which the Company's Board of Directors, or a duly-authorized committee thereof, may grant stock options, restricted stock, restricted stock units and stock appreciation rights to employees and consultants of the Company or its subsidiaries. The Company amended the plan to increase the number of shares and to convert the number of shares in the 2006 plan to the 2011 plan. Options that have been granted under the Plan have been granted at an exercise price equal to (or greater than) the stock's fair market value at the date of the grant, with terms of 10 years and vesting generally over four to five years or on the occurrence of a liquidity event. On April 19, 2011, the Company adopted the Plan to be effective as of April 29, 2011. The maximum number of shares that may be subject to awards under the Plan is 2,941,746 as of September 30, 2014.

        The Company recognizes compensation costs in the financial statements for all share-based payments granted based on the grant date estimated fair value.

        The Plan allows for awards based on time, performance and market conditions. Compensation expense for awards based on time is expensed on a straight-line basis over the service period. Compensation expense for performance awards are recognized using the graded vesting method.

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 11. Stock Based Compensation (Continued)

Compensation expense for market conditions such as those conditioned on either a liquidity event condition or a specified performance condition have not been recognized and will be recognized upon consummation of the relevant market condition. At September 30, 2014, there were a total of 883,290 additional shares available for grant under the Plan.

        The fair value of an option award is estimated on the date of grant using a lattice-based option valuation model. Because lattice-based option valuation models incorporate ranges of assumptions for inputs, those ranges are disclosed. Expected volatilities are based on the historical volatility of the stock of comparable public companies. The Company uses historical data to estimate option exercise and employee termination within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

        On May 15, 2013, the Company issued 419,500 options with a per share exercise price of $8.40. The options vest ratably over a three year period or become fully vested in the event of a change in control as defined in the award agreement. The Company also re-priced certain previously issued options and stock appreciation rights on May 15, 2013 at a per share exercise price of $8.40, which resulted in incremental compensation expense of $73 attributable to fully vested awards.

        On October 1, 2013, the Company granted 25,452 Restricted Stock Units with a per share exercise price of $8.25, and these Restricted Stock Units vested immediately.

        In March of 2014, the Company issued 35,000 options with a per share exercise price of $9.10. The options vest ratably over a three year period or ratably over a specified time frame as defined in the award agreement.

        In May of 2014, the Company settled one half of the vested outstanding Restricted Stock Units held by certain of its named executive officers. The number of shares purchased was 11,710 at a total cost of $107.

        The following weighted average assumptions were used by the Company for awards granted during the nine months ended September 30, 2014:

        For the nine months ended September 30, 2014 and 2013, the Company recorded stock-based compensation costs in the amounts of $1,970 and $1,068, respectively. As of September 30, 2014 and December 31, 2013, unrecognized stock-based compensation costs to be recognized over future periods approximated $2,026 and $4,029, respectively. At September 30, 2014, the remaining unrecognized compensation expense was $745 for certain awards that vest solely upon a change in control and $1,281 for certain awards that vest either over the requisite service period or a change in control. The

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 11. Stock Based Compensation (Continued)

remaining weighted-average period for the awards that vest solely upon a change in control cannot be determined because they vest upon an event not within the Company's control. The remaining compensation expense of $2,026 is expected to be recognized over a weighted-average period of 1.3 years. The total income tax benefit recognized in the consolidated statements of operations for the stock-based compensation arrangements was $-0- for the three month period ended September 30, 2014 and 2013, and $-0- for the nine month period ended September 30, 2014 and 2013.

        Stock option activity for the nine months ended September 30, 2014 is as follows (these amounts have not been rounded in thousands):

        Restricted stock unit ("RSU") activity for the nine months ended September 30, 2014, is as follows (these amounts have not been rounded in thousands):

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 11. Stock Based Compensation (Continued)

        Stock appreciation rights activity for the nine months ended September 30, 2014 is as follows (these amounts have not been rounded into thousands):

Note 12. Business Segments

        The Company has elected to organize and report on its operations as two operating segments: Retail financial services and Internet financial services.

        The following tables present summarized financial information for the Company's segments:

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 12. Business Segments (Continued)

        Intersegment revenues of $736 for the three months ended September 30, 2014, have been eliminated.

        Intersegment revenues of $2,004 for the nine months ended September 30, 2014, have been eliminated.

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 12. Business Segments (Continued)

        Intersegment revenues of $88 for the three months ended September 30, 2013, have been eliminated

        Intersegment revenues of $88 for the nine months ended September 30, 2013, have been eliminated

Note 13. Income Taxes

        Community Choice Financial Inc, and its subsidiaries file a consolidated federal income tax return. The Company files consolidated or separate state income tax returns as permitted by the individual states in which it operates. The effective rate change is related to permanent differences between book and tax. The Company had no liability recorded for unrecognized tax benefits at September 30, 2014 and December 31, 2013.

Note 14. Discontinued Operations

        In May of 2014, the controlling members of the Company's consolidated VIE, Insight Holdings, sold 100% of the member interests. The Company received $3.5 million for its member interests and has classified Insight Holdings as a discontinued operation.

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 14. Discontinued Operations (Continued)

        Results from discontinued operations of Insight Holdings for the periods of the three months ended September 30, 2014 and 2013 and the nine months ended September 30, 2014 and 2013 were as follows:

        Assets of $37,718 and liabilities of $4,777 were included at December 31, 2013 in the Consolidated Balance Sheet and Consolidating Balance Sheets in Note 17. Insight Holdings was formerly included in the Retail financial services segment.

        The Company will continue to be an agent for the Insight prepaid card and earn fees based on card sales and activity.

        Prior to the sale of Insight Holdings, a portion of the revenue was eliminated during consolidation. The agency revenue paid to the Company, from Insight Holdings previously eliminated was $-0- and $1,199 for the three month periods ended September 30, 2014 and 2013, respectively, and $2,145 and $2,522 for the nine month periods ended September 30, 2014 and 2013, respectively.

