Results of Operations

The following table sets forth certain information derived from the Company's
consolidated statements of operations and balance sheets, as well as operating
data and ratios, for the periods indicated (unaudited):

                                              Three months                  Six months
                                          ended September 30,          ended September 30,
                                           2009          2008           2009          2008
                                                       (Dollars in thousands)

Average gross loans receivable (1)      $  744,099       653,671        719,910       634,097
Average net loans receivable (2)           547,482       482,130        530,906       468,318

Expenses as a % of total revenue:
Provision for loan losses                     24.1 %        25.4 %         22.3 %        22.9 %
General and administrative                    49.7 %        52.7 %         51.4 %        53.9 %
Total interest expense                         3.5 %         4.2 %          3.3 %         4.2 %

Operating margin (3)                          26.2 %        21.8 %         26.3 %        23.2 %

Return on average assets (annualized)         10.3 %         7.8 %         10.5 %         8.5 %

Offices opened or acquired, net                 17            35             22            69

Total offices (at period end)                  966           907            966           907

(1) Average gross loans receivable have been determined by averaging month-end gross loans receivable over the indicated period.

(2) Average loans receivable have been determined by averaging month-end gross loans receivable less unearned interest and deferred fees over the indicated period.

(3) Operating margin is computed as total revenues less provision for loan losses and general and administrative expenses, as a percentage of total revenue.

Comparison of Three Months Ended September 30, 2009, Versus Three Months Ended September 30, 2008

Net income increased to $14.6 million for the three months ended September 30, 2009, or 46.9%, from the three month period ended September 30, 2008. Operating income (revenues less provision for loan losses and general and administrative expenses) increased approximately $7.3 million, or 36.2%.

Total revenues rose to $104.2 million during the quarter ended September 30, 2009, a 13.6% increase over the $91.7 million for the corresponding quarter of the previous year. This increase was attributable to new offices and an increase in revenues from offices open throughout both quarterly periods. Revenues from the 834 offices open throughout both quarterly periods increased by approximately 9.0%. At September 30, 2009, the Company had 966 offices in operation, an increase of 22 offices from March 31, 2009.

Interest and fee income for the quarter ended September 30, 2009 increased by $11.5 million, or 14.3%, over the same period of the prior year. This increase resulted from a $65.4 million increase, or 13.6%, in average net loans receivable over the two corresponding periods.

Insurance commissions and other income increased by approximately $1.0 million, or 8.6%, between the two quarterly periods. Insurance commissions increased by approximately $823,000, or 10.2%, during the most recent quarter when compared to the prior year quarter due to the increase in loans in those states where credit insurance is sold in conjunction with the loan. Other income increased by approximately $175,000, or 4.9%, over the two corresponding quarters primarily due to the interest rate swaps mark to market adjustment.

The provision for loan losses during the three months ended September 30, 2009 increased by $1.8 million, or 7.9%, from the same quarter last year. Charge-offs as a percentage of average loans decreased during the second quarter to 16.2% (annualized) from 17.0% (annualized) in the second quarter of the prior year. Accounts that were 61 days or more past due on a recency basis remained consistent at 3.3% as of September 30, 2009 and 2008. On a contractual basis, accounts 61 days or more past due increased slightly from 4.5% at September 30, 2008 to 4.6% at September 30, 2009. Management continues to closely monitor the loan portfolio credit risk during the current economic environment. The Company has been able to control the risk of losses due to our decentralized collection process and the closed-ended, short-term nature of the loans. The combination of these factors enables us to maintain continuing contact with our customers, which allows us to continue to monitor their current situations and the likelihood of successful collections.

In addition, loans over 90 days past due on a recency basis are fully reserved. Generally, loans are charged off at the earlier of when such loans are deemed to be uncollectible or when six months have elapsed since the date of the last full contractual payment. The Company continues to monitor closely the loan portfolio in light of current economic conditions and believes that the loss ratios are within acceptable ranges in light of these conditions.

General and administrative expenses for the quarter ended September 30, 2009 increased by $3.4 million, or 7.0% over the same quarter of fiscal 2009. Overall, general and administrative expenses, when divided by average open offices, decreased by approximately 0.5% when comparing the two periods. The total general and administrative expense as a percent of total revenues was 49.7% for the three months ended September 30, 2009 and was 52.7% for the three months ended September 30, 2008. This decrease is a result of the Company opening fewer offices in the current year compared to prior year.

