We are a growth-oriented, technology-enabled, highly-diversified, multi-channel and multi-product consumer finance company serving a wide range of underbanked consumers in the United States ("U.S."), Canada and, through February 25, 2019, the United Kingdom ("U.K."), and are a market leader in our industry based on revenues. We believe that we have the only true omni-channel customer acquisition, onboarding and servicing platform that is integrated across store, online, mobile and contact center touchpoints. Our IT platform, which we refer to as the “Curo Platform,” seamlessly integrates customer acquisition loan underwriting, scoring, servicing, collections, regulatory compliance and reporting activities into a single, centralized system. We use advanced risk analytics powered by proprietary algorithms and over 15 years of loan performance data to efficiently and effectively score our customers’ loan applications. SinceFrom January 1, 2010 to December 31, 2018, we have extended over $14.5$17.1 billion in total credit across approximately 38.143.8 million total loans, and our revenue of $963.6 million in 2017 represents a 24.8% compound annual growth rate, or CAGR, over the same time period.loans.

The CURO business was founded in 1997 to meet the growing needs of underbanked consumers looking for access to credit. We set outWith more than 20 years of experience, we seek to offer a variety of convenient, easily-accessible financial and loan services and overacross all of our 20 years of operations, expanded across the United States, Canada and the United Kingdom.markets.

CURO Financial Technologies Corp., or CFTC (thenpreviously known as Speedy Cash Holdings Corp. ("CFTC"), was incorporated in Delaware in July 2008. In September 2008, our founders sold or otherwise contributed all of the outstanding equity of the various operating entities that comprised the CURO business to a wholly-owned subsidiary of CFTC in connection with an investment in CFTC by Friedman Fleischer & Lowe Capital Partners II, L.P. and its affiliated funds, or FFL Partners.Group Holdings Corp., previously known as Speedy Group Holdings Corp., was incorporated in Delaware in February 2013 as the parent company of CFTC. In May 2016, we changed the name of Speedy Group Holdings Corp. to CURO Group Holdings Corp. We similarly changed the names of some of its subsidiaries. The terms “CURO",“CURO," "we,” “our,” “us,”“us” and the “Company,” in this Annual Report“Company” refer to CURO Group Holdings Corp. and its directly and indirectly owned subsidiaries as a combined entity, except where otherwise stated. The term "CFTC" refers to CURO Financial Technologies Corp., our wholly-owned subsidiary, and it's directly and indirectly owned subsidiaries as a consolidated entity, except where otherwise stated.

As of December 31, 2017,2018, our store network consisted of 407413 locations across 14 U.S. states and seven Canadian provinces and we offered our online services in 27 U.S. states, five Canadian provinces and the United Kingdom.U.K.

We offer a broad range of consumer finance products, including Unsecured Installment Loans,loans, Secured Installment Loans,loans, Open-End Loansloans and Single-Pay Loans.loans. We have tailored our products to fit our customers’ particular needs as they access and build credit. OurWe believe that our product suite allows us to serve a broader group of potential borrowers than most of our competitors. The flexibility of our products, particularly our installmentInstallment and open-end

We serve the large and growing market of individuals who have limited access to traditional sources of consumer credit and financial services. We define our addressable market as underbanked consumers in the United States,U.S., Canada and, through February 25, 2019, the United Kingdom.U.K. According to a study by the Center for Financial Services Innovation ("CFSI") conducted in 2017, there are as many as 121 million Americans who are currently underserved by financial services companies. According to studies by ACORN Canada and Pricewaterhouse CoopersPricewaterhouseCoopers LLP, the statistics in Canada and the United Kingdom are similar, with an estimated 15% of Canadian residents (approximately 5 million individuals) and an estimated 20 to 25% of United Kingdom residents (approximately 10 to 14five million individuals) classified as underbanked. Given our international footprint, this translates intoWith an addressable targetadressable market of approximately 140126 million individuals. Weindividuals, we believe that with our scalable omni-channel platform and diverse product offerings we are wellbetter positioned than our competitors to gain market share as sub-scale players struggleshare.

In April 2018, we announced that we expect to keep pacebegin offering U.S. consumers a new line of credit product through a relationship with MetaBank® ("Meta"), a wholly-owned subsidiary of Meta Financial Group, Inc. CURO and Meta are currently developing the technological evolution taking place inpilot launch. We do not expect the industry.Meta relationship to contribute to financial results until 2020.

On December 7, 2017, our common stock began trading on the New York Stock Exchange ("NYSE") under the symbol "CURO." We filed an amendmentcompleted our initial public offering ("IPO") of 6,666,667 shares of common stock on December 11, 2017, at a price of $14.00 per share, which provided net proceeds to our certificateus of incorporation on$81.1 million. On January 5, 2018, the underwriters exercised their option to purchase additional shares at the IPO price, less the underwriting discount, which provided additional proceeds to us of $13.1 million.

On December 6, 2017 thatwe effected a 36-for-1 split of our common stock. Additionally, we filed an amendedstock and restated certificate of incorporation on December 11, 2017 that, among other things, changedwe increased the authorized number of shares of our common stock to 250,000,000, consisting of 225,000,000 shares of common stock, with a par value of $0.001 per share and 25,000,000 shares of preferred stock, with a par value of $0.001 per share. All share and per share data in this Annual Report on Form 10-K ("Annual Report") have been retroactively adjusted for all periods presented to reflect the stock split as if the stock split had occurred at the beginning of the earliest period presented.

As a company with less than $1.07 billion in revenue duringAt the time of our last fiscal year,IPO, we qualifyqualified as an “emerging growth company” as defined in("EGC") under the Jumpstart Our Business Startups Act of 2012 or the ("JOBS Act.

We operate in a segment of the financial services industry that provides lending products to underbanked consumers in need of convenient and flexible access to credit and other financial products. In the United StatesU.S. alone, according to a study by the Center for Financial Services Innovation, or CFSI, these underserved consumers in our target market spent an estimated $126.5$173.2 billion on fees and interest in 2016 related to credit products similar to those we offer.

We believe our target consumers have a need for tailored financing products to cover essential expenses. According to a study in 2017 by the U.S. Federal Reserve, 44% of American adults could not cover an emergency expense costing $400 or would cover it by selling an asset or borrowing money. Additionally, a study conductedpublished in 2015 by JP Morgan Chase & Co., which analyzed the transaction information of 2.5 million of its account holders in the U.S., found that 41% of those sampled experienced month-to-month income swingsfluctuations of more than 30%.

We compete against a wide variety of consumer finance providers including online and branch-based consumer lenders, credit card companies, pawn shops, rent-to-own and other financial institutions that offer similar financial services. A study by CFSI haspublished in November 2016 estimated that spending on credit products offered by our industry in the U.S. exhibited a 10.0% CAGRcompound annual growth rate of 10% from 2010 to 2015. This growth has been accompanied by shrinking access to credit for our

In addition to the beneficial secularbroad trends broadly impacting the consumer finance landscape, we believe we are well positioned to grow our market share as a result of several changes we have observed related to consumer preferences within alternative financial services. Specifically,As described below, we believe that a combination of evolving consumer preferences, increasing use of mobile devices and overall adoption rates for technology are driving significant change in our industry.

 

We believe the following competitive strengths differentiate us and serve as barriers forto others seeking to enter our market.

In the second quarter of 2017, we launched Avio Credit, a newU.S. online product branded in the United States targeting individuals in the 600-675 FICO band. This product is structured as an Unsecured Installment Loanloan with varying principal amounts and loan terms up to 48 months. As of April 2017, 10% of U.S. consumers had FICO scores between 600 and 649. A further 13.2% of U.S. consumers had FICO scores between 650 and 699, a portion of whom would fall into the credit profile targeted by our Avio Credit product.

We expect to expandare expanding Installment and Open-End loan products under our LendDirect brand in Canada to include additional provinces and increase customer acquisition efforts in existing markets. WeTo supplement the online channel, we opened three LendDirect stores in Canada during the fourth quarter of 2017 and plan to open more inseven during the year ended December 31, 2018. We have also accelerated our offering of Open-End products under our Canadian CashMoney brand. Seven million Canadians have a FICO score below 700.700 according to FactorTrust. We estimate that the consumer credit opportunity for this customer

In April 2018, we announced a relationship with Meta to offer consumers in the United Kingdom, we launched online longer-term loans in November 2017 withU.S. a flexible and innovative line of credit product. CURO and Meta are currently developing the pilot launch. We do not expect the Meta relationship to contribute to our Juo Loans brand. According to a study by the Financial Conduct Authority, the U.K. guarantor market in 2016 comprised £300 million in loans outstanding and had annual originations of approximately £200 million. A report by L.E.K. Consulting found that this market experienced double digit percentage growth from 2008 to 2017. We believe the U.K. guarantor loan market is currently dominated by one lender but otherwise largely made up of smaller participants with growth challenges.financial results until 2020.