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 15. Transactions with Variable Interest Entities

        The Company acquired a 22.5% membership interest of Insight Holdings in 2011. As additional consideration to Insight Holdings, the Company agreed to make available to Insight Holdings a revolving credit facility of $3,000. Prior to April 1, 2013, the Company determined that Insight Holdings was a VIE but that the Company was not the primary beneficiary, and therefore, had not consolidated Insight Holdings. The investment in Insight Holdings was accounted for under the equity method. Effective with the extension of the line of credit on April 1, 2013, the Company consolidated Insight Holdings. During 2013, the Company's membership interest increased to 22.7% as a result of Insight Holdings redeeming the membership interests of another member. Effective May 12, 2014, Insight Holdings was sold to an independent third party and is treated as a discontinued operation and the Company has no continued ownership remaining.

        The Company has limited agency agreements with unaffiliated third-party lenders since the acquisition of our internet provider in 2012. The agreement governs the terms by which the Company refers customers to that lender, on a non-exclusive basis, for a possible extension of credit, processes loan applications and commits to reimburse the lender for any loans or related fees that were not collected from such customers. As of September 30, 2014 and December 31, 2013, the outstanding amount of active consumer loans, which was our maximum exposure, was $8.7 million and $9.2 million, respectively, which were guaranteed by the Company. This guarantee obligation is recorded as a current liability on the Company's consolidated balance sheet. The accrual for these obligations totaled $1,597 and $1,387 as of September 30, 2014 and December 31, 2013, respectively. The Company has determined that the lenders are VIEs but that the Company is not the primary beneficiary of the VIEs. Therefore, the Company has not consolidated either lender.

Note 16. Supplemental Guarantor Information

        The 2019 notes and the 2020 notes contain various covenants that, subject to certain exceptions defined in the indentures governing the notes (the "Indentures"), limit the Company's ability to, among other things, engage in certain transactions with affiliates, pay dividends or distributions, redeem or repurchase capital stock, incur or assume liens or additional debt, and consolidate or merge with or into another entity or sell substantially all of its assets. The Company has optional redemption features on the 2019 notes and the 2020 notes prior to their maturity which, depending on the date of the redemption, would require premiums to be paid in addition to all principal and interest due.

        The 2019 notes and 2020 notes are guaranteed by all of the Company's guarantor subsidiaries existing as of April 29, 2011 (the date the Company issued the notes) and any subsequent guarantor subsidiaries that guarantee the Company's indebtedness or the indebtedness of any other subsidiary guarantor (the "Subsidiary Guarantors"), in accordance with the Indentures. The Company is a holding company and has no independent assets or operations of its own. The guarantees under the 2019 notes and 2020 notes are full and unconditional and joint and several. There are no restrictions on the ability of the Company or any of the Subsidiary Guarantors to obtain funds from its restricted subsidiaries by dividend or loan, except for net worth requirements required by certain states in which the Company operates and certain requirements relating to Insight Capital, LLC as a result of its separate revolving credit facility. Certain Subsidiary Guarantors are required to maintain net worth ranging from $5 to $1,000. The total net worth requirements of these Subsidiary Guarantors is $11.7 million. The Indentures contain certain affirmative and negative covenants applicable to the Company and its

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 16. Supplemental Guarantor Information (Continued)

Subsidiary Guarantors, including restrictions on their ability to incur additional indebtedness, consummate certain asset sales, make investments in certain entities that create liens on their assets, enter into certain affiliate transactions and make certain restricted payments, including restrictions on the Company's ability to pay dividends on, or repurchase, its common stock.

        As discussed in Note 10, the Company consolidated Insight Holdings as of April 1, 2013, and as discussed in Note 14, Insight Holdings is now treated as a discontinued operation and prior periods have been restated on the statement of operations. Insight Holdings was not a subsidiary of the Company, was not a guarantor under the 2019 notes or 2020 notes and, was not otherwise an obligor under the Company's debt instruments.

        As long as the $7,000 Alabama Revolving Credit Agreement remains outstanding, the guarantee provided by our Alabama subsidiary, Insight Capital, LLC, will be secured on a second-priority basis by the shared Alabama collateral held by such subsidiary. As a result, any obligations under the Alabama Revolving Credit Agreement must first be satisfied before the Alabama subsidiary can make any payments with respect to the 2019 and 2020 Notes.

Note 17. Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information

        The following presents the condensed consolidating guarantor financial information as of September 30, 2014 and December 31, 2013, and for the nine months ended September 30, 2014 and 2013, for the subsidiaries of the Company that serve as guarantors of the Notes, and for the subsidiaries that do not serve as a guarantor. The non-guarantor subsidiaries are Buckeye Check Cashing of Florida II, LLC, CCFI Funding LLC, CCFI Funding II, LLC, Direct Financial Solutions of UK Limited and its subsidiary Cash Central UK Limited, Direct Financial Solutions of Canada, Inc and its subsidiaries DFS-CC Financial Services LLC, DFS-CC Financial Services (Calgary) LLC and DFS-CC Financial Services (Toronto) LLC, and Direct Financial Solutions of Australia Pty Ltd, and its subsidiary Cash Central of Australia Pty Ltd. The Company's entire guarantor subsidiaries are 100% owned, and all guarantees are full and conditional, joint and several.

        Of the entities included under "Non-Guarantor Subsidiaries" in the tables below, Buckeye Check Cashing of Florida II, LLC, CCFI Funding, and CCFI Funding II are "Unrestricted Subsidiaries" as defined in the indentures governing the 2019 notes and 2020 notes. Buckeye Check Cashing of Florida II, LLC was acquired on July 31, 2012, CCFI Funding was established on December 20, 2013, and CCFI Funding II was established on June 19, 2014. As of September 30, 2014 and December 31, 2013, such unrestricted subsidiaries had total assets of $82,464 and $54,665 and total liabilities of $69,484 and $39,717, respectively and for the nine months ended September 30, 2014 and 2013 had total revenues of $33,490 and $19,546, total operating expenses of $22,519 and $13,823, and net income (loss) from continuing operations of $417 and ($558), respectively. As described above, Insight Holdings is included in the tables below as a "Non-Guarantor Subsidiary" because the Company consolidated the entity as of April 1, 2013. As of December 31, 2013, our non-guarantor consolidated entity had total assets of $37,718 and total liabilities of $4,777. For the nine months ended September 30, 2014 and September 30, 2013, this entity is included in discontinued operations, net of tax. The remainder of the entities included under "non-Guarantor Subsidiaries" in the tables below are "Restricted Subsidiaries" as defined in the indentures governing the 2019 notes and the 2020 notes and, for the periods specified, did not have material assets, liabilities, revenue or expenses.