Interest expense decreased by approximately $275,000 when comparing the two corresponding quarterly periods as a result of a decrease in the average interest rate, and decrease in the average outstanding debt balance.

The Company's effective income tax rate decreased slightly to 38.3% for the quarter ended September 30, 2009 from 38.4% for the prior year quarter.

Comparison of Six Months Ended September 30, 2009 Versus Six Months Ended September 30, 2008

Net income increased to $29.2 million for the six months ended September 30, 2009, or 37.4%, from the six month period ended September 30, 2008. Operating income increased approximately $12.0 million, or 28.6%, and was offset partially by an increase in income taxes.

Total revenues rose to $204.4 million during the six months ended September 30, 2009, a 13.5% increase over the $180.1 million for the corresponding six months of the previous year. This increase was attributable to new offices and an increase in revenues from offices open throughout both quarterly periods. Revenues from the 834 offices open throughout both quarterly periods increased by approximately 9.2%.

Interest and fee income for the six months ended September 30, 2009 increased by $20.2 million, or 12.9%, over the same period of the prior year. This increase resulted from a $62.6 million increase, or 13.4%, in average net loans receivable over the two corresponding periods.

Insurance commissions and other income increased by $4.1 million, or 17.2%, between the two six months period. Insurance commissions increased by $1.6 million, or 10.4%, during the most recent six months when compared to the prior year six months due to the increase in loans in those states where credit insurance is sold in conjunction with the loan. Other income increased by approximately $2.4 million, or 30.5%, over the two corresponding six months primarily due to the repurchase and cancellation of $10 million face value of the convertible notes, which resulted in a $2.4 million pre-tax gain.

The provision for loan losses during the six months ended September 30, 2009 increased by $4.4 million, or 10.7%, from the same six months last year. Net charge-offs as a percentage of average net loans decreased from 15.8% (annualized) during the prior year first six months to 15.1% (annualized) during the most recent six months.

General and administrative expenses for the six months ended September 30, 2009 increased by $7.9 million, or 8.2% over the same six months of fiscal 2009. Overall, general and administrative expenses, when divided by average open offices, decreased by approximately 1.0% when comparing the two periods. The total general and administrative expense as a percent of total revenues was 51.4% for the six months ended September 30, 2009 and 53.9% the six months ended September 30, 2008. This decrease is a result of the Company opening fewer offices in the current year compared to prior year.

Interest expense decreased by approximately $773,000 when comparing the two corresponding six month periods as a result a decrease in the average interest rate and a decrease in the average outstanding debt balance.

The Company's effective income tax rate decreased to 37.8% for the six months ended September 30, 2009 compared to 37.9% for the first six months of the prior year.

Critical Accounting Policies

The Company's accounting and reporting policies are in accordance with U. S. generally accepted accounting principles and conform to general practices within the finance company industry. Certain accounting policies involve significant judgment by the Company's management, including the use of estimates and assumptions which affect the reported amounts of assets, liabilities, revenues, and expenses. As a result, changes in these estimates and assumptions could significantly affect the Company's financial position and results of operations. The Company considers its policies regarding the allowance for loan losses and share-based compensation to be its most critical accounting policies due to the significant degree of management judgment involved.

Allowance for Loan Losses

The Company has developed policies and procedures for assessing the adequacy of the allowance for loan losses that take into consideration various assumptions and estimates with respect to the loan portfolio. The Company's assumptions and estimates may be affected in the future by changes in economic conditions, among other factors. Additional information concerning the allowance for loan losses is discussed under "Management's Discussion and Analysis of Financial Conditions and Results of Operations - Credit Quality" in the Company's report on Form 10-K for the fiscal year ended March 31, 2009.

Share-Based Compensation

The Company measures compensation cost for share-based awards at fair value and recognizes compensation over the service period for awards expected to vest. The fair value of restricted stock is based on the number of shares granted and the quoted price of the Company's common stock at the time of grant, and the fair value of stock options is determined using the Black-Scholes valuation model. The Black-Scholes model requires the input of highly subjective assumptions, including expected volatility, risk-free interest rate and expected life, changes to which can materially affect the fair value estimate. In addition, the estimation of share-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from the Company's current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience. Actual results, and future changes in estimates, may differ substantially from the Company's current estimates.