Our customers require essential financial services and place a value on timely, transparent, affordable and convenient alternatives to banks, credit card companies and other traditional financial services companies. According to a recentMay 2017 study by FactorTrust, underbanked customers in the United States tend toU.S. have the following characteristics:

In the United States,U.S., our customers generally earn between $25,000 and $75,000 annually. In Canada, our customers generally earn between C$25,000 and C$60,000 annually. In the United Kingdom our customers generally earn between £18,000 and £31,000 annually. Our customers utilize the services provided by our industry for a variety of reasons, including that they often:

We provide Unsecured Installment Loans,loans, Secured Installment Loans,loans, Open-End Loans,loans, Single-Pay Loansloans and a number of ancillary financial products, including check cashing, proprietary reloadable prepaid debit cards (Opt+), credit protection insurance in the Canadian market, gold buying, retail installment sales and money transfer services. We have designed our products and customer journeyexperience to be consumer-friendly, accessible and easy to understand. Our platform and product suite enable us to provide severala number of key benefits that appeal to our customers:

Our centralized underwriting platform and its proprietary algorithms are used for every aspect of underwriting and scoring of our loan products. The customer application, approval, origination and funding processes differ by state, country and by channel. Our customers typically have an active phone number, open checking account, recurring income and a valid government-issued form of identification. For in-store loans, the customer presents required documentation, including a recent pay stub or support for underlying bank account activity for in-person verification. For online loans, application data is verified with third-party data vendors, our proprietary algorithms and/or tech-enabled account verification. Our proprietary, highly scalable, scoring system employs a champion/challenger process whereby models compete to produce the most successful customer outcomes and profitable cohorts. Our algorithms use data relevancy and machine learning techniques to identify approximately 60 variables from a universe of approximately 11,600 that are the most predictive in terms of credit outcomes. The algorithms are continuously reviewed and refreshed and are focused on a number of factors related to disposable income, expense trends and cash flows, among other factors, for a given loan applicant. The predictability of our scoring models is driven by the combination of application data, purchased third-party data and our robust internal database of over 7483 million records (as of December 31, 2017)2018) associated with loan information. These variables are then combined inanalyzed using a series of algorithms to create a score that allows us to scaleoptimize lending decisions.decisions in a scalable manner.

For the years ended December 31, 2018, 2017 and 2016, approximately 78.0%, 76.6% and 2015, approximately 77%, 73% and 71%73.2%, respectively, of our consolidated revenues were generated from services provided within the United StatesU.S. and approximately 19%17.5%, 23%19.3% and 23%22.7%, respectively, of our consolidated revenues were generated from services provided within Canada. For each of the years ended December 31, 2018 and 2017, approximately 62.4% and 2016, approximately 60% and 61%60.4%, respectively, of our long-lived assets were located within the United States, respectivelyU.S., and approximately 38%37.6% and 36%37.8%, respectively, of our long-lived assets were located within Canada. Additionally, for the years ended December 31, 2018, 2017 and 2016, approximately 4.5%, 4.1% and 4.1% of our consolidated revenues were generated from services provided within the U.K., which was placed into administration effective February 25, 2019. As a result of the U.K. administration, the U.K.-domiciled long-lived assets as of December 31, 2018 were fully impaired. For the year ended December 31, 2017, approximately 1.8% of our long-lived assets were located within the U.K. See Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A")"Operations" in this Annual Report on Form 10-K for additional information on our geographic segments.

The following charts reflectdepict the revenue contribution, including CSOcredit services organization ("CSO") fees, of the products and services that we currently offer:

For the years ended December 31, 2018, 2017 2016 and 2015,2016, revenue generated through our online channel wasrepresented 45%, 38%, and 33% and 30%, respectively, of consolidated revenue.

Below is an outline of the primary products we offered as of December 31, 2017:2018:

Unsecured Installment Loansloans are fixed-term, fully amortizing loans with a fixed payment amount due each period during the term of the loan. Loans are originated and owned by us or third-party lenders pursuant to credit services organizationCSO and credit access business statutes, which we collectively refer to as our CSO programs. For CSO programs, we arrange and guarantee the loans. Payments are due bi-weekly or monthly to best match the customer's pay cycle. Customers may prepay without penalty or fees. Unsecured Installment Loanloan terms are governed by

Secured Installment Loansloans are similar to Unsecured Installment Loans butloans except that they are also secured by a vehicle title. These loans are originated and owned by us or by third-party lenders through our CSO programs. For these loans the customer provides a clear title or security interest in thehis or her vehicle as collateral. The customer receives the benefit of immediate cash butand retains possession of the vehicle while the loan is outstanding. The loan requires periodic payments of principal and interest with a fixed payment amount due each period during the term of the loan. Payments are due bi-weekly or monthly to match the customer's pay cycle. Customers may prepay without penalty or fees. Secured Installment Loanloan terms are governed by enabling state legislation in the United States.U.S. Secured Installment Loansloans comprised 10.5%10.1%, 9.8%10.5%, and 10.6%9.8% of our consolidated revenue during the years ended December 31, 2018, 2017 2016 and 2015,2016, respectively.

Open-End Loansloans are a line of credit for the customer without a specified maturity date. Customers may draw against their line of credit, repay with minimum, partial or full payment and redraw as needed. We report and earn interest on the outstanding loan balances drawn by the customer against their approved credit limit. Customers may prepay without penalty or fees. Typically, customers do not initially draw the full amount of their credit limit. Loan terms are governed by enabling state legislation in the United States. UnsecuredU.S. and federal regulations in Canada. Open-End Loansloans comprised 6.7%13.0%, 7.0%7.6% and 5.2%8.1% of our consolidated revenue during the years ended December 31, 2018, 2017 2016 and 2015, respectively. Secured Open-End Loans are offered as part of our product mix in states with enabling legislation and accounted for approximately 0.9%, 1.0%, and 1.2% of our consolidated revenue during the years ended December 31, 2017, 2016, and 2015, respectively.

We also provide a number of ancillary financial products including check cashing, proprietary reloadable prepaid debit cards (Opt+), credit protection insurance in the Canadian market, gold buying, retail installment sales and money transfer services. We had over 120,00076,000 active Opt+ cards as of December 31, 2017,2018, which includes any card with a positive balance or transaction in the past 90 days. Opt+ customers have loaded over $1.7$2.0 billion to their cards since we started offering this product in 2011. Ancillary products comprised 4.6%, 4.2% and 4.4% of our consolidated revenue during the years ended December 31, 2018, 2017 and 2016, respectively.

Through our CSO programs, we act as a credit services organization/credit access business on behalf of customers in accordance with applicable state laws. We currently offer loans through CSO programs in stores and online in the state of Texas and online in the state of Ohio. In Texas we offer Unsecured Installment Loans and

We currently have relationships with four unaffiliated third-party lenders for our CSO programs. We periodically evaluate the competitive terms of our unaffiliated third-party lender contracts and such evaluation may result in the transfer of volume and loan balances between lenders. The process does not require significant effort or resources outside the normal course of business and we believe the incremental cost of changing or acquiring new unaffiliated third-party lender relationships to be immaterial.

When a customer executes an agreement with us underUnder our CSO programs, we agree to provide certain services to thea customer in exchange for a CSO fee payable to us by the customer. One of the services is to guarantee the customer’s obligation to repay the loan the customer receives from the third-party lender. CSO fees are calculated based on the amount of the customer’s outstanding loan. For CSO loans, each lender is responsible for providing the criteria by which the customer’s application is underwritten and, if approved, determining the amount of the customer loan. We in turn are responsible for assessing whether or not we will guarantee the loan. This guarantee represents an obligation to purchase specific loans if they go in to default.

The maximum amount payable under all such CSO guarantees provided by us was $66.9 million at December 31, 2018, compared to $65.2 million at December 31, 2017, compared to $59.6 million at December 31, 2016.2017. This liability is not included in our Consolidated Balance Sheets. Should we be required to pay any portion of the total amount of the loans we have guaranteed, we will attempt to recover some or all of the entire amount from the customers.applicable customer(s). We hold no collateral in respect of the guarantees.

These guarantees are performance guarantees as defined in ASC Topic 460. Performance guarantees are initially accountedWe estimate a liability for pursuantlosses associated with the guaranty provided to ASC Topic 460the CSO lenders using assumptions and recognized at fair value and subsequently, pursuantmethodologies similar to ASC Topic 450, as contingent liabilities whenthe allowance for loan losses, which we incur losses as the guarantor. The initial measurement of the guarantee liability is recorded at fair value and reported in "Credit services organization guarantee liability" inrecognize for our Consolidated Balance Sheets. The initial fair value of the guarantee is the price we would pay to a third party market participant to assume the guarantee liability. There is no active market for transferring the guarantee liability. Accordingly, we determine the initial fair value of the guarantee by estimating the expected losses on the guaranteedconsumer loans. The expected losses on the guaranteed loans are estimated by assessing the nature of the loan products, the credit worthiness of the borrowers in the customer base, our historical loan default history for similar loans, industry loan default history, and historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. We review the factors that support estimates of expected losses and the guarantee liability monthly. In addition, because the majority of the underlying loan customers make bi-weekly payments, loan-pool payment performance is evaluated more frequently than monthly.