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 17. Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information (Continued)

Community Choice Financial Inc. and Subsidiaries
Condensed Consolidating Balance Sheet (unaudited)
September 30, 2014

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Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 17. Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information (Continued)

Community Choice Financial Inc. and Subsidiaries
Condensed Consolidating Balance Sheet
December 31, 2013

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 17. Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information (Continued)

Community Choice Financial Inc. and Subsidiaries
Condensed Consolidating Statements of Operations (unaudited)
Nine Months Ended September 30, 2014

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 17. Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information (Continued)

Community Choice Financial Inc. and Subsidiaries
Condensed Consolidating Statements of Operations (unaudited)
Nine Months Ended September 30, 2013

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 17. Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information (Continued)

Community Choice Financial Inc. and Subsidiaries
Condensed Consolidating Statement of Cash Flows (unaudited)
Nine Months Ended September 30, 2014

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Community Choice Financial Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)

Note 17. Supplemental Condensed Consolidating Guarantor and Non-Guarantor Financial Information (Continued)

Community Choice Financial Inc. and Subsidiaries
Condensed Consolidating Statement of Cash Flows (unaudited)
Nine Months Ended September 30, 2013

Note 18. Subsequent Events

        The Company terminated the operations of CCFI Funding I in October 2014. The $8.1 million term note and the $2.7 million note payable to the guarantor subsidiaries were paid in full. The $2.6 million in receivables were sold to other guarantor and non-guarantor subsidiaries of the Company.

        The revolving credit facility for CCFI Funding II was amended from $25.0 million to $35.0 million in October of 2014. CCFI Funding II drew an additional $11.25 million in anticipation of purchasing additional receivables from guarantor subsidiaries.

        A number of the Company's independent board members have disclosed to the Audit and Compliance Committee that they have made an investment in the lender that provides the credit facility to CCFI Funding II.

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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 Community Choice Financial's financial condition and results of operations. References to "CCFI", "the company", "us", "we", "our" and "ours" refer to Community Choice Financial, together with its subsidiaries. This discussion contains forward-looking statements and involves numerous risks and uncertainties. Actual results may differ materially from those contained in any forward-looking statements.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

        The Private Securities Litigation Reform Act of 1995 ("Act") provides a safe harbor for forward-looking statements. Certain statements in this report are forward-looking statements within the meaning of the Act, and such statements are intended to qualify for the protection of the safe harbor provided by the Act. The words "anticipate," "estimate," "expect," "objective," "goal," "project," "intend," "plan," "believe," "will," "should," "may," "target," "forecast," "guidance," "outlook," and similar expressions generally identify forward-looking statements. Similarly, descriptions of our objectives, strategies, plans, goals or targets are also forward-looking statements. Forward-looking statements relate to the expectations of management as to future occurrences and trends, including statements expressing optimism or pessimism about future operating results or events and projected revenues, earnings, capital expenditures and business strategy. Forward-looking statements are based upon a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Forward-looking statements are and will be based upon management's then-current views and assumptions regarding future events and operating performance, and are applicable only as of the dates of such statements. Although we believe the expectations expressed in forward-looking statements are based on reasonable assumptions within the bounds of our knowledge, forward-looking statements, by their nature, involve risks, uncertainties and other factors, any one or a combination of which could materially affect our business, financial condition, results of operations or liquidity.

        Forward-looking statements that we make herein and in other reports and releases are not guarantees of future performance and actual results may differ materially from those discussed in such forward-looking statements as a result of various factors, including, but not limited to, the ongoing impact of the economic and credit crisis, leveling demand for our products, our inability to successfully execute strategic initiatives, including integration of acquired businesses, competitive pressures, economic pressures on our customers and us, regulatory and legislative changes, the impact of legislation, the risks discussed under Item 1A "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2013, and other factors discussed from time to time. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. We undertake no obligation to publicly update forward-looking statements whether as a result of new information, future events or otherwise.

        Readers are advised, however, to consult any further disclosures we make on related subjects in our public announcements, releases, and reports.

Overview

        We are a leading retail provider of alternative financial services to unbanked and under banked consumers. We provide our customers a variety of financial products and services, including short-term consumer loans, medium-term loans, check cashing, prepaid debit cards, secured loans and other services that address the specific needs of our customers. Through our retail focused business model we provide our customers with high-quality service and immediate access to retail financial services at competitive rates and through the channel most convenient for our customers. As of September 30, 2014, we operated 532 storefront locations across 15 states and 24 states via the internet.

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        Our retail business model is focused on providing a broadening array of financial products and services through the distribution channels which satisfy the target customer needs where and when they desire. We want to achieve a superior level of customer satisfaction resulting in increased market penetration and value creation. Our overall revenue has expanded as we have executed on our retail model. An important part of our retail model is investing in and creating a premier brand presence, supported by a highly trained and motivated workforce with the aim of enhancing the customer's experience, generating increased traffic and introducing our customers to our diversified set of products. We have achieved organic growth through increased market share and expanded our customer relationships through our additional product offerings.

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 than 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 integrate acquisitions into our operations. Acquisitions have provided us with an existing market presence to build upon with our expanding product offerings. They also allow us to leverage an established customer base that can generate new word-of-mouth marketing and referrals while we implement our retail model at the acquired stores. Finally, we believe our internet presence provides an additional channel to complement our store retail model.