Income Taxes

Management uses certain assumptions and estimates in determining income taxes payable or refundable, deferred income tax liabilities and assets for events recognized differently in its financial statements and income tax returns, and income tax expense. Determining these amounts requires analysis of certain transactions and interpretation of tax laws and regulations. Management exercises considerable judgment in evaluating the amount and timing of recognition of the resulting income tax liabilities and assets. These judgments and estimates are re-evaluated on a periodic basis as regulatory and business factors change.

No assurance can be given that either the tax returns submitted by management or the income tax reported on the Consolidated Financial Statements will not be adjusted by either adverse rulings by the U.S. Tax Court, changes in the tax code, or assessments made by the Internal Revenue Service ("IRS") or state taxing authorities. The Company is subject to potential adverse adjustments, including but not limited to: an increase in the statutory federal or state income tax rates, the permanent non-deductibility of amounts currently considered deductible either now or in future periods, and the dependency on the generation of future taxable income, including capital gains, in order to ultimately realize deferred income tax assets.

The Company adopted FASB ASC 740 (Prior authoritative literature: FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes") on April 1, 2007. Under FASB ASC 740, the Company includes the current and deferred tax impact of its tax positions in the financial statements when it is more likely than not (likelihood of greater than 50%) that such positions will be sustained by taxing authorities, with full knowledge of relevant information, based on the technical merits of the tax position. While the Company supports its tax positions by unambiguous tax law, prior experience with the taxing authority, and analysis that considers all relevant facts, circumstances and regulations, management must still rely on assumptions and estimates to determine the overall likelihood of success and proper quantification of a given tax position.

Liquidity and Capital Resources

The Company has financed its operations, acquisitions and office expansion through a combination of cash flow from operations and borrowings from its institutional lenders. The Company's primary ongoing cash requirements relate to the funding of new offices and acquisitions, the overall growth of loans outstanding, the repayment of indebtedness and the repurchase of its common stock. As the Company's gross loans receivable increased from $505.8 million at March 31, 2007 to $671.2 million at March 31, 2009, net cash provided by operating activities for fiscal years 2007, 2008 and 2009 was $110.1 million, $136.0 million and $153.9 million, respectively.

The Company believes stock repurchases and debt repurchases to be a viable component of the Company's long-term financial strategy and an excellent use of excess cash when the opportunity arises. As of November 2, 2009, the Company has $15.0 million in aggregate remaining repurchase capacity under all of the Company's outstanding stock repurchase authorizations.

The Company plans to open or acquire at least 30 branches in the United States and 15 branches in Mexico during fiscal 2010. Expenditures by the Company to open and furnish new offices averaged approximately $25,000 per office during fiscal 2009. New offices have also required from $100,000 to $400,000 to fund outstanding loans receivable originated during their first 12 months of operation.

The Company acquired no offices and two loan portfolios from a competitor in two states during the first six months of fiscal 2010. Gross loans receivable purchased in these transactions was approximately $840,000 in the aggregate at the dates of purchase. The Company believes that attractive opportunities to acquire new offices or receivables from its competitors or to acquire offices in communities not currently served by the Company will continue to become available as conditions in local economies and the financial circumstances of owners change.

The Company amended its revolving credit facility effective July 31, 2009. As amended, base revolving facility was increased to $213.3 million, with no seasonal revolving credit commitment, and the expiration date was extended to July 31, 2011. Funds borrowed under the revolving credit facility bear interest, at the Company's option, at either the agent bank's prime rate plus 1.0% per annum or the LIBOR rate plus 3.0% per annum, with a minimum of 4.0% per annum.

At September 30, 2009, the interest rate on borrowings under the revolving credit facility was 4.25%. The Company pays a commitment fee equal to .375% per annum of the daily unused portion of the revolving credit facility. Amounts outstanding under the revolving credit facility may not exceed specified percentages of eligible loans receivable. On September 30, 2009, $145.4 million was outstanding under this facility, and there was $67.9 million of unused borrowing availability under the borrowing base limitations.

The Company's credit agreements contain a number of financial covenants, including minimum net worth and fixed charge coverage requirements. The credit agreements also contain certain other covenants, including covenants that impose limitations on the Company with respect to (i) declaring or paying dividends or making distributions on or acquiring common or preferred stock or warrants or options; (ii) redeeming or purchasing or prepaying principal or interest on subordinated debt; (iii) incurring additional indebtedness; and (iv) entering into a merger, consolidation or sale of substantial assets or subsidiaries. The Company believes that it was in compliance with these agreements as of September 30, 2009, and does not believe that these agreements will materially limit its business and expansion strategy.

