As filed with the Securities and Exchange Commission on June 2, 2015

Registration No. 333-203468

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

FLAGSHIP CREDIT CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware

6141

61-1758288

(State or Other Jurisdiction of
Incorporation or Organization)

(Primary Standard Industrial
Classification Code Number)

(I.R.S. Employer

Identification Number)

Flagship Credit Corporation

3 Christy Drive, Suite 201

Chadds Ford, PA 19317

1-800-430-9063

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Michael Ritter

Chief Executive Officer and President

Flagship Credit Corporation

3 Christy Drive, Suite 201

Chadds Ford, PA 19317

1-800-430-9063

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

Copies to:

Richard D. Truesdell, Jr., Esq.

John B. Meade, Esq.

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York 10017

(212) 450-4000

David J. Goldschmidt, Esq.

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036

(212) 735-3000

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

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

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

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

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

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

CALCULATION OF REGISTRATION FEE



Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee(3)
Class A Common Stock, $.001 par value per share	$50,000,000	$5,810

(1)	Includes shares which may be sold pursuant to the underwriters’ option to purchase additional shares.

(2)	Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457 under the Securities Act of 1933.

(3)	Previously paid.

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

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

SUBJECT TO COMPLETION, DATED JUNE 2, 2015

PRELIMINARY PROSPECTUS

LOGO

Shares

Class A Common Stock

$ per share

We are offering shares of our Class A common stock. The selling stockholders identified in this prospectus are offering an additional shares. We will not receive any proceeds from the sale of Class A common stock by the selling stockholders.

This is our initial public offering, and no public market exists for our Class A common stock. We anticipate that the initial public offering price will be between $ and $ per share.

We have two classes of authorized common stock: the Class A common stock offered hereby and Class B common stock, each of which has one vote per share. Following this offering, certain investment funds constituting part of the Perella Weinberg Partners Asset Based Value Strategy will hold substantially all of our issued and outstanding Class B common stock and will control more than a majority of the combined voting power of our common stock. As a result of their ownership, they will be able to control any action requiring the general approval of our stockholders, including the election of our board of directors, the adoption of amendments to our amended and restated certificate of incorporation and amended and restated bylaws and the approval of any merger or sale of substantially all of our assets. We are a “controlled company” within the meaning of the corporate governance rules of the . See “Organizational Structure” and “Management—Controlled Company Exception.”

We intend to apply to have our Class A common stock listed on the under the symbol “ .”

Investing in our Class A common stock involves risks. See “Risk Factors” beginning on page 16.

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


	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions	$	$
Proceeds to us before expenses(1)	$	$
Proceeds to the selling stockholders before expenses	$	$

(1)	See “Underwriting” for additional compensation to be paid to the underwriters.

The selling stockholders have granted the underwriters the option to purchase up to an additional shares of Class A common stock.

The underwriters expect to deliver the shares to purchasers on or about , 2015 through the book-entry facilities of The Depository Trust Company.

, 2015

TABLE OF CONTENTS


	Page
Prospectus Summary		1
Risk Factors		16
Special Note Regarding Forward-Looking Statements		49
Organizational Structure		50
Use of Proceeds		58
Dividend Policy		58
Capitalization		59
Dilution		60
Unaudited Pro Forma Financial Information		61
Selected Historical Financial Data		66
Management’s Discussion and Analysis of Financial Condition and Results of Operations		68
Business		89


	Page
Management		105
Compensation Discussion and Analysis		109
Certain Relationships and Related Party Transactions		120
Principal and Selling Stockholders		127
Description of Capital Stock		130
U.S. Federal Tax Considerations for Non-U.S. Holders of Class A Common Stock		138
Shares Eligible for Future Sale		141
Underwriting		143
Legal Matters		150
Experts		150
Where You Can Find More Information		150
Index to Consolidated Financial Statements		F-1

In this prospectus, “Flagship,” the “company,” “we,” “us” and “our” refer (i) prior to the consummation of the Reorganization Transactions described under “Organizational Structure—Reorganization Transactions,” to FC HoldCo LLC (“FC HoldCo”) and its consolidated subsidiaries and (ii) after the Reorganization Transactions described under “Organizational Structure—Reorganization Transactions,” to Flagship Credit Corporation and its consolidated subsidiaries, including FC HoldCo. We also refer to Flagship Credit Corporation as the “Issuer.” We refer to the investment funds constituting part of the Perella Weinberg Partners Asset Based Value Strategy as the “ABV Funds.” The ABV Funds are managed by Perella Weinberg Partners Capital Management LP, an affiliate of Perella Weinberg Partners Group LP (together with its affiliates and designees, including the ABV Funds, “PWP”).

Throughout this prospectus we also refer to the term “FICO^® score,” which means a credit score developed by Fair Isaac & Co. A FICO^® score is widely used as a means of evaluating the likelihood that credit users will pay their obligations. The range of FICO^® scores is 300-850, with a higher FICO^® score generally indicating a greater likelihood of repayment.

We, the selling stockholders and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We, the selling stockholders and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may provide you. We and the selling stockholders are offering to sell, and seeking offers to buy, shares of Class A common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the Class A common stock.

This prospectus includes industry and market data that we obtained from periodic industry publications, third-party studies and surveys, filings of public companies in our industry and internal company surveys. These sources include government and industry sources. Industry publications and surveys generally state that the information contained therein has been obtained from sources believed to be reliable. Although we believe the industry and market data to be reliable as of the date of this prospectus, this information could prove to be inaccurate. Industry and market data could be wrong because of the method by which sources obtained their data and because information cannot always be verified with complete certainty due to the limits on the availability

and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. In addition, we do not know all of the assumptions regarding general economic conditions or growth that were used in preparing the forecasts from the sources relied upon or cited herein.

Certain of the states in which we are licensed to provide consumer finance services have laws or regulations which require regulatory notice or approval for the acquisition of “control” of regulated entities. Under some state laws or regulations applicable to licensing, there exists a presumption of “control” when an acquiring party acquires as little as 10% of the voting securities of a regulated entity or of a company which itself controls (directly or indirectly) a regulated entity. Therefore, in connection with any person acquiring 10% or more of our combined common stock, the prior notification to or approval of some state licensing regulators, or a determination from such regulators that “control” has not been acquired, may be required.

Until , 2015, all dealers that buy, sell or trade our Class A common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that you should consider before deciding to invest in our Class A common stock. You should read this entire prospectus carefully, including the “Risk Factors” section, the consolidated financial statements and the notes to those statements.

Our Company

Flagship is an independent, growth-oriented automotive financing and servicing company. We provide financing to borrowers that do not typically have access to prime credit lending terms for the purchase of affordable, late-model vehicles and the refinancing of existing automotive financings. We have a full-service platform for the origination, underwriting and servicing of automotive finance receivables with robust enterprise-wide risk management and compliance systems and processes. The majority of our finance receivables are retail installment contracts originated through our growing base of dealer customers in our Indirect channel. We also originate automotive loans directly to borrowers through CarFinance.com, our Direct channel. Our strategy is to consistently grow our finance receivables while prudently managing our portfolio risk.

In 2014, we originated $1.3 billion in finance receivables to more than 64,600 accounts. These originations represented a 40% increase from 2013. 64% of our total originations in 2014 were used by borrowers to finance the purchase of used vehicles, 12% were used to refinance existing automotive financings of used vehicles, and 24% were used to finance the purchase of new vehicles. In 2014, we achieved a 13.5% yield on earning assets, earned net interest income of $163.0 million and net income of $22.6 million.

For the three months ended March 31, 2015, we originated $365.9 million in finance receivables to more than 19,000 accounts. These originations represented a 23% increase from the same period in 2014. 69% of our total originations in the three months ended March 31, 2015 were used by borrowers to finance the purchase of used vehicles, 10% were used to refinance existing automotive financings of used vehicles, and 21% were used to finance the purchase of new vehicles. As of March 31, 2015, we managed approximately $2.1 billion of gross finance receivables, of which 99.4% are originated finance receivables, with a weighted average FICO^® score of 597 based on FICO^® scores at origination. For the three months ended March 31, 2015, we achieved an annualized 13.1% yield on earning assets, earned net interest income of $49.1 million and net income of $5.8 million.

As of March 31, 2015, we had 619 employees across our Chadds Ford, Pennsylvania, Irving, Texas, Irvine, California, Phoenix, Arizona and Indianapolis, Indiana offices.

Our Industry

The automotive lending market is among the largest consumer finance markets in the U.S. and continues to grow as more consumers choose to finance the purchase of new and used vehicles. Total outstanding automotive loan balances were approximately $905 billion according to Experian Information Solutions, Inc. (“Experian”) as of March 31, 2015. In the fourth quarter of 2014, approximately 84% of new and 55% of used vehicle purchases (including leased vehicles) were financed, compared to 81% and 51% in the fourth quarter of 2010. In the fourth quarter of 2014, approximately 63% of all vehicles financed in the U.S. were used vehicles. Borrowers typically considered to be below prime by credit evaluation services purchase a greater portion of used vehicles relative to borrowers considered to be prime. According to Experian, as of December 31, 2014, the percentage of borrowers that were considered to be below prime was 39% of the total automotive loans outstanding.

reached a Seasonally Adjusted Annual Rate (“SAAR”) of 16.5 million units, having increased at a 7.9% compound annual growth rate (“CAGR”) since March 2010, according to the U.S. Bureau of Economic Analysis. Moreover, according to the Federal Reserve Board and Federal Open Market Committee economic projections, as of March 18, 2015, the U.S. economy is expected to grow at an annual rate of 2.5% in 2015 and 2016. In addition to an attractive macroeconomic environment, the aging of vehicles in the U.S. is further driving light vehicle sales growth. According to the Bureau of Transportation Statistics, the average U.S. vehicle age has increased 36% since 1995 to 11.4 years old as of January 1, 2014, setting the stage for an upcoming replacement cycle as consumers make vehicle purchases that were deferred during the recent recession.

The U.S. automotive lending market is fragmented, especially for lenders to below prime borrowers. Based on Experian Automotive data, no single lender had greater than a 6% share of the below prime automotive lending market as measured by unit count during the fourth quarter of 2014. Similarly, among used vehicle lenders that provide financing to borrowers with a VantageScore^® of 501 to 660, the five largest market participants had a collective market share (based on the number of vehicles financed) of only 24% in the fourth quarter of 2014. VantageScore^® is a credit score developed by the three major credit bureaus with a range of 300-850.

Our Typical Borrower

Our typical borrower does not have access to credit on prime lending terms, but has stable income, limited indebtedness and a FICO^® score that is between 525 and 675. Our borrowers often have a blemished credit history but are able to demonstrate an ability to satisfy their obligations under a retail installment contract or loan that is consistent with our established underwriting guidelines. We refer to our typical borrowers as non-prime, although some third-party credit evaluation services refer to our typical borrowers as a mix of non-prime and sub-prime. We believe our underwriting approach enables us to offer financing on terms that are fair and affordable to our borrowers relative to alternatives in the market and are attractive to our dealer customers.

Our Indirect Channel

Our Indirect channel currently uses the Flagship and CarFinance brands. We have well-established relationships with our nationwide dealer customer base from whom we originate retail installment contracts that meet our underwriting criteria. When selecting dealer customers, we focus on manufacturer-franchised dealers that sell new and used vehicles and independent dealers that meet our standards. We use the term “active dealers” to refer to dealer customers who have completed our dealer enrollment process and are capable of submitting applications. We use the term “funding dealers” to refer to dealer customers who have funded a retail installment contract with us in the past 12 months. As of March 31, 2015, our dealer customer base consisted of more than 7,700 active dealer customers in 43 states of which approximately 5,500 are funding dealer relationships. We are continuing to grow our nationwide dealer customer base through our dealer roll-out strategy and increasing our penetration rate with our existing dealer customers.

We are positioned with our dealer customers as one of the few independent lenders able to tailor financing terms to meet a borrower’s specific ability to pay, helping dealer customers complete certain sales transactions. We offer a relationship-based model for working with dealer customers where our area sales managers, credit analysts and funding analysts work together to service each dealer. We believe this team approach helps build relationships with our dealer customers and enables us to be more flexible in offering financing suitable to our borrowers and dealer customers.

March 31, 2015, we originated approximately $318 million of retail installment contracts from our dealer customers, 81% of which were originated from manufacturer-franchised dealer customers and approximately 19% of which were originated from our qualified independent dealer customers. As of March 31, 2015 and December 31, 2014, the weighted average APR on our Indirect finance receivables portfolio was 15.6% and 15.6% on a gross outstanding balance of $1.8 billion and $1.6 billion, respectively.

Our Direct Channel

Our Direct channel, CarFinance.com, offers automotive loans directly to non-prime borrowers that meet our underwriting criteria to refinance existing automotive financings and to finance the purchase of new or used vehicles. We source applications both organically, which includes our web portal, direct mail campaigns and paid web search placements, and through third-parties, such as lead generation providers and “pass through” relationships with other financial institutions.

While to date CarFinance.com originations have predominantly been used by borrowers to refinance existing automotive financings, we believe CarFinance.com is an attractive long-term growth opportunity for us to capitalize on changing consumer behavior in the automotive market. We believe there is an emerging group of consumers who prefer to use the internet, including via mobile devices, to research and arrange for vehicle purchases prior to visiting a dealer. As consumers continue to use the internet, including via mobile devices, to complete more aspects of the vehicle purchasing process, we believe CarFinance.com will increasingly be viewed as a value-added lead generation service for our dealer customers.

In 2014, we originated approximately $194 million of automotive loans through our Direct channel, of which 79% were used to refinance existing automotive loans and 21% of which were used to purchase new and used vehicles. For the three months ended March 31, 2015, we originated approximately $48 million of automotive loans through our Direct channel, of which 79% were used to refinance existing automotive loans and 21% of which were used to purchase new and used vehicles. As of March 31, 2015 and December 31, 2014, our weighted average APR on our Direct finance receivables portfolio was 12.8% and 12.9% on a gross outstanding balance of $285 million and $264 million, respectively.

Our Affinity Program

Within our Indirect and Direct channels, we can generate origination volume through affinity programs. Affinity programs enable us to gain access to incremental borrowers through their affiliation with certain professions, employers and organizations. For example, we have a relationship with Dealers’ Financial Services, LLC (“DFS”) and its Military Installment Lending and Education Service program (“MILES”), a third-party affinity network focused on providing non-prime active duty military personnel with information and education about automotive financing. We continue to seek similar affinity relationships that provide access to borrowers that meet our underwriting criteria.

Our Underwriting Approach

When evaluating an application, we rely on a highly disciplined credit and underwriting approach that employs a hybrid of advanced analytics, proprietary scorecards, workflow systems and review by trained and experienced credit analysts. Applications sourced through our Indirect and Direct channels that meet our minimum underwriting criteria are scored using one of our proprietary statistical scorecards and reviewed by a credit analyst. Our scorecards augment commonly applied credit factors, such as FICO^® scores, with additional credit characteristics and the specifics of each finance receivable structure. Once scored, each application is reviewed by a credit analyst. The credit analyst determines if the financing terms are consistent with our underwriting guidelines based on the applicant’s credit history, debt level, and capacity to repay borrowings as well as an analysis of the loan structure and collateral.

Following underwriting, all accepted approval offers undergo a verification process prior to funding. Our funding analysts review documentation received directly from borrowers and from dealer customers on behalf of borrowers to assess the accuracy and completeness of all information we require. Through our stringent funding verification process, we seek to verify, among other items, employment, income and insurance information and typically conduct a telephone interview. This process helps improve our credit performance and enhances our compliance program by helping to ensure that our borrowers understand the terms of their retail installment contract or loan.

Our History

Our management team has significant experience in the non-prime automotive financing sector over multiple economic cycles. The Flagship brand was initially created in 1998 when our Chief Executive Officer and President, Michael Ritter, merged Franklin Acceptance Corporation and ProCredit, Inc. Under Mr. Ritter’s leadership, the finance receivables portfolio grew to $841 million prior to the sale of the company to Wells Fargo Financial, Inc. in 2000 to form its national indirect vehicle lending operations. The origins of our current business date back to 2005 when the former Flagship Credit Corporation (“Former FCC”) was founded by Michael Ritter. In August 2010, the ABV Funds formed Flagship Credit Acceptance LLC (“FCA”) and acquired the assets of Former FCC. Our management team transitioned to FCA and continued to operate the business.

Similarly, CarFinance Capital LLC (“CFC”) was founded and led by a team of automotive financing industry veterans that successfully managed automotive financing companies over multiple economic cycles. Members of the management team led Triad Financial Corporation, helping it grow to more than $4 billion of finance receivables. Members of the management team also founded RoadLoans.com, one of the earliest web-based, direct lending origination platforms. In 2011, the ABV Funds made an equity investment in CFC.

On January 1, 2015, we completed the merger of the parent entities of FCA and CFC within a single corporate entity, which is our ongoing company.

Our Competitive Strengths

Well positioned in an attractive, high growth market.

Full-service, scalable automotive financing platform.

We have developed a full-service automotive financing platform with origination, underwriting, risk management and servicing capabilities to support our growth strategy. We employ centralized underwriting and servicing to ensure we continue our disciplined, consistent approach to underwriting, risk management, servicing and compliance. In addition, we have made significant investments in staffing, processes and state-of-the-art systems.

Flexible business model tailored to the needs of our dealer customers and borrowers.

us to offer a competitive automotive financing product with superior customer service. While our larger competitors, primarily banks, tend to compete on cost of funds and speed of execution, we focus on better understanding the specific credit profile and particular financial circumstances of our borrowers.

Experienced management team.

Access to robust financing markets to fund growth.

Comprehensive risk management and compliance systems and processes.

We have comprehensive underwriting, servicing, risk management and compliance systems and processes. We developed our underwriting criteria based on an extensive, proprietary database of historical data and expansive third-party inputs. We continuously review our underwriting criteria based on data analytics and third-party data sources to respond to changing market conditions. Our rigorous approach to credit underwriting is evidenced by our consistent risk-adjusted returns on our finance receivables. Our senior management team has significant experience in managing enterprise-wide risk and compliance in the automotive financing market and has built a team of experienced professionals to design, implement and continuously improve our systems and processes. We also utilize industry-leading regulatory consulting and advisory firms to assess and review internal practices and controls. As we execute our growth strategy, we will continue to adapt to evolving legal, compliance and regulatory requirements.

Our Business and Growth Strategy

Continue national dealer roll-out.

expanding into new markets through our team of area sales managers. We have a methodical and targeted growth plan that carefully seeks to integrate each new sales territory with our team of trained credit analysts and funding analysts, as well as our supporting infrastructure. We believe that our systems, staffing and platform capabilities are sufficient to support our growth objectives.

Increase dealer penetration.

We continually work to further develop our relationships within our existing dealer base of more than 7,700 active dealer customers. As our area sales managers, credit analysts and funding analysts build stronger working relationships with our dealer customers, we expect that they will better understand the dealer customer’s individual needs. We believe this will drive our penetration rates with dealer customers, helping to further drive our growth. Our area sales managers are incentivized to increase their dealer penetration rate on a monthly basis. As our dealer penetration rates increase, we believe we have the potential to realize significant cost and operating synergies in our origination and marketing functions, helping to drive our profitability.

Expand our CarFinance.com platform.

Our Direct channel, CarFinance.com, accounted for 15% of our total originations in 2014. We believe we can continue to grow our direct originations through third-party application sources such as lead generation providers and pass-through applications from other financial institutions. However, we believe the larger, and more strategic, potential growth opportunity for our Direct channel is to increase traffic to CarFinance.com, our organic web portal. CarFinance.com positions us to benefit from changing consumer behavior in the automotive market. We believe there is an emerging group of consumers who prefer to use the internet, including via mobile devices, to research and arrange for vehicle purchases. Our significant investment in CarFinance.com since its inception in 2011 will help us capitalize on this changing consumer purchase behavior and the evolution of the vehicle buying experience. In this environment, we believe CarFinance.com will increasingly be viewed as a value-added lead generation service by our dealer customers, thereby expanding our relationship with our dealer customers beyond traditional financing and offering us the potential for further growth.

Increase our affinity relationships.

In our Indirect channel, we have had success working with DFS and its MILES program to gain access to an incremental group of non-prime borrowers that meet our underwriting criteria. We continue to seek new relationships with other affinity programs as they offer efficient lead channels outside of our traditional Indirect and Direct channels.

Risk Factors

Before you invest in our stock, you should carefully consider all the information in this prospectus, including matters set forth under the heading “Risk Factors.”

Summary of Offering Structure

As used in this prospectus, “existing owners” refers to the owners of FC HoldCo, collectively, prior to the Reorganization Transactions (as defined in “Organizational Structure—Reorganization Transactions”), and “Continuing LLC Owners” refers to those existing owners who will retain their equity ownership in FC HoldCo in the form of LLC Units (as defined below) after the Reorganization Transactions. The “Issuer” refers to Flagship Credit Corporation, the issuer of the Class A and Class B common stock.

•

This offering is being conducted through what is commonly referred to as an “Up-C” structure, which is often used by partnerships and limited liability companies when they decide to undertake an initial public offering.

•

The Up-C structure allows existing owners of a partnership or limited liability company to continue to realize the tax benefits associated with their ownership in an entity that is treated as a partnership for income tax purposes following an initial public offering, and provides tax benefits and associated cash flow to both the issuer corporation in the initial public offering and the existing owners of the partnership or limited liability company.

•

After the completion of this offering, we will operate and control the business affairs of FC HoldCo as its sole managing member, conduct our business through FC HoldCo and its subsidiaries and include FC HoldCo in our consolidated financial statements.

•

Investors in this offering will purchase shares of our Class A common stock.

•

The Issuer intends to contribute all of the proceeds from the sale of its Class A common stock in this offering to its wholly owned subsidiary, Flagship Credit Holdings Inc. (“Flagship Holdings”), and to cause Flagship Holdings to use (i) assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), $ of such proceeds to retire the Flagship Holdings Notes (as defined in “Organizational Structure—Reorganization Transactions—Investors’ Reorganization Transactions”) and (ii) the remainder of such proceeds to purchase paired Common Interests and Preferred Interests in FC HoldCo (each such pair, consisting of one Common Interest and one Preferred Interest, an “LLC Unit”) at a purchase price per LLC Unit equal to the net purchase price per share for Class A shares sold in this offering. Immediately following the purchase of LLC Units by Flagship Holdings using the remainder of such proceeds, the number of LLC Units held by Flagship Holdings will be equal to the number of outstanding shares of our Class A common stock at such time.

•

Continuing LLC Owners will continue to hold non-voting LLC Units and will be issued a number of shares of our Class B common stock equal to the number of LLC Units held by them upon completion of this offering. The Class B common stock will not be publicly traded and will not entitle its holders to receive dividends or distributions upon a liquidation, dissolution or winding up of the Issuer.

•

The Class A and Class B common stock will vote together as a single class on all matters submitted to a vote of stockholders, except as otherwise required by applicable law.

•

Continuing LLC Owners will have the right to exchange their LLC Units, together with the corresponding shares of Class B common stock (which will be cancelled in connection with the exchange), for shares of our Class A common stock on a one-for-one basis or, at our election, a cash payment equal to a volume weighted average market price of one share of Class A common stock for each LLC Unit exchanged, pursuant to the terms of an exchange agreement to be entered into in connection with this offering (the “Exchange Agreement”).

•

Assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), as a result of these transactions and this offering, upon completion of this offering:

•

Our Class A common stock will be held as follows:

•

shares (or shares if the underwriters exercise in full their option to purchase additional shares of Class A common stock) by investors in this offering; and

•

shares by certain of the ABV Funds (the “Reorganization Parties”) received pursuant to the Investors’ Reorganization Transactions described under “Organizational Structure—Reorganization Transactions—Investors’ Reorganization Transactions”

•

Our Class B common stock (together with the same number of LLC Units) will be held as follows:

•

shares and LLC Units by the Continuing LLC Owners.

•

The combined voting power in the Issuer will be as follows:

•

% for investors in this offering (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock);

•

% for the Reorganization Parties (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock); and

•

% for the Continuing LLC Owners (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

•

Under a TRA to be entered into in connection with this offering, the Issuer and Flagship Holdings generally will retain approximately 15% of certain tax savings that are available to it under the tax rules applicable to the Up-C structure, and generally will be required to pay approximately 85% of such tax savings to the existing owners.

•

The ability of the Issuer and Flagship Holdings to make payments under the TRA and to pay their own tax liabilities to taxing authorities will require that they receive distributions from FC HoldCo. These tax distributions will include pro rata distributions to the Issuer, Flagship Holdings and the other holders of LLC Units, including the ABV Funds, which generally will be calculated by reference to the taxable income of FC HoldCo allocated to the holders. Generally, these tax distributions will be computed based on an assumed tax rate equal to . FC HoldCo will make pro rata tax distributions in accordance with LLC Unit ownership.

See “Risk Factors—Risks Relating to Our Organization and Structure,” “Organizational Structure” and “Certain Relationships and Related Party Transactions.”

The diagram below depicts our organizational structure immediately following this offering assuming no exercise by the underwriters of their option to purchase additional shares of Class A common stock.

LOGO

Corporate Information

We were incorporated in the State of Delaware on March 16, 2015. We are a newly formed corporation, have no material assets and have not engaged in any business or other activities except in connection with our incorporation and with the Reorganization Transactions described under “Organizational Structure.” Our principal executive offices are located at 3 Christy Drive, Suite 201, Chadds Ford, PA 19317, and our telephone number is 1-800-430-9063.

THE OFFERING

Class A Common stock offered by us

shares.

Class A Common stock offered by the selling stockholders

shares.

Class A Common stock to be outstanding after this offering

Assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), shares ( shares if all then outstanding exchangeable LLC Units were exchanged for newly-issued shares of Class A common stock on a one-for-one basis).

Class B Common stock to be outstanding after this offering

Assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), shares.

Voting power held by holders of Class A common stock after giving effect to this offering

Assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), %.

Voting power held by holders of Class B common stock after giving effect to this offering

Assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), %.

Option to purchase additional shares of Class A common stock

The selling stockholders have granted the underwriters an option to purchase up to an additional shares of Class A common stock.

Use of proceeds

We estimate that the gross proceeds to us from the sale of shares of our Class A common stock by us in this offering will be approximately $ million, assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus). Each $1 increase (decrease) in the public offering price per share would increase (decrease) our gross proceeds by $ million.

We intend to contribute all of the proceeds we receive in this offering to Flagship Holdings, and to cause Flagship Holdings to use (i) assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), $ million of the proceeds contributed to it to retire the Flagship Holdings Notes and (ii) the remaining proceeds to purchase LLC Units from FC HoldCo, as described under “Organizational Structure—Reorganization Transactions.” We intend to cause FC HoldCo to pay the expenses of this offering, including

the estimated underwriting discounts and commissions. See “Use of Proceeds.”

We will not receive any proceeds from the sale of shares of Class A common stock by the selling stockholders.

Voting rights

Following the Reorganization Transactions, unit holders of FC HoldCo (other than the Issuer and Flagship Holdings) will hold one share of Class B common stock for each LLC Unit held by them. The shares of Class B common stock have no economic rights.

Each share of Class A common stock and Class B common stock entitles its holder to one vote on all matters to be voted on by stockholders generally, except that no stockholder or group (other than the ABV Funds or their affiliates) which acquires more than 9.99% of our capital stock shall have the right to vote more than 9.99% of our capital stock entitled to vote on matters presented to our stockholders for their vote or approval without the required notice or consent for the purchase of such shares having been provided or obtained as required by any federal, state or local consumer or other law, regulation or regulatory authority applicable to or having jurisdiction over us or any of our subsidiaries.

Holders of our Class A common stock and Class B common stock will vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law. See “Description of Capital Stock.”

When LLC Units and a corresponding number of shares of Class B common stock are exchanged for Class A common stock or cash by a Continuing LLC Owner pursuant to the Exchange Agreement described below, such shares of Class B common stock will be cancelled.

Dividend policy

We currently anticipate that we will retain all available funds for use in the operation and expansion of our business, and do not anticipate paying any cash dividends on our Class A common stock in the foreseeable future. See “Dividend Policy.”

Exchange agreement

Prior to this offering, we will enter into the Exchange Agreement with Continuing LLC Owners so that they may, subject to the terms of the Exchange Agreement, exchange their LLC Units, together with the corresponding shares of Class B common stock, for shares of our Class A common stock or, at our election, cash payment equal to a volume weighted average market price of one share of Class A common stock for each LLC Unit exchanged, subject to customary conversion rate adjustments for stock splits, stock dividends, reclassifications and other similar transactions. When a LLC Unit, together with a share of our Class B common stock, is exchanged for a share of our Class A common stock or cash, the corresponding share of our Class B common stock will be cancelled.

Tax receivable agreement

Future exchanges of LLC Units, together with the corresponding shares of Class B common stock, for shares of our Class A common stock or cash are expected to produce favorable tax attributes for us, as are certain transfers of interests in FC HoldCo to occur prior to this offering pursuant to the Investors’ Reorganization Transactions described under “Organizational Structure—Reorganization Transactions—Investors’ Reorganization Transactions.” These tax attributes would not be available to us in the absence of those transactions. Upon the closing of this offering, we will be a party to the TRA. Under this agreement, we generally expect to retain the benefit of 15% of the applicable tax savings after our payment obligations below are taken into account.

Under the TRA, we generally will be required to pay to Continuing LLC Owners and certain of the ABV Funds 85% of the applicable savings, if any, in U.S. federal, state, and local income tax that we actually realize (or in some circumstances are deemed to realize) as a result of:

•

certain tax attributes created as a result of transfers of interests in FC HoldCo to Flagship Holdings in the Reorganization Transactions;

•

certain tax attributes created in the future as a result of exchanges by Continuing LLC Owners of their LLC Units, together with the corresponding shares of Class B common stock, for shares of our Class A common stock;

•

tax benefits related to imputed interest arising from payments under the TRA; and

•

payments under the TRA.