        We are actively growing our store count and internet presence to increase our market share. During the three months ended September 30, 2014, we opened 6 stores and have opened 22 stores during the nine months ended September 30, 2014. We closed underperforming stores as part of our routine performance review.

        The chart below sets forth certain information regarding our retail presence for the year ended December 31, 2013, and the nine months ended September 30, 2014.

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        The following table provides the geographic composition of our physical locations as of December 31, 2013, and September 30, 2014:

        In addition, the Company provides internet financial services in the following states: Alabama, Alaska, California, Delaware, Hawaii, Idaho, Illinois, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Nevada, New Mexico, North Dakota, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Washington, Wisconsin, and Wyoming.

Changes in Legislation

        In July 2010, the Dodd-Frank Act was signed into law. Among other things, this act created the CFPB and granted it the authority to regulate companies that provide consumer financial services. In April 2012, the CFPB began its first examination of the Company's retail operations. We have received our report and at this time we do not anticipate any material changes to our retail operations as a result of the examination report. We expect to be periodically examined in the future by the CFPB as well as other regulatory agencies.

Product Characteristics and Mix

        As the Company expands it's product offerings to meet 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. Our secured loan offerings tend to have longer maturities than our short-term consumer loan offerings. In addition, the shift in mix to longer term loans results in a higher loan loss reserve. We believe that our prepaid debit card direct deposit offering has reduced our check cashing fees, however, by establishing our Insight prepaid debit card with direct deposit as an alternative to check cashing, we may extend the customer relationship and increase associated revenue over time.

Expenses

        The Company's operating expenses related primarily to the operation of its stores and internet presence, including salaries and benefits, store occupancy costs, internet advertising, loan loss provisions, 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,

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insurance, salaries, benefits, occupancy costs, professional expenses and management fees paid by us to our majority stockholders.

        We view our compliance, collections and information technology groups as core competencies. We have invested in each of these areas and believe we will benefit from increased economies of scale as we continue to grow our business.

Discontinued Operations

        Insight Holdings, was previously integrated into the Company's consolidated financial results after the Company determined that that it was the primary beneficiary of the variable interest entity. On May 12, 2014, Insight Holdings was sold to a third party. As a result, the operations of Insight Holdings have been classified as discontinued operations in the Company's statement of operations.

Critical Accounting Policies

        Consistent with accounting principles generally accepted in the United States of America, 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, include allowance for loan losses, equity method investments, goodwill, stock based compensation, stock repurchase obligation, 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.

Finance Receivables, Net

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

        Short-term consumer loan products typically range in size from $100 to $1,000, with a maturity between fourteen and thirty days, and an agreement to defer the presentment of the customer's personal check or preauthorized debit 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 charging fees of 15% to 20%, to charging interest at 25% per annum plus origination fees. The customers repay the cash advance by making cash payments or allowing the check or preauthorized debit to be presented.

        Medium-term loan products typically range from $100 to $5,000, and are evidenced by a promissory note with a maturity between three and thirty-six months. These loans vary in structure depending upon the regulatory environments where they are offered. The loans are due in installments or provide for a line of credit with periodic monthly payments.

        Secured loan products typically range from $750 to $5,000, and are evidenced by a promissory note with a maturity between one and twenty-four months. The customer grants a right in collateral and the loan may be secured with a lien on the collateral. The risk characteristics of secured loans primarily depend on the regulatory requirements of each market. Repayment risks associated with secured financings relate to the ability of the borrower to repay the loan and the value of the underlying collateral.

        In some instances the Company maintains debt-purchasing arrangements with third-party lenders. The Company accrues for these obligations 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.

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        Total finance receivables, net of unearned advance fees and allowance for loan losses, on the consolidated balance sheets as of December 31, 2013 and September 30, 2014 were $165.3 million and $181.1 million, respectively. The allowance for loan losses as of December 31, 2013 and September 30, 2014 were $18.0 million and $26.2 million, respectively. At December 31, 2013 and September 30, 2014, the allowance for loan losses was 9.5% and 12.3%, respectively, of total finance receivables, reflecting a higher mix of medium-term and secured loans, which have higher allowances for loan losses.

        Finance receivables, net as of December 31, 2013 and September 30, 2014 are as follows (in thousands):

        The total changes to the allowance for loan losses for the three months ended September 30, 2013 and 2014, and the nine months ended September 30, 2013 and 2014, were as follows (in thousands):

        The provision for loan losses for the three months ended September 30, 2013, and 2014 includes losses from returned items from check cashing of $2.3 million and $2.5 million, respectively, and third party lender losses of $3.7 million and $5.1 million, respectively.

        The provision for loan losses for the nine months ended September 30, 2013, and 2014 includes losses from returned items from check cashing of $5.9 million and $6.0 million, respectively, and third party lender losses of $8.0 million and $11.8 million, respectively.

        The increase in provision for loan losses in 2014, as compared to the 2013 prior periods, reflects a higher mix of medium-term and secured loans, which have higher allowance for loan losses.

Goodwill and Equity Method Investments

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

        The Company conducted its annual test for impairment of goodwill as of December 31, 2013 for both the Retail financial and Internet financial services segments which resulted in no impairment of goodwill. The methodology for determining the fair value was a combination of quoted market prices, prices of comparable businesses, discounted cash flows and other valuation techniques.

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        The Company performed a subsequent goodwill impairment test for the Retail services segment as required when a portion of the segment is sold. Upon the sale of Insight Holdings, this resulted in no impairment of goodwill as of May 12, 2014.

        Equity method investments represent investments over which the Company exercises significant influence over the activities of the entity but which do not meet the requirements for consolidation and are accounted for using the equity method of accounting. Prior to April 1, 2013, the Company's investment in Insight Holdings was accounted for under the equity method as a result of extending a line of credit, the Company consolidated Insight Holdings effective as of April 1, 2013 until May 12, 2014, when it was sold. See Note 10 to the consolidated financial statements.