Our guarantee liability for incurred losses on CSO loans guaranteed by the Company was $17.8$12.0 million and $17.1$17.8 million at December 31, 2018 and 2017, and 2016, respectively. This liability represents the unamortized portion of the guarantee obligation required to be recognized at inception of the performance guarantee in accordance with ASC Topic 460 and a contingent liability for those performance guarantees where it is probable that we will be required to purchase the guaranteed loan from the lender in accordance with ASC Topic 450.

CSO fees are calculated based on the amount of the customer’s outstanding loan. We complyloan in compliance with theeach state's applicable jurisdiction’s Credit Services Organization Act or a similar statute. These laws generally define the services that we can provide to consumers and require us to provide a contract to the customer outlining our services and the costcosts of those services to the customer. For services we provide under our CSO programs, we receive payments from customers on their scheduled loan repayment due dates. The CSO fee is earned ratably over the term of the loan as the customers make payments. If a loan is paid off early, no additional CSO fees are due or collected. The maximum CSO loan term is 180 days and 18 months in Texas and Ohio, respectively. During the years ended December 31, 2018 and 2017, 57.3% and 2016, approximately 53.6% and 53.2%, respectively, of Unsecured Installment Loans,

Since CSO loans are made by a third partythird-party lender, we do not include them in our Consolidated Balance Sheets as loans receivable. CSO fees receivable are included in “Prepaid expense and other” in our Consolidated Balance Sheets. We receive payments from customers for these fees on their scheduled loan repayment due dates.

The majority of revenue generated through our CSO programs was for Unsecured Installment Loans,loans, which comprised 96.4%97.6%, 96.4% and 91.6% and 94.0% of our total CSO revenue for the years ended December 31, 2018, 2017 2016 and 2015,2016, respectively.

We are focused in part on capturingattracting new accountscustomers as demonstrated by the 2.02.2 million new customers we acquired between January 2015 and December 2018 in the U.S. For the years ended December 31, 2018, 2017 in ourand 2016, U.S. market. In 2015, we experienced an increase in advertising expense as a resultpercentage of a strategy to gain market share during a period of time when we believed the online marketU.S. revenue was disrupted. We returned to more normalized spend levels in 20165.7%, 4.9% and 2017 following the surge in advertising expense in 2015, but with better efficiency because of improved analytics and an accelerating shift to mobile and online.5.0%, respectively.

OurIn the U.S., our marketing efforts focus on a variety of targeted, direct response strategies. We use various forms of media to build brand awareness and drive customer traffic in stores, online and to our contact centers. These strategies include direct response spot television in each operating market, radio campaigns, point-of-purchase materials, a multi-listing and directory program for print and online yellow pages, local store marketing activities, prescreen direct mail campaigns, robust online marketing strategies and “send a friend” and word-of-mouth referrals from satisfied customers. We also utilize our unique capability to drive customers originated online to our store locations–a program we call “Site-to-Store.”

TheWe believe Cash Money platform has built strong brand awareness as a leading provider of alternative financial solutions in Canada. Cash Money’s marketing efforts have historically included high frequency television buys, print media and targeted publications, as well as local advertising in the communities we serve.

Wage Day has historically built a strong brand name as a leading on-lineonline provider of short-term consumer loans to individuals in the United Kingdom.U.K. Through February 25, 2019, Wage Day’s marketing efforts includeincluded direct marketing ofto its existing customer base through a variety of channels, including email and text messaging, and new customer acquisition through leads purchased through its affiliates.

The Curo Platform is our proprietary IT platform, which is a unified, centralized platform that seamlessly integrates activities related to customer acquisition, underwriting, scoring, servicing, collections, compliance and reporting. The Curo Platform is scalable and has been successfully implemented in the United States,U.S., Canada and the United Kingdom.U.K. The Curo Platform is designed to enable us to support and monitor compliance with regulatory and other legal requirements applicable to the financial products we offer. Our platform captures transactional history by store and by customer, which allows us to track loan originations, payments, defaults and payoffs, as well as historical collection activities on past-due accounts. In addition, our stores perform automated daily cash reconciliation at each store and every bank account in the system. This fully-integrated IT platform enables us to make real-time, data-driven changes to our acquisition and risk models, which yield significant benefits in terms of customer acquisition costs and credit performance. Each of our stores has secure, real-time access to corporate servers and the most up to dateup-to-date information to maintain consistent underwriting standards. All loan applications are scanned and electronic copies are centrally stored for convenient access and retrieval. Our IT platform contains over 15 years of continually updated customer data comprising over 7483 million loan records (as of December 31, 2017)2018) to formulate our robust, proprietary underwriting algorithms. This platform then automatically applies multi-algorithmic analysis to a customer’s loan application to produce a “Curo Score,” which drives our underwriting decision. Globally, as of December 31, 20172018, we have over 185190 employees who write code and manage our networks and infrastructure for our IT platform.

To enable store-level employees to focus on customer service and to improve effectiveness and compliance management, we operate centralized collection facilities in the United States,U.S., Canada and, through February 25, 2019, the United Kingdom.U.K. Our collections personnel are trained to optimize regulatory-compliant loan repayment while treating our customers fairly. Our collections personnel contact customers after a missed payment, primarily via phone calls, letters and emails, and attempt to help the customer understand available payment arrangements or alternatives to satisfy the deficiency. We use a variety of collectionscollection strategies, including payment plans, settlements and adjustments to due dates. Collections teams are trained to apply different strategies and tools for the various stages of delinquency and also vary methodologies by product type.

Our collections centers in Wichita, Kansas and Toronto, Ontario and Nottingham, United Kingdom employed a total of over 265181 collection professionals as of December 31, 2017.2018. Our collection centers in Nottingham, U.K. employed a total of 60 collection professionals as of December 31, 2018.

We believe that the primary factors upon which we compete are:

Our underbanked customers tend to value service that is quick and convenient, lenders that can provide the most appropriate structure, and loan terms and payments that are affordable. We face competition in all of our markets from other alternative financial services providers, banks, savings and loan institutions, short-term consumer lenders and other financial services entities. Generally, the landscape is characterized by a small number of large, national participants with a significant presence in markets across the country and a significant number of smaller localized operators. Our competitors in the alternative financial services industry include monoline operators (both public and private) specializing in short-term cash advances, multiline providers offering cash advance services in addition to check cashing and other services and subprime specialty finance and consumer finance companies, as well as businesses conducting operations online and by phone.

We believe that customer service is critical to our continued success and growth. As such, we have staffed each of our stores with a full-time Store Manager, or Branch Manager or Manager, thatwho runs the day-to-day operations of the store. The Manager is typically supported by two to three Senior Assistant Managers and/or Assistant Managers and three to eight full-time Customer Advocates. A newernew store will typically ramp upstart with a Manager, a Senior Assistant Manager, two Assistant Managers and two Customer Advocates. Customer Advocates conduct the point-of-sale activities and greet and interact with customers from a secured area behind expansive windows. We believe staff continuity is critical to our business. We believe that our pay rates are equal to or better than all of our major competitors and we constantly evaluate our benefit plans to maintain their competitiveness.

The alternative financial services industry is regulated at the federal, state and local levels in the United States;U.S.; at the federal and provincial levels in Canada; and at the centralnational government level in the United Kingdom.U.K. In general, these regulations are designed to protect consumers and the public, while providing standard guidelines for business operations. Laws and regulations typically impose restrictions and requirements, such as governing interest rates and fees, maximum loan amounts, the number of simultaneous or consecutive loans, required waiting periods between loans, loan extensions and refinancings, payment schedules (including maximum and minimum loan durations), required repayment plans for borrowers claiming inability to repay loans, disclosures, security for loans and payment mechanisms, licensing, and in certain jurisdictions, database reporting and loan utilization information. We are also subject to federal, state, provincial and local laws and regulations relating to our other financial products, including laws and regulations governing recording and reporting certain financial transactions, identifying and reporting suspicious activities and safeguarding the privacy of customers’ non-public personal information. For more information regarding the regulations applicable to our business and the risks to which they subject us, see the section entitled “Risk Factors” in this Annual Report.

The legal environment is constantly changing as new laws and regulations are introduced and adopted, and existing laws and regulations are repealed, amended, modified andor reinterpreted. We regularly work with authorities, both directly and through our active memberships in industry trade associations, to support our industry and to promote the development of laws and regulations that are equitable to businesses and consumers alike.

debt collection on our behalf of us,through such proposals, and the CFPB might use its supervisory authority to impose similar restrictions on the Company.us. We cannot provide any assurances that additional federal, state, provincial or local statutes or regulations will not be enacted in the future in any of the jurisdictions in which we operate. It is possible that future changes to statutes or regulations will have a material adverse effect on our results of operations and financial condition.

The U.S. federal government and its respective agencies possess significant regulatory authority over consumer financial services. The body of laws to which we are subject has a significant impact on our operations. In November 2017, the CFPB published a rule specifically targeted at payday, vehicle title and certain high-cost installment loans ( “CFPB Rule”) that could have such an impact if it becomes effective.