See “Organizational Structure” and “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.”

stock symbol

“ .”

Unless we specifically state otherwise, the information in this prospectus does not take into account:

•

the issuance of up to shares of Class A common stock which the underwriters have the option to purchase from the selling stockholders;

•

shares of Class A common stock reserved for issuance pursuant to equity compensation plans; and

•

the issuance of up to shares of Class A common stock issuable upon exchange of the same number of LLC Units (together with the same number of shares of our Class B common stock) that will be held by certain of our existing owners immediately following this offering, assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus).

SUMMARY FINANCIAL AND OTHER DATA

The following tables present our summary historical and pro forma financial data. The combined consolidated statements of operations data for the years ended December 31, 2014, 2013 and 2012 and combined consolidated balance sheet data as at December 31, 2014 and 2013 are derived from FC HoldCo’s audited combined consolidated financial statements and the notes thereto included elsewhere in this prospectus. The consolidated statements of operations data for the three months ended March 31, 2015 and 2014 and the consolidated balance sheet data as at March 31, 2015 are derived from FC HoldCo’s unaudited consolidated financial statements and the notes thereto included elsewhere in this prospectus. The summary pro forma financial data for the period ended, and as at, March 31, 2015 and December 31, 2014 are derived from the unaudited condensed consolidated pro forma financial statements and the notes thereto included elsewhere in this prospectus. The summary historical and pro forma financial data presented below are not necessarily indicative of the results to be expected for any future period. You should read the following summary consolidated financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated historical and pro forma financial statements and the related notes appearing elsewhere in this prospectus.


	Three Months Ended March 31,				Year Ended December 31,
	2015		2014		2014		2013		2012
					(in thousands)
Statements of Operations Data
Financing and other interest income	$	64,667	$	42,920	$	208,817	$	122,948	$	57,861
Interest expense		15,537		9,034		45,780		27,312		12,696

Net interest income		49,130		33,886		163,037		95,636		45,165
Provision for credit losses		27,989		19,360		88,650		51,189		29,413

Net interest income after provision for credit losses		21,141		14,526		74,387		44,447		15,752
Other income (expense)		1,408		1,157		4,604		3,063		(197	)
Compensation and benefits		9,473		6,685		31,244		19,924		14,089
General and administrative		6,883		5,117		24,053		17,486		11,972
Depreciation and amortization		362		220		1,083		717		414

Net income (loss) before allocation to noncontrolling interest		5,831		3,661		22,611		9,383		(10,920	)
Net loss attributable to noncontrolling interest		—		—		—		—		413

Net income (loss) attributable to FC HoldCo	$	5,831	$	3,661	$	22,611	$	9,383	$	(10,507	)


	As of March 31,			As of December 31,
	Pro Forma As Adjusted(1)(2)	2015		Pro Forma As Adjusted(1)(2)	2014		2013		2012
	(in thousands)
Balance Sheets Data
Finance receivables, net of allowance for credit losses	$	$	2,078,564	$	$	1,890,607	$	1,190,290	$	579,152
Goodwill and intangibles			544			544		544		544
Total assets			2,306,814			2,072,151		1,298,335		634,214
Total borrowings			2,049,830			1,816,924		1,058,399		463,407
Total liabilities			2,066,416			1,832,988		1,068,970		469,641
Total members’ equity			240,398			239,163		229,365		164,573
Allowance for credit losses			79,522			71,174		42,713		24,523

(1)

Pro forma as adjusted consolidated balance sheet data presents consolidated balance sheet data on a pro forma as adjusted basis for Flagship after giving effect to (i) the Reorganization Transactions described under “Organizational Structure,” (ii) the creation of certain tax assets in connection with this offering and the Reorganization Transactions, (iii) the creation of related liabilities in connection with entering into the TRA with certain of our existing owners and (iv) the sale by us of shares of Class A common stock pursuant to this offering and the application of the proceeds from this offering as described in “Use of Proceeds,” based on an assumed initial public offering price of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus.

(2)

A $1.00 increase or decrease in the assumed initial public offering price would increase or decrease, as applicable, cash and cash equivalents, total assets and total equity by $ , assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions. Similarly, an increase or decrease of one million shares of Class A common stock sold in this offering by us would increase or decrease, as applicable, cash and cash equivalents, total assets and total equity by $ , based on an assumed initial public offering price of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions.


	Three Months Ended March 31,						Year Ended December 31,
	2015			2014			2014			2013			2012
							(in thousands, unless otherwise specified)
Other Information:
Charge-offs, net of recoveries	$	19,641		$	11,940		$	60,189		$	32,999		$	9,530
End of period delinquent principal over 60 days(1)		39,173			15,383			42,726			22,653			9,884
Purchases and originations of finance receivables held for investment		365,895			297,193			1,250,444			892,162			517,836
End of period gross finance receivables held for investment		2,091,258			1,386,721			1,902,896			1,198,584			589,186
Average gross finance receivables held for investment		1,997,077			1,292,653			1,550,740			893,885			371,281
Average total assets		2,189,483			1,419,667			1,685,243			966,275			406,003
Average total borrowings		1,933,377			1,170,095			1,437,662			760,903			270,204
Average total members’ equity		239,781			238,710			234,264			196,969			131,026

Ratios:
Yield on earning assets(2)		13.1	%		13.5	%		13.5	%		13.8	%		15.6	%
Cost of borrowings(3)		3.3			3.1			3.2			3.6			4.7
Net interest margin(4)		10.0			10.6			10.5			10.7			12.2
Efficiency ratio(5)		32.3			33.6			32.9			38.0			56.6
Return on average assets(6)		1.1			1.0			1.3			1.0			(2.6	)
Return on average members’ equity(7)		9.7			6.1			9.7			4.8			(8.0	)
Tangible members’ equity to tangible assets(8)		10.4			16.1			11.5			17.6			25.9
Net charge-off ratio(9)		3.9			3.7			3.9			3.7			2.6
Delinquency ratio, end of period(10)		1.9			1.4			2.2			1.9			1.7
Allowance for credit losses to loans(11)		3.8			3.6			3.7			3.6			4.2

(1)	End of period delinquent principal over 60 days excludes those finance receivables in bankruptcy status totaling $20.2 million, $11.3 million and $5.6 million in 2014, 2013 and 2012, respectively, and $23.1 million and $12.0 million at March 31, 2015 and 2014, respectively.

(2)	Yield on earning assets is defined as the ratio of financing and other interest income to average gross finance receivables held for investment.

(3)	Cost of borrowings is defined as the ratio of interest expense to average total borrowings; excludes gains / (losses) on derivative financial instruments.

(4)	Net interest margin is defined as the ratio of net interest income to average gross finance receivables.

(5)	Efficiency ratio is defined as the ratio of operating expenses (excluding depreciation and amortization) to net interest income and other income (expense) (excluding gains / (losses) on derivative financial instruments).

(6)	Return on average assets is defined as the ratio of net income (loss) attributable to FC HoldCo to average total assets.

(7)	Return on average equity is defined as the ratio of net income (loss) attributable to FC HoldCo to average total members’ equity.

(8)

Tangible members’ equity to tangible assets is defined as the ratio of end of period tangible members’ equity to end of period tangible assets. Our management considers, among other things, this non-GAAP (as defined below) financial measure to monitor and set limits on our leverage. We believe that this non-GAAP financial measure provides both management and investors a more complete understanding of the underlying operational results and trends and our marketplace performance. Tangible members’ equity to tangible assets is a non-GAAP measure and should be considered in addition to, but not as a substitute for or superior to, members’ equity to total assets and other measures of financial performance prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). A reconciliation from GAAP to this non-GAAP measure is as follows:


	Three Months Ended March 31,						Year Ended December 31,
							(in thousands, unless otherwise specified)
	2015			2014			2014			2013			2012
Total members’ equity	$	240,398		$	248,054		$	239,163		$	229,365		$	164,573
Deduct: Goodwill and intangibles		(544	)		(544	)		(544	)		(544	)		(544	)

Tangible members’ equity		239,854			247,510			238,619			228,821			164,029

Total assets		2,306,814			1,540,999			2,072,151			1,298,335			634,214
Deduct: Goodwill and intangibles		(544	)		(544	)		(544	)		(544	)		(544	)

Tangible assets		2,306,270			1,540,455			2,071,607			1,297,791			633,670

Total members’ equity to total assets ratio		10.4	%		16.1	%		11.5	%		17.7	%		25.9	%
Tangible members’ equity to tangible assets ratio		10.4	%		16.1	%		11.5	%		17.6	%		25.9	%

(9)	Net charge-off ratio is defined as the ratio of charge-offs, net of recoveries, to average gross finance receivables held for investment.

(10)	Delinquency ratio, end of period is defined as the ratio of end of period delinquent principal over 60 days to end of period gross finance receivables held for investment.

(11)	Allowance for credit losses to loans is defined as the ratio of allowance for credit losses to end of period gross finance receivables held for investment.

RISK FACTORS

You should carefully consider the following risks and all of the other information set forth in this prospectus before deciding to invest in shares of our Class A common stock. If any of the following risks actually occurs, our business, financial condition or results of operations would likely suffer. In such case, the trading price of our Class A common stock could decline due to any of these risks, and you may lose all or part of your investment.

Risks Relating to Our Business

Our consolidated results of operations and financial condition and our borrowers’ ability to make payments on their loans have been, and may in the future be, adversely affected by economic conditions and other factors that we cannot control.

Uncertainty and negative trends in general economic conditions in the U.S. and abroad historically have created a difficult operating environment for our business and other companies in our industry. During periods of economic slowdown such as the recent economic downturn, delinquencies, defaults, repossessions and losses generally increase while proceeds from auction sales decrease. These periods may also be accompanied by increased unemployment rates, decreased consumer demand for automobiles and declining values of automobiles securing outstanding accounts, which weaken collateral coverage and increase the amount of loss in the event of default. Additionally, higher or unstable gasoline prices, unstable real estate values, reset of adjustable rate mortgages to higher interest rates, general availability of consumer credit or other factors that impact consumer confidence or disposable income could increase loss frequency and decrease consumer demand for automobiles as well as weaken collateral values on certain types of automobiles.

Because our focus is on non-prime consumers, the actual rates of delinquencies, defaults, repossessions and losses on our finance receivables could be more dramatically affected by an economic downturn. Non-prime borrowers generally have lower collection rates and higher finance receivable loss rates than prime borrowers. Non-prime borrowers have historically been, and may in the future become, more likely to be affected, or more severely affected, by adverse macroeconomic conditions, particularly unemployment. If our borrowers default, we will bear this risk to the extent of any deficiency between the value of the collateral and the outstanding principal, or the full outstanding principal in certain cases where the collateral does not get repossessed, and accrued but unpaid interest of the finance receivable, which could adversely affect our results from operations. In addition, during an economic slowdown, our servicing costs may increase without a corresponding increase in our financing income. Under certain circumstances, we may also be required to repurchase those finance receivables we have securitized.

If aspects of our business, including the quality of our finance receivables portfolio or our borrowers, are significantly affected by economic changes or any other conditions in the future, we cannot be certain that our policies and procedures for underwriting, processing and servicing finance receivables will adequately adapt to such changes. If we fail to adapt to changing economic conditions or other factors, or if such changes affect our borrowers’ willingness or capacity to repay their loans, it could have a material adverse effect on our business, results of operations and financial condition.

Furthermore, our business is significantly affected by monetary and regulatory policies of the U.S. federal government and its agencies. Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control and could have a material adverse effect on us through interest rate changes, costs of compliance with increased regulation and other factors. See “Business—Regulation.” If we experience an economic downturn or if the U.S. economy is unable to continue or sustain its recovery from the most recent economic downturn or if we become affected by other events beyond our control, we may experience a significant reduction in revenues, earnings and cash flows and difficulties accessing capital, which could have a material adverse effect on our business, results of operations and financial condition.

Our allowance for credit losses may prove to be insufficient to absorb probable losses inherent in our finance receivables portfolio.

We maintain an allowance for credit losses, a reserve established through a provision for credit losses charged to expense, that we believe is appropriate to provide for probable losses inherent in our finance receivables portfolio. Probable losses are estimated based on various factors including expected defaults and rates of severity, taking into account the specific credit characteristics of the portfolio. Additionally, the loss estimates are impacted by our estimate of the value of the underlying collateral, trends in projected used car values and macroeconomic trends, including unemployment rates and energy prices. If customer behavior changes as a result of economic conditions and if we are unable to predict how unemployment rates, the fluctuation of energy prices, and general economic uncertainty may affect our allowance for credit losses, our provision may be inadequate. Our allowance for credit losses is an estimate, and if actual credit losses are materially greater than our allowance for credit losses, it could have a material adverse effect on our business, results of operations and financial condition.

Our risk management processes and procedures may not be effective in mitigating our risks.

We have established processes and procedures intended to identify, measure, monitor and control the types of risk to which we are subject, including, but not limited to, credit risk, market risk, strategic risk, liquidity risk and operational risk. Credit risk is the risk of loss that arises when a borrower fails to meet the terms of a loan. Market risk is the risk of loss due to changes in external market factors such as interest rates and prepayment rates. Strategic risk is the risk from changes in the business environment, improper implementation of decisions or inadequate responsiveness to changes in the business environment. Liquidity risk is the risk that a company’s financial condition or overall safety and soundness are adversely affected by an inability, or perceived inability, to meet funding obligations and support business growth. Operational risk is the risk of loss arising from inadequate or failed processes, people or systems, external events (for example, natural disasters) or compliance, reputational or legal matters and includes those risks as they relate directly to our company as well as to third-parties with whom we contract or otherwise do business.

We seek to monitor and control our risk exposure through a framework that includes our risk appetite, enterprise risk assessment process, risk policies, procedures and controls, reporting requirements, credit risk culture and governance structure. Our framework, however, may not always effectively identify and control our risks. In addition, there may also be risks that exist, or that develop in the future, that we have not appropriately anticipated, identified or mitigated, including when processes are changed or new products and services are introduced. If our risk management framework does not effectively identify and control our risks, both those we are aware of and those we do not anticipate, we could suffer unexpected losses or be adversely affected, and that could have a material adverse effect on our business, results of operations and financial condition.

Our business depends on our ability to successfully manage our credit risk, and failing to do so may result in higher charge-off rates.

Our success depends on our ability to manage our credit risk. The models and approaches we use to manage our credit risk may not accurately predict future charge-offs for various reasons discussed in “—Our risk management processes and procedures may not be effective in mitigating our risks.”

Our ability to manage credit risk and avoid higher charge-off rates also may be adversely affected by economic conditions that may be difficult to predict, such as the recent economic downturn. See “—Our consolidated results of operations and financial condition and our borrowers’ ability to make payments on their loans have been, and may in the future be, adversely affected by economic conditions and other factors that we cannot control.” Delinquency and charge off rates increased in 2013 relative to 2012 and in 2014 relative to 2013 due to seasoning of our finance receivables portfolio. Both may increase in the future as our portfolio further matures and are likely to increase materially if economic conditions deteriorate. There can be no assurance that

our credit underwriting and risk management strategies will enable us to avoid higher charge-off rates or that our allowance for credit losses will be sufficient to cover actual losses.

A customer’s ability to repay us can be negatively impacted by increases in his or her payment obligations to other lenders under mortgage, credit card and other loans. In addition, a customer’s ability to repay us can be negatively impacted by a restricted availability of credit to consumers generally, including reduced and closed lines of credit. Customers with insufficient cash flow to fund daily living expenses and lack of access to other sources of credit may be more likely to default on their payment obligations to us, resulting in higher losses in our portfolio. Our collection operations may be ineffective at securing more of our customers’ diminished cash flow than other competing creditors.

We offer payment extensions to borrowers on our retail installment contracts and loans on a limited basis. We believe that payment extensions granted according to our policies and guidelines are an effective portfolio management technique and result in higher ultimate cash collections from the portfolio. Changes in extension levels may have an impact on the ultimate amount of consumer finance receivables charged off by us. However, the timing of a charge-off may be affected if the previously extended account ultimately results in a charge-off. To the extent that extensions impact the ultimate timing of when an account is charged off, historical charge-off ratios and loss confirmation periods used in the determination of the adequacy of our allowance for credit losses are also impacted. For additional information on our extensions and modifications, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Extensions and Modifications.”

Our ability to manage credit risk also may be adversely affected by legal or regulatory changes (such as bankruptcy laws and collection regulations), competitors’ actions and consumer behavior, as well as inadequate collection operations staffing, inadequate remarketing capabilities, and techniques, models and performance of vendors such as collection agencies. Our failure to adequately manage credit risk could have a material adverse effect on our business, results of operations and financial condition.

Our results of operation and financial condition depend on the credit performance of our finance receivables.

Substantially all of our finance receivables are below prime receivables with obligors who do not qualify for conventional automotive financing products as a result of, among other things, a lack of or adverse credit history, low income levels and/or the inability to provide adequate down payments. Our typical borrower does not have access to credit on prime lending terms, has stable income, limited indebtedness and a FICO^® score between 525 and 675. While underwriting guidelines were designed to establish that, notwithstanding such factors, the obligor would be a reasonable credit risk, the receivables nonetheless will experience higher default rates than a portfolio of obligations of prime obligors. In the event of such a default on an automotive finance receivable, generally the most practical alternative is repossession of the financed vehicle, although the collateral value of the vehicle usually does not cover the outstanding account balance and costs of recovery.

Repossessions and consequent sales that do not yield sufficient proceeds to repay the receivables in full typically result in losses on those receivables, which could have a material adverse effect on our business, results of operations and financial condition. In certain circumstances, we may not be able to locate the collateral or we may elect not to repossess in which case the entire outstanding account balance will be charged off, generally resulting in a higher loss amount compared to the defaulted finance receivables that we are able to repossess. During the year ended December 31, 2014, we realized gross losses of $111.5 million in finance receivables, of which $87.3 million, or 78%, were repossessed, while $24.2 million, or 22%, were full balance charge-offs, which resulted in an overall unit default rate of 7.6%. On average, we experienced a net recovery rate of 48.8% on repossessed finance receivables sold at auction during the year ended December 31, 2014, which, when combined with $8.7 million of subsequent recoveries, resulted in an annualized net loss rate of 3.88%.

We depend on the accuracy and completeness of information about borrowers, and any misrepresented information could adversely affect our business, results of operations and financial condition.

In deciding whether to approve the acquisition of retail installment contracts or creation of loans or to enter into other transactions with borrowers, we may rely on information furnished to us by or on behalf of borrowers, including financial information. We also may rely on representations by and on behalf of borrowers as to the accuracy and completeness of that information. If any of this information is intentionally, negligently or erroneously misrepresented and such misrepresentation is not detected prior to funding, the value of the finance receivable may be significantly lower than expected. Whether a misrepresentation is made by the applicant, a dealer customer, another third-party or one of our employees, we generally bear the risk of loss associated with the misrepresentation. Our controls and processes may not have detected or may not detect all misrepresented information in our loan originations or from our retail installment contract applications. Any such misrepresented information could adversely affect our business, results of operations and financial condition.

Our underwriting process requires the use of discretion, which may result in variability of terms, and could adversely affect our business, results of operations and financial condition.

Our underwriting system partially relies on our underwriters’ discretion. We train our underwriters to originate retail installment contracts or loans that conform to our underwriting standards. Such training includes critical aspects of state and federal regulatory compliance, account management and customer relations. Our underwriters have the authority to approve, decline and structure loans and retail installment contracts within broadly written underwriting guidelines rather than having all terms approved centrally or by an automated process. As a result, there may be variability in the use of discretion in the credit decision made, approval terms, including pricing, and finance receivables portfolios, even when underwriting policies are followed. Moreover, we cannot be certain that every loan is made and every retail installment contract is structured in accordance with our underwriting standards and rules (including rules relating to state and federal regulatory compliance), and we have in the past experienced application of discretion that varied from our underwriting standards. The nature of our approval process could adversely affect our operating results, and variances in underwriting standards and lack of supervision could expose us to greater delinquencies and charge-offs than we have historically experienced, along with legal and regulatory risk, which could adversely affect our business, results of operations and financial condition.

We also use models to assist us in managing many aspects of our business, and if they are not accurate or are misinterpreted, it could have a material adverse effect on our business, results of operations and financial condition.

We use models to assist us in managing many aspects of our business, including liquidity and capital planning, customer selection, credit and other risk management, pricing, reserving, collections management and staffing levels. Our models, including the proprietary scorecards we use to supplement FICO^® scores when evaluating potential borrowers, may prove in practice to be less predictive than we expect for a variety of reasons, including as a result of errors in constructing, interpreting or using the models or the use of inaccurate assumptions (including failures to update assumptions appropriately or in a timely manner). Our assumptions may be inaccurate for many reasons including that they often involve matters that are inherently difficult to predict and beyond our control (for example, macroeconomic conditions and their impact on customer behavior), and they often involve complex interactions between a number of dependent and independent variables, factors and other assumptions. For example, errors or inaccuracies in our models may have the effect of increasing or decreasing finance receivable volume in certain credit tiers, resulting in unintended portfolio distributions, or over- or underestimating credit risk, resulting in overpriced retail installment contracts or loans or greater than expected finance receivable losses. This may be particularly acute when we migrate to new scorecards, such as our fifth generation FCA scorecard, which was introduced in January 2015 and our first generation CFC scorecard which was introduced in March 2015. Errors or inaccuracies in our models may be material and could lead us to make incorrect or suboptimal decisions in managing our business, and this could have a material adverse effect on our business, results of operations and financial condition.

If assumptions or estimates we use in preparing our financial statements are incorrect or are required to change, our reported results of operations and financial condition may be adversely affected.

We are required to use certain assumptions and estimates in preparing our financial statements under GAAP, including in determining allowances for credit losses, fair value of financial instruments, asset impairment, reserves related to litigation and other legal matters, valuation of income and other taxes and regulatory exposures. In addition, significant assumptions and estimates are involved in determining certain disclosures required under GAAP, including those involving the fair value of our financial instruments. If the assumptions or estimates underlying our financial statements are incorrect, the actual amounts realized on transactions and balances subject to those estimates will be different, and this could have a material adverse effect on our results of operations and financial condition.

In addition, the Financial Accounting Standards Board (“FASB”), is currently reviewing or proposing changes to several financial accounting and reporting standards that govern key aspects of our financial statements, including areas where assumptions or estimates are required. As a result of changes to financial accounting or reporting standards, whether promulgated or required by the FASB or other regulators, we could be required to change certain of the assumptions or estimates we previously used in preparing our financial statements, which could negatively impact how we record and report our results of operations and financial condition generally. For additional information on the key areas for which assumptions and estimates are used in preparing our financial statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates.”

Changes in market conditions, including rising interest rates, could adversely affect the rate at which our borrowers prepay their loans and the value of our finance receivables portfolio, as well as increase our financing cost, which could negatively affect our business, results of operation and financial condition.

Changing market conditions, including but not limited to, changes in interest rates, the availability of credit, changes in housing prices, the relative economic vitality of the area in which our borrowers and their assets are located, changes in tax laws, other opportunities for investment available to our customers, homeowner mobility, and other economic, social, geographic, demographic, and legal factors beyond our control, may affect the rates at which our borrowers prepay their loans. Any increase in interest rates may slow the rate of prepayment for our finance receivables, which could adversely affect our liquidity by reducing the cash flows from, and the value of, the finance receivables we utilize as collateral in our secured funding transactions.

As interest rates change, our gross interest rate spread also either increases or decreases because the rates charged on the retail installment contracts originated from dealers are limited by market and competitive conditions, restricting our ability to pass on increased interest costs to the consumer.

Moreover, all of our finance receivables are fixed-rate contracts, which generally decline in value if interest rates increase. As such, if changing market conditions cause interest rates to increase substantially, the value of our finance receivables could decline. In addition, rising interest rates may increase our cost of financing and capital. Accordingly, any increase in interest rates could negatively affect our business, results of operation and financial condition.

The geographic distribution of our finance receivables portfolio may increase the risk of delinquencies and charge-offs on our finance receivables.

Certain geographic concentrations of our finance receivables portfolio may increase as we adjust our risk and loss tolerance and strategy to achieve our profitability goals. We have the greatest concentration of finance receivables outstanding in Texas, California, Florida, Arizona and Georgia, which together accounted for 58.2% of our finance receivables portfolio as at March 31, 2015; borrowers in Texas, California and Florida represented 20.6%, 12.8% and 10.6%, respectively, of such portfolio. Any geographic concentration may expose us to an

increased risk of loss if that geographic region experiences low employment rates, natural disasters or weak economic conditions. Certain regions of the U.S. from time to time will experience weaker economic conditions and higher unemployment, and, consequently, finance receivables originated in such regions will experience higher rates of delinquency and loss than on similar finance receivables nationally. In addition, natural disasters in specific geographic regions may result in higher rates of delinquency and loss in those areas. In the event that a significant portion of our finance receivables are originated in states where weak economic conditions, low employment rates or natural disasters affect such states in particular, it could adversely impact the delinquency and default rates of our finance receivables pool, which, in turn, could have a material adverse effect on our business, results of operations and financial condition.

We may be unable to successfully integrate the predecessor FCA and CFC businesses and realize any synergies that we anticipate.

We completed the merger of FC HoldCo LLC, the holding company of FCA, and CF Capital Holdings LLC, the holding company of CFC, on January 1, 2015. Prior to January 1, 2015, though controlled by the ABV Funds, both businesses operated separately. Although now operated by one management team, we continue to operate separate underwriting and funding systems for the predecessor FCA and CFC businesses, and achieving the anticipated benefits of the combination and the success of our combined companies will depend in part upon whether the predecessor businesses integrate their systems in an effective and efficient manner. Our ability to integrate the predecessor businesses and their operating systems and realize the synergies that we anticipate is subject to a number of uncertainties, many of which are related to conditions beyond our control, such as general negative economic trends and competition. We may encounter difficulties with any of the following:

•

integrating operational, credit, funding, servicing, collection, accounting and technology policies, processes and systems, including developing a common data warehouse and reporting structure, and the implementation of those policies and procedures;

•

integrating personnel and human resources systems as well as the cultures of each of the former businesses;

•

integrating legal and compliance functions, including executing a common compliance management system and the implementation of our legal and compliance policies;

•

distraction of management and employees from operations; and

•

inefficiencies associated with the integration of the operations of the combined company.

An inability to effect any of the aforementioned aspects of the integration in a timely manner may result in our failing to realize the anticipated benefits of the merger, including anticipated synergies, and could have a material adverse effect on our business, results of operations and financial condition.

Moreover, even following integration of these systems, including our common compliance management system and integrated compliance policies, the testing of these systems may identify deficiencies that will require further attention and involve additional costs. As systems are integrated and new policies are applied to parts of our business, business processes may be required to change, resulting in reduced revenue, additional expense or otherwise having a material adverse effect on our business, results of operations and financial condition.

We face significant risks in implementing our growth strategy, some of which are outside our control.

We intend to continue our growth strategy to expand our automotive financing franchise by increasing market penetration via the number and depth of our relationships in the automotive financing market and expanding our direct-to-consumer footprint. Our ability to execute this growth strategy is subject to significant risks, some of which are beyond our control, including:

•

the inherent uncertainty regarding general economic conditions;

•

our ability to obtain adequate financing for our expansion plans;

•

the prevailing laws and regulatory environment of each state in which we operate or seek to operate and, to the extent applicable, federal laws and regulations, which are subject to change at any time;

•

the degree of competition in new markets and its effect on our ability to attract new customers;

•

our ability to recruit and retain qualified personnel, in particular in areas where we face a great deal of competition;

•

our ability to obtain and maintain any regulatory approvals, government permits or licenses that may be required on a timely basis; and

•

our ability to maintain origination volume while migrating from two scorecards to one scorecard in our Indirect channel over time.

As part of our strategy to grow our business, we may also execute strategic acquisitions or partnerships or make other strategic investments in businesses, products, technologies or platforms to enhance or grow our business. These strategic investments may also present integration, technical, legal, regulatory or other challenges that we may not be able to manage effectively. The planning and integration of an acquisition, partnership or investment may divert employee time and other resources, which could impair our ability to focus on our business.

We may not be able to execute our growth strategy due to lack of acceptance by partners, customers or employees, higher than forecasted costs, lengthy transition periods, synergies or savings not being realized and a variety of other factors. This may result in a delay or unrealized benefit or in some cases, increased costs or other unforeseen risks to our business, which could have a material adverse effect on our business, results of operations and financial condition.

We may make future acquisitions of automotive finance receivables that may result in unanticipated costs or liabilities.

We may, from time to time, make acquisitions of pools of finance receivables. Future acquisitions could pose numerous risks to our operations, including:

•

we may incur substantial unanticipated integration costs;

•

processing the acquired receivables may divert significant management attention and financial resources from our other operations and could disrupt our ongoing business;

•

we may fail to realize the potential cost savings or other financial benefits and/or the strategic benefits of the acquisitions;

•

we may face liquidity risk if we are unable to meet our funding obligations; and

•

we may incur or inherit claims or liabilities as a result of acquiring the receivables, and we may not be successful in seeking indemnification for such claims or liabilities.

In connection with these acquisitions, we could incur debt, large and immediate write-offs or assume liabilities. We may not be able to complete acquisitions without a material adverse effect on our business, financial condition and results of operations.

We may be unable to successfully expand our direct lending platform.

A part of our strategy is to expand our direct lending platform, but realizing benefits from this strategy is uncertain. We may not assign the appropriate level of resources, priority or expertise to the development and commercialization of the direct lending platform. Our success will be dependent on factors such as partner and customer acceptance, adoption and usage, competition, the effectiveness of marketing programs, the availability

of appropriate technologies and business processes and regulatory approvals. Success of the platform also may depend upon our ability to deliver it on a large scale, which may require a significant investment. If online aggregators (companies that collect credit applications from consumers which they refer to multiple lenders) or other third-party service providers misrepresent information about us, the value of our direct loan originations may be lower than expected. In any event, we may not realize the benefit for many years, or competitors may introduce more compelling direct-to-consumer products, services or enhancements. Our failure to successfully expand our direct lending platform could have a material adverse effect on our business, results of operations and financial condition.