        One of the methods that management employs in the review of such assets uses estimates of future cash flows. If the carrying value is considered impaired, an impairment charge is recorded for the amount by which the carrying value exceeds its fair value. For equity method investments, an impairment charge is recorded if the decline in value is other than temporary. 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 such assets.

        There was no impairment loss charged to operations for goodwill for either Retail financial services or Internet financial services during the nine months ended September 30, 2013 and 2014.

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. The Company has not recorded any valuation allowances.

        Primarily as a result of the acquisition of CheckSmart (our predecessor in 2006) and California Check Cashing Stores (which we acquired in 2011), by their respective private equity sponsors at the time, we benefit from the tax 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. We expect goodwill amortization of $27.3 million to result in cash tax savings of approximately $10.9 million at the expected combined rate of 40% for the fiscal year 2014 tax return. 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 resulted in the creation of deferred income tax items on our balance sheet.

Non-Guarantor Subsidiaries and Unrestricted Subsidiaries

        As described in more detail under Note 17 to the unaudited financial statements for the nine months ended September 30, 2014, which are included elsewhere in this Form 10-Q, as of September 30, 2014, we had eight non-guarantor subsidiaries and we previously had one consolidated entity that was not a subsidiary (and, therefore, was not a guarantor), as defined by Company's indentures governing its senior secured notes. As of September 30, 2014, of these entities, Buckeye Check Cashing of Florida II, LLC, CCFI Funding LLC, and CCFI Funding II LLC are "Unrestricted Subsidiaries" as defined in the indentures governing the 2019 notes and 2020 notes. Buckeye Check Cashing of Florida II, LLC was acquired on July 31, 2012, CCFI Funding was established on December 20, 2013, and CCFI Funding II was established on June 19, 2014. As of September 30, 2014 and December 31, 2013, such unrestricted subsidiaries had total assets of $82,849 and $54,665 and total liabilities of $69,484 and $39,717, respectively and for the nine months ended September 30, 2014 and 2013 had total revenues of $33,490 and $19,546, total operating expenses of $22,519 and $13,823, and

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net income (loss) from continuing operations of $417 and $(558), respectively. As of December 31, 2013, our non-guarantor consolidated entity had total assets of $37,718 and total liabilities of $4,777 and no assets or liabilities are reflected on the Company's balance sheet as of September 30, 2014, because the entity is no longer consolidated. For the nine months ended September 30, 2014 and September 30, 2013, this entity is included in discontinued operations, net of tax. The remainder of the entities included under "non-Guarantor Subsidiaries" in the tables below are "Restricted Subsidiaries" as defined in the indentures governing its senior secured notes and, for the periods specified, did not have material assets, liabilities, revenue or expenses.

Results of Operations

Three Months Ended September 30, 2014 Compared to Three Months Ended September 30, 2013

        The following table sets forth key operating data for our operations for the three months ended September 30, 2013 and 2014 (dollars in thousands):

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        The following tables set forth key loan and check cashing operating data for our operations as of and for the three months ended September 30, 2013 and 2014 (in thousands, except for store data, averages, percentages or unless otherwise specified):

Operating Metrics

Revenue

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        For the three months ended September 30, 2014, total revenue increased by $25.6 million, or 23.2%, compared to the same period in 2013. The majority of this growth came from the expansion of the internet portfolio, new stores, and other organic retail growth.

        Revenue from short-term consumer loan fees and interest for the three months ended September 30, 2014 increased $5.1 million, or 8.3%, compared to the same period in 2013. Growth from our internet segment, and new stores were the primary drivers of the revenue increase.

        Revenue from medium-term loans for the three months ended September 30, 2014 increased $17.0 million, or 148.6%, compared to the same period in 2013. The primary increase in medium-term loan revenue is due primarily to the growth of the internet portfolio.

        Revenue from secured loan fees for the three months ended September 30, 2014 increased $2.1 million, or 24.4%, compared to the same period in 2013. We grew secured loan revenue principally through expansion of our portfolios in most markets.

Operating Expenses

        Total operating expenses increased by $20.7 million, or 24.3%, for the three months ended September 30, 2014 as compared to the same period in 2013. This overall increase was primarily due to a higher provision for loan losses. The provision for loan losses grew $15.4 million, or from 36.4% to 40.9%, of revenue for the three months ended September 30, 2014 related to higher provisioning due to growth of the Internet Segment, bad debt related to new store openings, and a general shift towards longer term products. As a percent of revenue, salaries and benefits decreased from 16.7% to 15.1% for the three months ended September 30, 2014 as compared to the prior year.

        Occupancy expense increased by $0.6 million, or 8.6%, for the three months ended September 30, 2014 as compared to the prior year period due to an increase in our number of retail locations.

        Importantly, total operating expenses, excluding Provision for Loan Losses, declined from 40.8% of revenues to 37.0% of revenues, evidencing the realization of operating leverage as a result of expanding our revenue through portfolio growth.

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Corporate and Other Expenses

        Corporate expenses increased by $4.9 million, or 36.1%, for the three months ended September 30, 2014, primarily due to expansion of our corporate functions supporting growth initiatives, stock compensation, and health care costs.

        Interest expense increased by $1.3 million, or 10.3%, for the three months ended September 30, 2014 as compared to the prior year period primarily due to the increase in total borrowings.

        The stock repurchase obligation is carried at fair market value. The increase in expense of $2.5 million during the three months ended September 30, 2014 as compared to the same period in 2013 is due to an increase in the likelihood of the obligation requiring cash settlement.

Business Segment Results of Operations for the Three Months Ended September 30, 2014

        The following tables present summarized financial information for the Company's segments:

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        Intersegment revenues of $736 for the three month period ending September 30, 2014 have been eliminated.

        Intersegment revenues of $88 for the three month period ending September 30, 2014 have been eliminated.

Retail Financial Services

        Retail financial services represented 77.6%, or $105.5 million, of consolidated revenues for the three months ended September 30, 2014.