In light of the industry challenge to the Congressional Review Act. Moreover,2017 Final CFPB leadership changed in November 2017Rule, the CFPB's proposals to delay the effective date of the Mandatory Underwriting Provisions and ultimately rescind them, and the agencypossibility of legal challenges to the 2019 Proposed Rule if it is currently headed by an Acting Director. The Acting Director or successor could suspend, delay or modify the CFPB Rule. Further,adopted, we expect that important elements of the CFPB Rule will be subject to legal challenge by trade groups or other private parties. Legislation was introduced in the House of Representatives December 1, 2017 to consider a review of the CFPB Rule. We cannot predict at this time whether Congress will allow the rule to stand or whether private legal challenges will be successful. Thus, it is impossible to predict whether and when the 2017 Final CFPB Rule will go into effect and, if so, whether and how it might be modified orfurther modified; nor can we quantify the impactpotential effect on our businessresults of operations and operations.financial condition.

In its currentissued form, the 2017 Final CFPB Rule establishessets forth the Mandatory Underwriting Provisions that establish ability-to-repay, or ATR,("ATR") requirements for “covered short-term loans” and “covered longer-term balloon-payment loans,” as well as payment limitations on these loans and “covered longer-term loans.” Covered short-term loans are consumer loans with a term of 45 days or less. Covered longer-term balloon payment loans include consumer loans with a term of more than 45 days where (i) the loan is payable in a single payment, (ii) any payment is more than twice any other payment, or (iii) the loan is a multiple advance loan that may not fully amortize by a specified date and the final payment could be more than twice the amount of other minimum payments. Covered longer-term loans are consumer loans with a term of more than 45 days where (i) the total cost of credit exceeds an annual rate of 36%, and (ii) the lender obtains a form of “leveraged payment mechanism” giving the lender a right to initiate transfers from the consumer’s deposit or other asset account. Post-dated checks, authorizations to initiate ACH payments and authorizations to initiate prepaid or debit card payments are all leveraged payment mechanisms under the CFPB Rule.

The 2017 Final CFPB Rule excludesexcluded from coverage, among other loans: (1)(i) purchase-money credit secured by the vehicle or other goods financed (but not unsecured purchase-money credit or credit that finances services as opposed to goods); (2)(ii) real property or dwelling-secured credit if the lien is recorded or perfected; (3)(iii) credit cards; (4)(iv) student loans; (5)(v) non-recourse pawn loans; and (6)(vi) overdraft services and overdraft lines of credit. These exclusions dowould not apply to our current loans.

Under the provisions of the 2017 Final CFPB Rule applicable to covered short-term loans and covered longer-term balloon

payment loans, a lender willwould need to choose between:

Covered longer-term loans that are not balloon loans are not subject to the foregoing requirements.Mandatory Underwriting Provisions of the 2017 Final CFPB Rule. However, such loans are subject to the 2017 Final CFPB Rule's “penalty fee prevention” provisions ("Payment Provisions"), which apply to all covered loans. Under these provisions:

The 2017 Final CFPB Rule also requires the CFPB’s registration of consumer reporting agencies as “registered information systems” to whom lenders must furnish information about covered short-term and longer-term balloon loans and

The CFPB commenced its second examination of us in February 2017 and completed the related field work in June 2017. The scope of the 2017 examination included a review of our our Compliance Management System, our substantive compliance with applicable federal laws and other matters requiring attention. The 2017 examination had no material impact ondid not materially affect our financial condition or results of operations, and we received the final CFPB Examination Report in February 2018. 

Additionally, in June 2018 we discontinued the use of secondary payment cards for affected borrowers referenced above who did not explicitly reauthorize the use of secondary payment cards. For those borrowers, in the event we cannot obtain payment through the bank account or payment card listed on the borrower’s application, we will need to rely exclusively on other collection methods such as delinquency notices and/or collection calls. Our discontinuance of December 31, 2017.using secondary cards for affected borrowers will increase collections costs and reduce the effectiveness of our collection efforts.

While we do not expect that matters arising from theour past CFPB examinations will have a material impact on us, we have made in recent years and are continuing to make, at least in part to meet CFPBthe CFPB's expectations, certain enhancements to our compliance procedures and consumer disclosures. For example, we are in the process of evaluating our payment practices. Even in advance of the effective date of the CFPB Rule (and even if the CFPB Rule doesPayment Provisions do not become effective, for one reason or another), we may make changes to these practices in a manner

rule and the President signed thea joint resolution on November 1, 2017 to repeal the Anti-Arbitration Rule. As a result, the rule will not become effective, and, pursuant to the Congressional Review Act, substantially similar rules may only be reissued with specific legislative authorization.

Under the Equal Credit Opportunity Act or ECOA,("ECOA"), and Regulation B, we may not discriminate on various prohibited bases, including race, gender, national origin, marital status and the receipt of government benefits, or retirement or part-time income, and we must also deliver notices specifying the basis for credit denials, as well as certain other notices.

The Fair Credit Reporting Act or FCRA,("FCRA") regulates the use of consumer reports and reporting of information to credit reporting agencies. These laws limitFCRA limits the permissible uses of credit reports and requirerequires us to provide notices to customers when we take adverse action or increase interest rates based on information obtained from third parties, including credit bureaus.

We are also subject to additional federal requirements with respect to electronic signatures and disclosures under the Electronic Signatures In Global And National Commerce Act or ESIGN;("ESIGN") and requirements with respect to electronic payments under the Electronic Funds Transfer Act or EFTA,("EFTA)" and Regulation E. EFTA and Regulation E requirements also have an important impact on our prepaid debit card services business. These rulesThe EFTA and regulationsRegulation E protect consumers engaging in electronic fund transfers and contain restrictions, require disclosures and provide consumers certain rights relating to electronic fund transfers, including requiring a written authorization, signed or similarly authenticated,electronic fund transfers authorized in connection with certain credit transactions payable through payments thatadvance to recur at substantially equal intervals.

Additionally, we are subject to compliance with the Telephone Consumer Protection Act or(the "TCPA"), the TCPA, and CAN-SPAM Act and the regulations of the FCC,Federal Communications Commission, which include limitations on telemarketing calls, auto-dialed calls, pre-recorded calls, text messages and unsolicited faxes. While we believe that our practices comply with the TCPA, the TCPA has given rise to a spate of litigation nationwide.

We apply the rules under the Fair Debt Collection Practices Act or FDCPA,("FDCPA") as a guide to conducting our collections activities for delinquent loan accounts, as well as complying withand we are subject to applicable state collections laws.laws as well.

The BSA also requires us to register as a money services business with the Financial Crimes Enforcement Network of the Treasury Department or FinCEN.("FinCEN"). This registration is intended to enable governmental authorities to better enforce laws prohibiting money laundering and other illegal activities. We are registered as a money services business with FinCEN and must re-register with FinCEN by December 31 every other year. We must also maintain a list of names and addresses of, and other information about, our stores and must make that list available to FinCEN and any requesting law enforcement or supervisory agency. That store list must be updated at least annually.

Federal anti-money-laundering laws make it a criminal offense to own or operate a money transmittal business without the appropriate state licenses, which we maintain. In addition, the USA PATRIOT Act of 2001 and its corresponding federal regulations require us, as a “financial institution,” to establish and maintain an anti-money-laundering program. Such a program must include: (1)(i) internal policies, procedures and controls designed to identify and report money laundering; (2)(ii) a designated compliance officer; (3)(iii) an ongoing employee-training program; and (4)(iv) an independent audit function to test the program. Because our compliance with other federal regulations has essentially a similar purpose, we do not believe compliance with these requirements has had or will have any material impact on our operations. In addition, federal regulations require us to report suspicious transactions involving at least $2,000 to FinCEN. The regulations generally describe four classes of reportable suspicious transactions-onetransactions: one or more related transactions that the money services business knows, suspects or has reason to suspect (1)(i) involve funds derived from illegal activity or are intended to hide or disguise such funds, (2)(ii) are designed to evade the requirements of the BSA (3)(iii) appear to serve no business or lawful purpose or (4)(iv) involve the use of the money service business to facilitate criminal activity.

The Office of Foreign Assets Control or OFAC,("OFAC") publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted or sanctioned countries. It also lists individuals, groups and entities, such as terrorists and narcotics traffickers, designated under programs that are not country-specific. Collectively, such individuals and companies are called “Specially Designated Nationals.” Their assets are blocked and we are generally prohibited from dealing with them.

 

Short-term consumer loans must comply with extensive laws of the states where our stores are located or, in the case of our online loans, where the borrower resides. These laws impose, among other matters, restrictions and requirements governing interest rates and fees; maximum loan amounts; the number of simultaneous or consecutive loans, and required waiting periods between loans; loan extensions and refinancings; payment schedules (including maximum and minimum loan durations); required repayment plans for borrowers claiming inability to repay loans; collections; disclosures; security for loans and payment mechanisms; licensing; and (in certain jurisdictions) database reporting and loan utilization information. While the federal FDCPA does not typically apply to our activities, comparable, and in some cases more rigorous, state laws do apply.