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

The demand for the products we offer may be reduced due to a variety of factors, such as demographic patterns, changes in customer preferences or financial conditions, regulatory restrictions that decrease customer access to particular products or the availability of competing products. Should we fail to adapt to significant changes in our customers’ demand for, or access to, our products, our revenues could decrease significantly and our operations could be harmed. Even if we do make changes to existing products or introduce new products to fulfill customer demand, customers may resist such changes or may reject such products. Moreover, the effect of any product change on the results of our business may not be fully ascertainable until the change has been in effect for some time, and, by that time, it may be too late to make further modifications to such product without causing further harm to our business, results of operations and financial condition.

Our profitability and financial condition could be materially adversely affected if the value of used cars declines resulting in lower recoveries in sales of repossessed vehicles.

General economic conditions, the supply of off-lease and other used vehicles to be sold, new vehicle market prices and marketing programs, vehicle brand image and strength, perceived vehicle quality, general consumer preference and confidence levels, overall price, and volatility of gasoline or diesel fuel, among other factors, heavily influence used vehicle prices and thus the amount we recover in remarketing repossessed vehicles that serve as collateral for underlying loans. As a result, declines in used vehicle prices could have a negative impact on our profitability and financial condition.

Our business could be negatively impacted if we are unsuccessful in developing and maintaining relationships with automobile dealerships.

Our ability to originate retail installment contracts is reliant on our relationships with automobile dealers. In particular, our automotive financing operations depend in large part upon our ability to establish and maintain relationships with reputable automobile dealers that originate retail installment contracts at the point-of-sale, which they subsequently assign to us. Although we have relationships with certain automobile dealers, none of our relationships are exclusive and some of them are newly established and they may be terminated at any time. During the recent economic downturn, as a result of the contraction of credit to both dealers and their customers, there was an increase in dealership closures, and dealers experienced decreased sales and retail installment contracts volume. Dealers may experience decreased sales and retail installment contracts volume in the future, which may have an adverse effect on our business, results of operations and financial condition.

The assessment of our liquidity is based upon significant judgments or estimates that could prove to be materially incorrect.

In assessing our current financial position and developing operating plans for the future, management has made significant judgments and estimates with respect to our liquidity, including but not limited to:

•

our ability to generate sufficient cash to service all of our outstanding debt;

•

our continued ability to access debt and securitization markets and other sources of funding on favorable terms;

•

our ability to complete, as needed, additional borrowings, securitizations or other transactions to support liquidity, and the costs associated with these funding sources, including sales at less than carrying value and limits on the types of assets that can be securitized or sold, which would affect profitability;

•

our ability to comply with our debt covenants;

•

the amount of cash expected to be received from our finance receivables portfolio through collections (including prepayments) and receipt of fees we collect, which could be materially different from our estimates;

•

the amortization rate of our receivables could be materially different from our estimates and result in an early amortization event in our securitization facilities, which could have a materially adverse effect on our liquidity and cost of funds; and

•

the potential for reduced income due to the possible deterioration of the credit quality of our finance receivables portfolios.

Additionally, there are numerous risks to our financial results, liquidity, and capital raising and debt refinancing plans that are not quantified in our current liquidity forecasts. These risks include, but are not limited, to the following:

•

our inability to grow our finance receivables portfolio with adequate profitability to fund operations, credit losses, and other expenses;

•

our inability to monetize assets including, but not limited to, our access to debt and securitization markets;

•

the effect of federal, state and local laws, regulations or regulatory policies and practices, including the Dodd-Frank Act (which, among other things, established the CFPB), on our ability to conduct business or the manner in which we conduct business, such as licensing requirements, pricing limitations or restrictions on the method of offering products, as well as changes that may result from increased regulatory scrutiny of the below prime lending industry;

•

the potential for increasing costs and difficulty in servicing our finance receivables portfolio as a result of heightened nationwide regulatory scrutiny of loan servicing in the industry generally;

•

potential liability relating to automotive financing products which we have sold or may sell in the future, if it is determined that there was a non-curable breach of a warranty made in connection with the transaction;

•

potential liability relating to securitized finance receivables if it is determined that there was a non-curable breach of a warranty made in connection with the transaction;

•

the potential for additional unforeseen cash demands or accelerations of obligations;

•

reduced income due to contract modifications where the borrower’s interest rate is reduced, principal payments are deferred, or other concessions are made;

•

the potential for declines in bond and equity markets; and

•

the potential effect on us if the capital levels of our regulated and unregulated subsidiaries prove inadequate to support current business plans.

We intend to support our liquidity position by managing originations, maintaining disciplined underwriting standards, along with additional securitizations. We intend to support operations and repay indebtedness with one

or more of the following activities, among others: finance receivable collections, cash on hand, additional debt financings (particularly new securitizations and possible new issuances and/or debt refinancing transactions) or a combination of the foregoing. There can be no assurance that we will be successful in undertaking any of these activities to support our operations and repay our obligations.

However, the actual outcome of one or more of our plans could be materially different from what is expected, or one or more of our significant judgments or estimates about the potential effects of these risks and uncertainties could prove to be materially incorrect. In the event of such an occurrence, if third-party financing is not available, our liquidity could be substantially and materially affected, and as a result, substantial doubt could exist about our ability to continue as a going concern.

Our securitizations may expose us to financing and other risks, and there can be no assurance that we will be able to access the securitization market in the future, which may require us to seek more costly financing.

Historically, we have depended upon our ability to obtain permanent financing for pools of retail installment contracts by conducting term securitization transactions. By “permanent financing” we mean financing that extends to cover the full term during which the underlying finance receivables are outstanding and that requires repayment as the finance receivables are repaid or charged off. Our past practice has been, and our future plan is, to repay loans made to us under our warehouse credit facilities with the proceeds of securitizations. There can be no assurance that any securitization transaction will be available on terms acceptable to us, or at all. The timing of any securitization transaction is affected by a number of factors beyond our control, any of which could cause substantial delays, including, without limitation, market conditions, the approval by all parties of the terms of the securitization and our ability to acquire a sufficient number of retail installment contracts for securitization.

In each securitization transaction, we convey a pool of finance receivables to a special purpose entity, which, in turn, conveys the finance receivables to a trust (the issuing entity). Concurrently, the trust issues non-recourse notes or certificates pursuant to the terms of an indenture, which then are transferred to the special purpose entity in exchange for the finance receivables. The securities issued by the issuing entity are secured by the pool of finance receivables. In exchange for the transfer of finance receivables to the issuing entity, we receive the cash proceeds from the sale of the trust securities, all residual interests, if any, in the cash flows from the finance receivables after payment of the trust securities, and a 100% beneficial interest in the issuing entity. During periods of challenging credit and liquidity conditions, the value of the residual interests we may retain in our securitizations could be reduced or, in some cases, eliminated.

We currently act as servicer with respect to our securitization trusts and their related series of asset-backed securities. If we default in our servicing obligations, a servicer termination event could occur with respect to the relevant asset-backed securities, and we could be replaced as servicer. Servicer defaults include, for example, the failure of the servicer to make any payment, transfer or deposit in accordance with the securitization documents, a breach of representations, warranties or agreements made by the servicer under the securitization documents, the delegation of the servicer’s duties contrary to the securitization documents and the occurrence of certain insolvency events with respect to the servicer. Such a servicer termination event could have materially adverse consequences on our liquidity, cost of funds and ability to access the securitization markets in the future. Although we were able to complete one securitization in 2012, four securitizations in 2013 and four securitizations in 2014, the securitization market could become constrained, and we can give no assurances that we will be able to complete additional securitizations.

Rating agencies may also affect our ability to execute a securitization transaction, or increase the costs we expect to incur from executing securitization transactions, not only by deciding not to issue ratings for our securitization transactions, but also by altering the criteria and process they follow in issuing ratings. Rating agencies could alter their ratings processes or criteria after we have accumulated finance receivables for securitization in a manner that effectively reduces the value of those finance receivables by increasing our

financing costs or otherwise requiring that we incur additional costs to comply with those processes and criteria. We have no ability to control or predict what actions the rating agencies may take.

Further, other matters, such as (i) accounting standards applicable to securitization transactions and (ii) capital and leverage requirements applicable to banks and other regulated financial institutions holding asset-backed securities, could result in decreased investor demand for securities issued through our securitization transactions, or increased competition from other institutions that undertake securitization transactions. In addition, compliance with certain regulatory requirements, including the Dodd-Frank Act, the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) and the Investment Company Act of 1940, as well as the impact of any regulatory investigations or enforcement activities, may affect the type of securitizations that we are able to complete.

If it is not possible or economical for us to securitize our finance receivables in the future, we would need to seek alternative financing to support our operations and to meet our existing debt obligations, which may be less efficient and more expensive than raising capital via securitizations and could have a material adverse effect on our business, results of operation and financial condition.

Our results of operations depend on our ability to secure and maintain adequate warehouse financing on favorable terms.

We rely on warehouse credit facilities in order to originate significant volumes of retail installment contracts and loans. Historically, our primary sources of day-to-day liquidity have been our warehouse credit facilities, in which we sold and contributed receivables to special-purpose subsidiaries, where they were “warehoused” until they were financed on a long-term basis through the issuance of asset-backed notes. Upon issuance of the notes, funds advanced under one or more warehouse credit facilities were repaid from the proceeds. Our short-term funding capacity as of March 31, 2015 was $713.8 million, comprising four credit facilities with five multinational banks (the “Former Warehouse Credit Facilities”). On April 27, 2015, we refinanced the Former Warehouse Credit Facilities with a new warehouse credit facility with a lender group consisting of six multinational banks (the “New Warehouse Credit Facility”). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Warehouse Facilities.”

If we are unable to maintain warehouse financing on acceptable terms, we may be required to curtail our origination of new retail installment contracts and loans, which could have a material adverse effect on our business, results of operation and financial condition.

Our results of operations depend on cash flows from our residual interests in our securitization program and our warehouse credit facilities.

When we finance our finance receivables portfolio through warehouse credit facilities and securitizations, we receive cash and a residual interest in the assets financed. Those financed assets are owned by the special-purpose subsidiary that is formed for the related securitization. This residual interest represents the right to receive the future cash flows to be generated by the finance receivables in excess of (i) the interest and principal paid to lenders or investors on the indebtedness issued in connection with the financing, (ii) the costs of servicing the finance receivables and (iii) certain other costs incurred in connection with completing and maintaining the warehouse credit facilities or securitizations. We sometimes refer to these future cash flows as “excess spread cash flows.”

Under the financial structures we have used to date in our warehouse credit facilities and securitizations, excess spread cash flows that would otherwise be paid to the holder of the residual interest are first used to increase overcollateralization or are retained in a reserve account within the warehouse facilities or securitization trusts to provide liquidity and credit enhancement for the related securities.

While the specific terms and mechanics vary among transactions, our warehousing agreements and securitizations generally provide that we will receive excess spread cash flows only if the amount of overcollateralization and reserve account balances have reached specified levels and/or the delinquency, defaults or net losses related to the finance receivables in the finance receivable pools are below certain predetermined levels. In the event delinquencies, defaults or net losses on finance receivables exceed these levels, the terms of the warehouse credit facilities or securitizations may require increased credit enhancement, and in certain circumstances, may permit affected parties to require the transfer of servicing on some or all of the securitized or warehoused contracts from us to an unaffiliated servicer.

We typically retain residual interests or use them as collateral to borrow cash. In any case, the future excess spread cash flow received in respect of the residual interests is integral to the financing of our operations. The amount of cash received from residual interests depends on how well our portfolio of securitized and warehoused finance receivables performs. If our portfolio of securitized and warehoused finance receivables has higher delinquency and loss ratios than expected, then the amount of money realized from our retained residual interests, or the amount of money we could obtain from the sale or other financing of our residual interests, would be reduced, which could have a material adverse effect on our business, results of operations and financial condition.

If our finance receivables fail to meet certain criteria or characteristics or under other circumstances, we may be required to repurchase the finance receivables that we sell or securitize, which could adversely affect our business, results of operation and financial condition.

As of March 31, 2015, we have completed 11 rated securitizations of our finance receivables portfolio. The documents governing our securitizations contain provisions that require us to repurchase finance receivables under certain circumstances. While our securitization documents vary, they contain customary provisions that require us to repurchase finance receivables if our representations and warranties concerning loan quality, originations, underwriting and servicing techniques and circumstances are inaccurate or not complied with. For example, in December 2014, CFC repurchased 206 receivables representing an aggregate principal amount of $2.6 million, or 0.26%, of the initial finance receivables securitized, from its then four outstanding securitizations after identifying an inaccurate representation in connection with such receivables. We also believe that many holders of the securitization notes, as well as the transaction parties, are particularly aware of the conditions under which originators must repurchase finance receivables and would likely enforce any repurchase remedies that they may have. Enforcement of such repurchase remedies could have a material adverse effect on our business, results of operations and financial condition.

Our indebtedness is significant, which could affect our ability to meet our obligations under our debt instruments and could materially and adversely affect our business and ability to react to changes in the economy or our industry.

We currently have a significant amount of indebtedness. As of March 31, 2015 and December 31, 2014, we had $2.1 billion and $1.8 billion of indebtedness outstanding (including warehouse credit facilities, securitizations and residual interest credit facilities), respectively. Interest expense on our indebtedness was $15.5 million for the three months ended March 31, 2015 and $45.8 million in 2014. There can be no assurance that we will be able to repay or refinance our debt in the future.

The amount of indebtedness could have important consequences, including the following:

•

it may require us to dedicate a significant portion of our cash flow from operations to the payment of the principal of, and interest on, our indebtedness, which reduces the funds available for other purposes, including retail installment contracts or direct loan originations;

•

it could limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing regulatory, business and economic conditions;

•

it may limit our ability to incur additional borrowings or securitizations for working capital, capital expenditures, business development, debt service requirements, acquisitions or general corporate or other purposes, or to refinance our indebtedness;

•

it may require us to seek to change the maturity, interest rate and other terms of our existing debt;

•

it may place us at a competitive disadvantage compared to other, less leveraged competitors;

•

it may cause a downgrade of our debt and long-term corporate ratings if and after those ratings are obtained;

•

it may cause us to be more vulnerable to periods of negative or slow growth in the general economy or in our business; and

•

it may increase our cost of borrowing.

In addition, meeting our anticipated liquidity requirements is contingent upon our continued compliance with our existing debt agreements. An event of default or declaration of acceleration under our securitizations could also result in an event of default and declaration of acceleration under our residual interest credit facilities. Such an acceleration of our debt would have a material adverse effect on our liquidity and our ability to continue as a going concern. Furthermore, our existing debt agreements do not restrict us from incurring significant additional indebtedness. If our debt obligations increase, whether due to the increased cost of existing indebtedness or the incurrence of additional indebtedness, the consequences described above could be magnified, which could have a material adverse effect on our business, results of operations and financial condition.

Our business could be adversely affected if we are unable to attract, retain and motivate key officers and employees.

Our success depends, in large part, on our ability to retain, recruit and motivate key officers and employees. Our senior management team has significant industry experience and would be difficult to replace. We may not be able to attract and retain qualified personnel to replace or succeed members of our senior management team or other key personnel following the completion of this offering or at any other time. Failure to retain talented senior leadership could have a material adverse effect on our business, results of operations and financial condition. We currently maintain key man insurance on Michael Ritter, our Chief Executive Officer and President, in the amount of $5,000,000; however, that coverage would likely be inadequate to compensate for the loss of his services.

Litigation and regulatory actions could subject us to significant fines, penalties, judgments and requirements resulting in increased expenses.

As an automotive financing company, we may be subject to various consumer claims and litigation seeking damages and statutory penalties. Some litigation against us could take the form of class action complaints by consumers. As the assignee of retail installment contracts originated by automobile dealers, we also may be named as a co-defendant in lawsuits filed by consumers principally against automobile dealers. If such an action were brought, we would contest liability and/or the amount of damages as appropriate. Although we currently have no material pending or threatened litigation, the outcome of future matters could materially adversely affect our business, results of operation and financial condition.

We are also involved, from time to time, in reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding our business, which could subject us to significant fines, penalties, obligations to change our business practices or other requirements resulting in increased expenses, diminished income and damage to our reputation. In December 2014, we received civil subpoenas pursuant to FIRREA from the Civil Division of the United States Attorney’s Office for the District of New Jersey seeking documents related to our below prime automotive financing and related securitization activities. At this time, we cannot predict the scope, duration or likely outcome of the government’s investigation.

The current environment of additional regulation, increased regulatory compliance efforts and enhanced regulatory enforcement has resulted in significant operational and compliance costs and may prevent or make it less attractive for us to continue providing certain products and services. There is no assurance that these governmental actions will not, in the future, affect how we conduct our business and in turn have a material adverse effect on our business, results of operations and financial condition.

Our use of electronic contracts could impact our ability to perfect our ownership or security interest in our finance receivables portfolio.

We have modified our systems to permit origination and assignment of retail installment contracts and loans in electronic form. We have engaged a third-party to facilitate the process of creating, establishing control of and storing electronic contracts in a manner that enables us to perfect our ownership or security interest in the electronic contracts by satisfying the requirements for “control” of electronic chattel paper under the Uniform Commercial Code. Although the law governing the perfection of ownership and security interests in electronic contracts was enacted in 2001, the statutory requirements for the relevant control arrangements have not been meaningfully tested in court. In addition, market practices regarding control of electronic contracts are still developing. As a result, there is a risk that the systems employed by us or any third-party to maintain control of the electronic contracts may not be sufficient as a matter of law to give us a perfected ownership or security interest in the finance receivables evidenced by electronic contracts. In addition, technological failure, including failure in the security or access restrictions with respect to the systems, and operational failure, such as the failure to implement and maintain adequate internal controls and procedures, could also affect our ability to obtain or maintain a perfected ownership or security interest in the finance receivables evidenced by electronic contracts (or the priority of such interests). Our failure or inability to perfect our ownership or security interest in the finance receivables could have a material adverse effect on our business, results of operations and financial condition.

We partially rely on third-parties to deliver services, and failure by those parties to provide these services or meet contractual requirements could have a material adverse effect on our business.

We depend on third-party service providers, including certain offshore third-party service providers, for many aspects of our business operations. For example, we depend on third-parties like Experian to obtain data related to our market that we use in our origination and servicing platforms. We also have a contract with Insperity, Inc. (“Insperity”), a professional employer organization, to provide the human resources platform for FCA through December 2015. We rely on third-party originators and aggregators to collect loan applications from consumers and refer them to us. In addition, we rely on third-party servicing centers for a portion of our servicing activities and on third-party repossession and remarketing agents. If a service provider fails to provide the services that we require or expect, or fails to meet contractual requirements, such as service levels or compliance with applicable laws, the failure could negatively impact our business by damaging our relationship with our employees, adversely affecting our ability to process customers’ transactions in a timely and accurate manner, otherwise hampering our ability to service our customers, or subjecting us to litigation or regulatory risk for poor vendor oversight. Such a failure could adversely affect the perception of the reliability of our networks and services, and the quality of our brands, and could have a material and adverse effect on our business, results of operation and financial condition.

Our failure to calculate payments due, allocate payments received and calculate and present consumer disclosures in compliance with legal requirements and the terms of our borrowers’ retail installment contracts or loans could subject us to remediation costs, legal liability, regulatory scrutiny and reputational harm.

We depend on our employees and third party vendors, as well as our payment processes and systems, to calculate interest, fees and other payments due and to receive and apply payments, in each case in accordance with applicable law and the terms of a borrower’s retail installment or loan contract. From time to time, we identify certain discrepancies in our historic calculations, such as the use of an incorrect interest start date, the

untimely posting of payments, errors in calculating amounts due and in the manner in which payments have been applied. Such discrepancies could result in errors in internal reporting of delinquencies, external reporting to credit bureaus, erroneous charges to borrowers of interest, late or other fees and misstatements of balances. While we continue to monitor the performance of our payment processes and systems and remedy any identified discrepancies, we may experience such discrepancies in the future, and as a result, we may be subject to remediation costs, legal liability, regulatory scrutiny and reputational harm, any of which could have a material adverse impact on our results of operations.

We also depend on our employees, third party vendors and dealers, as well as certain processes and systems, to calculate and present disclosures to borrowers and others relating to our retail installment contracts and loans, including legally required disclosures. From time to time, we identify certain discrepancies in our calculations, which may result in the need to make corrected disclosures, subject us to remediation costs, legal liability, regulatory scrutiny and reputational harm, any of which could have a material adverse impact on our results of operations.

Employee misconduct could harm us by subjecting us to monetary loss, significant legal liability, regulatory scrutiny and reputational harm.

Our reputation is critical to maintaining and developing relationships with our existing and potential customers and third-parties with whom we do business. There is a risk that our employees could engage in misconduct that adversely affects our business. For example, if an employee were to engage, or be accused of engaging, in illegal or suspicious activities including fraud or theft, we could suffer direct losses from the activity, and in addition we could be subject to regulatory sanctions and suffer serious harm to our reputation, financial condition, customer relationships, and ability to attract future customers. Employee misconduct could prompt regulators to allege or to determine based upon such misconduct that we have not established adequate supervisory systems and procedures to inform employees of applicable rules or to detect and deter violations of such rules. Although we have measures in place to detect and prevent employee misconduct, it is not always possible to deter employee misconduct, and the precautions we take to detect and prevent misconduct may not be effective in all cases. Misconduct by our employees, or even unsubstantiated allegations of misconduct, could result in a material adverse effect on our reputation and our business.

Failures or security breaches in our information systems or internet platforms, in the information systems of third-parties or loss or destruction of physical records could adversely affect our reputation and could subject us to significant costs and regulatory penalties.

In the normal course of business, we collect, process and retain sensitive and confidential consumer information and may, subject to applicable law, share that information with our third-party service providers. Despite the security measures we have in place, our computer systems, software and networks may be vulnerable to breaches, unauthorized access, misuse, computer viruses or other malicious code that could result in disruption to our business or the loss or theft of confidential information, including customer information. Our information systems or internet platforms may also be subject to partial or complete failure, or may operate in a manner that we had not intended, for periods of time. Any failure, interruption or breach in our cyber security, including any failure of our back-up systems or failure to maintain adequate security surrounding customer information, or any failure of our information systems or internet platforms more generally could result in reputational harm, disruption in the management of our customer relationships or the inability to originate, process and service our finance receivables. Further, any of these cyber security and operational risks could result in a loss of customer business, subject us to additional regulatory scrutiny or expose us to lawsuits by customers for identity theft or other damages resulting from the misuse of their personal information and possible financial liability, or for other damages that may be caused by an information systems failure, any of which could have a material adverse effect on our business, results of operation and financial condition. Regulators may also impose penalties or require remedial action if they identify weaknesses in our security systems, and we may be required to incur significant costs to increase our cyber security to address any vulnerabilities that may be discovered or to remediate the harm caused by any security breaches.

We rely on encryption and authentication technology licensed from third-parties to provide the security and authentication necessary to effect secure online transmission of confidential consumer information. Advances in computer capabilities, new discoveries in the field of cryptography or other events or developments may result in a compromise or breach of the algorithms that we use to protect sensitive consumer transaction data. A party who is able to circumvent our security measures could misappropriate proprietary information or cause interruptions in our operations. We may be required to expend capital and other resources to protect against such security breaches or cyber-attacks or to alleviate problems caused by such breaches or attacks. Our security measures are designed to protect against security breaches and cyber-attacks, but our failure to prevent such security breaches and cyber-attacks, whether due to an external cyber-security incident, a programming error or other cause, could damage our reputation, expose us to mitigation costs and the risks of private litigation and government enforcement, disrupt our business or otherwise have a material adverse effect on our results of operations.

As part of our business, and pursuant to applicable law, we may also share confidential customer information and proprietary information with customers, vendors, service providers, business partners, rating agencies and investors. The information systems of these third-parties may be vulnerable to security breaches, and we may not be able to ensure that these third-parties have appropriate security controls in place to protect the information we share with them. Parcel delivery services have also in the past lost or misplaced confidential customer information while in transit. If our proprietary or confidential customer information is intercepted, stolen, misused or mishandled while in possession of a third-party, it could result in reputational harm to us, loss of customer business and additional regulatory scrutiny, and it could expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, results of operation and financial condition.

In addition, our offices have physical customer records necessary for day-to-day operations that contain extensive confidential information about our customers, including financial and personally identifiable information. The loss or theft of customer information and data from our offices could subject us to additional regulatory scrutiny and penalties and could expose us to civil litigation and possible financial liability, which could have a material adverse effect on our business, results of operation and financial condition. In addition, if we cannot locate original documents (or copies, in some cases), we may not be able to collect on the finance receivables for which we do not have documents. This also could have a material adverse effect on our business, results of operations and financial condition.

Disruptions in the operation of our computer systems and data centers could have a material adverse effect on our business.

Our technology systems are a critical component of our business. We rely on a number of third-party providers for our loan origination and loan servicing systems, including application service providers and business process outsourcers. We also manage and maintain a data center. Our ability to deliver products and services to our customers and operate our business in compliance with applicable laws depends on the efficient and uninterrupted operation of our computer systems and data centers, as well as those of our third-party service network providers. These computer systems and data centers may encounter service interruptions at any time due to system, network or software failure, operator negligence or improper operation by employees, physical or electronic loss of data or security breaches, computer viruses, natural disasters or other reasons. In addition, the implementation of technology changes and upgrades to maintain current and integrate new systems may also cause service interruptions, transaction processing errors and system conversion delays and may cause our failure to comply with applicable laws. Any failure of our systems due to any of these causes, if not supported by our disaster recovery plan, could cause an interruption in operations and could have a material adverse effect on our business, results of operations and financial condition.

We may not be able to make technological improvements as quickly as some of our competitors, which could harm our ability to compete with our competitors and adversely affect our business, results of operation and financial condition.

The automotive financing industry is undergoing rapid technological changes, with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables

financial and lending institutions to better serve customers and reduce costs. Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience, as well as to create additional efficiencies in our operations. We may not be able to effectively implement new technology-driven products and services as quickly as some of our competitors or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological change affecting the automotive financing industry could harm our ability to compete with our competitors and adversely affect our business, results of operation and financial condition.

Competition with other lenders could have a material adverse effect on us.

The automotive financing market is highly fragmented and is served by a variety of entities, including, but not limited to, the captive finance affiliates of major automobile manufacturers, banks, savings and loan associations, credit unions and independent finance companies. See “Business—Competition.” Some of these competitors have greater financial, technical and marketing resources than we possess. Some competitors also have a lower cost of funds and access to funding sources that may not be available to us. Our competitors often can provide financing on terms more favorable to automobile purchasers or dealers than we offer. Many of these competitors also have long-standing relationships with automobile dealerships and may offer dealerships or their customers other forms of financing that we do not offer. Increased competition or our failure to compete effectively in an already competitive automotive financing market could have a material adverse effect on our business, results of operations and financial condition.

We anticipate that we will encounter greater competition as we expand our operations and as the economy continues to emerge from recession. Increasing competition could also require us to lower the rates we charge on loans in order to maintain volume, which could also have a material adverse effect on our business, results of operations and financial condition.

Damage to our reputation could negatively impact our business.

Recently, automotive financing companies have been experiencing increased reputational risk as consumers take issue with certain of their practices or judgments. Maintaining a positive reputation is critical to our attracting and retaining dealers, customers, investors and employees. Harm to our reputation can arise from many sources, including employee misconduct, misconduct by outsourced service providers (including third-party repossession agents) or other counterparties, litigation or regulatory actions, failure by us to meet minimum standards of service and quality, inadequate protection of customer information and compliance failures. Negative publicity regarding us, our industry or others engaged in a similar business or activities, whether or not accurate, may damage our reputation, which could have a material adverse effect on our business, results of operations and financial condition.

If we are alleged to have infringed upon the intellectual property rights owned by others or are not able to manage and protect our intellectual property, our business and results of operations could be adversely affected.

Competitors or other third-parties may allege that we, or consultants or other third-parties retained or indemnified by us, infringe on their intellectual property rights. We also may face allegations that our employees have misappropriated intellectual property of their former employers or other third-parties. Given the complex, rapidly changing and competitive technological and business environment in which we operate, and the potential risks and uncertainties of intellectual property-related litigation, an assertion of an infringement claim against us may cause us to spend significant amounts to defend the claim (even if we ultimately prevail), pay significant money damages, lose significant revenues, be prohibited from using the relevant systems, processes, technologies or other intellectual property, cease offering certain products or services, or incur significant license, royalty or technology development expenses. Moreover, it has become common in recent years for individuals and groups to purchase intellectual property assets for the sole purpose of making claims of

infringement and attempting to extract settlements from companies like ours. Even in instances where we believe that claims and allegations of intellectual property infringement against us are without merit, defending against such claims is time-consuming and expensive and could result in the diversion of time and attention of our management and employees. In addition, although in some cases a third-party may have agreed to indemnify us for such costs, such indemnifying party may refuse or be unable to uphold its contractual obligations. In addition to infringement claims, we may also become involved in disputes with others regarding the ownership of intellectual property rights. For example, to the extent that we jointly own intellectual property with other parties, disagreements may arise as to the ownership or use of the intellectual property governed by such relationships. If we are unable to resolve these disputes, we could lose valuable intellectual property rights.