        For the three months ended September 30, 2014, total revenues in the Retail segment increased by $9.7 million, or 10.1%, compared to the prior year comparable period, primarily due to new stores, and organic growth in our short-term, medium-term, and secured loan portfolios.

        The provision for loan losses increased as a percentage of revenue due to the higher reserves resulting from our continued shift to longer term products and the higher provisioning related to new stores. Other operating expenses increased as a percentage of revenue due to new store openings. New stores require a period of time to gain market share and revenue prior to achieving operating leverage. Overall gross profit was lower as a percentage of revenue due primarily to higher provisioning and the impact of new stores.

Internet Financial Services

        For the three months ended September 30, 2014, total revenues contributed by our Internet financial services segment was $30.5 million, an increase of $16.0 million, or 110.0% over the three months ended September 30, 2013. As the Company expanded this segment, the mix of products shifted to more medium-term products with correspondingly higher net bad debt. Other operating expenses in the current quarter increased by $2.2 million but fell as a percentage of total revenue to 27.0% versus 41.1% in 2013. Operating gross profit for the segment of $1.6 million is an increase of $4.4 million over the loss in 2013 and also improved to 5.4% of revenue.

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Nine Months Ended September 30, 2014 Compared to Nine Months Ended September 30, 2013

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        The following tables set forth key loan and check cashing operating data for our operations as of and for the nine months ended September 30, 2013 and 2014 (in thousands, except for store data, averages, percentages or unless otherwise specified):

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Operating Metrics

Revenue

        For the nine months ended September 30, 2014, total revenue increased by $70.8 million, or 23.2%, compared to the same period in 2013. The majority of this growth came from the expansion of the internet portfolio, new stores, and other organic retail growth.

        Revenue from short-term consumer loan fees and interest for the nine months ended September 30, 2014 increased $13.0 million, or 7.7%, compared to the same period in 2013. Growth from our internet segment and new stores were the primary drivers of the revenue increase.

        Revenue from medium-term loans for the nine months ended September 30, 2014 increased $49.7 million, or 202.8%, compared to the same period in 2013. The primary increase in medium-term loan revenue is due to the growth of the internet portfolio.

        Revenue from secured loan fees for the nine months ended September 30, 2014 increased $5.9 million, or 24.8%, compared to the same period in 2013. We grew secured loan revenue through expansion of our portfolios in most retail markets.

Operating Expenses

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        Total operating expenses increased by $60.8 million, or 28.7%, for the nine months ended September 30, 2014 as compared to the same period in 2013. This overall increase was due to expense primarily related to a higher provision for loan losses. The provision for loan losses grew $44.4 million, or from 28.1% to 34.6% of revenue, for the nine months ended September 30, 2014 due to growth of the internet segment, bad debt related to new store openings, and a continued general shift towards longer term products. As a percent of revenue, salaries and benefits decreased from 17.5% to 16.1% for the nine months ended September 30, 2014 as compared to the prior year.

        Occupancy expense increased by $2.2 million, or 11.3%, for the nine months ended September 30, 2014 as compared to the prior year period due to an increase in our number of retail locations.

        Advertising and marketing expense increased by $2.1 million, or 17.6%, for the nine months ended September 30, 2014 as compared to the prior year period, also attributable primarily due to increased marketing activities in our internet segment.

        Other operating expenses increased by $1.9 million, or 9.2%, for the nine months ended September 30, 2014 as compared to the prior year period primarily due to new stores and costs associated with our expanded internet portfolio.

        Importantly, total operating expenses, excluding Provision for Loan Losses, declined from 41.4% of revenues to 38.0% of revenues, evidencing the realization of operating leverage as a result of expanding our revenue through portfolio growth.

        Corporate expenses increased, by $11.3 million, or 27.0%, during the nine months ended September 30, 2014, as compared to the prior period in 2013, due primarily to expansion of our corporate functions supporting growth initiatives, stock compensation, and health care costs.

        Interest expense increased by $2.4 million during the nine months ended September 30, 2014, or 6.1%, as compared to the same period in 2013, primarily attributable to carrying a larger balance on our lines of credit during 2014 and the increase in total borrowings.

        Discontinued operations includes $4.4 million of capital losses related to the sale of Insight Holdings and $0.2 million of losses during the nine months ended September 30, 2014 as compared to the prior period in 2013 which includes losses of $1.0 million.

        The stock repurchase obligation is carried at fair market value. The expense of $2.5 million during the nine months ended September 30, 2014 as compared to the decline of $0.2 million for the same period in 2013 is due to an increase in the likelihood of the obligation requiring cash settlement.

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Business Segment Results of Operations for the Nine Months Ended September 30, 2014

        The following tables present summarized financial information for the Company's segments:

        Intersegment revenues of $2,004 for the nine month period ending September 30, 2014, have been eliminated.

        Intersegment revenues of $88 for the nine month period ending September 30, 2013, have been eliminated.

Retail Financial Services

        Retail financial services represented 78.6%, or $295.0 million, of consolidated revenues for the nine months ended September 30, 2014 which was an increase of $23.1 million, or 8.5%, over the prior period primarily due to new stores, and strong organic growth in our short-term, medium-term, and secured loan portfolios.

        The provision for loan losses increased as a percentage of revenue due to the higher reserves from the shift to longer term products and the higher provisioning related to new stores. Other operating expenses increased as a percentage of revenue due to new store openings. New stores require a period of time to gain market share and revenue prior to achieving operating leverage. Overall gross profit was lower as a percentage of revenue due primarily to higher provisioning and the impact of new stores.

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Internet Financial Services

        For the nine months ended September 30, 2014, total revenues contributed by our Internet financial services segment was $80.3 million, an increase of $47.6 million, or 145.9%, over the nine months ended September 30, 2013. As the Company expanded this segment, the mix of products shifted to more medium-term with higher net bad debt resulting in a 64.4% provision for loan losses for the nine months ended September 30, 2013 compared to 60.8% for the nine months ended September 30, 2014. Other operating expenses in the most recent nine month period increased by $6.6 million but fell as a percentage of total revenue to 25.6% versus 42.8% in 2013. Operating gross profit of $10.9 million is an increase of $13.3 million over the comparable period in 2013 and also improved to 13.6% of revenue.