In the event of serious or systemic violations of state law by us or, in certain instances, our third-party service providers when acting on our behalf, we would be subject to a variety of regulatory and private sanctions. These could include license suspension or revocation (not necessarily limited to the state or product to which the

The California Finance LendersFinancing Law caps interest rates on loans under $2,500 but imposes no interest rate limit on loans valuedof $2,500 or higher.more. The California Department of Business Oversight ("DBO"(the “DBO”) is currently evaluating whether-contrary to both our practice and general industry practice-thehas asserted that the interest rate cap applies to loans in an original principal amount of $2,500 or more that are partially prepaid shortly after origination to reduce the principal balance below $2,500. While we disagree with this interpretation of the law, we nevertheless entered into a consent order with the DBO addressing the matter to eliminate the cost, distraction and risks of potential litigation. The consent order does not contain any admission of wrongdoing and will not have a material effect on our results of operations or financial condition.

conduct an individual analysis of whether "under the circumstances of the case, taking into account the bargaining process and prevailing market conditions" a detailed submission"particular rate was 'overly harsh,' 'unduly oppressive,' or 'so one-sided as to shock the conscience.'" This analysis is "highly dependent on this issuecontext" and "flexible," according to the court. The court warned that lower courts should be wary of and must avoid remedies that amount to an "across-the-board imposition of a cap on interest rates."

In September 2018, a putative class action lawsuit was filed against the Company in September 2016, but have not receivedthe Southern District of California alleging that certain loans made by the Company in amounts of $2,500 or greater are unconscionable and therefore a response.violation of California law. The Company filed its answer and motion to compel arbitration on October 30, 2018.

During the past few years, legislation, ballot initiatives and regulations have been proposed or adopted in various states that would prohibit or severely restrict our short-term consumer lending. For example, during 2018, legislation was enacted in Ohio and a ballot initiative was adopted in Colorado restricting our loans in those states. Also, during the 2018 session, three bills were introduced in the California Assembly which would have directly impacted the products we currently offer. Assembly Bill 2500 as introduced would have imposed a 36% APR cap on all consumer loans between $2,500 and $5,000 and a 24% APR cap on all consumer loans between $5,000 and $10,000. Assembly Bill 2953 would have imposed a 36% APR cap on all auto title loans. Assembly Bill 3010 as introduced would have limited borrowers to one outstanding payday loan at a time across all lenders using a common database to enforce the one loan restriction. Assembly Bill 2500 did not pass out of the Assembly by the May 31, 2018 deadline. Assembly Bills 2953 and 3010 advanced to the Senate but did not pass out of the Senate Banking and Insurance Committee by the June 30, 2018 deadline. Nevertheless, similar bills may be introduced and/or enacted in the 2019 or subsequent legislative sessions.

We, along with others in the short-term consumer loan industry, intend to continue to inform and educate legislators and regulators and to oppose legislative or regulatory action that would unduly prohibit or severely restrict short-term consumer loans.loans as compared with those currently allowed. Nevertheless, if legislative or regulatory action with that effect were taken in states in which we have a significant number of stores (or at the federal level), that action could have a material adverse effect on our loan-related activities and revenues.

In some states, check cashing companies or money transmission agents are required to meet minimum bonding or capital requirements and are subject to record-keeping requirements and/or fee limits.

Currently, approximately 30 states in the United StatesU.S. have enabling legislation that specifically allows direct loans of the type that we make. In Texas and Ohio, we currently operate under a CSO model. In Texas, thisthe CSO model is expressly authorized under Section 393 of the Texas Finance Code. As a CSO, we serve as arranger for consumers to obtain credit from independent, non-bank consumer lending companies and we guaranty the lender against loss. As required by Texas law, we are registered as a CSO and also licensed as a Credit Access Business or CAB.("CAB"). Texas law subjects us to audit by the State’s Office of Consumer Credit Commissioner and requires us to provide expanded disclosures to customers regarding credit service products.

The Texas cities of Austin, Dallas, San Antonio, Houston and several others (nearly 45 cities in total as of December 31, 2017)2018) have passed substantially similar local ordinances addressing products offered by CABs. These local ordinances place restrictions on the amounts that can be loaned to customers and the terms under which the loans can be repaid. As of December 31, 2017,2018, we operated 7068 stores in Texas cities with local ordinances. We have been cited by the City of Austin for alleged violations of the Austin ordinance but believe that: (1)(i) the ordinance conflicts with Texas state law and (2)(ii) our product in any event complies with the ordinance, when it is properly construed. The Austin Municipal Court agreed with our position that the ordinance conflicts with Texas law and, accordingly, did not address our second argument. In September 2017, the Travis County Court reversed this decision and remanded the case to the Municipal Court for further proceedings consistent with its opinion (including, presumably, a decision on our second argument). However, in October 2017 we appealed this County Court's decision.To date, a hearing and trial on the merits has not been scheduled. Accordingly, we willdo not expect to have a final determination of the lawfulness of our CAB program under the Austin ordinance (and similar ordinances in other Texas cities) for some time. AAn adverse final adverse decision could potentially result in material monetary liability in Austin and elsewhere and would force us to restructure the loans we arrange in Texas.

OurIn Ohio, lending subsidiary iswe currently operate as a registered underCSO and provide CSO services to borrowers who apply for and obtain Unsecured Installment loans from a third-party lender. However, in late July 2018, the Ohio Credit Services Organization Actlegislature passed House Bill 123 which significantly limits permissible fees and regulated byother terms on short term loans in Ohio. The Governor signed House Bill 123 into law on July 30, 2018, which effectively eliminated the viability of the CSO model in Ohio. The principal sections of the new law are scheduled to become operative on or about April 27, 2019. As a result, we will no longer operate as a registered CSO in Ohio after that date. The Ohio Department of Commerce Division of Financial Institutions. Asgranted us a CSO,short-term lender's license on February 15, 2019. Under this license, we provide credit services to our customers in accordance with the Credit Services Organization Act. Unlike Texas law, however, the Ohio Credit Services Organization Act does not expressly authorize the loan program we offer. Operating as a CSO allows us to charge a fee for arranging loans to our customers from unaffiliated third-party lenders, for assisting customers in preparing and completing the information and documents that the unaffiliated third-party lenders require the customers to submit in order to obtain loans and for providing guarantees of customer obligations to thewill

unaffiliated third-party lenders. We determine whether we are prepared to guarantee the loans, using our own underwriting guidelines,offer an Installment loan product for a term of 120 days. Ohio customers may originate and the lender applies its own underwriting guidelines in determining whether to make the loan. We obtain assurances from lenders that they comply with applicable federal and Ohio laws when setting loan terms. We offermanage their loans online in Ohio.via the internet or mobile application.

Our businesses are regulatedsupervised by state authorities in each state where we operate, whether through storefronts or online. We are subject to regular state examinations and audits and must address with the appropriate state agency any findings or criticisms resulting from these examinations and audits.

In addition to state laws governing our lending activities, most states have laws and regulations governing check cashing and money transmission, including licensing and bonding requirements and laws regarding maximum fees, recordkeeping and/or posting of fees, and our business is subject to various local rules, such as local zoning and occupancy regulations. These local rules and regulations are subject to change and vary widely from state to state and city to city.

We cannot provide any assurances that additional state or local statutes or regulations will not be enacted in the future in any of the jurisdictions in which we operate. Additionally, we cannot provide any assurances that any future changes to statutes or regulations will not have a material adverse effect on our results of operations and financial condition.

In May 2007, Canadian federal legislation was enacted that exempts from the criminal rate of interest provisions of the Criminal Code (which prohibit receiving (or entering into an agreement to receive) interest at an effective annual rate that exceeds 60% on the credit advanced under the loan agreement) cash advance loans of $1,500 or less if the term of the loan is 62 days or less (“payday loans”) and the person is licensed under provincial legislation as a short-term cash advance lender and the province has been designated under the Criminal Code.

OnIn March 9, 2017, Bill S-237 titled “An Act to Amend the Criminal Code” was introduced in the Senate (of Canada). The bill proposed to reduce the Criminal Rate of interest from 60% APR to 20% plus the Bank of Canada overnight interest rate of approximately 2%.rate. In February of 2018, the bill was amended in committee to a maximum interest rate cap of 45%. plus the Bank of Canada overnight interest rate. A similar bill was introduced by the same Senator in 2015 and did not pass out of the Senate. We cannot speculate as to the likelihood of this bill progressing in the legislative process.

Currently, Ontario, Alberta, British Columbia, Manitoba, Nova Scotia, Prince Edward Island, Saskatchewan and New Brunswick have provincial enabling legislation allowing for payday loans and have also been designated under the Criminal Code. Newfoundland has proposedbeen designated under the Criminal Code, but enabling legislation, but such legislation is not yet in force. Under the provincial payday lender legislation there are generally cost of borrowing disclosure requirements, collection activity requirements, caps on the cost of borrowing that may be recovered from borrowers and restrictions on certain types of lending practices, such as extending more than one payday loan to a borrower at any one time.

Canadian provinces periodically review the regulations for payday loan products. Some provinces specify a time period within the Act while other provinces are silent or simply note that reviews will be periodic.