Moreover, we rely on a variety of measures to protect our intellectual property and proprietary information, including copyrights, trademarks, trade secrets and controls on access and distribution. These measures may not prevent misappropriation or infringement of our intellectual property or proprietary information and a resulting loss of competitive advantage, and in any event, we may be required to litigate to protect our intellectual property and proprietary information from misappropriation or infringement by others, which is expensive, could cause a diversion of resources and may not be successful. Third-parties may challenge, invalidate or circumvent our intellectual property, or our intellectual property may not be sufficient to provide us with competitive advantages. For example, words and devices contained in our trademarks and trade names are also found in the trade names and trademarks of a significant number of third-parties. This has resulted in, and may in the future result in, challenges to our ability to use our trademarks and trade names in particular geographical areas or lines of business. Such challenges could impede our future expansion into new geographic areas or lines of business and could limit our ability to realize the full value of our trademarks and trade names. We may have to litigate to enforce or determine the scope and enforceability of our intellectual property rights, which is expensive, could cause a diversion of resources and may not prove successful. Existing use by others of trademarks and trade names that are similar to ours could limit our ability to challenge third-parties when their use of such marks or names may cause consumer confusion, negatively affect consumers’ perception of our brand and products or dilute our brand identity.

Our competitors or other third-parties may also independently design or develop similar technology, or otherwise duplicate our services or products such that we could not assert our intellectual property rights against them. In addition, our contractual arrangements may not effectively prevent disclosure of our intellectual property or confidential and proprietary information or provide an adequate remedy in the event of an unauthorized disclosure. The loss or diminution of our intellectual property protection or the inability to obtain third-party intellectual property could have a material adverse effect on our business, results of operations and financial condition.

Risks Relating to the Regulation of Our Business

Our business is subject to extensive government regulation, supervision, examination and enforcement, which could adversely affect our business, results of operations and financial condition.

Our business is subject to numerous federal, state and local laws and regulations. These laws and regulations cover all aspects of our business, including lending practices, treatment of our customers, customer privacy and information security and conduct and qualifications of personnel. These laws and their implementing regulations include, among others, usury laws, anti-money laundering requirements (Bank Secrecy Act and USA PATRIOT Act), Equal Credit Opportunity Act (“ECOA”), Fair Debt Collection Practices Act (“FDCPA”), Fair Credit Reporting Act (“FCRA”), privacy regulations (Gramm-Leach Bliley Act and Right to Financial Privacy Act), Electronic Funds Transfer Act (“EFTA”), Servicemembers Civil Relief Act (“SCRA”), Telephone Consumer Protection Act (“TCPA”), Truth in Lending Act (“TILA”), FIRREA and requirements related to unfair, deceptive, or abusive acts or practices. Many states and local jurisdictions have consumer protection laws analogous to, or in addition to, those listed above. See “Business—Regulation.”

We are also subject to potential enforcement, supervisions and other actions that may be brought by state attorneys general or other state and federal enforcement authorities and other governmental agencies. Any such

actions could subject us to civil money penalties, customer remediation and increased compliance costs, as well as damage our reputation and brand and could limit or prohibit our ability to offer certain products and services or engage in certain business practices.

We believe that we maintain all material licenses and permits required for our current operations and are in substantial compliance with all applicable federal, state and local regulations, but we may not be able to maintain all requisite licenses and permits, and the failure to satisfy those and other regulatory requirements could have a material adverse effect on our operations. Our dealers and many of our third-party service providers must also comply with certain licensing requirements and credit and trade practice statutes and regulations. Failure of our dealers and third-party service providers to comply with these statutes and regulations could result in consumer rights of rescission and other remedies that could have a material adverse effect on us. In addition, changes in laws or regulations applicable to us could subject us to additional licensing, registration and other regulatory requirements in the future or could adversely affect our ability to operate or the manner in which we conduct business.

New laws or regulations or policy changes in enforcement practices of existing laws or regulations applicable to our businesses may be imposed, which could adversely impact our profitability, limit our ability to continue existing or pursue new business activities, require us to change certain of our business practices or alter our relationships with customers, affect retention of our key personnel or expose us to additional costs (including increased compliance costs). These changes may also require us to invest significant management attention and resources to make any necessary changes. Failure to comply with these laws and regulations could also give rise to regulatory sanctions, customer rescission rights, action by state and local attorneys general, civil or criminal liability or damage to our reputation, which could have a material adverse effect on our business, results of operations and financial condition.

Unlike competitors that are banks, we are subject to the licensing and operational requirements of states and other jurisdictions, and our business would be adversely affected if we lost our licenses.

Because we are not a depository institution, we normally do not benefit from exemptions to state loan origination, servicing or debt collection licensing and regulatory requirements. To the extent that they exist, we must comply with state licensing and/or various operational compliance requirements in all 50 states and the District of Columbia. These include, among others, form and content of contracts (including limitations on rates and fees), other documentation, collection practices and disclosures, and record keeping requirements. We are sensitive to regulatory changes that may increase our costs through stricter licensing laws, disclosure laws or increased fees. Currently, we believe we have all required licenses as applicable to do business in all states where we do business.

In addition, we are subject to periodic examinations by state and other regulators. The states that currently do not provide extensive regulation of our business may later choose to do so. The failure to comply with licensing or permit requirements and other local regulatory requirements could result in significant statutory civil and criminal penalties, monetary damages, attorneys’ fees and costs, possible review of licenses, and damage to reputation, brand, and valued customer relationships. Such outcomes could have a material adverse effect on our business, results of operations and financial condition.

Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and adversely affect our business opportunities.

Legislators and/or regulators are increasingly adopting or revising privacy, information security and data protection laws that potentially could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer and/or employee information and some of our current or planned business activities. This includes increased privacy-related enforcement activity at the federal level, by the Federal Trade Commission, as well as at the state level, such as with regard to mobile applications. This could also increase our costs of compliance and business operations and could reduce income from certain business initiatives.

Compliance with current or future privacy, data protection and information security laws (including those regarding security breach notification) affecting customer and/or employee data to which we are subject could result in higher compliance and technology costs. Our failure to comply with privacy, data protection and information security laws could result in potentially significant regulatory and/or governmental investigations and/or actions, litigation, fines, sanctions and damage to our reputation and our brand, any of which could have a material adverse effect on our business, results of operations and financial condition.

The actions of the CFPB have increased, and likely will continue to increase, our regulatory compliance efforts and associated costs.

The CFPB, which was created by the Dodd-Frank Act, has broad regulatory and enforcement authority over entities offering consumer financial services or products, including non-bank commercial companies in the business of extending credit and servicing consumer loans, such as us. The CFPB is authorized to write regulations under federal consumer financial protection laws, including those prohibiting unfair, deceptive or abusive acts or practices (“UDAAP”), and to examine certain financial institutions for compliance with such laws. The CFPB can remediate violations of consumer protection laws in a number of ways, including imposing civil money penalties and requiring institutions to provide customer restitution and to improve their compliance management systems. There continues to be uncertainty as to how the CFPB’s strategies and priorities, including in both its supervisory and enforcement processes, will impact our businesses and our results of operations going forward. Actions by the CFPB may increase our compliance costs and require changes in our business practices that could limit or negatively affect the products and services that we currently offer.

We may come under the supervisory and examination authority of the CFPB with respect to compliance with federal consumer financial protection laws as a result of the agency’s authority to supervise non-depository “larger participants” in certain markets for consumer financial services and products, including the automotive financing business. On September 17, 2014, the CFPB issued a proposed rule to implement its supervision of certain larger nonbank automotive financing companies, which as defined in the proposal would include us. We expect a final rule to be issued in 2015.

The CFPB has focused on the area of automotive financing, particularly with respect to indirect financing arrangements and fair lending compliance. In March 2013, the CFPB issued a bulletin stating that indirect automotive lenders, such as us, may be liable for ECOA fair lending violations based on dealer-specific and portfolio-wide disparities, on a prohibited basis, that result from allowing dealers to mark up the consumer’s interest rate above the indirect automotive lender’s buy rate, which is the minimum interest rate at which the lender is willing to purchase the retail installment contract, allowing the dealers a share of the increased revenue. The CFPB recommended that indirect automotive lenders take steps to ensure compliance with ECOA, which may include imposing controls on dealer markup, monitoring and addressing the effects of dealer markup policies, eliminating dealer discretion to mark up buy rates and compensating dealers using a different mechanism. In order to address the concerns raised in the bulletin, we have implemented a program to educate dealers and monitor dealer mark-up practices and are enhancing our fair lending compliance management system, including monitoring of buy rates and credit decisions.

The CFPB is also conducting supervisory audits of indirect automotive lenders for ECOA compliance and has taken public and non-public supervisory and enforcement actions where it has found violations. In December 2013, a large indirect lender entered into a settlement with the CFPB and the U.S. Department of Justice (the “DOJ”) resolving allegations of discrimination and agreed to pay damages and a monetary penalty and implement a detailed compliance plan. These actions by the CFPB could negatively impact the business of other lenders and dealers in the vehicle finance market, including increasing regulatory compliance requirements and associated costs.

The CFPB has also indicated a strong interest in debt collection and consumer reporting practices, which may impact our ability to originate and collect on loans. In November 2013, the CFPB issued an advance notice of proposed rulemaking regarding debt collection, seeking input on, among other issues, whether it should issue

rules to cover the conduct of creditors collecting in their own names on their own consumer loans and whether it should generally seek to harmonize any rules it develops for third-party collectors and first-party collectors. We cannot predict with any certainty whether the CFPB will issue regulations that would cover our debt collection activities or how such regulations would impact our operations. In November 2014, the CFPB took a public enforcement action against a “buy-here, pay-here” automotive dealer regarding its debt collection and credit reporting practices.

In addition, the CFPB and other regulators have brought enforcement actions against lenders in connection with the sale of certain ancillary products, such as debt protection products that cancel or suspend a borrower’s monthly payment or total indebtedness if certain life events occur. Regulators have questioned such products’ value and the tactics used by lenders to sell these bundled products. In January 2012, FCA began funding contracts sourced through a military lending platform owned by DFS. During 2012, FCA was informed that DFS was the subject of a targeted review by the CFPB relating to the disclosure and treatment of military allotments and of service contracts and other “add-on” products. In June 2013, the CFPB announced the entry of orders against both DFS and its original program partner, U.S. Bank. Although we have established sales practices that we believe comply with current federal and state laws, the CFPB or other regulators may challenge our sales practices in regard to ancillary products.

If the CFPB changes regulations, modifies through supervision or enforcement past related regulatory guidance or interprets existing regulations in a different or stricter manner than they have been interpreted in the past by us, the industry or other regulators, our compliance costs, risk of enforcement actions, fines, penalties and litigation exposure could increase. If future regulatory or legislative restrictions or prohibitions affect our ability to offer certain products or require us to make significant changes to our business practices, and we are unable to develop compliant alternatives with acceptable returns, these restrictions could have a material adverse impact on our financial condition and results of operations.

The Dodd-Frank Act authorizes state officials to enforce regulations issued by the CFPB and to enforce the Dodd-Frank Act’s general UDAAP prohibition. This could make it more difficult than in the past for federal financial regulators to declare state laws that differ from federal standards to be preempted. To the extent that states enact requirements that differ from federal standards or state officials or courts adopt interpretations of federal consumer laws that differ from those adopted by the CFPB, we may be required to alter or cease offering products or services in some jurisdictions, which would increase compliance costs, we may be subject to a higher risk of state enforcement actions.

As a result of the enhanced consumer protection framework being implemented by the CFPB and other changes occurring in the regulatory environment, the amount of fees and interest we collect, the number of optional products we sell and the number of new loans we originate could decrease, which could have a material adverse effect on our business, results of operations and financial condition.

The Dodd-Frank Act has had, and may continue to have, a significant impact on our business, results of operation and financial condition.

Federal regulatory agencies have issued numerous rulemakings to implement the provisions of the Dodd-Frank Act, which was enacted in 2010, but a number of provisions still require final rulemaking or additional guidance and interpretation by these agencies. Although the ultimate impact of the Dodd-Frank Act on the U.S. financial system and us remains unclear, the law and its implementing regulations have had, and may continue to have, a significant adverse impact on our business, results of operation and financial condition. For example, the Dodd-Frank Act and related regulations restrict certain business practices, impose additional costs on us (including increased compliance costs and increased costs of funding raised through the issuance of asset-backed securities), limit the fees we can charge for services and affect the value of our assets. The Dodd-Frank Act also may adversely affect the securitization market because it requires, among other things, that a securitizer generally retain not less than 5% of the credit risk of certain types of securitized assets that are transferred, sold,

or conveyed through the issuance of asset-backed securities. In October 2014, federal regulatory agencies issued final rules to implement these credit risk retention requirements, and compliance for new securitizations backed by automotive loans is required beginning December 24, 2016. These changes could result in additional costs or limit our ability to securitize finance receivables, and we continue to evaluate the final rules and their potential impact on our securitization activities. For more information about the regulatory framework affecting our businesses, see “Business—Regulation.”

Our use of third-party vendors and our other ongoing third-party business relationships are subject to increasing regulatory requirements and attention.

We regularly use third-party vendors and subcontractors as part of our business. These types of third-party relationships are subject to increasingly demanding regulatory requirements and attention by our federal regulators. Regulation requires us to enhance our due diligence, ongoing monitoring and control over our third-party vendors and subcontractors and other ongoing third-party business relationships. In certain cases we may be required to renegotiate our agreements with these vendors and/or their subcontractors to meet these enhanced requirements, which could increase our costs. We expect that our regulators will hold us responsible for deficiencies in our oversight and control of our third-party relationships and for the performance of the parties with which we have these relationships. As a result, if our regulators conclude that we have not exercised adequate oversight and control over our third-party vendors and subcontractors or other ongoing third-party business relationships, or that such third-parties have not performed appropriately, we could be subject to enforcement actions. Such enforcement actions could have a material adverse effect on our business, results of operations and financial condition.

We are subject to government regulations concerning our hourly and our other employees, including minimum wage, overtime, and health care laws.

We are subject to applicable rules and regulations relating to our relationship with our employees, including minimum wage and break requirements, health benefits, unemployment taxes, overtime, and working conditions and immigration status. Legislated increases in the federal minimum wage and increases in additional labor cost components, such as employee benefit costs, workers’ compensation insurance rates, compliance costs and fines, as well as the cost of litigation in connection with these regulations, would increase our labor costs. Unionizing and collective-bargaining efforts have received increased attention nationwide in recent periods. Should our employees become represented by unions, we would be obligated to bargain with those unions with respect to wages, hours and other terms and conditions of employment, which is likely to increase our labor costs. Moreover, as part of the process of union organizing and collective-bargaining, strikes and other work stoppages may occur, which would cause disruption to our business. Similarly, many employers have been subject to actions brought by governmental agencies and private individuals under wage-hour laws on a variety of claims, such as improper classification of workers as exempt from overtime pay requirements and failure to pay overtime wages properly, with such actions sometimes brought as class actions, and these actions can result in material liabilities and expenses. Should we be subject to employment litigation, such as actions involving wage-hour, overtime, break, and working time, it may distract our management from business matters and result in increased labor costs. In addition, we currently sponsor employer-subsidized premiums for major medical programs for eligible salaried and hourly personnel who elect health care coverage through our insurance programs. As a result of regulatory changes, we may not be able to continue to offer health care coverage to our employees on affordable terms or at all. If we are unable to locate, attract, train, or retain qualified personnel, or if our costs of labor increase significantly, it could have a material adverse effect on our business, results of operations, and financial position.

Risks Relating to Our Organization and Structure

If the ownership of our common stock continues to be highly concentrated, it may prevent you and other minority stockholders from influencing significant corporate decisions and may result in conflicts of interest.

Immediately following the completion of this offering, the ABV Funds will own approximately % of our outstanding common stock on a combined basis or % if the underwriters’ option to purchase additional shares of Class A common stock is exercised in full. As a result, the ABV Funds will own shares sufficient for the majority vote over all matters requiring a stockholder vote, including: the election of directors; mergers, consolidations and acquisitions; the sale of all or substantially all of our assets and other decisions affecting our capital structure; the amendment of our certificate of incorporation and our bylaws; and our winding up and dissolution. This concentration of ownership may delay, deter or prevent acts that would be favored by our other stockholders and may also have the effect of delaying, preventing or deterring a change in control of us.

The interests of the ABV Funds may not always coincide with our interests or the interests of our other stockholders. They may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. Also, the ABV Funds may seek to cause us to take courses of action that, in their judgment, could enhance their investment in us, but which might involve risks to our other stockholders or adversely affect us or our other stockholders, including investors in this offering. In addition, immediately following this offering and the application of net proceeds therefrom, the Continuing LLC Owners will own % of the LLC Units. Because they hold their ownership interest in our business through FC HoldCo, rather than through the public company, these existing owners may have conflicting interests with our public stockholders. For example, the TRA Parties (as defined in “Organizational Structure—Following This Offering”) may have different tax positions from us which could influence their decisions regarding whether and when to dispose of assets, whether and when to incur new or refinance existing indebtedness, especially in light of the existence of the TRA that we entered in connection with this offering, and whether and when Flagship should terminate the TRA and accelerate its obligations thereunder. In addition, the structuring of future transactions may take into consideration the tax or other considerations of the TRA Parties even where no similar benefit would accrue to us. See “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.”

In addition, under the terms of the TRA, we may not elect an early termination of the TRA without the consent of each of certain ABV Funds until such ABV Fund has exchanged all of its LLC Units (and Class B common stock) for shares of Class A common stock or cash. Accordingly, we may be prevented from terminating the TRA in circumstances where we determine it would be beneficial for us to do so, including potentially in connection with future strategic transactions.

As a result of this concentration, the implications of our structure or actions taken by the ABV Funds or PWP, the market price of our Class A common stock could decline or stockholders might not receive a premium over the then-current market price of our Class A common stock upon a change in control. In addition, this concentration of share ownership may adversely affect the trading price of our Class A common stock because investors may perceive disadvantages in owning shares in a company with significant stockholders.

We are a holding company with no operations and will rely on our operating subsidiaries to provide us with funds necessary to meet our financial obligations and to pay dividends.

We are a holding company with no material direct operations. Our principal asset is the controlling equity interest in FC HoldCo we hold directly or indirectly through our wholly owned subsidiary Flagship Holdings. As a result, we will be dependent on loans, dividends and other payments from our subsidiaries to generate the funds necessary to meet our financial obligations and to pay dividends on our common stock. Our subsidiaries are legally distinct from us and may be prohibited or restricted from paying dividends or otherwise making funds available to us under certain conditions. If the cash we receive from our subsidiaries pursuant to dividend payments is insufficient for us to fund our obligations, or if a subsidiary is unable to pay dividends to us, we may

be required to raise cash through the incurrence of debt, the issuance of equity or the sale of assets. However, there is no assurance that we would be able to raise cash by these means. If the ability of any of our subsidiaries to pay dividends or make other distributions or payments to us is materially restricted by regulatory requirements, bankruptcy or insolvency, or our need to maintain our financial strength ratings, or is limited due to operating results or other factors, it could materially adversely affect our ability to pay our operating costs and other corporate expense and we may be unable to, or our board may exercise its discretion not to, pay dividends.

We do not anticipate paying any dividends on our Class A common stock in the foreseeable future.

We have no plans to pay regular dividends on our Class A common stock, and we anticipate that a significant amount of any free cash flow generated from our operations will be utilized to fund the development and growth of our business and accordingly would not be available for dividends. Any declaration and payment of future dividends to holders of our Class A common stock will be at the sole discretion of our board of directors and will depend on many factors, including our financial condition, earnings, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that our board of directors deems relevant. Until such time that we pay a dividend, capital appreciation in the price of our Class A common stock, if any, will be your only source of gain on an investment in our Class A common stock.

Certain provisions of a stockholders agreement we expect to enter into with the ABV Funds (the “Stockholders Agreement”), our amended and restated certificate of incorporation and our amended and restated bylaws could hinder, delay or prevent a change in control of us, which could adversely affect the price of our Class A common stock.

Certain provisions of the Stockholders Agreement, our amended and restated certificate of incorporation and our amended and restated bylaws contain provisions that could make it more difficult for a third party to acquire us without the consent of our board of directors or the ABV Funds. These provisions provide for:

•

a classified board of directors with staggered three-year terms;

•

removal of directors only for cause and only with the affirmative vote of at least 66 ²/₃% of the voting interest of stockholders entitled to vote (provided, however, that for so long as the ABV Funds and certain of their affiliates and permitted transferees beneficially own, directly or indirectly, at least 40% of outstanding voting stock, directors may be removed with or without cause with the affirmative vote of a majority of the voting interest of stockholders entitled to vote);

•

provisions in our amended and restated certificate of incorporation and amended and restated bylaws prevent stockholders from calling special meetings of our stockholders (provided, however, that for so long as the ABV Funds and certain of their affiliates and permitted transferees beneficially own, directly or indirectly, at least 40% of our outstanding voting stock, special meetings of our stockholders may be requested by the ABV Funds, by the board of directors or by the chairman of the board of directors);

•

advance notice requirements by stockholders with respect to director nominations and actions to be taken at annual meetings;

•

certain rights to the ABV Funds and certain of their affiliates and permitted transferees with respect to the designation of directors for nomination and election to our board of directors, including the ability to appoint a majority of the members of our board of directors, plus one director, for so long as the ABV Funds and certain of their affiliates and permitted transferees continue to beneficially own, directly or indirectly at least 5% of our outstanding voting stock. See “Certain Relationships and Related Party Transactions—Stockholders Agreement”;

•

no provision in our amended and restated certificate of incorporation or amended and restated bylaws for cumulative voting in the election of directors, which means that the holders of a majority of the outstanding shares of our outstanding voting stock can elect all the directors standing for election;

•

our amended and restated certificate of incorporation provides that no stockholder or group (other than the ABV Funds or their affiliates) which acquires more than 9.99% of our capital stock shall have the right to vote more than 9.99% of our capital stock entitled to vote on matters presented to our stockholders for their vote or approval without the required notice or consent for the purchase of such shares having been provided or obtained as required by any federal, state or local consumer or other law, regulation or regulatory authority applicable to or having jurisdiction over us or any of our subsidiaries;

•

our amended and restated certificate of incorporation and our amended and restated bylaws preclude action by our stockholders outside a meeting by written consent, provided, however, that for so long as the ABV Funds and certain of their affiliates and permitted transferees beneficially own, directly or indirectly, at least 40% of our outstanding voting stock, our stockholders may act without a meeting by written consent by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of our stock entitled to vote thereon were present and voted; and

•

under our amended and restated certificate of incorporation, our board of directors has authority to cause the issuance of preferred stock from time to time in one or more series and to establish the terms, preferences and rights of any such series of preferred stock, all without approval of our stockholders. Nothing in our amended and restated certificate of incorporation precludes future issuances without stockholder approval of the authorized but unissued shares of our common stock.

In addition, these provisions may make it difficult and expensive for a third party to pursue a tender offer, change in control or takeover attempt that is opposed by the ABV Funds, our management or our board of directors. Public stockholders who might desire to participate in these types of transactions may not have an opportunity to do so, even if the transaction is favorable to stockholders. These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control or change our management and board of directors and, as a result, may adversely affect the market price of our Class A common stock and your ability to realize any potential change of control premium. See “Description of Capital Stock—Anti-Takeover Effects of Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws and Certain Provisions of Delaware Law.”

Certain of our stockholders have the right to engage or invest in the same or similar businesses as us.

The ABV Funds and their respective affiliates engage in other investments and business activities in addition to their ownership of us. Under our amended and restated certificate of incorporation, the ABV Funds, directors affiliated with the ABV Funds and their affiliates and any other non-employee directors will have no duty to refrain from engaging in any transaction or matter that may be an investment or corporate or business opportunity or offer a prospective economic or competitive advantage in which we or any of our subsidiaries could have an interest or expectancy (a “Corporate Opportunity”), or otherwise competing with us and our affiliates.

In the event that the ABV Funds, directors affiliated with the ABV Funds and their affiliates and any other non-employee directors acquire knowledge of a potential Corporate Opportunity, provided that this knowledge was not acquired solely in such person’s capacity as our director or officer and such person acts in good faith, then even if such person pursues, acquires or offers the Corporate Opportunity to another person or entity or if such person does not present the Corporate Opportunity to us, such person is deemed to have fully satisfied such person’s fiduciary duties owed to us and is not liable to us. See “Description of Capital Stock—Corporate Opportunity.”

We will be a “controlled company” within the meaning of the listing standards and, as a result, are exempt from certain corporate governance requirements.

After the completion of this offering, investment funds associated with or designated by the ABV Funds will hold substantially all of our issued and outstanding Class B common stock and will control more than a majority

of the combined voting power of our common stock. As a result, we will be a “controlled company” within the meaning of the corporate governance standards. Under the rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance standards, including (1) the requirement that a majority of the board of directors consist of independent directors, (2) the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities, (3) the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities and (4) the requirement for an annual performance evaluation of the nominating and corporate governance and compensation committees. Following this offering, we intend to utilize these exemptions. As a result, following this offering, we will not have a majority of independent directors on our board of directors; and we will not have a nominating and corporate governance committee or a compensation committee that is composed entirely of independent directors. Also, such committee will not be subject to annual performance evaluations. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance standards. In the event that we cease to be a “controlled company,” we will be required to comply with these provisions within the transition periods specified in the rules.

Our ability to pay taxes and expenses, including payments under the TRA, may be limited by our structure.

Upon the consummation of this offering, our principal asset will be a controlling equity interest in FC HoldCo. As such, we will have no independent means of generating revenue. FC HoldCo will continue to be treated as a partnership for U.S. federal income tax purposes and, as such, will not be subject to U.S. federal income tax. Instead, taxable income will be allocated to holders of its LLC Units, including us. Accordingly, we will incur income taxes on our allocable share of any net taxable income of FC HoldCo and will also incur expenses related to our operations. Pursuant to the amended and restated limited liability company agreement of FC HoldCo (the “New LLC Agreement”), FC HoldCo will make cash distributions to the owners of LLC Units, calculated using an assumed tax rate, to help fund their tax obligations in respect of the taxable income of FC HoldCo that is allocated to them. In addition to tax expenses, we also will incur expenses related to our operations, plus payments under the TRA, which we expect will be significant. We intend to cause FC HoldCo to make distributions or, in the case of certain expenses, payments in an amount sufficient to allow us to pay our taxes and operating expenses, including distributions to fund any ordinary course payments due under the TRA. However, FC HoldCo’s ability to make such distributions may be subject to various limitations and restrictions. We will be a holding company with no operations and will rely on FC HoldCo to provide us with funds necessary to meet any financial obligations. If we do not have sufficient funds to pay tax or other liabilities or to fund our operations (as a result of FC HoldCo’s inability to make distributions due to various limitations and restrictions or as a result of the acceleration of our obligations under the TRA), we may have to borrow funds and thus our liquidity and financial condition could be materially and adversely affected. To the extent that we are unable to make payments under the TRA for any reason, such payments will be deferred and will accrue interest at a rate equal to until paid (although a rate equal to will apply if the inability to make payments under the TRA is due to limitations imposed on us or any of our subsidiaries by a debt agreement in effect on the date of this prospectus).

We will be required to pay certain of our existing owners for certain tax benefits we may claim, and we expect that the payments we will be required to make will be substantial.

Future exchanges of LLC Units and shares of Class B common stock for shares of our Class A common stock or cash are expected to produce future tax benefits for us, as are certain of the Reorganization Transactions described under “Organizational Structure.” Upon the consummation of the relevant Reorganization Transactions, the resulting tax basis adjustments are likely to increase (for tax purposes) our depreciation and amortization deductions and therefore reduce the amount of income tax we would be required to pay in the future in the absence of this increased basis. When we acquire LLC Units from our existing owners through future

exchanges, the resulting tax basis adjustments are also expected to reduce the amount of income tax we would be required to pay in the future. This increased tax basis may also decrease gain (or increase loss) on future dispositions of certain assets to the extent the tax basis is allocated to those assets. Under the TRA, we generally expect to retain the benefit of 15% of the applicable tax savings after our payment obligations described below are taken into account.

Upon the closing of this offering, we will be a party to the TRA. We generally will be required to pay to the TRA Parties 85% of the applicable savings, if any, in income tax that we actually realize (or in certain circumstances are deemed to realize) as a result of (1) any increase in tax basis that was created as a result of transfers of common and preferred interests in FC HoldCo to Flagship Holdings in the Reorganization Transactions, (2) any increase in tax basis that is created as a result of future exchanges by the Continuing LLC Owners of their LLC Units (and Class B common stock) for shares of our Class A common stock or cash, (3) tax benefits related to imputed interest arising from payments under the TRA and (4) payments under the TRA.

The payment obligations under the TRA are obligations of the Issuer and Flagship Holdings, not FC HoldCo, and we expect that the payments we will be required to make under the TRA will be substantial. Assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize all tax benefits that are subject to the TRA, we expect that the tax savings we will be deemed to realize associated with (1) the acquisition of common and preferred interests in FC HoldCo in the Reorganization Transactions and (2) future exchanges of LLC Units as described above would aggregate approximately $ over years from the date of this offering, based on the initial public offering price of $ per share of our Class A common stock, which is the midpoint of the range set forth on the cover page of this prospectus, and assuming all future exchanges would occur one year after this offering. Under such scenario we would be required to pay the TRA Parties 85% of such amount, or $ , over the year period from the date of this offering. The actual amounts may materially differ from these hypothetical amounts, as potential future tax savings we will be deemed to realize, and TRA payments by us, will be calculated based in part on the market value of our Class A common stock at the time of purchase or exchange and the prevailing federal, state and local tax rates applicable to us over the life of the TRA, and will generally be dependent on our ability to generate sufficient future taxable income to realize the benefit of the increases in tax basis and other tax attributes subject to the TRA. See “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.” Payments under the TRA are not conditioned on our existing owners’ continued ownership of us after this offering.