Liquidity and Capital Resources

        We have historically funded our operating liquidity needs through cash flow from operations and borrowing under our revolving credit facilities. We believe that cash flow from operations and available cash, together with our ability to access existing and future credit facilities, will be adequate to meet our liquidity needs for the foreseeable future. Beyond the immediate future, funding capital expenditures, working capital and debt requirements will depend on our future financial performance, which is subject to many economic, commercial, financial and other factors that are beyond our control. In addition, these factors may require us to pursue alternative sources of capital such as asset- specific financing, incurrence of additional indebtedness, or asset sales.

Nine Month Cash Flow Analysis

        The table below summarizes our cash flows for the nine months ended September 30, 2013 and 2014.

        Cash Flows from Operating Activities.    During the nine months ended September 30, 2014, net cash provided by operating activities was $161.7 million compared to $121.1 million in the nine months ended September 30, 2013, a $40.6 million increase. Cash flows from operating activities increased primarily due to operating income and the non-cash impact of increased provisioning in 2014.

        Cash Flows from Investing Activities.    During the nine months ended September 30, 2014, net cash used in investing activities was $162.8 million. The primary use of cash was the origination of $145.0 million of loans. Additionally, we had $18.4 million in capital expenditures as we increase our number of retail locations. During the nine months ended September 30, 2013, net cash used in investing activities was $111.9 million primarily due to the origination of loans.

        Cash Flows from Financing Activities.    During the nine months ended September 30, 2014, net cash provided by financing activities was $34.8 million. The primary source of cash was $11.7 million in borrowings under our revolving credit facilities and $22.8 million in proceeds from subsidiary notes. During the nine months ended September 30, 2013, net cash provided by financing activities was $28.4 million primarily due to borrowings under revolving credit facilities.

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Financing Instruments

        The indentures governing our senior secured notes contain certain covenants and events of default that are customary with respect to noninvestment grade debt securities, including limitations on our ability to incur additional indebtedness, pay dividends on or make other distributions or repurchase our capital stock, make certain investments, enter into certain types of transactions with affiliates, create liens and sell certain assets or merge with or into other companies. The agreement governing our $40 million revolving credit facility contains restrictive covenants that limit our ability to incur additional indebtedness, pay dividends on or make other distributions or repurchase our capital stock, make certain investments, enter into certain types of transactions with affiliates, create liens and sell certain assets or merge with or into other companies, in each case to the same extent as the indentures governing our notes. In addition, the agreement governing this revolving credit facility contains a consolidated total net leverage ratio covenant, which will be tested at the time of any borrowing under the facility and on a quarterly basis when any loans are outstanding. As of December 31, 2013 and September 30, 2014, we were in compliance with these covenants.

        We may from time to time repurchase our outstanding debt, including in the open market through privately negotiated transactions, by exercising redemption rights or otherwise.

Capital Expenditures

        For the nine months ended September 30, 2013 and 2014, we spent $8.9 million and $18.4 million, respectively, on capital expenditures. The increase is primarily due to opening retail locations in the Alabama and Tennessee markets. The Company opened 22 stores during the nine months ended September 30, 2014 as compared to 8 stores during the prior year comparable period.

Seasonality

        Our business is seasonal based on the liquidity and cash flow demands of our customers. Customers' cash tax refund checks primarily in the first calendar quarter of each year which is traditionally our strongest check cashing quarter. We typically see our loan portfolio decline in the first quarter as a result of the consumer liquidity created through tax refund checks. Following the first quarter, we typically see our loan portfolio expand through the balance of the year with the third and fourth quarters showing the strongest loan demand due to the holiday season.

Contractual Obligations and Commitments

        A non-guarantor subsidiary of the Company issued a series of related party seller notes as a portion of the consideration for the acquisition of 54 stores in Florida ("Florida Acquisition"). The related party Florida seller notes are secured by the assets of the subsidiary. The related party Florida seller notes have been valued on the balance sheet at their fair market value reflecting an implied interest rate of 12.75%. All of the related party Florida seller notes that remain outstanding mature in August 2016. The related party Florida seller notes contain certain covenants and provisions which are enforceable upon the non-guarantor subsidiary. The related party Florida seller notes are non-recourse to the Company and the guarantor subsidiaries. This non-guarantor subsidiary may offset against the related party Florida seller notes for certain adjustments and indemnification related to the Florida Acquisition.

        On November 1, 2013, the Company entered into an amendment to the non-guarantor notes resulting from the Florida Acquisition. Pursuant to this amendment, the non-guarantor subsidiary party thereto pre-paid $2.5 million of the principal payments originally scheduled to be paid during 2014. In addition, for a payment of $0.5 million, the non-guarantor obligor settled in full, the $1.5 million non-guarantor term note. The $8.0 million and $9.0 million non-guarantor notes were further amended

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to provide the non-guarantor subsidiary obligor the option to prepay the notes at a 20% discount through September 30, 2014, or at a 15% discount from October 1, 2014 through September 30, 2015.

        On December 20, 2013 and June 19, 2014, the Company created non- guarantor subsidiaries in order to acquire loans from the Retail and Internet portfolios. The non-guarantor subsidiary funding came from an $8.1 million term note and a $25.0 million revolver with a $21.4 million balance at September 30, 2014, in order to acquire the loans.

        On June 26, 2013, the Company entered into a Software License Agreement ("SLA") and a Software Support and Maintenance Agreement ("MSA") (collectively, the "eCash Agreements") with eCash Software Systems, Inc. ("eCash") to acquire a perpetual license for a new point-of-sale and operations platform system. Under the eCash Agreement, eCash will license to the Company and its subsidiaries software capable of managing retail and on- line-transactional information, and revenue (the "Licensed Systems"). The implementation of the Licensed Systems commenced in July 2013. The eCash Agreements contain detailed terms governing license fees, professional services fees and ongoing maintenance fees, including credits, as well as fees and rates for services that may be requested by the Company. The total estimated amount to be paid to eCash with respect to the SLA is in excess of $4.5 million, the ("License Purchase Price"). This License Purchase Price is payable semi- annually over five years and is subject to customary provisions including provisions related to delivery milestones and performance. Pursuant to the MSA, the Company has also committed to purchase maintenance for five years with fees dependent upon the number of licensed locations and requested additional services.