On March 30, 2015,In September 2018, Nova Scotia completed its triennial review processprocess. In November 2018, the Utility and reducedReview Board announced its decision to reduce the maximum cost of borrowing from C$2522 per C$100 to C$2219 per C$100, effective in May of 2015.February 1, 2019. The remaining recommendations of the reviewReview Board, mainly an extended payment plan offering, were not implementedmay be considered by the Minister.  The Utility and Review Board has yet to give notice of this year’s review expected sometime in 2018. In a recent press release, the respective ministry announced its plans to conduct the next review of the regulations in the fall of 2018. Cash Money operated five retail store locations as of December 31, 20172018 and has an internet presence in Nova Scotia.

On September 21, 2016,Effective January 1, 2017, the British Columbia Ministry of Public Safety and Solicitor General (the "Ministry") announced a reduction inreduced the total cost of borrowing from C$23 per C$100 lent to C$17 per C$100 lent. A further reduction to C$15 per C$100 lent effective Januarycame into effect on September 1, 2017. At2018. On February 26, 2019, the same time,Minister of Public Safety and Solicitor General introduced in Parliament bill 7 titled “Business Practices and Consumer Amendment Act." With respect to high cost credit products, including the types of loans we offer, this act would give the authority to the Ministry also announcedto, among other things, proscribe a consultation titled "Consumer Protectionlower interest rate, prohibit presentments upon default, set fees for British Columbians who use high-cost alternative financial services," seeking input on whether,optional products and what additional, regulation may be warranted. The consultation concluded October 20, 2016 andimpose a cooling off period. Given that it is early in the legislative process and timing following this consultationmost of the provisions would be subject to a further regulatory process to determine exact specifications, we are unknown.unable to predict the effect on our business and results of operations.

OnIn April 20, 2016, the Ontario Ministry of Government and Consumer Services or the Ministry,(the "Ministry"), published a 30-day consultation to consider the total cost of borrowing for payday lending in Ontario, which was C$21 per C$100 lent. TheUnder consideration iswas whether the rate should remain at C$21 or be lowered to C$19, C$17 or C$15 per C$100 lent. OnIn August 30, 2016, the Ministry published another 30-day consultation seeking public input on a two stagetwo-stage reduction in the total cost of borrowing, proposing a maximum rate of C$18 per C$100 lent effective January 1, 2017 and a further reduction to C$15 per C$100 lent effective January 1, 2018.

In December 2015, Bill 156 titled “the Alternative Financial Services Statute Law Amendment Act” was introduced. This legislation (i) proposed additional consumer protections such as a cooling-off period and extended repayment plan. This legislation alsoplan and (ii) provided the Ministry with the authority, subject to a regulatory process, to impose additional requirements such as establishing a maximum loan amount. The Alternative Financial Services Statute Law Amendment Act passed second reading before the Parliament recessed in June of 2016.

Upon the Ontario Parliament returning from summer recess in September of 2016, the Premier of Ontario prorogued the legislature. Therefore all prior bills died and new legislation would need to be introduced. Ondied. In November 3, 2016, the Ministry introduced Bill 59 titled “Putting Consumers First Act (the “Act”“PCF Act”). The Act, which encompassed many of the provisions of the previous legislation (the Alternative Financial Services Statute Law Amendment Act). The Ministry also and incorporated the provisions of three other previous, unrelated pieces of legislation in the Act.legislation. Bill 59 officially received Royal Assent onin April 13, 2017. A majority of the Single-Pay-loan-related provisions in the PCF Act, including but not limited to installment repayment plans, advertising requirements, prohibitions on number of loans in a year and disclosure requirements were subject to a further regulatory process.

With respect to the regulatory process for the authorities granted to the Ministry in Bill 59, the Ministry of Government and Consumer Services issued a consultation document onin July 7, 2017 requesting feedback on whether and how regulations should change regarding most notably extended payment plans, maximum loan amounts, a cooling off period between loans and limits on fees charged to cash government checks. Responses to the July 7, 2017 consultation document were due by August 21, 2017. OnAfter considering responses, in December 19, 2017 the Ministry announced the new regulations with respect to payday loans. Most notably, the Ministry detailed two new regulations effective July 1, 2018: (1)(i) a requirement to make the third loan originated by the same customer within 63 days repayable in 2two or 3 installmentthree installments, depending on the customer’s pay frequency, and; (2)(ii) a requirement for the loan amount not to exceed 50% of the customer’s net pay in the month prior to the loan. Additionally, in the December 19, 2017 announcement, the Ministry confirmed a decrease in the maximum cost of borrower from C$18 per C$100 lent to C$15 per C$100 lent.

We conducted online lending and operated 124131 of our 193200 Canadian stores in Ontario (asas of December 31, 2017).2018. Revenues originated in Ontario represented approximately 66.7%62.7% of revenue generated in Canada and 12.9%11.0% of our total consolidated revenues for the year ended December 31, 2017. Until these regulations2018. We are fully in effect, we cannot speculate oncurrently evaluating the potential impacteffects of the regulations. They could have a material adverse effectforegoing regulations on our Ontario operations.

OnIn May 12, 2016, the Alberta Government introduced Bill 15 titled “An Act to End Predatory Lending.Lending,” The most notable provisions of this Billwhich, among other things, included for loans in scope a reduction in the maximum cost of borrowing from C$23 to C$15 per C$100 lent and a requirement that all loans arebe repaid in installments. For customers paid semi-monthly, bi-weekly or on a more frequent basis, at least three installment payments would be required. For customers paid on a monthly basis, at least two installment payments would be required. All covered loan terms must be no less than 42 days and no greater than 62 days, with no penalty for early repayment. Additionally, the Bill included a provision for a reduction in the cost of borrowing to 60% APR when alternative options for credit exist and are being utilized by a sufficient number of individuals.

OnIn May 27, 2016, Bill 15 received Royal Assent. The maximum cost of borrowing of C$15 per C$100 lent became effective onin August 1, 2016. On November 25, 2016 the Alberta Government issued theand final regulations for the installment payments effective November 30, 2016. As a result of these regulatory changes, we introduced an Installment product during 2016 and, by the end of 2017, exclusively offered only Installment and Open-End products.

OnIn November 29, 2017, the Alberta Government introduced a new bill titled “A Better Deal for Consumers and Businesses Act”. This billAct,” which covered a number of industries including high costhigh-cost credit businesses. The Act isbusinesses and was intended to provide the government with the

authority to promulgate certain regulations to further insure consumer protection. The Actact passed and formerlyformally received Royal Assent on December 15, 2017. In February of 2018, the Alberta Government initiated a consultation process with respect to licensing and disclosures for high costrespecting high-cost credit products, which includes our currentresulted in additional regulations being passed setting out a regime for such products, including installment loan product. We cannot speculateloans with an APR of 32% or more and lines of credit with an annual interest of 32% or more. Among other things, high-cost lenders are required to hold a license and to provide additional disclosures to borrowers. This high-cost credit regime became effective on the potential changes to regulations and, the potential impact to our operations.January 1, 2019.

We operated 27 of our 193200 Canadian stores (as of December 31, 2017)2018) and conducted online lending in Alberta. Revenues in Alberta were approximately 17.3% of Canadian revenues and 3.0% of total consolidated revenues for the year ended December 31, 2018 and were approximately 13.4% of Canadian revenues and 2.6% of total consolidated revenues for the year ended December 31, 2017 and were approximately 15.1%2017. We are currently evaluating the effects of Canadian revenues and 3.4% of total consolidated revenues for the year ended December 31, 2016. If we are unable to replace a significant portion of the affected revenues with otherour product offerings, this change could have a material adverse effect on our results for our Canadian operations.changes in Alberta. For additional information, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

OnIn January 12, 2016, the province of Manitoba announced a Public Utilities Board or PUB,("PUB") hearing from April 12, 2016 through April 19, 2016 to specifically review and consider a reduction in the rate from C$17 per C$100 lent to C$15 per C$100 lent and a reduction in the maximum amount borrowers can loan from 30% of net pay to 25% of net pay. OnIn June 17, 2016, the PUB issued its report to the government recommending that these proposed changes not be made. It is unknown if and when the government may adopt the recommendations of the PUB. As of December 31, 2017,2018, we operated four stores in Manitoba.

Effective in February 2018, Saskatchewan has amended its Payday Loan Regulations suchto provide that as of February 15, 2018, the maximum rate that may be charged to a borrower will be reduced from C$23 per C$100 lent to C$17 and the maximum fee for a dishonoureddishonored check will be reduced from C$50 to C$25. As of December 31, 2017,2018, we operated six stores in Saskatchewan.