The actual increase in tax basis resulting from future exchanges of LLC Units (and Class B common stock) for shares of Class A common stock or cash, as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, including the timing of exchanges by the Continuing LLC Owners, the price of our Class A common stock at the time of the exchange, whether such exchanges are taxable, the amount and timing of the taxable income we generate in the future, the federal, state and local tax rates then applicable and the portion of our payments under the TRA constituting imputed interest. Payments under the TRA are expected to give rise to certain additional tax benefits attributable either to additional increases in tax basis or to deductions for imputed interest, depending on the circumstances. Any such benefits are covered by the TRA and will increase the amounts due thereunder. In addition, the TRA will provide for interest, at a rate equal to , accrued from the due date (without extensions) of the corresponding tax return to the date of payment specified by the TRA.

Payments under the TRA will be based on the tax reporting positions that we determine. If the IRS challenges any increases in tax basis or other tax attributes subject to the TRA and any such increases in tax basis, including any increases in tax basis resulting from the consummation of the Investors’ Reorganization Transactions, or other tax benefits are subsequently disallowed, we would not be reimbursed for any payments previously made under the TRA (although we would reduce future amounts otherwise payable under the TRA). As a result, payments could be made under the TRA in excess of the tax savings that we realize in respect of the attributes to which the TRA relates.

In certain cases, payments under the TRA to our existing owners may be accelerated or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the TRA.

The TRA provides that (1) in the event that we materially breach any of our material obligations under the agreement, whether as a result of failure to make any payment within three months of when due, failure to honor any other material obligation required thereunder or by operation of law as a result of the rejection of the agreement in a bankruptcy or otherwise, (2) upon certain mergers, asset sales, other forms of business combinations or other changes of control or (3) if, at any time, we elect an early termination of the agreement, our (or our successor’s) obligations under the TRA (with respect to all LLC Units, whether or not LLC Units have been exchanged or acquired before or after such transaction) would accelerate and become payable in a lump sum amount equal to the present value of the anticipated future tax benefits calculated based on certain assumptions, including that we would have sufficient taxable income to fully utilize the deductions arising from the tax basis and other tax attributes subject to the TRA. Under the terms of the TRA, we may not elect an early termination of the TRA without the consent of each of certain ABV Funds until such ABV Fund has exchanged all of its LLC Units (and Class B common stock) for shares of Class A common stock or cash. Accordingly, we may be prevented from terminating the TRA in circumstances where we determine it would be beneficial for us to do so, including potentially in connection with future strategic transactions.

As a result of the foregoing, (1) we could be required to make payments under the TRA that are greater than or less than the specified percentage of the actual tax savings we realize in respect of the tax attributes subject to the TRA and (2) if we materially breach a material obligation under the TRA or the TRA is otherwise terminated early, we would be required to make an immediate lump sum payment equal to the present value of the anticipated future tax savings, which payment may be made significantly in advance of the actual realization of such future tax savings. In these situations, our obligations under the TRA could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. There can be no assurance that we will be able to fund or finance our obligations under the TRA. If we were permitted to elect to terminate the TRA immediately after this offering, based on an assumed initial public offering price of $ per share of our Class A common stock, which is the midpoint of the range set forth on the cover page of this prospectus, and a discount rate equal to , we estimate that we would be required to pay $ in the aggregate under the TRA. See “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.”

In certain circumstances, FC HoldCo will be required to make distributions to us and the existing owners of FC HoldCo and the distributions that FC HoldCo will be required to make may be substantial.

FC HoldCo will be treated as a partnership for U.S. federal income tax purposes and, as such, will not be subject to U.S. federal income tax. Instead, taxable income will be allocated to holders of its LLC Units, including us. Pursuant to the New LLC Agreement, FC HoldCo will make pro rata cash distributions, or tax distributions, to the owners of LLC Units, calculated using an assumed tax rate.

Funds used by FC HoldCo to satisfy its tax distribution obligations will not be available for reinvestment in our business. Moreover, the tax distributions that FC HoldCo will be required to make may be substantial, and may exceed (as a percentage of FC HoldCo’s income) the overall effective tax rate applicable to a similarly situated corporate taxpayer. In addition, because these payments will be calculated with reference to an assumed tax rate, these payments may significantly exceed the actual tax liability for many of the existing owners of FC HoldCo.

As a result of the use of an assumed tax rate in calculating FC HoldCo’s distribution obligations, we may receive distributions significantly in excess of our tax liabilities and obligations to make payments under the TRA. To the extent, as currently expected, we do not distribute such cash balances as dividends on our Class A common stock and instead, for example, hold such cash balances or lend them to FC HoldCo, the existing owners of FC HoldCo would benefit from any value attributable to such accumulated cash balances as a result of their

ownership of Class A common stock following an exchange of their LLC Units. See “Organizational Structure—Reorganization Transactions—Amendments of the Limited Liability Company Agreement of FC HoldCo” and “Organizational Structure—Following This Offering.”

We will not be reimbursed for any payments made to our existing investors under the TRA in the event that any tax benefits are disallowed.

If the IRS challenges any increases in tax basis that give rise to payments under the TRA and any such increases in tax basis, including any increases in tax basis resulting from the consummation of the Investors’ Reorganization Transactions, are subsequently disallowed, the recipients of payments under those agreements will not reimburse us for any payments we previously made to them. Any such disallowance would be taken into account in determining future payments under the TRA and would, therefore, reduce the amount of any such future payments. Nevertheless, if the claimed tax benefits from any increases in tax basis are disallowed, our payments under the TRA could exceed our actual tax savings, and we may not be able to recoup payments under the TRA that were calculated on the assumption that the disallowed tax savings were available.

Risks Related to Our Class A Common Stock and This Offering

Before this offering, there has been no established public market for our Class A common stock. An active, liquid trading market for our Class A common stock may not develop or be sustained following this offering. If an active trading market for our Class A common stock does not develop or is not maintained, your ability to sell your shares of Class A common stock when desired and the prices that you may obtain for your shares of Class A common stock will be adversely affected.

The market price and trading volume of our Class A common stock may be volatile, which could result in rapid and substantial losses for our stockholders.

Even if an active trading market develops, the market price of our Class A common stock may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our Class A common stock may fluctuate and cause significant price variations to occur. The initial public offering price of our Class A common stock will be determined by negotiation between us, the representatives of the underwriters and the selling stockholders based on a number of factors and may not be indicative of prices that will prevail in the open market following completion of this offering. If the market price of our Class A common stock declines significantly, you may be unable to resell your shares at or above your purchase price, if at all. The market price of our Class A common stock may fluctuate or decline significantly in the future. Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our Class A common stock include:

•

variations in our quarterly or annual operating results;

•

changes in our earnings estimates (if provided) or differences between our actual financial and operating results and those expected by investors and analysts;

•

the contents of published research reports about us or our industry or the failure of securities analysts to cover our Class A common stock after this offering;

•

additions to, or departures of, key management personnel;

•

any increased indebtedness we may incur in the future;

•

announcements by us or others and developments affecting us;

•

actions by institutional stockholders;

•

litigation and governmental investigations;

•

changes in market valuations of similar companies;

•

speculation or reports by the press or investment community with respect to us or our industry in general;

•

increases in market interest rates that may lead purchasers of our shares to demand a higher yield;

•

announcements by us or our competitors of significant contracts, acquisitions, dispositions, strategic relationships, joint ventures or capital commitments; and

•

general market, political and economic conditions, including any such conditions and local conditions in the markets in which our borrowers are located.

These broad market and industry factors may decrease the market price of our Class A common stock, regardless of our actual operating performance. The stock market in general has from time to time experienced extreme price and volume fluctuations, including in recent months. In addition, in the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

Future offerings of debt or equity securities by us may adversely affect the market price of our Class A common stock.

In the future, we may attempt to obtain financing or to further increase our capital resources by issuing additional shares of our Class A common stock or offering debt or other equity securities, including commercial paper, medium-term notes, senior or subordinated notes, debt securities convertible into equity or shares of preferred stock. In particular, we intend to continue to seek opportunities to acquire automobile finance portfolios. Future acquisitions could require substantial additional capital in excess of cash from operations. We would expect to finance the capital required for acquisitions through a combination of additional issuances of equity, corporate indebtedness, asset-backed financing and/or cash from operations.

Issuing additional shares of our Class A common stock or other equity securities or securities convertible into equity may dilute the economic and voting rights of our stockholders at the time of such issuance or reduce the market price of our Class A common stock or both. Upon liquidation, holders of debt securities and preferred shares, if issued, and lenders with respect to other borrowings would receive a distribution of our available assets prior to the holders of our Class A common stock. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion. Preferred shares, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our Class A common stock. Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing or nature of our future offerings. Thus, holders of our Class A common stock bear the risk that our future offerings may reduce the market price of our Class A common stock and dilute their stockholdings in us. See “Description of Capital Stock.”

The market price of our Class A common stock could be negatively affected by sales of substantial amounts of our Class A common stock in the public markets.

Assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), there will be shares of Class A common stock outstanding after this offering, or shares outstanding if the underwriters exercise their option to purchase additional shares of Class A common stock in full. Of our issued and outstanding shares, all the Class A common stock sold in this offering will be freely transferable, except for any shares held by our “affiliates,” as that term is defined in Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”). Assuming an initial public offering

price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), approximately % of our outstanding Class A common stock (or % if the underwriters exercise their option to purchase additional shares of Class A common stock in full) will be held by the ABV Funds following completion of the offering and can be resold into the public markets in the future in accordance with the requirements of Rule 144. See “Shares Eligible For Future Sale.”

We and our executive officers, directors and the ABV Funds (who, assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), will hold in the aggregate approximately % of our outstanding Class A common stock immediately after the completion of this offering or % if the underwriters exercise their option to purchase additional shares of Class A common stock in full) have agreed with the underwriters that, subject to certain exceptions, for a period of 180 days after the date of this prospectus, we and they will not directly or indirectly offer, pledge, sell, contract to sell, sell any option or contract to purchase or otherwise dispose of any Class A common stock or any securities convertible into or exercisable or exchangeable for Class A common stock, or in any manner transfer all or a portion of the economic consequences associated with the ownership of Class A common stock, or cause a registration statement covering any Class A common stock to be filed, without the prior written consent of . See “Underwriting.” may waive these restrictions at their discretion.

Pursuant to the registration rights agreement, the ABV Funds and certain of their affiliates and permitted third party transferees have the right, in certain circumstances, to require us to register their approximately shares of our Class A common stock (assuming an initial public offering price of $ per share, equal to the midpoint of the range set forth on the cover page of this prospectus) under the Securities Act for sale into the public markets. Upon the effectiveness of such a registration statement, all shares covered by the registration statement will be freely transferable. See “Certain Relationships and Related Party Transactions—Stockholders Agreement.”

Subject to limitations and assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), approximately shares will become eligible for sale upon expiration of the 180-day lock-up period. The market price of our Class A common stock may decline significantly when the restrictions on resale by our existing stockholders lapse. A decline in the price of our Class A common stock might impede our ability to raise capital through the issuance of additional Class A common stock or other equity securities.

Investors in this offering will suffer immediate and substantial dilution.

The initial public offering price of our Class A common stock will be substantially higher than the net tangible book value as further adjusted per share issued and outstanding immediately after this offering. Our net tangible book value per share as of March 31, 2015 was approximately $ and represents the amount of book value of our total tangible assets minus the book value of our total liabilities, divided by the number of our shares of Class A common stock then issued and outstanding. Investors who purchase Class A common stock in this offering will pay a price per share that substantially exceeds the net tangible book value per share of Class A common stock. If you purchase shares of our Class A common stock in this offering, you will experience immediate and substantial dilution of $ in the net tangible book value per share, based upon the initial public offering price of $ per share (the midpoint of the estimated initial public offering price range set forth on the cover of this prospectus). Assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), investors that purchase Class A common stock in this offering will have purchased % of the shares issued and outstanding immediately after the offering, but will have paid % of the total consideration for those shares.

Our Class A common stock is and will be subordinate to all of our existing and future indebtedness and any preferred stock, and effectively subordinated to all indebtedness and preferred equity claims against our subsidiaries.

Shares of our Class A common stock are common equity interests in us and, as such, will rank junior to all of our existing and future indebtedness and other liabilities. Additionally, holders of our Class A common stock may become subject to the prior dividend and liquidation rights of holders of any classes or series of preferred stock that our board of directors may designate and issue without any action on the part of the holders of our Class A common stock. Furthermore, our right to participate in a distribution of assets upon any of our subsidiaries’ liquidation or reorganization is subject to the prior claims of that subsidiary’s creditors and preferred stockholders.

The obligations associated with being a public company will require significant resources and management attention, which will increase our costs of operations and may divert focus from our business operations.

As a result of this offering, we will become subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”). The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal controls and procedures for financial reporting. As a result, we will incur significant legal, accounting and other expenses that we did not previously incur. Once established, these controls may not achieve their intended objectives. Control processes that involve human diligence and compliance, such as our disclosure controls and procedures and internal control over financial reporting, are subject to lapses in judgment and breakdowns resulting from human failures. Controls can also be circumvented by collusion or improper management override. Because of such limitations, there are risks that material misstatements due to error or fraud may not be prevented or detected and that information may not be reported on a timely basis. If our controls are not effective, it could have a material adverse effect on our results of operations, financial condition, and market for our Class A common stock, and could subject us to regulatory scrutiny.

Furthermore, the need to establish the corporate infrastructure demanded of a public company may divert management’s attention from implementing our growth strategy, which could prevent us from improving our business, results of operations and financial condition. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a stand-alone public company. However, the measures we take may not be sufficient to satisfy our obligations as a public company. In addition, we cannot predict or estimate the amount of additional costs we may incur in order to comply with these requirements.

State licensing laws and regulations may delay, discourage or otherwise impede investors from purchasing our Class A common stock.

Certain of the states in which we are licensed to provide consumer finance services have laws or regulations which require regulatory notice or approval for the acquisition of “control” of regulated entities. Under some state laws or regulations applicable to licensing, there exists a presumption of “control” when an acquiring party acquires 10% or more of the voting securities of a regulated entity or of a company which itself controls (directly or indirectly) a regulated entity. Therefore, in connection with any person acquiring 10% or more of our combined common stock, it may be necessary to seek the prior notification to or approval of some state licensing regulators, or a determination from such regulators that “control” has not been acquired. Furthermore, upon the acquisition of 10% or more of our combined common stock, state regulators may require certain information about the acquirers. Such laws or regulations could significantly delay, discourage, or otherwise impede investors’ ability to acquire our Class A common stock.

If we are unable to achieve and maintain effective internal control over financial reporting, this could have a material adverse effect on our business.

Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal control over financial reporting, and will require in the same report, a report by our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud or material error. Any failure to implement current internal controls or required new or improved controls, or difficulties encountered in their implementation could have a material adverse effect on our business and stock price.

In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit

attention by those responsible for oversight of our financial reporting. The discovery of a material weakness and the disclosure of that fact, even if quickly remedied, could reduce the market value of shares of our Class A common stock. Additionally, the existence of any material weakness or significant deficiency requires management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiency and management may not be able to remediate any such material weaknesses or significant deficiency in a timely manner. Undetected material weaknesses in our internal controls could lead to financial statement restatements, which could have a material adverse effect on our business, financial condition and results of operation.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

We have made statements under the captions “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and in other sections of this prospectus that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including those factors discussed under the caption entitled “Risk Factors.” You should specifically consider the numerous risks outlined under “Risk Factors.”

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this prospectus to conform our prior statements to actual results or revised expectations.

ORGANIZATIONAL STRUCTURE

Organizational Structure Prior to This Offering

The following diagram depicts our organizational structure prior to the Reorganization Transactions. This chart is provided for illustrative purposes only and does not purport to represent all legal entities within our organizational structure.

LOGO

Organizational Structure Following This Offering

LOGO

Immediately following this offering, the Issuer will be a holding company and, either directly or through its wholly owned subsidiary Flagship Holdings, its principal asset will be a controlling equity interest in FC HoldCo. Through Flagship Holdings, the sole managing member of FC HoldCo, the Issuer will operate and control all of the business and affairs of FC HoldCo and, through FC HoldCo and its subsidiaries, conduct our business. The Issuer will include FC HoldCo in its consolidated financial statements and will report a noncontrolling interest related to the LLC Units held by the Continuing LLC Owners on its consolidated financial statements.

Our post-offering organizational structure will allow the Continuing LLC Owners to retain their equity ownership in FC HoldCo, an entity that is classified as a partnership for U.S. federal income tax purposes, in the form of LLC Units. Investors participating in this offering will, by contrast, hold equity in the Issuer, a Delaware corporation that is a domestic corporation for U.S. federal income tax purposes, in the form of shares of our Class A common stock. We believe that the Continuing LLC Owners generally find it advantageous to hold their equity interests in an entity that is not taxable as a corporation for U.S. federal income tax purposes. The Continuing LLC Owners, Flagship Holdings and the Issuer will incur U.S. federal, state and local income taxes

on their allocable share of any taxable income of FC HoldCo as calculated pursuant to the New LLC Agreement. As described below, each of the Continuing LLC Owners will also hold a number of shares of Class B common stock of the Issuer equal to the number of LLC Units held by such person. Although these shares have no economic rights, they will allow such owners to directly exercise voting power at the Issuer, which will be the managing member of FC HoldCo, at a level that is consistent with their overall equity ownership of our business. Under our amended and restated certificate of incorporation, each share of Class B common stock shall be entitled to one vote. When a LLC Unit is exchanged by a Continuing LLC Owner (which we would generally expect to occur in connection with a sale or other transfer), a corresponding share of Class B common stock held by the exchanging owner is also exchanged and will be cancelled. Shares of Class B common stock are not transferable except together with the transfer of an equal number of LLC Units.

Incorporation of the Issuer

The Issuer was incorporated in the State of Delaware on March 16, 2015. Except in connection with its incorporation and in connection with the transactions described below under “Reorganization Transactions,” the Issuer has not, and will not, engage in any business or other activities prior to this offering. The Issuer’s amended and restated certificate of incorporation will authorize two classes of common stock, Class A common stock and Class B common stock, each having the terms described in “Description of Capital Stock.”

Immediately prior to the Pre-Closing Reorganization Transactions (as defined below, under “—Investors’ Reorganization Transactions”), the Issuer’s outstanding Class A common stock will undergo a stock split (the “Pre-Closing Stock Split”) in which each outstanding share of Class A common stock will be converted into a number of new shares of Class A common stock that will be determined by reference to the price per share of Class A common stock sold in this offering. If the price per share of Class A common stock sold in this offering is $ (the midpoint of the range set forth on the cover page of this prospectus), each existing share of Class A common stock would be converted into shares of new Class A common stock in the stock split. Immediately following the completion of this offering, each Continuing LLC Owner will hold a number of shares of our Class B common stock equal to the number of LLC Units held by such Continuing LLC Owner, each share of which provides its holder with no economic rights but entitles the holder to one vote on matters presented to the Issuer’s stockholders, as described in “Description of Capital Stock—Class B Common Stock.” Holders of Class A common stock and Class B common stock vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law.

Reorganization Transactions

On March 20, 2015, the Issuer incorporated in the State of Delaware a new wholly owned subsidiary, Flagship Holdings. The incorporation of Flagship Holdings, the two amendments of the limited liability company agreement of FC HoldCo, the Investors’ Reorganization Transactions and the entry into the Exchange Agreement and the TRA, all described below, are collectively referred to as the “Reorganization Transactions.”

Amendment of the Limited Liability Company Agreement of FC HoldCo

Immediately before the Pre-Closing Reorganization Transactions, the limited liability company agreement of FC HoldCo will be amended and restated to, among other things, appoint Flagship Holdings as its sole managing member and recapitalize the existing preferred, common and other interests in FC HoldCo into non-voting LLC Units, each comprised of one new preferred interest (a “Preferred Interest”) and one new common interest (a “Common Interest”), with the result that the only outstanding equity interests in FC HoldCo after such amendment will be LLC Units (the “Pre-Closing LLC Recapitalization”). We refer to the limited liability company agreement of FC HoldCo, as in effect at the time of completion of this offering, as the “New LLC Agreement.”

Through its subsidiary Flagship Holdings, the sole managing member of FC HoldCo, the Issuer will have the right to determine when distributions will be made to the unit holders of FC HoldCo and the amount of any such distributions (subject to the requirements with respect to the tax distributions described below). If the Issuer authorizes a distribution, such distribution will be made to the holders of LLC Units, including the Issuer, pro rata in accordance with their respective ownership interests in FC HoldCo, provided that Flagship Holdings, as sole managing member, will be entitled to non-pro rata distributions for certain fees and expenses of the Issuer and Flagship Holdings.

Upon the consummation of this offering, the Issuer and Flagship Holdings will be holding companies and their principal asset will be a controlling equity interest in FC HoldCo. As such, the Issuer will have no independent means of generating revenue. FC HoldCo will be treated as a partnership for U.S. federal income tax purposes and, as such, will not be subject to U.S. federal income tax. Instead, taxable income will be allocated to holders of LLC Units, including the Issuer and Flagship Holdings. Accordingly, the Issuer and Flagship Holdings will incur income taxes on their allocable share of any net taxable income of FC HoldCo and will also incur expenses related to their operations. Pursuant to the New LLC Agreement, FC HoldCo will make pro rata cash distributions to the holders of LLC Units, calculated using an assumed tax rate, to help to fund their tax obligations in respect of the taxable income of FC HoldCo that is allocated to them. Generally, these tax distributions will be computed based on an assumed income tax rate equal to . FC HoldCo will make tax distributions pro rata in accordance with LLC Unit ownership. In addition to tax expenses, the Issuer and Flagship Holdings also will incur expenses related to their operations, plus payments under the TRA, which the Issuer expects will be significant. The Issuer intends to cause FC HoldCo to make distributions or, in the case of certain expenses, payments in an amount sufficient to allow the Issuer and Flagship Holdings to pay their taxes and operating expenses, including distributions to fund any ordinary course payments due under the TRA.

Investors’ Reorganization Transactions

On , 2015:

(1)

each of CFC HoldCo LLC and FCA HoldCo LLC made a distribution of the existing FC HoldCo preferred and common interests held by it to its members, Perella Weinberg Partners Asset Based Value Master Fund II L.P. (“ABVF Master Fund”), Perella Weinberg Partners ABV Opportunity Master Fund II B L.P. (“ABVO 2 Master Fund”) and Perella Weinberg Partners ABV Opportunity Master Fund III B L.P. (“ABVO 3 Master Fund,” and collectively, the “Master Funds”), pro rata in proportion to each Master Fund’s existing interest in the entity;

(2)

ABVF Master Fund distributed the existing FC HoldCo preferred and common interests held by it to its owners, Perella Weinberg Partners Asset Based Value Delaware Intermediate Fund LLC (“ABVF Delaware Blocker”) and Perella Weinberg Partners Asset Based Value Fund LP (“ABVF US Feeder”), pro rata in accordance with their respective interests in ABVF Master Fund, and ABVO 2 Master Fund distributed the existing FC HoldCo preferred and common interests held by it to its owners, Perella Weinberg Partners ABV Opportunity Delaware Intermediate Fund II LLC (“ABVO 2 Delaware Blocker”) and Perella Weinberg Partners ABV Opportunity Fund II LP (“ABVO 2 US Feeder”), pro rata in accordance with their respective interests in ABVO 2 Master Fund;

(3)

Perella Weinberg Partners Asset Based Value Offshore Fund (“ABVF Offshore Feeder”) contributed an ABVF Delaware Blocker promissory note to the Issuer in exchange for shares of the Issuer’s Class A common stock, Perella Weinberg Partners ABV Opportunity Offshore Fund III A (“ABVO 3 Offshore Feeder IIIA”) and Perella Weinberg Partners ABV Opportunity Offshore Fund III B (“ABVO 3 Offshore Feeder IIIB”) each indirectly contributed a Perella Weinberg Partners ABV Opportunity Delaware Intermediate Fund III LLC (“ABVO 3 Delaware Blocker”) promissory note to (“New ABVO 3 Master Fund”), New ABVO 3 Master Fund contributed the ABVO 3 Delaware Blocker promissory notes to the Issuer in exchange for shares of the Issuer’s Class A common stock, and the Issuer contributed the ABVF Delaware Blocker promissory note and the ABVO 3 Delaware Blocker promissory notes to Flagship Holdings as additional paid-in capital;

(4)

the Issuer contributed to Flagship Holdings shares of the Issuer’s Class A common stock as additional paid-in capital;

(5)

ABVF Delaware Blocker transferred all of its existing FC HoldCo common interest to Flagship Holdings in satisfaction of the ABVF Delaware Blocker promissory note held by Flagship Holdings;

(6)

ABVO 2 Delaware Blocker sold all of its existing FC HoldCo common interests to Flagship Holdings in exchange for shares of the Issuer’s Class A common stock;

(7)

ABVO 3 Master Fund sold all of its existing FC HoldCo common interests to Flagship Holdings in exchange for shares of the Issuer’s Class A common stock and Flagship Holdings promissory notes bearing an aggregate principal amount of approximately $ ;

(8)

ABVO 2 Delaware Blocker distributed the shares of the Issuer’s Class A common stock it received to Perella Weinberg Partners ABV Opportunity Offshore Fund II A (“ABVO 2 Offshore Feeder IIA”) and Perella Weinberg Partners ABV Opportunity Offshore Fund II B (“ABVO 2 Offshore Feeder IIB”), and ABVO 3 Master Fund distributed shares of the Issuer’s Class A common stock to Perella Weinberg Partners ABV Opportunity Fund III LP (“ABVO 3 US Feeder”) and the Flagship Holdings promissory notes it received to ABVO 3 Delaware Blocker;

(9)

ABVO 3 Delaware Blocker transferred the Flagship Holdings promissory notes it received to Flagship Holdings in satisfaction of the ABVO 3 Delaware Blocker promissory note held by Flagship Holdings; and

(10)

ABVO 3 US Feeder directly contributed its shares of the Issuer’s Class A common stock to New ABVO 3 Master Fund.

Assuming that the price per Class A share sold in this offering is $ (the midpoint of the range set forth on the cover page of this prospectus), immediately after the Pre-Closing Stock Split and the Pre-Closing LLC Recapitalization and prior to the completion of this offering:

(1)

the Issuer will contribute an additional shares of the Issuer’s Class A common stock to Flagship Holdings;

(2)

Perella Weinberg Partners ABV Opportunity Offshore Fund IIIA (“ABVO 3 Offshore Feeder IIIA”) and Perella Weinberg Partners ABV Opportunity Offshore Fund IIIB (“ABVO 3 Offshore Feeder IIIB”) will each indirectly contribute an ABVO 3 Delaware Blocker promissory note to New ABVO 3 Master Fund, New ABVO 3 Master Fund will contribute the ABVO 3 Delaware Blocker promissory notes to the Issuer in exchange for shares of the Issuer’s Class A common stock, ABVF Offshore Feeder will contribute an ABVF Delaware Blocker promissory note to the Issuer in exchange for shares of the Issuer’s Class A common stock and the Issuer will further contribute the ABVO 3 Delaware Blocker and ABVF Delaware Blocker promissory notes received by it to Flagship Holdings as additional paid-in capital;

(3)

ABVF Delaware Blocker will transfer a portion of its Preferred Interests to Flagship Holdings in satisfaction of the ABVF Delaware Blocker promissory note held by Flagship Holdings;

(4)

Flagship Holdings will purchase:

•

all of ABVO 3 Master Fund’s Preferred Interests from ABVO 3 Master Fund in exchange for shares of the Issuer’s Class A common stock and Flagship Holdings promissory notes bearing an aggregate principal amount of approximately $ ,

•

all of ABVO 2 Delaware Blocker’s Preferred Interests from ABVO 2 Delaware Blocker in exchange for shares of the Issuer’s Class A common stock and an approximately $ Flagship Holdings promissory note,

•

all of ABVF Delaware Blocker’s remaining Preferred Interests from ABVF Delaware Blocker in exchange for an approximately $ Flagship Holdings promissory note,

•

a portion of ABVF US Feeder’s LLC Units in exchange for an approximately $ promissory note, and

•

a portion of ABVO 2 US Feeder’s LLC Units in exchange for an approximately $ Flagship Holdings promissory note; and

(5)

ABVO 3 Master Fund will distribute Flagship Holdings promissory notes bearing a principal amount of approximately $ to ABVO 3 Delaware Blocker, which will then transfer the Flagship Holdings promissory notes to Flagship Holdings in satisfaction of the ABVO 3 Delaware Blocker promissory notes, ABVO 3 Master Fund will indirectly transfer the remaining Flagship Holdings promissory notes and shares of the Issuer’s Class A common stock received by it as described in clause (4) above to New ABVO 3 Master Fund, and ABVO 2 Delaware Blocker will transfer the shares of the Issuer’s Class A common stock and the Flagship Holdings promissory note received by it as described in clause (4) above to ABVO 2 Offshore Feeder IIA and ABVO 2 Offshore Feeder IIB.

We refer to the above transactions as the “Investors’ Reorganization Transactions” and the portion of the Investors’ Reorganization Transactions that occurs immediately prior to the completion of this offering, described in the immediately preceding paragraph, as the “Pre-Closing Reorganization Transactions.” We further refer to the promissory notes issued by Flagship Holdings that will be outstanding upon the completion of the Pre-Closing Reorganization Transactions as the “Flagship Holdings Notes.” In connection with the Investors’ Reorganization Transactions, the Issuer, Flagship Holdings and certain of the ABV Funds and their owners that participated in the Investors’ Reorganization Transactions (the “Investor Reorganization TRA Parties”) will enter into the TRA.