Impact of Inflation

        Our results of operations are not materially impacted by fluctuations in inflation.

Balance Sheet Variations

        Cash and cash equivalents, accounts payable, accrued liabilities, money orders payable and revolving advances vary because of seasonal and day-to-day requirements resulting primarily from maintaining cash for cashing checks and making loans, and the receipt and remittance of cash from the sale of prepaid debit cards, wire transfers, money orders and the processing of bill payments.

Loan Portfolio

        As of September 30, 2014, we offered loans in 32 states. We have established an allowance in respect of our loans receivable at a level that our management believes to be adequate to absorb known or probable losses from loans made by us and accruals for losses in respect of loans made by third parties. Our policy for determining the allowance for loan losses is based on historical experience, as well as our management's review and analysis of the payment and collection of the loans within prior periods. Our policy is to charge off accounts in accordance with policy. All loans and services, regardless of type, are made in accordance with state regulations, and, therefore, the terms of the loans and services may vary from state to state. Loan fees and interest are earned on loans. Products which allow for an upfront fee are recognized over the loan term. Other products interest is earned over the term of the loan.

        As of September 30, 2014 and December 31, 2013, our total finance receivables net of unearned advance fees were approximately $207.3 million and $183.3 million, respectively.

Investee Companies

        We had an equity investment in Insight Holdings. The Company consolidated Insight Holdings as a VIE effective April 1, 2013 and the previous equity method of accounting for the investment was discontinued.

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        On May 12, 2014, Insight Holdings, the previously consolidated VIE, together with each of its members, closed a transaction whereby each sold their entire interest in Insight Holdings for a cash purchase price subject to post- closing adjustments that are based on performance. The Company owned 22.7% of the member units that were sold. Additionally, the Company terminated the $3,000 revolving credit facility to Insight Holdings.

Off-Balance Sheet Arrangements

        In certain markets, the Company arranges for consumers to obtain consumer loan products from one of several independent third-party lenders whereby the Company acts as a facilitator. For consumer loan products originated by third-party lenders under the programs, each lender is responsible for providing the criteria by which the consumer's application is underwritten and, if approved, determining the amount of the consumer loan. The Company in turn is responsible for assessing whether or not the Company will guarantee such loans. When a consumer executes an agreement with the Company under the programs, the Company agrees, for a fee payable to the Company by the consumer, to provide certain services to the consumer, one of which is to guarantee the consumer's obligation to repay the loan received by the consumer from the third-party lender if the consumer fails to do so. The guarantee represents an obligation to purchase specific loans that go into default. As of September 30, 2014 and December 31, 2013, the outstanding amount of active consumer loans was $8.7 million and $9.2 million, respectively, which were guaranteed by the Company. The loan loss reserve which represents the estimated fair value of the liability for estimated losses on consumer loans guaranteed by the Company of $1.6 million and $1.5 million as of September 30, 2014 and December 31, 2013, respectively.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

        As of September 30, 2014, we have no material market risk sensitive instruments entered into for trading or other purposes, as defined by accounting principles generally accepted in the United States of America.

Interest rate risk

        The cash and cash equivalents reflected on our balance sheet represent largely uninvested cash in our branches and cash-in-transit. The amount of interest income we earn on these funds will decline with a decline in interest rates. However, due to the short-term nature of short-term investment grade securities and money market accounts, an immediate decline in interest rates would not have a material impact on our financial position, results of operations or cash flows.

        As of September 30, 2014, we had $501.8 million of indebtedness, of which, $36.7 million outstanding under our revolving credit facility is subject to variable interest rates based on Prime and LIBOR rates. In addition, we have access to an additional $9.0 million on lines of credit which are subject to variable interest rates.

ITEM 4.    CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

        The Company maintains disclosure controls and procedures, as defined in Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the "Exchange Act," that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company's management carried out an evaluation, under the supervision and with the

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participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective as of September 30, 2014.

Internal Control Over Financial Reporting

        There were no changes in the Company's internal control over financial reporting, as defined in Rule 15d-15(f) under the Exchange Act, during the quarter ended September 30, 2014 that have materially affected, or are reasonably likely to affect, the Company's internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS.

        We and our subsidiaries are party to a variety of legal, administrative, regulatory and government proceedings, claims and inquiries arising in the normal course of business. While the results of these proceedings, claims and inquiries cannot be predicted with certainty, we believe that the final outcome of the foregoing will not have a material adverse effect on our financial condition, results of operations or cash flows. Further, although we are not party to any active litigation raising such claims, legal proceedings may be instituted against us that purport to be class actions or multiparty litigation. In most of these instances, we believe that these actions are subject to arbitration agreements and that the plaintiffs are compelled to arbitrate with us on an individual basis. In the event that a lawsuit purports to be a class action, the amount of damages for which we might be responsible is uncertain. In addition, any such amount would depend upon proof of the allegations and on the number of persons who constitute the class of affected persons.

ITEM 1A.    RISK FACTORS.

        There have been no material changes with respect to the risk factors disclosed under the "Item 1A Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2013.

ITEM 5.    OTHER INFORMATION

        On November 6, 2014, the Company's Compensation Committee unanimously determined to pay to the Company's Chairman and Chief Executive Officer an additional bonus payable to him in two installments of $1,000,000 each. The first installment is payable on or before December 31, 2014, and the second installment on the one-year anniversary of the first payment. Payment of each installment is conditioned on his continued employment as of the date of payment.

ITEM 6.    EXHIBITS.

        The following exhibits are filed or furnished as part of this report:

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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