In Canada, the federal government generally does not regulate check cashing businesses, except in respect of federally regulated financial institutions (and other than the Criminal Code of Canada provisions noted above in respect of charging or receiving in excess of 60% annual interest on the credit advanced in respect of the fee for a check cashing transaction) nor do most provincial governments generally impose any regulations specific to the check cashing industry. The exceptions are the provinces of Quebec, where check cashing stores are not permitted to charge a fee to cash a government check; and Manitoba, British Columbia and Ontario, where the province imposes a maximum fee to be charged to cash a government check; and British Columbia and Ontario, where there is proposed legislation which will either restrict or impose a maximum fee that can be charged to cash a government check or any other check that may be designated by regulation.check. The province of Saskatchewan also regulates the check cashing business but only in respect of provincially regulated loan, trust and financing corporations. Cash Money does not operate in the province of Quebec.

The Financial Transaction and Reports Analysis Centre of Canada is responsible for ensuring that money services businesses comply with the legislative requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act or the PCMLTFA.(the "PCMLTFA"). The PCMLTFA requires the reporting of large cash transactions involving amounts of $10,000C$10,000 or more received in cash and international electronic funds transfer requests or receiptsmaintenance of $10,000 or more.certain records relating to the exchange of foreign currency. The PCMLTFA also requires submitting suspicious transactions reports when there are reasonable grounds to suspect that a transaction or attempted transaction is related to the commission of a money laundering offense or to the financing of a terrorist activity, and the submission of terrorist financing reports where a person has possession or control of property that they know or believe to be owned or controlled by or

on behalf of a terrorist or terrorist group. The PCMLTFA also imposes obligations on money services businesses in respect of record keeping, identity verification, and implementing a compliance policy.

In the United Kingdom,U.K., consumer lending is governed by The Consumer Credit Act 1974, which was amended by the Consumer Credit Act 2006 or the CCA,(the "CCA") and related rules and regulations supplemented by guidance. On April 1, 2014, the Financial Conduct Authority or FCA,("FCA") assumed responsibility for regulating consumer credit from the Office of Fair Trading or OFT,("OFT"), as enacted under the Financial Services Act 2012. The FCA is the regulatory body in the United KingdomU.K. that is responsible for the regulation and oversight of the consumer credit industry. Firms operating with consumer credit licenses originally issued by the OFT were required to register with the FCA in the fall of 2013 to obtain interim permission to conduct consumer credit activities from April 1, 2014 until they had applied for and obtained full authorization from the FCA. In February 2016, we were notified that our two lending businesses in the United Kingdom,U.K., SRC Transatlantic Limited and CURO Transatlantic Limited (f/k/a

While U.K. consumer credit businesses are principally regulated by the FCA, there is additional legislation and regulation that governs consumer credit, including the CCA. The CCA imposes various obligations on lenders, and any person who exercises the rights and duties of lenders to correctly document credit agreements and guarantees and indemnities, give borrowers rights to withdraw, provide post contract information such as statements of account, notices of sums in arrears and default notices, protect consumers who purchase a good or service from a linked supplier and not to take certain recovery or enforcement action until prescribed forms of post-contractual notices have been served and prescribed time periods have elapsed. Any failure to comply with such legislation or regulation may have serious consequences for our U.K. operations, as well as a risk that the FCA may revoke or suspend our authorization.

The FCA and its predecessor, the OFT, have already taken action against, and have imposed requirements on, a number of well-known U.K. financial institutions. In addition, our U.K. operations are subject to various regulations concerning consumer protection and data protection, among others.

We areOur U.K. Subsidiaries were also subject to the powers of the U.K. Information Commissioner’s Office or the ICO,(the "ICO") to take enforcement action in relation to data protection. By virtue of doing business with financial institutions and other FCA regulated companies in the United Kingdom,U.K., our subsidiaries of the Group arewere typically contractually obligated to comply with certain other requirements such as the Consumer Finance Association (CFA) and the Credit Services Association’s (CSA) Code of Practice.

the set of areas, including its high level principles and conduct of business standards. The FCA has substantially greater powers than the OFT and given the FCA has only been responsible for regulating consumer credit since April 2014, it is likely that the regulatory requirements applicable to our industry will continue to increase, as the FCA deepens its understanding of the industry through the authorization process. In addition, it is likely that the compliance framework that will be needed to continue to satisfy the FCA requirements will demand incremental investment and resources in our compliance governance framework. For example, it is currently expected that as of 2019, the U.K. Senior Managers and Certification Regime, or SMCR, will be extended to all sectors of the financial services industry (including consumer credit firms, such as SRC Transatlantic Limited and CURO Transatlantic Limited), at which point the majority of the senior management team below the executive committee is expected to become certified persons. One result of this may be that we incur additional costs from putting in place systems to ensure all employees are appropriately notified of, and receive suitable training in, the rules of conduct which will apply to them. We have commenced planning for this, with the details to be finalized once the FCA issues its final rules, expected to be published during the second half of 2018. There is also a risk that we could become subject to additional or new regulatory obligations (such as FCA approval of senior managers and anti-money laundering and fraud prevention), or that those requirements to which we are currently subject could become more stringent.

The FCA regards lending and collections of loans as a “high risk” activity and therefore dedicates special resources to more intensive monitoring of businesses in this sector. CONC provides that firms that undertake consumer credit regulated activities should, for example, be required to treat a customer in default or arrears difficulties with forbearance and consideration and may consider suspending, reducing or waiving any further interest payments or charges from that customer or accepting token payments from the customer for a reasonable period. Regarding statute barred debt, a firm which undertakes consumer credit regulated activities must not mislead a customer by suggesting that said customer could be subject to court action for the sum of the statute barred debt, when that firm knows, or reasonably ought to know, that the relevant limitation period has expired.

The Money Laundering Regulations 2017 implement the European Union 4th Money Laundering Directive (2015/849/EU) and apply to lenders and specify that all lenders must be supervised for money laundering compliance. BothThrough February 25, 2019, our U.K. lending businesses are currentlysubsidiaries were supervised by the FCA for these purposes.

 

In the United Kingdom, a bank that clears a fraudulent check must refund the drawer. For this reason, banks have invoked more stringent credit inspection and indemnity criteria for businesses such as ours.

The FCA is undertaking various reviews relevant to consumer credit businesses, which may affect us.lenders in the U.K. For example, in July 2017 the FCA published a consultation paper on Assessing Creditworthiness in consumer credit. This consultation is designed to enable the FCA to provide further clarity around the factors for Lenders to consider when deciding the proportionality of an affordability assessment and expectations for a firm’s policies and procedures. This may leadThe FCA provided final guidance under its Policy Statement PS 18/19: Assessing creditworthiness in consumer credit which caused our U.K. subsidiaries to us makingmake changes to our creditworthiness assessments once theirtaking into account the final rules are published.published Policy Statement.

 

As a consumer finance business, we mustour U.K. Subsidiaries were required to comply with the requirements established by the Data Protection Act in relation todata protection legislation regarding processing the personal data of our customers. The applicable data protection legislation has undergone considerable change in the last few years, culminating in the GDPR and Data Protection Act 2018, as further described below. Any business controlling the processing of personal data (that is, determining the purposes of the processing and the manner in which it is carried out), such as consumer credit firms, must in particular maintain a data protection registration with the ICO for each of its companies. The ICO is an independent governmental authority responsible for maintaining, upholding and promoting the best business practices and legislative requirements for processing personal data and safeguarding the information rights of individuals and their rights to access their personal data.

Our internet address is www.curo.com. We make a variety of information available, free of charge, at our Investor Relations website, www.ir.curo.com. This information includes our Registration Statements, Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to those reports as soon as reasonably practicable after we electronically file those reports with or furnish them to the SEC, as well as our code of business conduct and ethics and other governance documents.

The public may read and copy materials filed by us with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file documents electronically with the SEC at www.sec.gov.

The contents of these websites, or the information connected to those websites, are not incorporated into this report. References to websites in this report are provided as a convenience and do not constitute, and should not be viewed as, incorporation by reference of the information contained on, or available through, the website.

Management regularly reviews and updates our internal controls, disclosure controls and procedures and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of the controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, results of operations and financial condition.

As discussed further in Item 9A, “Controls and Procedures, we have identified a material weakness in our internal control over financial reporting resulting from the improper or incomplete application of technical GAAP standards and related interpretations to complex or non-routine matters. We describe the specific issues leading to these conclusions in Item 9A, “Management’s Report on Internal Control over Financial Reporting.” We expect to remediate the material weakness in 2019.

For instance, as described above, if future changes in regulations affecting our products or services are enacted, theythese changes could adversely impact our current product offerings or alter the economic performance of our existing products and services. TheThese changes, in turn, could have a material adverse effect on our ability to comply with the terms of existing or future debt instruments may restrict us from adopting some of these alternatives.our debt.

The trading market for our common stock may not developdepends in part on the research and reports that securities or industry analysts publish about our business. If one or more of the marketsecurity or industry analysts that covers us downgrades our shares or publishes misleading or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our commonshares could decrease, which could cause our stock mayprice or trading volume to decline.

A majority of our company will lead to the developmentoutstanding shares of an active trading market, or how liquid that market may become. An active trading market for our common stock may never develop or be sustained, which could adversely impact your ability to sell your shares and could depress the market priceare held by a relatively small number of your shares. Consequently, you may be unable to sell yourour stockholders. Sales of a substantial number of shares of our common stock in the public market by our significant stockholders or pursuant to new issuances by us, or the perception that such sales could occur, could adversely affect the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that such sales may have on the prevailing market price of our common stock.