Exchange Agreement

We and the Continuing LLC Owners will enter into the Exchange Agreement at the time of this offering under which they (or certain permitted transferees thereof) will have the right, subject to the terms of the Exchange Agreement, to exchange their LLC Units, together with a corresponding number of shares of Class B common stock, for shares of our Class A common stock on a one-for-one basis, or, at our election, a cash payment equal to a volume weighted average market price of one share of Class A common stock for each LLC Unit exchanged, subject to customary conversion rate adjustments for stock splits, stock dividends, reclassifications and other similar transactions. The Exchange Agreement will provide, however, that such exchanges must be for a minimum of the lesser of LLC Units or all of the vested LLC Units held by such owner. The New LLC Agreement will also provide that as a general matter a Continuing LLC Owner will not have the right to exchange LLC Units if we determine that such exchange would be prohibited by law or regulation or would violate other agreements with us to which the Continuing LLC Owner may be subject, including the New LLC Agreement. We may impose additional restrictions on exchange that we determine to be necessary or advisable so that FC HoldCo is not treated as a “publicly traded partnership” taxable as a corporation for U.S. federal income tax purposes. As a Continuing LLC Owner exchanges LLC Units and Class B common stock for shares of Class A common stock or cash, the number of LLC Units held by the Issuer will correspondingly be increased as it acquires the exchanged LLC Units and a corresponding number of shares of Class B common stock are cancelled. See “Certain Relationships and Related Party Transactions—Exchange Agreement.”

As noted above, each of the Continuing LLC Owners will also hold a number of shares of our Class B common stock equal to the number of LLC Units held by such person. Although these shares have no economic rights, they will allow such Continuing LLC Owners to directly exercise voting power at the Issuer, the managing member of FC HoldCo, at a level that is consistent with their overall equity ownership of our business. Under our amended and restated certificate of incorporation, each share of Class B common stock will be entitled to one vote.

This Offering

In connection with the completion of this offering, the Issuer intends to contribute all of the proceeds it receives from this offering to Flagship Holdings and to cause Flagship Holdings to use (i) assuming an initial

public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), $ of the proceeds contributed to it to retire the Flagship Holdings Notes and (ii) the remainder of such proceeds to purchase newly issued LLC Units from FC HoldCo at a purchase price per LLC Unit equal to the net purchase price per Class A share in this offering. Assuming that the shares of Class A common stock to be sold in this offering are sold at $ per share (the midpoint of the range set forth on the cover page of this prospectus) at the time of this offering, Flagship Holdings will purchase from FC HoldCo LLC Units for an aggregate of $ million (or LLC Units for an aggregate of $ million if the underwriters exercise in full their option to purchase additional shares of Class A common stock). FC HoldCo will bear or reimburse the Issuer for all of the expenses of this offering. After giving effect to (i) the Pre-Closing Stock Split of the Class A common stock described above under “—Incorporation of the Issuer,” (ii) the Pre-Closing LLC Recapitalization of the existing interests in FC HoldCo into LLC Units described above under “—Amendment of the Limited Liability Company Agreement of FC HoldCo,” (iii) the Pre-Closing Reorganization Transactions and (iv) the repayment of the Flagship Holdings Notes and the purchase of LLC Units by Flagship Holdings using the proceeds from this offering, there will be LLC Units outstanding (or LLC Units outstanding, if the underwriters exercise in full their option to purchase additional shares of Class A common stock), and the Issuer, through Flagship Holdings, will own a number of such LLC Units equal to the number of outstanding shares of the Issuer’s Class A common stock. Accordingly, following this offering, the Issuer, directly or through Flagship Holdings, will hold one LLC Unit for every share of Class A common stock outstanding, a relationship that we believe fosters transparency because it results in a single share of Class A common stock representing (albeit indirectly) the same percentage ownership in FC HoldCo as a single LLC Unit.

Following This Offering

The Continuing LLC Owners may, subject to the terms of the Exchange Agreement, exchange their LLC Units, together with a corresponding number of shares of Class B common stock, for shares of our Class A common stock on a one-for-one basis, or, at our election, a cash payment equal to a volume weighted average market price of one share of Class A common stock for each LLC Unit exchanged. These exchanges are expected to result in increases in the tax basis of the assets of FC HoldCo that otherwise would not have been available. The increases in tax basis resulting from such exchanges may reduce the amount of tax that the Issuer and Flagship Holdings would otherwise be required to pay in the future. This increase in tax basis may also decrease gains (or increase losses) on future dispositions of certain assets to the extent the increase in tax basis is allocated to those assets. The increases in tax basis that resulted from certain transfers of interests in FC HoldCo to Flagship Holdings in the Reorganization Transactions may also provide the Issuer with similar tax benefits.

The Issuer and Flagship Holdings will be parties to a TRA with the Continuing LLC Owners and Investor Reorganization TRA Parties (the “TRA Parties”) that will provide for the payment by the Issuer and Flagship Holdings of approximately 85% of the amount of the calculated tax savings, if any, that the Issuer and Flagship Holdings are deemed to realize as a result of the increased tax basis described above and certain other tax benefits attributable to payments under the TRA. These payment obligations are obligations of the Issuer and Flagship Holdings and not of FC HoldCo. See “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.”

The Issuer and Flagship Holdings may accumulate cash balances in future years resulting from distributions from FC HoldCo exceeding its tax or other liabilities. To the extent the Issuer and Flagship Holdings do not use such cash balances to pay a dividend on or repurchase shares of Class A common stock and instead decide to hold or recontribute such cash balances to FC HoldCo for use in its operations, Continuing LLC Owners who exchange LLC Units and shares of Class B common stock for shares of Class A common stock or cash in the future could also benefit from any value attributable to such accumulated cash balances. See “Certain Relationships and Related Party Transactions—Exchange Agreement.”

Assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus) and as a result of the Reorganization Transactions and this offering, upon completion of this offering:

•

Our Class A common stock will be held as follows:

•

shares (or shares if the underwriters exercise in full their option to purchase additional shares of Class A common stock) by investors in this offering; and

•

shares by the Reorganization Parties.

•

Our Class B common stock (together with the same amount of LLC Units) will be held as follows:

•

shares and LLC Units by the Continuing LLC Owners.

•

The combined voting power in the Issuer will be as follows:

•

% for investors in this offering (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock);

•

% for the Reorganization Parties (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock); and

•

% for the Continuing LLC Owners (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

USE OF PROCEEDS

We intend to contribute all of the proceeds we receive in this offering to Flagship Holdings and to cause Flagship Holdings to use (i) assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), $ million of the proceeds contributed to it to retire the Flagship Holdings Notes and (ii) the remaining proceeds to purchase LLC Units from FC HoldCo, as described under “Organizational Structure—Reorganization Transactions.” We intend to cause FC HoldCo to pay the expenses of this offering, including the estimated underwriting discounts and commissions.

Pending specific application of these proceeds, we expect to invest them primarily in short term, investment-grade interest-bearing securities such as money market accounts, certificates of deposit, commercial paper and guaranteed obligations of the U.S. government.

We will not receive any proceeds from the sale of shares of Class A common stock by the selling stockholders.

DIVIDEND POLICY

Immediately following this offering, the Issuer will be a holding company, and either directly or through its wholly owned subsidiary Flagship Holdings, its principal asset will be a controlling equity interest in FC HoldCo. If the Issuer decides to pay a dividend in the future, it would need to cause FC HoldCo to make distributions to the Issuer and Flagship Holdings in an amount sufficient to cover such dividend. If FC HoldCo makes such distributions to the Issuer and Flagship Holdings, the other holders of LLC Units will be entitled to receive pro rata distributions.

Our ability to pay dividends on our Class A common stock is limited by our existing indebtedness and may be further restricted by the terms of any future debt or preferred securities incurred or issued by us or our subsidiaries. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” In addition, FC HoldCo is generally prohibited under Delaware law from making a distribution to unit holders (including us) to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of FC HoldCo (with certain exceptions) exceed the fair value of its assets. Subsidiaries of FC HoldCo are generally subject to similar legal limitations on their ability to make distributions to FC HoldCo.

CAPITALIZATION

The following table sets forth our cash, cash equivalents and capitalization as of March 31, 2015:

•

on a historical basis; and

•

on a pro forma basis to reflect (i) the Reorganization Transactions described under “Organizational Structure,” (ii) the creation of certain tax assets in connection with this offering and the Reorganization Transactions, (iii) the creation of related liabilities in connection with entering into the TRA with the Investor Reorganization TRA Parties and (iv) the sale by us of shares of Class A common stock in this offering and the application of the proceeds from this offering as described in “Use of Proceeds,” based on an assumed initial public offering price of $ per share, the midpoint of the range set forth on the cover page of this prospectus and after deducting estimated underwriting discounts and commissions and estimated offering expenses. Each $1 increase (decrease) in the public offering price per share would increase (decrease) our total stockholders’ equity and total capitalization by approximately $ million (assuming no exercise of the underwriters’ option to purchase additional shares).

This table should be read in conjunction with “Organizational Structure,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Unaudited Pro Forma Financial Information” and the consolidated financial statements and notes thereto appearing elsewhere in this prospectus.


	As of March 31, 2015
	(in thousands)
	Historical		Pro Forma
Cash and cash equivalents	$	6,366	$

Long-term debt:
Warehouse credit facilities		61,237
Securitized borrowing arrangements(1)		1,898,252
Residual interest credit facilities		90,341

Total long-term debt:		2,049,830

Preferred stock, .001 par value per share, shares authorized, shares outstanding		—
Class A Common stock, .001 par value per share, shares authorized, shares outstanding actual and shares outstanding on a pro forma as adjusted basis		—
Class B Common stock, .001 par value per share, shares authorized, shares outstanding actual and shares outstanding on a pro forma as adjusted basis		—
Additional paid-in capital		—

Total members’ equity		240,398

Total capitalization	$	2,290,228	$

(1)	Presented net of discount of $2.1 million.

DILUTION

Our pro forma net tangible book value as of March 31, 2015 was approximately $ million or $ per share of Class A common stock. Pro forma net tangible book value per share represents tangible assets, less liabilities, divided by the aggregate number of shares of Class A common stock outstanding. After giving effect to the sale by us of the shares of Class A common stock in this offering, at an assumed initial public offering price of $ per share, the midpoint of the range set forth on the cover page of this prospectus, and the receipt and application of the net proceeds, our pro forma net tangible book value as of March 31, 2015 would have been $ or $ per share, taking into account the effect to the Pre-Closing Stock Split. This represents an immediate increase in pro forma net tangible book value to existing stockholders of $ per share and an immediate dilution to new investors of $ per share. Dilution per share represents the difference between the price per share to be paid by new investors for the shares of Class A common stock sold in this offering and the pro forma net tangible book value per share immediately after this offering. The following table illustrates this per share dilution:


Assumed initial public offering price		$
Pro forma net tangible book value per share as of March 31, 2015	$
Increase in pro forma net tangible book value per share attributable to new investors
Pro forma net tangible book value per share after offering

Dilution per share to new investors		$

The following table sets forth, on a pro forma basis, as of March 31, 2015, the number of shares of Class A common stock purchased from Flagship, the total consideration paid, or to be paid, and the average price per share paid, or to be paid, by existing stockholders and by the new investors, at an assumed initial public offering price of $ per share, the midpoint of the range set forth on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and offering expenses payable by Flagship:


	Shares Purchased				Total Consideration				Average Price Per Share
	Number	Percent			Amount	Percent			Average Price Per Share
Existing stockholders				%	$			%
New investors
Total			100	%	$		100	%

The foregoing tables assume no exercise of the underwriters’ option to purchase additional shares of Class A common stock. If the underwriters exercise their option to purchase additional shares of our Class A common stock, there will be further dilution to new investors.

The number of shares of our Class A common stock set forth in the table above is based on shares of our Class A common stock outstanding and does not reflect:

•

shares of Class A common stock reserved for issuance pursuant to equity compensation plans; and

•

shares of Class A common stock issuable upon exchange of the same number of LLC Units (together with the same number of shares of our Class B common stock) that will be held by certain of our existing owners immediately following this offering.

UNAUDITED PRO FORMA FINANCIAL INFORMATION

The unaudited pro forma consolidated balance sheet as of March 31, 2015 and December 31, 2014 and the unaudited pro forma consolidated statements of operations for the three months ended March 31, 2015 and the year ended December 31, 2014 present our consolidated financial position and results of operations after giving effect to:

•

the Reorganization Transactions described under “Organizational Structure;”

•

the creation of certain tax assets in connection with this offering and the Reorganization Transactions;

•

the creation of related liabilities in connection with entering into the TRA with the Investor Reorganization TRA Parties described under “Certain Relationships and Related Party Transactions—Tax Receivable Agreement;” and

•

the recording of a provision for federal and state corporate income taxes based on the income of Flagship at an effective rate of % and (v) this offering and the use of proceeds from this offering,

as if each had been completed as of March 31, 2015 and December 31, 2014, in the case of the unaudited pro forma consolidated balance sheet as of March 31, 2015 and December 31, 2014, respectively, and as of January 1, 2014 with respect to the unaudited pro forma consolidated statements of operations.

The unaudited pro forma consolidated financial information has been prepared based on our historical financial statements and the assumptions and adjustments described in the notes to the unaudited pro forma financial information below. The adjustments necessary to fairly present the unaudited pro forma financial information has been based on available information and assumptions we believe are reasonable and are presented for illustrative purposes only. The unaudited pro forma financial information does not purport to represent our consolidated results of operations or consolidated financial position that would actually have occurred had the transactions referred to above been consummated on the dates assumed or to project our consolidated results of operations or consolidated financial position for any future date or period. The presentation of the unaudited pro forma financial information is prepared in conformity with Article 11 of Regulation S-X.

Our historical financial information has been derived from our consolidated financial statements and accompanying notes included elsewhere in this prospectus.

For purposes of the unaudited pro forma financial information, we have assumed that shares of Class A common stock will be issued by us at a price per share equal to the midpoint of the range set forth on the cover page of this prospectus, and as a result, immediately following the completion of this offering, the ownership percentage represented by LLC Units not held by us will be %, and the net loss attributable to LLC Units not held by us will accordingly represent % of our net loss. If the underwriters’ option to purchase additional shares of Class A common stock is exercised in full, the ownership percentage represented by LLC Units not held by us will be %, and the net loss attributable to LLC Units not held by us will accordingly represent % of our net loss.

The unaudited pro forma financial information should be read together with “Organizational Structure,” “Capitalization,” “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes thereto included elsewhere in this prospectus.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS DATA


	Three Months Ended March 31, 2015
	FC HoldCo		Reorganization Transactions Adjustments		As Adjusted Before Offering	Initial Public Offering Adjustments	Flagship Credit Corporation
	(in thousands)
Financing and other interest income	$	64,667	$		$	$	$
Interest expense		15,537

Net interest income		49,130
Provision for credit losses		27,989

Net interest income after provision for credit losses		21,141
Other income		1,408
Operating expenses:
Compensation and benefits		9,473
General and administrative		6,883
Depreciation and amortization		362

Total operating expenses		16,718

Pre–tax income		5,831
Income taxes				(1)
Net income	$	5,831	$		$	$	$
Net income attributable to noncontrolling interests	$	—	$	(2)	$	$	$
Net income attributable to us	$	5,831	$		$	$	$
Net income per share					$		$


	Year Ended December 31, 2014
	FC HoldCo		Reorganization Transactions Adjustments		As Adjusted Before Offering	Initial Public Offering Adjustments	Flagship Credit Corporation
	(in thousands)
Financing and other interest income	$	208,817	$		$	$	$
Interest expense		45,780

Net interest income		163,037
Provision for credit losses		88,650

Net interest income after provision for credit losses		74,387
Other income		4,604
Operating expenses:
Compensation and benefits		31,244
General and administrative		24,053
Depreciation and amortization		1,083

Total operating expenses		56,380

Pre–tax income		22,611
Income taxes				(1)
Net income	$	22,611	$		$	$	$
Net income attributable to noncontrolling interests	$	—	$	(2)	$	$	$
Net income attributable to us	$	22,611	$		$	$	$
Net income per share					$		$

(1)

Following the Reorganization Transactions, we will be subject to U.S. federal income taxes, in addition to state and local taxes. As a result, the pro forma consolidated statements of operations reflects an adjustment to income taxes to reflect an effective tax rate of %, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state and local jurisdictions. FC HoldCo has been, and will continue to be, treated as a partnership for federal and most state income tax purposes. As such, FC HoldCo’s profits and losses will flow through to its partners, including us, and are generally not subject to tax at the FC HoldCo level.

(2)

Upon completion of the Reorganization Transactions, we will become the sole managing member of FC HoldCo. Assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), we will initially own approximately % of the economic interest of FC HoldCo as a result of this offering, but will have 100% of the voting power and will control the management of FC HoldCo. Assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), immediately following the completion of this offering, the ownership percentage held by the noncontrolling interest will be %.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET DATA


	As of March 31, 2015
	FC HoldCo		Reorganization Transactions Adjustments		As Adjusted Before Offering	Initial Public Offering Adjustments	Flagship Credit Corporation
	(in thousands)
Assets
Cash and cash equivalents	$	6,366	$		$	$	$
Cash and cash equivalents—restricted		168,376
Finance receivables held for investment, net of allowance of $79,522 at March 31, 2015		2,078,564
Accrued interest		18,127
Fixed assets, net of accumulated depreciation of $2,603 at March 31, 2015		4,353
Capitalized debt issuance costs		18,678
Deferred tax assets		—		(1)
Other assets		12,350

Total assets	$	2,306,814	$		$	$	$

Liabilities and members’ equity
Liabilities:
Warehouse credit facilities		61,237
Term debt, net of discount of $2,071 at March 31, 2015		1,988,593
Accounts payable, accrued expenses and other liabilities		16,586
Deferred tax liabilities		—		(1)
Payable to related party pursuant to the Tax Receivable Agreement		—

Total liabilities		2,066,416

Commitments and contingencies

Members’ equity:
Class A common stock, $0.001 par value, shares authorized, shares issued and outstanding on a pro forma basis		—
Class B common stock, $0.001 par value, shares authorized, shares issued and outstanding on a pro forma basis		—
Common units, no par value; 223,379 units authorized, issued and outstanding		—
Senior common units, no par value; 72,359 units authorized, issued and outstanding		—
Preferred units, $1,000 par value; 223,379 units authorized, issued and outstanding		223,379
Incentive common units		295

Retained earnings		16,724
Noncontrolling interests		—		(2)

Total members’ equity		240,398
Total liabilities and members’ equity	$	2,306,814	$		$	$	$


	As of December 31, 2014
	FC HoldCo		Reorganization Transactions Adjustments		As Adjusted Before Offering	Initial Public Offering Adjustments	Flagship Credit Corporation
	(in thousands)
Assets
Cash and cash equivalents	$	11,071	$		$	$	$
Cash and cash equivalents—restricted		120,785
Finance receivables held for investment, net of allowance of $71,174 and $42,713 at December 31, 2014 and 2013, respectively		1,890,607
Accrued interest		17,213
Fixed assets, net of accumulated depreciation of $2,244 and $1,285 at December 31, 2014 and 2013, respectively		4,038
Capitalized debt issuance costs		15,815
Deferred tax assets		—		(1)
Other assets		12,622

Total assets	$	2,072,151	$		$	$	$

Liabilities and members’ equity
Liabilities:
Warehouse credit facilities		257,932
Term debt, net of discount of $2,198 and $2,654 at December 31, 2014 and 2013, respectively		1,558,992
Accounts payable, accrued expenses and other liabilities		16,064
Deferred tax liabilities		—		(1)
Payable to related party pursuant to the Tax Receivable Agreement		—

Total liabilities		1,832,988

Commitments and contingencies

Members’ equity:
Class A common stock, $0.001 par value, shares authorized, shares issued and outstanding on a pro forma basis		—
Class B common stock, $0.001 par value, shares authorized, shares issued and outstanding on a pro forma basis		—
Common units, no par value; 228,101 units authorized, issued and outstanding		—
Senior common units, no par value; 72,359 units authorized, issued and outstanding		—
Preferred units, $1,000 par value; 228,101 units authorized, issued and outstanding		228,101
Incentive common units		169
Retained earnings		10,893
Noncontrolling interests		—		(2)

Total members’ equity		239,163
Total liabilities and members’ equity	$	2,072,151	$		$	$	$

(1)

Following the Reorganization Transactions, we will be subject to U.S. federal income taxes, in addition to state and local taxes. As a result, the pro forma balance sheet reflects an adjustment to our deferred taxes assuming the federal rates currently in effect and the highest statutory rates apportioned to each state and local jurisdiction.

(2)

FC HoldCo has been, and will continue to be, treated as a partnership for federal and most state income tax purposes. As such, FC HoldCo’s profits and losses will flow through to its partners, including us, and are generally not subject to tax at the FC HoldCo level. Upon completion of the Reorganization Transactions, we will become the sole managing member of FC HoldCo. As a result of this offering, we will initially own approximately % of the economic interest of FC HoldCo, but will have 100% of the voting power and will control the management of FC HoldCo. Immediately following the completion of this offering, the ownership percentage held by the non-controlling interest will be %.

SELECTED HISTORICAL FINANCIAL DATA

The following tables present our selected historical financial data. The combined consolidated statements of operations data for the years ended December 31, 2014, 2013 and 2012 and combined consolidated balance sheets data as at December 31, 2014 and 2013 are derived from FC HoldCo’s audited combined consolidated financial statements and the notes thereto included elsewhere in this prospectus. The combined consolidated statements of operations data for the years ended December 31, 2011 and 2010 and combined consolidated balance sheets data as at December 31, 2012, 2011 and 2010 are unaudited and have been derived from FC HoldCo’s historical combined consolidated financial statements not included in this prospectus. The consolidated statements of operations data for the three months ended March 31, 2015 and 2014 and the consolidated balance sheets data as at March 31, 2015 are derived from FC HoldCo’s unaudited financial statements and the notes thereto included elsewhere in this prospectus. The selected historical data presented below are not necessarily indicative of the results to be expected for any future period. You should read the following selected consolidated financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated historical financial statements and the related notes appearing elsewhere in this prospectus.


	Three Months Ended March 31,				Year Ended December 31,
	2015		2014		2014		2013		2012			2011			2010
	(in thousands)
												(unaudited)			(unaudited)
Statements of Operations Data
Financing and other interest income	$	64,667	$	42,920	$	208,817	$	122,948	$	57,861		$	12,550		$	246
Interest expense		15,537		9,034		45,780		27,312		12,696			1,498			—

Net interest income		49,130		33,886		163,037		95,636		45,165			11,052			246
Provision for credit losses		27,989		19,360		88,650		51,189		29,413			4,720			104

Net interest income after provision for credit losses		21,141		14,526		74,387		44,447		15,752			6,332			142
Other income (expense)		1,408		1,157		4,604		3,063		(197	)		493			4
Compensation and benefits		9,473		6,685		31,244		19,924		14,089			6,712			827
General and administrative		6,883		5,117		24,053		17,486		11,972			6,387			644
Depreciation and amortization		362		220		1,083		717		414			162			19

Net income (loss) before allocation to noncontrolling interest		5,831		3,661		22,611		9,383		(10,920	)		(6,436	)		(1,344	)
Net loss attributable to noncontrolling interest		—		—		—		—		413			555			—

Net income (loss) attributable to FC HoldCo	$	5,831	$	3,661	$	22,611	$	9,383	$	(10,507	)	$	(5,881	)	$	(1,344	)


	As of March 31,		As of December 31,
	2015		2014		2013		2012		2011		2010
	(in thousands)
							(unaudited)		(unaudited)		(unaudited)
Balance Sheets Data
Finance receivables, net of allowance for credit losses	$	2,078,564	$	1,890,607	$	1,190,290	$	579,152	$	150,907	$	8,812
Goodwill and intangibles		544		544		544		544		544		—
Total assets		2,306,814		2,072,151		1,298,335		634,214		177,792		48,930
Total borrowings		2,049,830		1,816,924		1,058,399		463,407		77,000		—
Total liabilities		2,066,416		1,832,988		1,068,970		469,641		80,003		518
Total members’ equity		240,398		239,163		229,365		164,573		97,789		48,412
Allowance for credit losses		79,522		71,174		42,713		24,523		4,641		104

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and related notes. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Actual results may differ materially from those contained in any forward-looking statements. These forward-looking statements involve numerous risks and uncertainties, including those discussed below and elsewhere in this prospectus including the sections entitled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” All references in this discussion to “Flagship,” the “Company,” “we,” “us,” “our,” “ours” or similar terms refer to Flagship Credit Corporation, a Delaware corporation, together with its consolidated subsidiaries.

Our Company

As of March 31, 2015, we had 619 employees across our Chadds Ford, Pennsylvania, Irving, Texas, Irvine, California, Phoenix, Arizona and Indianapolis, Indiana offices.

Business Trends and Conditions

We believe our business and results of operations will be impacted in the future by various trends and conditions, including the following:

Attractive macroeconomic environment and national dealer roll-out strategy.

We believe the macroeconomic environment is attractive for automotive financing providers. Economic forecasts for the U.S. include continued lower unemployment rates and positive GDP growth. Further, we believe this macroeconomic environment will continue to drive purchase demand for new and used vehicles, which in turn will drive demand for automotive financing. Continuing strength of the macroeconomic environment and growing purchase activity coupled with our national dealer-roll out can support continued growth in our originations.

Changing consumer behavior expected to support the growth of CarFinance.com.

We believe a growing population of consumers prefers to use the internet, including via mobile devices, to research and arrange for vehicle purchases. This trend, if it continues, can change the role of dealers and automotive financing providers in the automotive purchase process. A significant change in automotive purchasing could affect our business, particularly our Indirect channel. However, we believe that our Direct channel, CarFinance.com positions us well to benefit from this changing consumer behavior and can help us increase origination volume.

Impact of regulatory developments.

We expect that the current trend of increased regulatory scrutiny of our industry by federal and state regulators, including the evolution of the CFPB’s regulatory and enforcement priorities, could impact our business and results of operations going forward. Actions by the DOJ, CFPB or other federal or state regulators could result in requirements to alter or cease offering affected products and services, increase the costs of accessing our traditional asset-backed funding markets, or otherwise increase our compliance costs and exposure to enforcement actions, fines, penalties and litigation.

Expected credit risk normalization in the automotive financing market.

We expect credit risk normalization in the automotive financing market to impact us. When compared to historical delinquency and loss rates in the automotive financing industry, delinquency and loss rates in the aftermath of the 2008-2009 recession were at cyclical lows. We believe that following the recession, lenders were significantly less willing to provide financing and consumers were less willing to apply for credit. However, both supply and demand for automotive credit are returning to pre-recession levels. As a result, we believe both delinquency and loss levels experienced by automotive financing providers since 2013 are more consistent with our expectations than those delinquency and loss rates experienced in the immediate aftermath of the 2008-2009 recession.

Impact of our recent growth and expected growth on our credit risk metrics.

Our gross finance receivables grew 59% in the year ended 2014. We expect that this growth rate in finance receivables will moderate as we achieve scale. When coupled with the seasoning of our overall portfolio and the recent industry trend of higher delinquency and credit loss rates, we expect to see an increase in the relative level and absolute amount of delinquencies and credit losses over time.

Seasonality

The automotive financing industry is subject to some level of seasonality. Typically, origination volume is the highest from February through April as a result of consumers applying tax refunds to new vehicle purchases. The summer period, from Memorial Day weekend through Labor Day weekend, is also typically stronger due to longer days creating more available time for borrowers to shop. Delinquencies and loss rates generally are highest in the period from November through January due to holiday spending, and the lowest during the tax refund period from February through April.

Single Operating Segment

We conduct our business through a single operating segment which includes our Indirect channel and our Direct channel. Profitability and expenses, including funding costs, credit losses and operating expenses, are managed for the business as a whole.

The Merger

Prior to January 1, 2015, we operated as two independent companies, FC HoldCo LLC and CF Capital Holdings LLC, the parent entities of FCA and CFC. On January 1, 2015, we completed the merger of FC HoldCo LLC and CF Capital Holdings within a single corporate entity, which is our ongoing company. As such, our historical financial statements for the years ended December 31, 2014, 2013 and 2012 and as of December 31, 2014 and 2013 are presented on a combined consolidated basis. The merger was accounted for as a reorganization of entities under common control in a manner similar to a pooling of interest. The historical assets and liabilities of FC HoldCo LLC and CF Capital Holdings LLC have been carried forward at their carrying amounts and income and expenses have been combined from the beginning of the period in which the combination occurred, and prior periods are presented as if the entities were combined as of the earliest period presented.

Description of Key Consolidated Statements of Operations Line Items

Below is a summary description of the key line items included in our Consolidated Statements of Operations.

Financing and Other Interest Income

Financing and other interest income consists primarily of interest income on our finance receivables. This income is presented net of the amortization of deferred premiums paid to dealers, acquisition fees charged to dealers and origination costs.

We analyze financing and other interest income as a function of two principal components: average finance receivables and yield on earning assets. The key drivers of average finance receivables include finance receivable volumes, payment rates, prepayment rates and charge-offs. Finance receivable volumes are influenced by a number of factors including macroeconomic conditions and customer demand. Payment rates and prepayment rates reflect the extent to which customers maintain a balance. We cease the accrual of interest once a finance receivable becomes more than 60 days past due. Accrued interest is written off on finance receivables when the principal balance is charged-off. The key drivers of yield on earning assets include pricing, changes to our mix of finance receivables, credit and delinquency performance of our finance receivables.

Interest Expense

Interest expense is incurred on our interest-bearing liabilities, which consist of our warehouse credit facilities, securitization financings and residual interest credit facilities, and includes the amortization of capitalized debt issuance costs and non-use fees. Key drivers of interest expense include the amounts outstanding on our borrowings and other funding sources, the interest rate environment and its effect on interest rates paid on our funding sources and the changing mix of our warehouse credit facilities and term debt.

Net Interest Income

Net interest income represents the difference between financing and other interest income and interest expense. We expect net interest income, as a percentage of interest-earning assets, to be influenced by changes in the interest rate environment, credit performance of our finance receivables and changes in the amount and composition of our interest-bearing liabilities. We track the spread between the interest income earned on our assets and the interest expense incurred on our debt and continually monitor the components of our yield and our cost of funds.