The Company's contractual obligations as of September 30, 2009 relating to FASB ASC 740 included unrecognized tax benefits of $5.9 million which are expected to be settled in greater than one year. While the settlement of the obligation is expected to be in excess of one year, the precise timing of the settlement is indeterminable.

The Company believes that cash flow from operations and borrowings under its revolving credit facility or other sources will be adequate to fund the expected cost of opening or acquiring new offices, including funding initial operating losses of new offices and funding loans receivable originated by those offices and the Company's other offices and the scheduled repayment of the other notes payable (for the next 12 months and for the foreseeable future beyond that). Management is not currently aware of any trends, demands, commitments, events or uncertainties related to the Company's operations that it believes will result in, or are reasonably likely to result in, the Company's liquidity increasing or decreasing in any material way. From time to time, the Company has needed and obtained, and expects that it will continue to need on a periodic basis, an increase in the borrowing limits under its revolving credit facility. The Company has successfully obtained such increases in the past and anticipates that it will be able to obtain such increases or secure other sources of financing in the future as the need arises; however, there can be no assurance that this additional funding will be available (or available on reasonable terms) if and when needed. In addition, there can be no assurance as to the cost of the additional funding, if additional funds were requested.

Inflation

The Company does not believe that inflation has a material adverse effect on its financial condition or results of operations. The primary impact of inflation on the operations of the Company is reflected in increased operating costs. While increases in operating costs would adversely affect the Company's operations, the consumer lending laws of two of the eleven states in which the Company currently operates allow indexing of maximum loan amounts to the Consumer Price Index and nine are unregulated regarding the loan size. These provisions will allow the Company to make larger loans at existing interest rates, which could partially offset the effect of inflationary increases in operating costs.

Quarterly Information and Seasonality

The Company's loan volume and corresponding loans receivable follow seasonal trends. The Company's highest loan demand occurs each year from October through December, its third fiscal quarter. Loan demand is generally the lowest and loan repayment is highest from January to March, its fourth fiscal quarter. Loan volume and average balances remain relatively level during the remainder of the year. This seasonal trend causes fluctuations in the Company's cash needs and quarterly operating performance through corresponding fluctuations in interest and fee income and insurance commissions earned, since unearned interest and insurance income are accreted to income on a collection method. Consequently, operating results for the Company's third fiscal quarter are significantly lower than in other quarters and operating results for its fourth fiscal quarter are generally higher than in other quarters.

Recently Adopted Accounting Pronouncements

See Note 2 to our Consolidated Financial Statements.

Forward-Looking Information

This report on Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of Operations," may contain various "forward-looking statements," within the meaning of Section 21E of the Securities Exchange Act of 1934, that are based on management's belief and assumptions, as well as information currently available to management. Statements other than those of historical fact, as well as those identified by the words "anticipate," "estimate," "plan," "expect," "believe," "may," "will," and "should" any variation of the foregoing and similar expressions are forward-looking statements. Although the Company believes that the expectations reflected in any such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Any such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company's actual financial results, performance or financial condition may vary materially from those anticipated, estimated or expected. Among the key factors that could cause the Company's actual financial results, performance or condition to differ from the expectations expressed or implied in such forward-looking statements are the following: actual or proposed changes in applicable laws or regulations that could adversely affect the Company's business of profitability; the continuation or worsening of adverse conditions in the global and domestic credit markets and uncertainties regarding, or the impact of governmental responses to those conditions; changes in interest rates; risks inherent in making loans, including repayment risks and value of collateral, which risks may increase in light of adverse or recessionary economic conditions; the timing and amount of revenues that may be recognized by the Company; changes in current revenue and expense trends (including trends affecting delinquencies and charge-offs); changes in the Company's markets and general changes in the economy (particularly in the markets served by the Company); and other matters discussed in this Report in Part I, Item 1A, "Risk Factors" in the Company's most recent annual report on Form 10-K filed with the Securities and Exchange Commission ("SEC") and the Company's other reports filed with, or furnished to, the SEC from time to time. The Company does not undertake any obligation to update any forward-looking statements it makes.