Any of these factors may result in large and sudden changes in the trading volume and market price of our common stock and may prevent you from being able to sell your shares at or above the price you paid for them.

These provisions may delay or prevent attempts by our stockholders to replace members of our management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. These provisions also may delay, prevent or deter a merger, acquisition, tender offer, proxy contest or other transaction that might otherwise result in our stockholders receiving a premium over the market price for their common stock. We believe these provisions will protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers or investors aiming to effect changes in management to negotiate with our board of directors and by providing our board of directors with more time to assess any proposal. However, such anti-takeover provisions could also depress the price of our common stock by acting to delay or prevent a change in control of us.

Any decision to declare and pay dividends will be dependent on a variety of December 31, 2017, or approximately 28.06%factors, including earnings, cash flow generation, financial position, results of operations, the terms of our indebtedness and 43.86%, respectively, after the underwriters exercised in full on January 5, 2018 their option to purchase additional shares. As a result, the FFL Holdersother contractual restrictions, capital requirements, business prospects and the Founder Holders collectively have the ability to elect all of the members ofother factors our board of directors and thereby controlmay deem relevant. The terms of our policies and operations, including the appointment of management, future issuancesindebtedness limits our ability to pay dividends to holders of our common stock or other securities, the payment of dividends, if any,stock. As a result, you should not rely on an investment in our common stock the incurrence or modification of debt by us, certain amendments to our amended and restated certificate of incorporation and amended and restated bylaws,provide dividend income and the entering intosuccess of extraordinary transactions, and their interests may not in all cases be aligned with your interests. In addition, the FFL Holders together with Founder Holders may have an interest in pursuing acquisitions, divestitures and other transactions that, in their respective judgment, could enhance their investment even though such transactions might involve risks to you. For example, the FFL Holders together with the Founder Holders could cause us to make acquisitions that increase our indebtedness or cause us to sell revenue-generating assets.

None.

Not Applicable.

Our IPO closed on December 11, 2017, and our common stock began trading on the NYSE on December 7, 2017, under the symbol "CURO." Prior to this date there was no public market for our common stock. The following table sets forth the reported high and low sales prices per share for

As of February 1, 2019, there were 108 stockholders of record of our common stock on the NYSE.

On May 12, 2017, we declared a dividendOur board of $28.0 million, which was paiddirectors has discretion to our stockholders on May 15, 2017, on August 2, 2017, we declared a dividend of $8.5 million, which was paid to our stockholders on August 11, 2017 and on October 16, 2017, we declared a dividend of $5.5 million, which was paid to our stockholders on October 16, 2017. In connection with issuance of the additional 12.00% Senior Secured Notes on November 2, 2017, we declared a dividend of $140.0 million on November 2, 2017, which was paid to our stockholders on November 2, 2017. We have otherwise not paid regular or special dividends since our inception in 2013. The terms of our indebtedness limit the ability of CFTCdetermine whether to pay dividends to CURO Group Holdings Corp., which would be necessary for us to pay dividendsin the future based on our common stock.

In addition to the financial information prepared in conformity with U.S. GAAP, we provide certain “non-GAAP financial measures” as defined under SEC rules,measures,” including:

We believe that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of ourthe Company's operations. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our business that, when viewed with ourthe Company's U.S. GAAP results, provide a more complete understanding of factors and trends affecting ourthe business.

We believe that investors regularly rely on non-GAAP financial measures, such as Adjusted Net Income, Adjusted Earnings per Share, EBITDA and Adjusted EBITDA, to assess operating performance and that such measures may highlight trends in ourthe business that may not otherwise be apparent when relying on financial measures calculated in accordance with U.S. GAAP. WeIn addition, we believe that the adjustments shown below are useful to investors in order to allow them to compare our financial results during the periods shown without the effect of each of these income or expense items. In addition, we believe that Adjusted Net Income, Adjusted Earnings per Share, EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of public companies in our industry, many of which present Adjusted Net Income, Adjusted Earnings per Share, EBITDA and/or Adjusted EBITDA when reporting their results.

We provide non-GAAP financial information for informational purposes and to enhance understanding of ourthe U.S. GAAP consolidated financial statements.Consolidated Financial Statements. Adjusted Net Income, Adjusted Earnings per Share, EBITDA, Adjusted EBITDA and Gross Combined Loans Receivable should not be considered as alternatives to income from continuing operations, segment operating income, or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flows from operating activities or any other liquidity measure derived in accordance with U.S. GAAP. Rather, these measures should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for, or superior to, U.S. GAAP results. Readers should consider the information in addition to, but not instead of or superior to, ourthe financial statements prepared in accordance with U.S. GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.

 

We are a growth-oriented, technology-enabled, highly-diversified, multi-channel and multi-product consumer finance company serving a wide range of underbanked consumers in the United States ("U.S."), Canada and, through February 25, 2019, the United Kingdom ("U.K") and are a market leader in our industry based on revenues. We believe that we have the only true omni-channel customer acquisition, onboarding and servicing platform in our industry that is integrated across store, online, mobile and contact center touchpoints. Our IT platform, which we refer to as the “Curo Platform,” seamlessly integrates customer acquisition loan underwriting, scoring, servicing, collections, regulatory compliance and reporting activities into a single, centralized system. We use advanced risk analytics powered by proprietary algorithms and over 15 years of loan performance data to efficiently and effectively score our customers’ loan applications. SinceFrom 2010 through December 31, 2018, we have extended $14.5$17.1 billion in total credit across approximately 38.143.8 million total loans, and our revenue of $963.6 million in 2017 represents a 24.8% compound annual growth rate, or CAGR, over the same time period.loans.

We operate in the United StatesU.S. under two principal brands, “Speedy Cash” and “Rapid Cash,” and we launched our newonline brand “Avio Credit” in the United StatesU.S. in the second quarter of 2017. In Canada, our stores are branded “Cash Money” and we offer “LendDirect” Installment loans online and at certain stores. In the United KingdomU.K., through February 25, 2019, we operateoperated online as “Wage Day Advance” and "Juo Loans" and, prior to their closure in the third quarter of 2017, our stores were branded “Speedy Cash.” In Canada, our stores are branded “Cash Money” and we offer “LendDirect” installment loans online. As of December 31, 2017,2018, our store network consisted of 407413 locations across 14 U.S. states and seven Canadian provinces. As of December 31, 2017,provinces and we offered our online services in 27 U.S. states, five Canadian provinces and the United Kingdom.U.K.

Gross combined loans receivable wereincreased $165.6 million, or 32.4%, to $677.2 million as of December 31, 2018 compared to $511.6 million and $354.2 million at December 31, 2017 and 2016, respectively. The increase was a result of Installment loan growth from higher originations and the Q1 Loss Recognition Change. For 2017, Installment loans that are up to 90 days past due are included in gross combined loans receivable. Excluding the year-over-year effect of such past-due loans,2017. Geographically, gross combined loans receivable increased $83.4 million or 23.5% from December 31, 2016 to December 31, 2017.

Loss provision rates as a percentage of loan originations (or loss provision rates)The net charge-off ("NCO") rate for Company Owned Unsecured Installment loans in the fourth quarter of 2018 increased sequentiallyapproximately 350 bps from 21.1% to 22.1%, reflecting normal seasonal trends and allowance coverage evaluation. Fourththe fourth quarter 2017 provision rate was consistent with the prior year provision rate of 22.0%. The effect of of the Q1 Loss Recognition Change, which caused higher provision rates in 2017, was offset by improved underwriting and credit scoring, and seasoning.

The required Unsecured Installment Allowance for loan losses as a percentage of Gross Company Owned Unsecured Installment gross loans receivable ("Allowance Coverage") remained consistent sequentially on a consolidated basis. Although NCO rates increased sequentially, consistent with normal seasonal trends, the past-due rate was flat and evaluation of collection experience required Allowance Coverage at a level similar to the level in the third quarter 2018.

NCO rates for Unsecured Installment CSO guarantee liability as a percentage of Unsecured Installment gross loans Guaranteed by the Company both declined fromincreased 400 bps compared to the endsame quarter in 2017. Approximately half of the third quarter of 2017. Thisincrease was due to broader qualification for CLIs. As described above, NCO rates increase as a result of realizationCLIs but growth in net revenue more than covers the increased NCO rates. The remainder of the impactsincrease was due to the timing of Hurricane Harvey, seasonal patternsloan growth in net charge-offsthe fourth quarter of 2017, which occurred sequentially from November to December and evaluation of year-end allowance coverage based on underlying vintage performance. Past-duedistorted the relationship between NCO dollars and quarterly average loan balances. NCO rates and past-due rates for Unsecured Installment gross loans receivable and Past-due Unsecured Installment gross loans Guaranteed by the Company remained consistentimproved sequentially by 320 bps and 90 bps, respectively, resulting in the required CSO liability for losses coverage to decrease from 16.8% to 15.0% in the fourth quarter over quarter.of 2018.