Provision for Credit Losses

Provision for credit losses is the expense related to our net credit losses (gross charge-offs less recoveries) and maintenance of the allowance for credit losses. The allowance for credit losses is maintained at a level we

believe to be adequate to cover the estimated probable losses in our finance receivables portfolio. We continuously review and evaluate our credit loss reserve methodology and models and implement further enhancements or changes to them, as needed.

Each of our finance receivables is assessed by our underwriters and using our proprietary, risk-based underwriting models that take into account an applicant’s credit profile, as well as their ability to repay the proposed retail installment contract or loan. Because the profitability of our finance receivables portfolio is directly affected by net credit losses, we closely analyze credit performance on an ongoing basis while taking into account the increase in the average age, or seasoning, of our portfolio. The seasoning of a portfolio results in a portfolio consisting of more finance receivables at a point where delinquencies and losses are more likely to occur. As the size and age of our portfolio increase, we expect a continued increase in the level and amount of delinquencies. Because delinquencies are an early indicator of future credit losses, we analyze delinquency trends, adjusting for seasonality, to determine whether or not our finance receivables are performing in line with our expectations. We also monitor recovery rates because of their impact on charge-offs. For more information, see “—Credit Quality” below.

Other Income (Expense)

Other income (expense) consists primarily of late fees, payment convenience fees and fees on sales of ancillary products. Other income (expense) also includes gains and losses on our derivative financial instruments. Other income (expense) is largely dependent on both the average balance of our finance receivables and their delinquency status.

Operating Expenses

Operating expenses consist of compensation and benefits, general and administrative and depreciation and amortization expenses. General and administrative expenses primarily consist of advertising and marketing, servicing and systems costs, professional fees and overhead support. Depreciation and amortization expenses consist solely of depreciation on our fixed assets and amortization on our intangible assets.

We assess our operational efficiency using various metrics and conduct extensive operating expense analysis to determine whether fluctuations in cost and expense levels indicate trends that need to be addressed. Our operating expense analysis also includes a review of origination and servicing costs to assist us in assessing profitability by portfolio.

Reorganization Transactions

The Issuer was incorporated on March 16, 2015 and, pursuant to a reorganization into a holding corporation structure, will become a holding corporation whose principal asset, either directly or through its wholly owned subsidiary, Flagship Holdings, will be a controlling equity interest in FC HoldCo. Through Flagship Holdings, the sole managing member of FC HoldCo, the Issuer will operate and control the business and affairs of FC HoldCo and its subsidiaries. The Issuer will include FC HoldCo in its consolidated financial statements and will report a noncontrolling interest related to the LLC Units held by our Continuing LLC Owners in our consolidated financial statements.

Immediately prior to the Pre-Closing Reorganization Transactions, we will execute several reorganization transactions described under “Organizational Structure—Reorganization Transactions,” as a result of which the limited liability company agreement of FC HoldCo will be amended and restated to, among other things, appoint Flagship Holdings as its sole managing member and effect the Pre-Closing LLC Recapitalization, with the result that the only outstanding equity interests in FC HoldCo after such amendment will be LLC Units. At that time, the Issuer’s outstanding Class A common stock will undergo the Pre-Closing Stock Split. After giving effect to (i) the Pre-Closing Stock Split of the Class A common stock, (ii) the Pre-Closing LLC Recapitalization of the

existing interests in FC HoldCo into LLC Units, (iii) the Pre-Closing Reorganization Transactions and (iv) the repayment of the Flagship Holding Notes and the purchase of LLC Units by Flagship Holdings using the proceeds from this offering, there will be LLC Units outstanding (or LLC Units outstanding, if the underwriters exercise in full their option to purchase additional shares of Class A common stock), and the Issuer, through Flagship Holdings, will own of those outstanding LLC Units (or LLC Units if the underwriters exercise in full their option to purchase additional shares of Class A common stock). Immediately following the completion of this offering, each Continuing LLC Owner will hold a number of shares of our Class B common stock equal to the number of LLC Units held by such Continuing LLC Owner.

Accordingly, following this offering, the Issuer, directly or through Flagship Holdings, will hold a number of LLC Units that is equal to the number of shares of Class A common stock outstanding, a relationship that we believe fosters transparency because it results in a single share of Class A common stock representing (albeit indirectly) the same percentage ownership in FC HoldCo as a single LLC Unit.

We will also enter into the Exchange Agreement with our Continuing LLC Owners under which they will have the right, subject to the terms of the Exchange Agreement, to exchange their LLC Units and shares of Class B common stock for shares of our Class A common stock on a one-for-one basis, or, at our election, a cash payment equal to a volume weighted average market price of one share of Class A common stock for each LLC Unit exchanged, subject to customary conversion rate adjustments for stock splits, stock dividends, reclassifications and other similar transactions. See “Organizational Structure” and “Certain Relationships and Related Party Transactions—Exchange Agreement.”

Following this offering, each of our Continuing LLC Owners that held voting units before the Reorganization Transactions and that continues to hold LLC Units will also hold a number of shares of Class B common stock of the Issuer equal to the number of LLC Units held by such person. The shares of Class B common stock have no economic rights but entitle the holder to one vote per share on matters presented to stockholders of the Issuer. The Class A and Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders, except as otherwise required by applicable law.

Income Taxes

FC HoldCo is currently, and after this offering will continue to be, treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, its taxable income or loss is passed through to and included in the tax returns of its members, including us. Accordingly, the consolidated financial statements included in this prospectus do not include a provision for federal and most state and local income taxes. Pursuant to the New LLC Agreement, FC HoldCo will make pro rata cash distributions to the holders of LLC Units, calculated using an assumed tax rate, to help to fund their tax obligations in respect of the taxable income of FC HoldCo that is allocated to them. Generally, these tax distributions will be computed based on an assumed income tax rate equal to . FC HoldCo will make tax distributions pro rata in accordance with LLC Unit ownership. FC HoldCo is subject to entity level taxation in certain states, as are certain of its subsidiaries. As a result, the accompanying consolidated statements of operations include tax expense related to those states. After consummation of the Reorganization Transactions, the Issuer and Flagship Holdings will be subject to U.S. federal, state and local income taxes with respect to their allocable share of any taxable income of FC HoldCo and will be taxed at the prevailing corporate tax rates. In addition to tax expenses, the Issuer and Flagship Holdings also will incur expenses related to our operations, plus payments under the TRA, which we expect will be significant. The Issuer intends to cause FC HoldCo to make distributions or, in the case of certain expenses, payments in an amount sufficient to allow us to pay the taxes and operating expenses of the Issuer and Flagship Holdings, including distributions to fund any ordinary course payments due under the TRA.

Results of Operations

Results of Operations—Three Months Ended March 31, 2015 and Three Months Ended March 31, 2014

Financing and Other Interest Income

Financing and other interest income was $64.7 million for the three months ended March 31, 2015 as compared with $42.9 million for the three months ended March 31, 2014. This increase of $21.8 million, or 51%, was due to an increase in average finance receivables, partially offset by a decrease in our yield on earning assets. Our average finance receivables increased 54% to $2.0 billion for the three months ended March 31, 2015 from $1.3 billion for the three months ended March 31, 2014. This increase was primarily attributable to the increase in the origination of finance receivables as we continued to focus our efforts on increasing our origination capacity through the addition of dealer customers and area sales managers within the Indirect channel and additional third-party referral partners within the Direct channel. In addition, origination volume for the three months ended March 31, 2015 benefitted from the combination of the FCA and CFC sales platforms, including cross-selling opportunities. We purchased and originated $365.9 million of finance receivables in the three months ended March 31, 2015 as compared with $297.2 million in the three months ended March 31, 2014. Our annualized yield on earning assets was 13.1% for the three months ended March 31, 2015, decreasing from 13.5% for the three months ended March 31, 2014.

Interest Expense

Interest expense was $15.5 million for the three months ended March 31, 2015 as compared with $9.0 million for the three months ended March 31, 2014. This increase of $6.5 million, or 72%, was primarily due to an increase in average warehouse and term debt outstanding and an increase in our cost of funds. Our average debt outstanding increased 65% to $1.9 billion for the three months ended March 31, 2015 from $1.2 billion for the three months ended March 31, 2014. This increase was a result of higher debt levels necessary to fund our growth in finance receivables. Our cost of funds increased to 3.3% for the three months ended March 31, 2015 as compared with 3.1% for the three months ended March 31, 2014. This increase was due to debt levels during the three months ended March 31, 2015 including higher cost borrowings under our residual credit agreements, partially offset by improved pricing on our warehouse credit facilities and term debt securitizations.

Provision for Credit Losses

Provision for credit losses was $28.0 million for the three months ended March 31, 2015 as compared with $19.4 million for the three months ended March 31, 2014. This increase of $8.6 million, or 45%, was primarily due to both the growth of our finance receivables portfolio and an increase in net charge-offs as a percentage of average finance receivables. The increase in net charge-offs as a percentage of average finance receivables was primarily due to the seasoning of our portfolio.

Other Income

Other income was $1.4 million for the three months ended March 31, 2015 as compared with $1.2 million for the three months ended March 31, 2014. Other income included losses on derivative financial instruments totaling $0.1 million for both of the three months ended March 31, 2015 and March 31, 2014. Excluding these losses on derivative financial instruments, other income increased $0.3 million, or 26%, primarily due to the growth of our finance receivables portfolio and the corresponding increase in late fees, payment convenience fees and fees on sales of ancillary products.

Operating Expenses

Operating expenses were $16.7 million for the three months ended March 31, 2015 as compared with $12.0 million for the three months ended March 31, 2014. This increase of $4.7 million, or 39%, was attributable to additional expenses necessary to support the growth of our originations and of our finance receivables portfolio. This includes higher compensation and benefits expenses resulting from an increase in full-time equivalent

employees from 476 at March 31, 2014 to 619 at March 31, 2015, along with higher levels of advertising and marketing, servicing and systems costs, professional fees and overhead necessary to support the growth in our business.

Net Income Attributable to FC HoldCo LLC

Net income attributable to FC HoldCo LLC was $5.8 million for the three months ended March 31, 2015 as compared with $3.7 million for the three months ended March 31, 2014. This increase of $2.1 million, or 59%, was primarily due to the increase in financing and other interest income, partially offset by the increase in provision for credit losses and operating expenses.

Results of Operations—Years Ended December 31, 2014, 2013 and 2012

Financing and Other Interest Income

Financing and other interest income was $208.8 million for the year ended December 31, 2014 as compared with $122.9 million for the year ended December 31, 2013. This increase of $85.9 million, or 70%, was primarily due to an increase in average finance receivables. Our average finance receivables increased 73% to $1.6 billion in 2014 from $893.9 million in 2013. This increase was attributable to the increase in the origination of finance receivables as we continued to focus our efforts on increasing our origination capacity through the addition of dealer customers and area sales managers within the Indirect channel and additional third-party referral partners within the Direct channel. We purchased and originated $1.3 billion of finance receivables in 2014 as compared with $892.2 million in 2013. Our yield on earning assets was 13.5% in 2014, decreasing from 13.8% in 2013.

Financing and other interest income was $122.9 million for the year ended December 31, 2013 as compared with $57.9 million for the year ended December 31, 2012. This increase of $65.0 million, or 112%, was primarily due to an increase in average finance receivables, partially offset by a decrease in yield on earning assets. Our average finance receivables increased 141% to $893.9 million in 2013 from $371.3 million in 2012. This increase was attributable to the increase in the origination of finance receivables as we continued to focus our efforts on increasing our origination capacity through the addition of dealer customers and area sales managers within the Indirect channel and additional third-party referral partners within the Direct channel. We purchased and originated $892.2 million of finance receivables in 2013 as compared with $517.8 million in 2012. Our yield on earning assets was 13.8% in 2013 as compared with 15.6% in 2012. This decrease was due to a combination of factors, including pricing strategies and the competitive environment, together with increasing originations of lower credit risk direct loans.

Interest Expense

Interest expense was $45.8 million for the year ended December 31, 2014 as compared with $27.3 million for the year ended December 31, 2013. This increase of $18.5 million, or 68%, was due to an increase in average warehouse and term debt outstanding, partially offset by a decrease in our cost of funds. Our average debt outstanding increased 89% to $1.4 billion in 2014 from $760.9 million in 2013. This increase was a result of higher debt levels necessary to fund our growth in finance receivables. Our cost of funds decreased to 3.2% in 2014 as compared with 3.6% in 2013. This decrease was due to improved pricing on our warehouse credit facilities and term debt securitizations.

Interest expense was $27.3 million for the year ended December 31, 2013 as compared with $12.7 million for the year ended December 31, 2012. This increase of $14.6 million, or 115%, was due to an increase in average warehouse and term debt outstanding, partially offset by a decrease in our cost of funds. Our average debt outstanding increased 182% to $760.9 million in 2013 from $270.2 million in 2012. This increase was also a result of higher debt levels necessary to fund our growth in finance receivables. Our cost of funds decreased to 3.6% in 2013 as compared with 4.7% in 2012. This decrease was also due to improved pricing on our warehouse credit facilities and term debt securitizations.

Provision for Credit Losses

Provision for credit losses was $88.7 million for the year ended December 31, 2014 as compared with $51.2 million for the year ended December 31, 2013. This increase of $37.5 million, or 73%, was primarily due to both the growth of our finance receivables portfolio and an increase in net charge-offs as a percentage of average finance receivables. The increase in net charge-offs as a percentage of average finance receivables was primarily due to the seasoning of our portfolio.

Provision for credit losses was $51.2 million for the year ended December 31, 2013 as compared with $29.4 million for the year ended December 31, 2012. This increase of $21.8 million, or 74%, was also primarily due to both the growth of our finance receivables portfolio and an increase in net charge-offs as a percentage of average finance receivables resulting from the seasoning of our portfolio.

Other Income (Expense)

Other income was $4.6 million for the year ended December 31, 2014 as compared with $3.1 million for the year ended December 31, 2013. Other income included gains (losses) on derivative financial instruments totaling ($0.3) million and $0.3 million for the years ended December 31, 2014 and 2013, respectively. Excluding these gains (losses) on derivative financial instruments, other income increased $2.2 million, or 79%, primarily due to the growth of our finance receivables portfolio and the corresponding increase in late fees, payment convenience fees and fees on sales of ancillary products.

Other income was $3.1 million for the year ended December 31, 2013 as compared with other expense of $0.2 million for the year ended December 31, 2012. Other income (expense) included gains (losses) on derivative financial instruments totaling $0.3 million and ($1.1) million for the years ended December 31, 2013 and 2012, respectively. Excluding these gains (losses) on derivative financial instruments, other income increased $1.9 million, or 206%, primarily due to the growth of our finance receivables portfolio.

Operating Expenses

Operating expenses were $56.4 million for the year ended December 31, 2014 as compared with $38.1 million for the year ended December 31, 2013. This increase of $18.3 million, or 48%, was attributable to additional expenses necessary to support the growth of our originations and of our finance receivables portfolio. This includes higher compensation and benefits expenses resulting from an increase in full-time equivalent employees from 445 at December 31, 2013 to 595 at December 31, 2014, along with higher levels of advertising and marketing, servicing and systems costs, professional fees and overhead necessary to support the growth in our business.

Operating expenses were $38.1 million for the year ended December 31, 2013 as compared with $26.5 million for the year ended December 31, 2012. This increase of $11.6 million, or 44%, was attributable to additional expenses necessary to support the growth of our originations and of our finance receivables portfolio. This includes higher compensation and benefits expenses resulting from an increase in full-time equivalent employees from 274 at December 31, 2012 to 445 at December 31, 2013, along with higher levels of advertising and marketing, servicing and systems costs, professional fees and overhead necessary to support the growth in our business.

Net Income Attributable to FC HoldCo LLC

Net income attributable to FC HoldCo LLC was $22.6 million for the year ended December 31, 2014 as compared with $9.4 million for the year ended December 31, 2013. This increase of $13.2 million, or 141%, was primarily due to the increase in financing and other interest income, partially offset by the increase in provision for credit losses and operating expenses.

Net income attributable to FC HoldCo LLC was $9.4 million for the year ended December 31, 2013 as compared with a net loss of $10.5 million for the year ended December 31, 2012. This increase of $19.9 million was also primarily due to the increase in financing and other interest income, partially offset by the increase in provision for credit losses and operating expenses.

Credit Quality

Finance Receivables Portfolio

Our primary asset and source of revenue is our finance receivables portfolio. The following table sets forth the composition of our gross finance receivables portfolio by product type, as of the dates indicated.


	At and for the Three Months Ended March 31,
	2015					2014
	$		%			$		%
	(in thousands of dollars)
End of Period Gross Finance Receivables
Retail Installment Contracts (Indirect)	$	1,805,955		86.4	%	$	1,204,563		86.9	%
Loans (Direct)		285,303		13.6	%		182,158		13.1	%

Total	$	2,091,258		100.0	%	$	1,386,721		100.0	%

Average Gross Finance Receivables
Retail Installment Contracts (Indirect)	$	1,722,485		86.3	%	$	1,127,324		87.2	%
Loans (Direct)		274,592		13.7	%		165,329		12.8	%

Total	$	1,997,077				$	1,292,653


	At or for the Year Ended December 31,
	2014							2013					2012
	$		%			$		%			$		%
	(in thousands of dollars)
End of Period Gross Finance Receivables
Retail Installment Contracts (Indirect)	$	1,639,016		86.1	%	$	1,050,083		87.6	%	$	535,058		90.8	%
Loans (Direct)		263,880		13.9	%		148,501		12.4	%		54,128		9.2	%

Total	$	1,902,896		100.0	%	$	1,198,584		100.0	%	$	589,186		100.0	%

Average Gross Finance Receivables
Retail Installment Contracts (Indirect)	$	1,344,550		86.7	%	$	792,570		88.7	%	$	343,509		92.5	%
Loans (Direct)		206,190		13.3	%		101,315		11.3	%		27,772		7.5	%

Total	$	1,550,740				$	893,885				$	371,281

Our finance receivables portfolio had the following geographic concentration as of March 31, 2015 and December 31, 2014. The table below shows the five states with greater than 5% of gross finance receivables outstanding.


	As of March 31, 2015					As of December 31, 2014
	Gross Finance Receivables Outstanding		% of Total Gross Finance Receivables Outstanding			Gross Finance Receivables Outstanding		% of Total Gross Finance Receivables Outstanding
	(in thousands of dollars)
Texas	$	430,481		20.6	%	$	409,042		21.5	%
California		266,986		12.8	%		249,102		13.1	%
Florida		221,290		10.6	%		206,531		10.9	%
Arizona		154,701		7.4	%		136,062		7.1	%
Georgia		141,903		6.8	%		122,656		6.4	%

Delinquency

We consider the delinquency status of our finance receivables portfolio as a key credit quality indicator and we monitor delinquency trends to assist in managing our exposure to credit risk. Interest income accrual ceases for finance receivables when payments are more than 60 days contractually past due. We consider a finance receivable delinquent when a customer fails to make at least 90% of a scheduled payment by the date such payment was contractually due. The period of delinquency is based on the number of days payments are contractually past due. Due to our target customer base, a relatively high percentage of accounts become delinquent at some point in the life of the retail installment contract or loan and there is a relatively high rate of account movement between current and delinquent status in the portfolio. The following is a summary of net finance receivables by the number of days delinquent as of the dates indicated:


	As of March 31,					As of December 31,
	2015					2014					2013					2012
	$		%			$		%			$		%			$		%
	(in thousands of dollars)
Finance receivables:
Current	$	1,575,221		76.2	%	$	1,337,684		71.0	%	$	854,437		72.0	%	$	433,529		74.0	%
1-30 days past due		385,646		18.6	%		418,093		22.2	%		258,912		21.8	%		119,768		20.5	%
31-60 days past due		68,313		3.3	%		84,422		4.5	%		51,561		4.3	%		22,249		3.8	%
60+ days past due		39,173		1.9	%		42,726		2.3	%		22,653		1.9	%		9,884		1.7	%

The delinquency categorization includes all past-due finance receivables except those finance receivables in bankruptcy status in an aggregate principal amount of $23.1 million, $20.2 million, $11.3 million and $5.6 million at March 31, 2015 and December 31, 2014, 2013 and 2012, respectively, as the court approved payments are generally less than contractual principal and interest due. The gross principal balance of nonaccrual finance receivables totaled $52.9 million, $54.4 million, $29.1 million and $12.5 million at March 31, 2015 and December 31, 2014, 2013 and 2012, respectively.

The delinquency categorization does not include finance receivables subject to payment extension. We had an average monthly amount of finance receivables subject to payment extension of $36.1 million in the three months ended March 31, 2015, $32.5 million in 2014, $12.8 million in 2013 and $2.5 million in 2012. See “—Extensions and Modifications.”

Credit Losses

Net credit losses consist of the unpaid principal balance of finance receivables, net of recovered amounts. Net credit losses are recorded as a reduction to the allowance for credit losses and subsequent recoveries of previously charged off amounts are credited to the allowance for credit losses. Net credit losses totaled $19.6 million and $11.9 million for the three months ended March 31, 2015 and 2014, respectively. The increase of $7.7 million from March 31, 2014 to 2015 was primarily due to both the growth of our finance receivables portfolio and an increase in net charge-offs as a percentage of average finance receivables. The increase in net charge-offs as a percentage of average finance receivables was primarily due to the seasoning of our finance receivables portfolio.

Net credit losses totaled $60.2 million, $33.0 million and $9.5 million for the years ended December 31, 2014, 2013 and 2012, respectively. The increases of $27.2 million from 2013 to 2014 and $23.5 million from 2012 to 2013 were primarily due to both the growth of our finance receivables portfolio and an increase in net charge-offs as a percentage of average finance receivables. The increase in net charge-offs as a percentage of average finance receivables was primarily due to the seasoning of our finance receivables portfolio.

Allowance for Credit Losses

The allowance for credit losses is established by direct charges to income in amounts sufficient to maintain the allowance at a level management determines to be adequate to cover estimated probable losses in our finance receivables portfolio. The allowance may fluctuate based upon continual review of the finance receivables portfolio and changes in economic conditions.

The allowance for credit losses totaled $79.5 million, $71.2 million, $42.7 million and $24.5 million at March 31, 2015 and December 31, 2014, 2013 and 2012, respectively. The increases of $8.3 million from December 31, 2014 to March 31, 2015, $28.5 million from 2013 to 2014 and $18.2 million from 2012 to 2013 were primarily attributable to the growth and seasoning of our finance receivables portfolio.

The following table summarizes the change in the allowance for credit losses on finance receivables:


	Three Months Ended March 31,			Year Ended December 31,
	2015			2014			2013			2012
	(in thousands of dollars)
Balance, beginning of period	$	71,174		$	42,713		$	24,523		$	4,641
Provision for credit losses		27,989			88,650			51,189			29,413
Amounts charged off		(22,467	)		(68,948	)		(37,199	)		(10,368	)
Recovery of amounts previously charged off		2,826			8,759			4,200			837

Balance, end of period	$	79,522		$	71,174		$	42,713		$	24,523

Total finance receivables	$	2,091,258		$	1,902,896		$	1,198,584		$	589,186
Ratio of net charge-offs to average finance receivables		3.9	%		3.9	%		3.7	%		2.6	%
Ratio of allowance for credit losses to gross finance receivables		3.8	%		3.7	%		3.6	%		4.2	%

Extensions and Modifications

In accordance with our policies and guidelines, we offer payment extensions to borrowers on our retail installment contracts and loans on a limited basis. To be eligible for an extension, a borrower must generally have made at least six payments since the account was originated and must not have received an extension in the immediately preceding 12 months. Additionally, the extension must bring the account current. No borrower is generally permitted more than five extensions over the life of the retail installment contract or loan or extensions totaling more than eight months in duration.

At the time an extension is granted, all delinquent amounts may be extended or paid, resulting in the classification of the retail installment contract or loan as current and therefore not considered a delinquent account, and thus reducing our delinquency rates. Thereafter, such account is aged based on the timely payment of future installments in the same manner as any other account.

The following is a summary of extensions on our retail installment contracts and loans held for investment as of March 31, 2015 and December 31, 2014:


	As of March 31,					As of December 31,
	2015					2014					2013					2012(1)
	$		%			$		%			$		%			$		%
	(in thousands of dollars)
Gross finance receivables:
Never extended	$	1,662,420		79.4	%	$	1,517,138		79.7	%		1,050,294		87.6	%		535,409		94.9	%
Extended once		367,748		17.6	%		336,849		17.7	%		141,414		11.8	%		27,896		4.9	%
Extended twice		61,109		2.9	%		47,173		2.5	%		6,872		0.6	%		845		0.2	%
Extended 3 times or more		3,549		0.2	%		1,975		0.1	%		300		0.0	%		120		0.0	%

(1)	Does not include extensions on $26.7 million of bulk portfolio purchases in 2012.

We had an average monthly amount of finance receivables subject to payment extension of $36.1 million in the three months ended March 31, 2015, $32.5 million in 2014, $12.8 million in 2013 and $2.5 million in 2012. In the three months ended March 31, 2015, the highest monthly amount of finance receivables subject to payment extension was $45.3 million and the lowest was $30.1 million. In 2014, the highest monthly amount of finance receivables subject to payment extension was $49.6 million and the lowest was $18.2 million. In 2013, the highest monthly amount of finance receivables subject to payment extension was $23.9 million and the lowest was $5.9 million. In 2012, the highest monthly amount of finance receivables subject to payment extension was $7.9 million and the lowest was $0.5 million (excluding extensions on $26.7 million of bulk portfolio purchases in 2012).

We evaluate the results of our extension strategies based upon the amount of cash installments that are collected on accounts after they have been extended versus the extent to which the collateral underlying the extended accounts has depreciated over the same period of time. Based on this evaluation, we believe that payment extensions granted according to our policies and guidelines are an effective portfolio management technique and result in higher ultimate cash collections from the portfolio.

Changes in extension levels may have an impact on the ultimate amount of consumer finance receivables charged off by us. However, the timing of a charge-off may be affected if the previously extended account ultimately results in a charge-off. To the extent that extensions impact the ultimate timing of when an account is charged off, historical charge-off ratios and loss confirmation periods used in the determination of the adequacy of our allowance for credit losses are also impacted. Increased use of extensions may result in a lengthening of the loss confirmation period, which would increase expectations of credit losses inherent in the portfolio and therefore increase the allowance for credit losses and related provision for credit losses. Changes in these ratios and periods are considered in determining the appropriate level of allowance for credit losses and related provision for credit losses.

From time to time, we have agreed to modify the terms of certain finance receivables at the request of the borrower. These modifications can include a reduced interest rate, extended retail installment contract or loan principal, contingent principal forgiveness and/or an extension of the retail installment contract or loan amortization schedule. As of March 31, 2015, we had 34 modified finance receivables outstanding, excluding modifications required by law or for other regulatory purposes, representing an aggregate principal balance of $0.4 million. Of these 34 finance receivables, 20 represent finance receivables which were purchased at a significant discount as part of bulk purchases, and 14 represent finance receivables underwritten by us. As of December 31, 2014, we had 25 modified finance receivables outstanding, excluding modifications required by law or for other regulatory purposes, representing an aggregate principal balance of $0.2 million. Of these 25 finance receivables, 15 represent finance receivables which were purchased at a significant discount as part of bulk purchases, and 10 represent finance receivables underwritten by us. All modifications of finance receivables are treated as exceptions to policy, and therefore occur on a very limited basis and require approval by senior management.

Troubled Debt Restructurings (“TDRs”)

When we determine that a borrower no longer has the ability to satisfy the original payment obligations on their retail installment contract or loan and would have the ability and willingness to satisfy modified payment obligations, we may grant them a concession through a temporary or permanent modification of retail installment contract or loan terms. Retail installment contracts or loans whose terms have been modified as described above are reported as TDRs.

We had no TDRs for the three months ended March 31, 2015 or the years ended December 31, 2014, 2013 or 2012.

Liquidity and Capital Resources

We require a significant amount of liquidity to originate retail installment contracts and loans and to service debt. Our operations are funded through the revenues generated by our finance receivables portfolio and debt financing. We seek to issue debt that appropriately matches the cash flows of the assets that we originate.

As of March 31, 2015, we had completed 11 separate securitizations totaling approximately $2.7 billion of initial notes collateralized by our finance receivables. At March 31, 2015, we had four warehouse credit facilities with five multinational banks (the “Former Warehouse Credit Facilities”). At March 31, 2015, we had total fixed rate liabilities of $1,988.6 million and total floating rate liabilities of $61.2 million.

Warehouse Facilities

As of March 31, 2015, we had total credit available to us of $775.0 million under the Former Warehouse Credit Facilities that were secured by our finance receivables that are not pledged to the securitizations. At March 31, 2015, $61.2 million was outstanding under the warehouse credit facilities. At March 31, 2015, we had $109.6 million of borrowings available under the warehouse credit facilities based on finance receivables pledged to the Former Warehouse Credit Facilities as of that date and $713.8 million of total available commitment under the warehouse credit facilities.

On April 27, 2015, we refinanced the four warehouse credit facilities with a new warehouse credit facility with a lender group consisting of six multinational banks with a maturity of April 2017 and total credit available to us of $1.4 billion that is secured by our finance receivables that are not pledged to the securitizations.

Our warehouse credit facility specifies required collateral characteristics, collateral concentrations, credit enhancement and advance rates. The facility has a two-year commitment and floating interest rates. We maintain daily funding forecasts for originations in order to balance the desire to minimize funding costs with our liquidity needs.

Our warehouse credit facility also has spread, delinquency and net loss ratio limits. Failure to meet any of these covenants could trigger increased overcollateralization requirements or, in the case of limits calculated with respect to the specific portfolio underlying certain credit lines, result in an event of default under the agreement. If an event of default occurs under the agreement, the lenders could elect to declare all amounts outstanding under the agreement to be immediately due and payable, enforce their interests against collateral pledged under the agreement, restrict our ability to obtain additional borrowings under the agreement and/or remove us as servicer. Our warehouse credit facility currently does not have any ratios above their limits, and we have never had a warehouse credit facility terminated due to failure to comply with any ratio or a failure to meet any covenant.

Securitization Financings

We believe that securitizations offer a very attractive source of funding due to the depth of the investor base and the cost efficiency of the market. In addition, given that the interest rate on both the underlying retail installment contracts and the securitization debt obligations is fixed, this source of funding does not result in earnings volatility due to increased interest rate risk. Securitizations also allow us to limit our exposure to risk upon an event of default as investors generally have no recourse other than to the pool of finance receivables underlying the securitization and may not look to, or draw upon, our assets, or the assets of our affiliates, in order to satisfy their claims.

All of our securitizations have several classes of notes, with principal paid sequentially based on seniority and, subject to certain limitations, any excess spread distributed to the residual certificate holder. All of our securitizations are on-balance sheet transactions. We retain the residual interest in each securitization. The following table summarizes the balances of our securitization financings as of March 31, 2015:


Title	Current Note Amounts Outstanding		Maturity Date(1)	Initial Note Amounts Issued		Weighted Average Coupon(2)			Current Receivables Pledged		Current Reserve Account Balance
(dollars in thousands)
FCAT 2012-1	$	30,324	July 15, 2019	$	109,000		4.78	%	$	32,243	$	2,295
FCAT 2013-1		95,819	July 15, 2020		222,160		2.57	%		97,835		4,534
CFCAT 2013-1		100,158	November 15, 2019		238,430		2.91	%		111,080		5,060
FCAT 2013-2		132,429	February 16, 2021		228,520		2.85	%		135,161		4,676
CFCAT 2013-2		163,313	October 15, 2020		303,800		3.27	%		167,032		6,200
FCAT 2014-1		196,578	August 16, 2021		266,090		2.03	%		201,475		5,430
CFCAT 2014-1		161,217	September 15, 2020		235,200		2.29	%		166,104		4,800
FCAT 2014-2		291,671	February 16, 2022		329,975		2.14	%		300,112		6,700
CFCAT 2014-2		187,479	November 15, 2021		230,500		1.88	%		193,643		4,680
FCAT 2015-1		280,725	July 15, 2022		280,725		2.19	%		255,099		5,160
CFCAT 2015-1		260,610	January 18, 2022		265,940		2.11	%		262,010		5,400

Total	$	1,900,323		$	2,710,340				$	1,921,794	$	54,935

(1)	Maturity dates for the Flagship Credit Auto Trust (“FCAT”) and CarFinance Capital Auto Trust (“CFCAT”) represent final legal maturities of the securitizations. The notes are expected to be paid based on the amortization of the finance receivables pledged to the trusts.

(2)	Weighted average coupon is based upon current note amounts outstanding and coupon of each tranche.

Residual Credit Agreements

On May 27, 2014, we entered into a credit agreement (the “First Residual Credit Agreement”) with a multinational bank whereby we borrowed $45.0 million in a financing transaction collateralized by the residual cash flows from the FCAT 2012-1, FCAT 2013-1, FCAT 2013-2 and FCAT 2014-1 securitizations with a maturity date of November 27, 2016. On December 11, 2014, we amended the First Residual Credit Agreement and increased our borrowing to $55.0 million to include the residual cash flows from the FCAT 2014-2 securitization and extended the maturity date to May 17, 2017.

On January 9, 2015, we entered into a new residual credit agreement (the “Second Residual Credit Agreement”) with a multinational bank whereby we borrowed $50.0 million in a financing transaction collateralized by the residual cash flows from the CFCAT 2013-1, CFCAT 2013-2, CFCAT 2014-1 and CFCAT 2014-2 securitizations with a maturity date of June 19, 2017. Both facilities require monthly amortization of the principal balance based on the cash flows of the underlying securitizations.

At March 31, 2015 and December 31, 2014, $90.3 million and $53.7 million were outstanding, respectively, under the residual credit agreements.

Term Loan

On August 23, 2012, we issued $142.8 million in Class A Notes under a loan agreement with two multinational banks. Under the agreement, we also issued $17.5 million in Class B Notes to affiliates of the ABV Funds. On October 24, 2013, this facility was refinanced and the eligible finance receivables pledged to this facility were transferred to our CFCAT 2013-2 securitization transaction and the Class A Notes were paid in full. On October 24, 2013, the Class B Notes were also exchanged for notes issued in the CFCAT 2013-2 securitization transaction. Affiliates of the ABV Funds sold the notes issued in the CFCAT 2013-2 securitization transaction on April 22, 2014.

Tax Receivable Agreement

Upon the closing of this offering, we will be a party to a TRA. Under this agreement, we generally will be required to pay to the TRA Parties 85% of the applicable savings, if any, in income tax that we actually realize (or in certain circumstances are deemed to realize) as a result of (1) any increase in tax basis that was created as a result of transfers of common and preferred interests in FC HoldCo to Flagship Holdings in the Reorganization Transactions, (2) any increase in tax basis that is created as a result of future exchanges by the Continuing LLC Owners of their LLC Units (and Class B common stock) for shares of our Class A common stock or cash, (3) tax benefits related to imputed interest arising from payments under the TRA and (4) payments under the TRA. After our payment obligations under the TRA are taken into account, we generally expect to retain the benefit of 15% of the applicable tax savings described above.

Upon closing of this offering, we will record $ as an increase to the liabilities due to the TRA Parties under the TRA, see “Unaudited Pro Forma Financial Information,” and in the future we may record additional amounts as additional liabilities due to the TRA Parties under the TRA, such amounts collectively representing our estimate of our requirement to pay 85% of the estimated realizable tax benefit resulting from (i) any increase in tax basis that was created as a result of transfers of common and preferred interests in FC HoldCo to Flagship Holdings in the Reorganization Transactions, (ii) any increase in tax basis that is created as a result of future exchanges by the Continuing LLC Owners of their LLC Units (and Class B common stock) for shares of our Class A common stock or cash, (iii) tax benefits related to imputed interest arising from payments under the TRA and (iv) payments under the TRA. See “Unaudited Pro Forma Financial Information.” The term of the TRA will commence upon completion of the acquisition of the common interests in FC HoldCo held by ABVF Delaware Blocker, ABVO 2 Delaware Blocker and ABVO 3 Master Fund (as described in “Organizational Structure—Reorganization Transactions—Investors’ Reorganization Transactions”) and will continue until all tax benefits covered by the TRA have been utilized or expired, unless payments under the agreement are accelerated in the event that we exercise our rights to terminate the agreement or materially breach any of our material obligations under the agreement or on the occurrence of certain mergers, asset sales, other forms of business combinations or other changes of control. Under the terms of the TRA, we may not elect an early termination of the TRA without the consent of each of certain ABV Funds until such ABV Fund has exchanged all of its LLC Units (and Class B common stock) for shares of Class A common stock or cash.

We expect to make payments under the TRA, to the extent they are required, within days after our federal income tax return is filed for each fiscal year. Interest on such payments will begin to accrue at a rate equal to from the due date (without extensions) of such tax return.

See “Risk Factors—Risks Relating to Our Organization and Structure” and “Certain Relationships and Related Party Transactions—Tax Receivable Agreement” for additional information.

Cash Flow Comparison—Three Months Ended March 31, 2015 and Three Months Ended March 31, 2014

Operating Activities

Net cash provided by operating activities totaled $44.7 million and $28.5 million for the three months ended March 31, 2015 and 2014, respectively. Cash flows from operating activities are affected by net income and adjusted for non-cash items including provision for credit losses and depreciation and amortization, including

amortization of deferred premiums paid to dealers, fees charged to dealers and origination costs. For the three months ended March 31, 2015, net cash provided by operating activities included $5.8 million in net income, $28.0 million in provision for credit losses and $11.4 million in depreciation and amortization. For the three months ended March 31, 2014, net cash provided by operating activities included $3.7 million in net income, $19.4 million in provision for credit losses and $6.8 million in depreciation and amortization.

Investing Activities

Net cash used in investing activities totaled $225.7 million and $211.1 million for the three months ended March 31, 2015 and 2014, respectively. Cash flows from investing activities are highly dependent on our originations of finance receivables. For the three months ended March 31, 2015, net cash used in investing activities included $382.1 million in originations of finance receivables which was partially offset by $157.1 million in collections on finance receivables. For the three months ended March 31, 2014, net cash used in investing activities included $308.1 million in originations of finance receivables which was partially offset by $97.7 million in collections on finance receivables.

Financing Activities

Net cash provided by financing activities totaled $176.2 million and $176.9 million for the three months ended March 31, 2015 and 2014, respectively. Cash flows from financing activities reflect the net amounts borrowed under our warehouse credit facilities and term debt to fund our origination of finance receivables. Cash flows from financing activities also include changes in restricted cash and preferred units issued and repurchased. For the three months ended March 31, 2015, net cash provided by financing activities included $196.7 million in net repayments on our warehouse credit facilities, $596.7 million in proceeds from the issuance of term debt, $167.2 million in repayments of term debt, a $47.6 million increase in restricted cash and $4.6 million in net redemptions of preferred units. For the three months ended March 31, 2014, net cash provided by financing activities included $83.5 million in net advances on our warehouse credit facilities, $229.8 million in proceeds from the issuance of term debt, $90.0 million in repayments of term debt, a $59.6 million increase in restricted cash and $15.0 million in proceeds from the issuance of preferred units.

We believe that our existing cash, cash equivalents and investment securities balances, our cash flow generating capabilities, our borrowing capacity and access to capital resources are sufficient to satisfy our future operating cash needs, capital asset purchases, outstanding commitments and other liquidity needs for our existing operations and potential future obligations.

Cash Flow Comparison—Years Ended December 31, 2014, 2013 and 2012

Operating Activities

Net cash provided by operating activities totaled $144.2 million, $77.7 million and $21.5 million for the years ended December 31, 2014, 2013 and 2012, respectively. Cash flows from operating activities are affected by net income (loss) and adjusted for non-cash items including provision for credit losses and depreciation and amortization, including amortization of deferred premiums paid to dealers, fees charged to dealers and origination costs. For the year ended December 31, 2014, net cash provided by operating activities included $22.6 million in net income, $88.7 million in provision for credit losses and $34.9 million in depreciation and amortization. For the year ended December 31, 2013, net cash provided by operating activities included $9.4 million in net income, $51.2 million in provision for credit losses and $19.1 million in depreciation and amortization. For the year ended December 31, 2012, net cash provided by operating activities included a net loss before allocation to noncontrolling interest of $10.9 million, $29.4 million in provision for credit losses and $5.6 million in depreciation and amortization.

Investing Activities

Net cash used in investing activities totaled $824.7 million, $678.1 million and $461.9 million for the years ended December 31, 2014, 2013 and 2012, respectively. Cash flows from investing activities are highly dependent on our originations of finance receivables. For the year ended December 31, 2014, net cash used in investing activities included $1.3 billion in originations of finance receivables which was partially offset by $481.0 million in collections on finance receivables. For the year ended December 31, 2013, net cash used in investing activities included $924.4 million in originations of finance receivables which was partially offset by $248.2 million in collections on finance receivables. For the year ended December 31, 2012, net cash used in investing activities included $549.8 million in originations of finance receivables which was partially offset by $89.6 million in collections on finance receivables.

Financing Activities

Net cash provided by financing activities totaled $681.1 million, $598.0 million and $443.0 million for the years ended December 31, 2014, 2013 and 2012, respectively. Cash flows from financing activities reflect the net amounts borrowed under our warehouse credit facilities and term debt to fund our origination of finance receivables. Cash flows from financing activities also include changes in restricted cash and preferred units issued and repurchased. For the year ended December 31, 2014, net cash provided by financing activities included $123.9 million in net advances on our warehouse credit facilities, $1.1 billion in proceeds from the issuance of term debt, $487.2 million in repayments of term debt, a $52.5 million increase in restricted cash and $10.4 million in net redemptions of preferred units. For the year ended December 31, 2013, net cash provided by financing activities included $98.2 million in net repayments on our warehouse credit facilities, $975.4 million in proceeds from the issuance of term debt, $282.8 million in repayments of term debt, a $41.6 million increase in restricted cash and $55.7 million in proceeds from the issuance of preferred units. For the year ended December 31, 2012, net cash provided by financing activities included $155.2 million in net advances on our warehouse credit facilities, $265.8 million in proceeds from the issuance of term debt, $34.8 million in repayments of term debt, a $18.2 million increase in restricted cash and $78.6 million in net proceeds from the issuance of preferred units.

Contractual Obligations, Commitments and Contingencies

In the normal course of business, we enter into various contractual obligations that require future cash payments. Our future cash payments associated with our contractual obligations as of December 31, 2014 are summarized below:


	Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
	(in millions of dollars)
Operating lease obligations	$	1,776	$	3,337	$	3,157	$	3,968	$	12,238
Warehouse credit facilities		78,453		179,479		—		—		257,932
Secured financings		—		53,739		148,414		1,359,037		1,561,190
Contractual interest payable(1)		46,501		76,940		70,489		42,593		236,523

Total	$	126,730	$	313,495	$	222,060	$	1,405,598	$	2,067,883

(1)	Future interest payments reflect the applicable fixed interest rate or variable rate for floating rate debt in effect at December 31, 2014.

Subsequent to December 31, 2014, we have completed the following transactions:

•

On January 9, 2015, we entered into the Second Residual Credit Agreement with a multinational bank whereby we borrowed $50.0 million in a financing transaction collateralized by the residual cash flows from the CFCAT 2013-1, CFCAT 2013-2, CFCAT 2014-1 and CFCAT 2014-2 securitizations with a maturity date of June 19, 2017.

•

On February 26, 2015, we completed a Rule 144A securitization transaction in which the CFCAT 2015-1 issued fixed-rate automotive receivables-backed notes with an initial principal balance of approximately $265.9 million at a 2.10% weighted average coupon. The notes have a final contractual maturity of January 18, 2022 and have a three month prefunding period. We received net proceeds of $10.4 million from the transaction.

•

On March 12, 2015, we completed a Rule 144A securitization transaction in which the FCAT 2015-1 issued fixed-rate automotive receivables-backed notes with an initial principal balance of approximately $280.7 million at a 2.19% weighted average coupon. The notes have a final contractual maturity of July 15, 2022 and have a three month prefunding period. We received net proceeds of $21.9 million from the transaction.

•

On April 27, 2015, we entered into the New Warehouse Credit Facility. The agreement provides for borrowings of up to $1.4 billion based on eligible collateral. In connection with this transaction, the Former Warehouse Credit Facilities were paid off and closed.

Off Balance Sheet Obligations

We do not engage in any off-balance sheet financing arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Quantitative and Qualitative Disclosure About Market Risk

Market risk represents the risk of loss that may affect our financial position due to adverse changes in financial market prices and rates. In the course of our normal operations, we are exposed to market risks, including interest rate risk, liquidity risk and credit risk.

Interest Rate Risk

Net interest income is the difference between the interest earned on our finance receivables and the rate paid on our interest bearing liabilities. Net interest income is affected by changes in the level of interest rates, as well as the amounts of assets and liabilities.

Currently, all of our finance receivables are fixed-rate finance receivables funded through both fixed-rate and floating-rate liabilities. To manage interest rate risk on our floating-rate liabilities, we generally pursue a funding strategy pursuant to which we seek to refinance our warehouse credit facility floating-rate liabilities by entering into fixed-rate securitizations. To the extent that our future capital structure continues to include floating-rate liabilities (normally with the London Interbank Offered Rate (“LIBOR”) as benchmark), our net income could be adversely affected if we are unable to effectively manage interest rate risk.

We assess our interest rate risk by estimating the effect on our net income of various scenarios that differ based on assumptions about the direction and the magnitude of interest rate changes. For purposes of presenting the possible earnings effect of a hypothetical, adverse change in interest rates over the twelve-month period from December 31, 2014, we assume that all interest rate sensitive liabilities will be impacted by a hypothetical, immediate 100 basis point increase in interest rates at the beginning of the period. Interest rate sensitive liabilities are assumed to be those for which the stated interest rate is not contractually fixed for the next twelve-month

period. Thus, liabilities that vary with changes in a market-based index, such as the federal funds rate or LIBOR, which will reset before the end of the twelve-month period. The sensitivity is based upon the hypothetical assumption that all relevant types of interest rates that affect our results would increase instantaneously, simultaneously and to the same degree. Assuming an immediate 100 basis point increase in the interest rates affecting all interest rate-sensitive liabilities at December 31, 2014, we estimate that net interest income over the following twelve-month period would decrease by approximately $2.6 million.

Changes in interest rates could materially adversely affect our funding costs and ability to successfully complete securitizations, which could in turn affect liquidity. Competitive factors, state limits and future regulatory reform may limit or restrict our ability to raise interest rates on our finance receivables. If interest rates were to rise materially over a sustained period of time, and we are unable to sufficiently raise interest rates on our finance receivables, our net interest income could be adversely impacted, which could have a material adverse effect on our net income.

We do not enter into interest rate-sensitive financial instruments for trading or speculative purposes.

Readers should exercise care in drawing conclusions based on the above analysis. There are inherent limitations in any methodology used to estimate the exposure to changes in market interest rates. The sensitivity analysis provided above contemplates only certain movements in interest rates at a particular point in time based on the existing balance sheet. It does not attempt to estimate the effect of a more significant interest rate increase over a sustained period of time. It also assumes an immediate change in interest rates, without regard to the impact of certain business decisions or initiatives that we would likely undertake to mitigate or eliminate some or all of the adverse effects of the modeled scenarios.

Liquidity Risks and Strategies

Adequate liquidity and sources of funding are essential to our business. Funding and liquidity risks arise from several factors, many of which we cannot control, such as disruptions in the financial markets, changes in key funding sources, credit spreads, changes in future credit ratings, changes in regulatory requirements and political and economic conditions.

We expect that if we were to pursue a corporate credit rating in the future, our future corporate credit ratings would be non-investment grade, which could have a significant impact on our cost of, and access to, capital. This, in turn, could negatively affect our ability to manage our liquidity and our ability and cost to finance our indebtedness.

There are numerous risks to our financial results and to our liquidity, capital raising and debt refinancing plans. These risks include, but are not limited to, our inability to grow our finance receivables portfolio with adequate profitability; the effect of federal, state and local laws, regulations, or regulatory policies and practices; potential liability relating to securitized finance receivables; and the potential for disruptions in bond and equity markets.

The principal factors that could impact our liquidity are customer delinquencies and defaults, and prolonged inability to adequately access capital market funding. We intend to support our liquidity position by:

(1) managing and maintaining disciplined underwriting standards and pricing for the finance receivables we originate and

(2) pursuing additional debt financings (including new securitizations).

However, it is possible that the actual outcome of one or more of our plans could be materially different than expected or that one or more of our significant judgments or estimates could prove to be materially incorrect.

Credit Risk

The risk inherent in our finance receivables portfolio is driven by credit quality and is affected by borrower-specific and macroeconomic factors such as changes in unemployment rates. We manage this risk through our underwriting and credit approval guidelines, servicing policies and practices, as well as third-party and proprietary credit tools used to underwrite retail installment contracts and loans.

Our underwriting process utilizes both third-party and proprietary credit tools to evaluate an applicant’s credit standing, repayment ability and the value and adequacy of collateral, if any. We calculate and assign each applicant a credit score that is used to generate an applicant’s credit tier. Once the credit tier is generated, we determine the applicant’s ability to repay a retail installment contract or loan based on the adequacy of their residual income under our underwriting standards, including the payment on the proposed retail installment contract or loan.

Origination and underwriting processes are systemically and centrally controlled with key inputs from the underwriters, with such underwriters subject to post-closing quality reviews. The underwriting process requires that each applicant provide full documentation and verification of information provided in the funding application.

During periods of increasing consumer risk, or diminishing collateral values, we are able to assess the expected performance of new applications and tighten our underwriting standards or increase our overall pricing to offset any potential impact. As our credit underwriting process is designed to return risk-based pricing offers to the borrower, our approval terms compete in the market at loss rates acceptable for meeting our required returns. See additional discussion of our approach to credit risk in “Business.”

Critical Accounting Policies and Estimates

The preparation of the consolidated financial statements and combined consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and combined consolidated financial statements and the reported amounts of revenues and expenses during the reporting year. Actual results could differ from those estimates. The accounting policies that we believe are the most critical to understanding and evaluating our reported financial results include the following.

Finance Receivables

Finance receivables are classified as held for investment and carried at amortized cost, net of an allowance for credit losses, as we have both the ability and intent to hold these receivables until maturity. Most of our finance receivables have been pledged as collateral under its warehouse credit facilities and securitized borrowing arrangements. Purchase premiums, discounts and origination costs are deferred and amortized as adjustments to financing income over the estimated life of the related receivables.

Certain of our finance receivables portfolios were purchased from third-parties at either a discount or a premium, the aggregate purchase price of which represents the fair value of the portfolio purchased. For those portfolios purchased at a discount, the discount primarily represents a credit discount necessary such that the portfolio will have a market rate of return after contemplating the credit losses on the acquired loans. Losses incurred on the loans are recorded against the credit discount. Losses anticipated incremental to the credit discount are recorded against the allowance. A portion of the discount for purchased portfolios represents anticipated credit losses on the acquired finance receivables.

Interest is accrued when earned in accordance with the contractual terms of the finance receivables. The accrual of interest is discontinued once a finance receivable becomes more than 60 days past due. These loans are designated as nonaccrual loans. We generally recognize interest income on nonaccrual loans on a cash basis when received. Interest accruals are resumed when the receivable becomes 60 days or less past due and when, in the judgment of management, the receivable is estimated to be fully collectible as to principal and interest.

Allowance for Credit Losses

We evaluate our finance receivables portfolio on a collective basis, due to it being comprised of smaller balance, homogenous loans with similar general credit risk characteristics. The allowance for credit losses is maintained at a level considered adequate to cover probable losses in the portfolio of finance receivables held for investment that have been incurred as of the financial statement date. Provisions for credit losses are charged to operations in amounts sufficient to maintain the allowance at the required level. Probable losses are estimated based on quantitative analysis taking into account the following:

•

Historical loss experience

•

Probability of default based on various factors including FICO score, loan-to-value ratio, payment-to-income ratio and amount of down payment

•

Estimated value of underlying collateral

•

Underwriting and collection practices including any recent changes or trends

We perform detailed comparisons of our historical loss experience since formation, including timing of losses, to our projections to determine if any adjustments need to be made to our loss estimates. We update these loss estimates on a quarterly basis. We also consider qualitative factors in determining the adequacy of the allowance for credit losses. The qualitative factors we consider include trends in projected used car values and macroeconomic trends, including unemployment rates and energy prices. Our management continually evaluates the credit quality of our finance receivables portfolio and conducts a quarterly review of the adequacy of the allowance for loan losses using these quantitative and qualitative factors.

Finance receivables are charged off against the allowance for credit losses in the month in which the account becomes 120 days contractually past due if the related vehicle has not been repossessed. Accounts in repossession are charged off when the vehicle is legally available for disposition. For repossessed vehicles, a charge-off is recorded representing the difference between estimated net sales proceeds and the amount of the delinquent receivable. Accrued interest on charged-off finance receivables is written off against financing income. Recoveries on finance receivables previously charged off are credited to the allowance for credit losses.

For portfolio acquisitions, the discount between the portfolio principal balance and the initial purchase price primarily represents a credit discount necessary such that the portfolio will have a market rate of return, contemplating the credit discount. Actual credit losses incurred on the portfolio are recorded against the discount. We will establish an allowance for credit losses to the extent that management’s estimate of losses inherent in an individual purchased portfolio at the balance sheet date exceeds the remaining unaccreted discount.

Large groups of smaller balance homogeneous loans, such as our finance receivables portfolio, are collectively evaluated for impairment. Loans that have been modified and, based upon an evaluation, determined that a concession has been granted to a borrower experiencing financial difficulty are generally considered troubled debt restructurings and classified as impaired.

BUSINESS

Our Company

As of March 31, 2015, we had 619 employees across our Chadds Ford, Pennsylvania, Irving, Texas, Irvine, California, Phoenix, Arizona and Indianapolis, Indiana offices.

Our Industry

The automotive lending market is among the largest consumer finance markets in the U.S. and continues to grow as more consumers choose to finance the purchase of new and used vehicles. Total outstanding automotive loan balances were approximately $905 billion according to Experian as of March 31, 2015. In the fourth quarter of 2014, approximately 84% of new and 55% of used vehicle purchases (including leased vehicles) were financed, compared to 81% and 51% in the fourth quarter of 2010. In the fourth quarter of 2014, approximately 63% of all vehicles financed in the U.S. were used vehicles. Borrowers typically considered to be below prime by credit evaluation services purchase a greater portion of used vehicles relative to borrowers considered to be prime. According to Experian, as of December 31, 2014, the percentage of borrowers that were considered to be below prime was 39% of the total automotive loans outstanding.

The U.S. light vehicle sales market is large and has experienced significant recent growth supported by an improving U.S. economy as well as the vehicle replacement cycle. In March 2015, U.S. light vehicle sales reached a SAAR of 16.5 million units, having increased at a 7.9% CAGR since March 2010, according to the U.S. Bureau of Economic Analysis. Moreover, according to the Federal Reserve Board and Federal Open Market Committee economic projections, as of March 18, 2015, the U.S. economy is expected to grow at an annual rate of 2.5% in 2015 and 2016. In addition to an attractive macroeconomic environment, the aging of vehicles in the U.S. is further driving light vehicle sales growth. According to the Bureau of Transportation Statistics, the average U.S. vehicle age has increased 36% since 1995 to 11.4 years old as of January 1, 2014, setting the stage for an upcoming replacement cycle as consumers make vehicle purchases that were deferred during the recent recession.

Automotive finance receivables are originated through two distinct channels, indirect and direct. For indirect originations, dealers extend credit to purchasers through the execution of a retail installment contract by deferring payment of the total purchase price as part of the process of selling a vehicle. Thereafter, dealers assign these retail installment contracts to automotive financing providers and receive the proceeds of these sales, net of all fees and discounts. In contrast, for direct originations, automotive financing providers originate loans directly to borrowers that meet specific underwriting criteria.

In the U.S., according to CNW, there are approximately 15,500 franchised and 35,000 independent dealers. Franchised dealers are affiliated with an original equipment manufacturer while independent dealers have no manufacturer relationship.

Our Typical Borrower

We refer to our typical borrowers as non-prime, although some third-party credit evaluation services would refer to our typical borrowers as a mix of non-prime and sub-prime. We understand that credit evaluation services vary in their distinction among non-prime, sub-prime and other categories of lending generally by reference to a borrower’s FICO score or other similar credit score. For example, one credit evaluation service designates borrowers within a credit score range of 601-660 as non-prime and borrowers with a score of 501-600 as sub-prime while another designates borrowers within a FICO score range of 620-680 as non-prime and borrowers with a FICO score of less than 620 as sub-prime, and another service designates borrowers within a credit score range of 620-679 as near-prime and borrowers with a score of 550-619 as sub-prime.

The following is a summary of the credit risk profile of our borrowers by FICO^® distribution, determined at origination, as of March 31, 2015 and December 31, 2014:


	As of March 31, 2015					As of December 31, 2014
	Gross Finance Receivables Outstanding		% of Total Gross Finance Receivables Outstanding			Gross Finance Receivables Outstanding		% of Total Gross Finance Receivables Outstanding
FICO^® Band	(in thousands of dollars)
No FICO^® Score	$	75,449		3.6	%	$	60,797		3.2	%
<525		52,211		2.5	%		39,094		2.1	%
525-574		536,328		25.7	%		471,028		24.9	%
575-624		944,746		45.8	%		888,106		47.0	%
625-674		403,569		19.4	%		373,274		19.8	%
>674		61,675		3.0	%		56,659		3.0	%

Although our typical borrower has a FICO score between 525 and 675, we will at times extend retail installment contract or loan offers to applicants who do not fall within this FICO score range. While some of our

borrowers do not have FICO scores (such as those without a credit history), of our borrowers that do have a FICO score, we require a minimum FICO score of 500. However, the FICO score is only one factor among many used by us to determine the creditworthiness of a borrower. Other factors that also drive the overall credit exposure for a borrower will include the structure of the retail installment contract or loan, the rate charged, and the expected default rate for the account.

For applicants with a limited credit history, including applicants who are unable to obtain a valid FICO score, we require a significantly stronger employment history than those with a credit history and FICO score, and also require other stability factors to meet our underwriting standards. In addition, we generate a proxy credit score for each applicant, including any applicant without a valid FICO score, based on our historical data, which is considered in the underwriting determination. We believe our underwriting approach enables us to offer financing on terms that are fair and affordable to our borrowers relative to alternatives in the market and are attractive to our dealer customers.

Our Business Channels

Our Indirect Channel

The following map illustrates the number of our active dealer customers by state as of March 31, 2015:

LOGO

We have the greatest concentration of finance receivables outstanding in Texas, California, Florida, Arizona and Georgia, which together accounted for 58.2% of our finance receivables portfolio as at March 31, 2015; borrowers in Texas, California and Florida represented 20.6%, 12.8% and 10.6%, respectively, of such portfolio.

For the year ended December 31, 2014, we originated approximately $1.1 billion of retail installment contracts from our dealer customers, 83% of which were originated from manufacturer-franchised dealer customers and approximately 17% of which were originated from our qualified independent dealer customers. Additionally, we established more than 2,000 new dealer customer relationships. For the three months ended March 31, 2015, we originated approximately $318 million of retail installment contracts from our dealer customers, 81% of which were originated from manufacturer-franchised dealer customers and approximately 19% of which were originated from our qualified independent dealer customers. As of March 31, 2015 and December 31, 2014, the weighted average APR on our Indirect finance receivables portfolio was 15.6% and 15.6% on a gross outstanding balance of $1.8 billion and $1.6 billion, respectively.

Our Direct Channel

Our Affinity Program

Within our Indirect and Direct channels, we can generate origination volume through affinity programs. Affinity programs enable us to gain access to incremental borrowers through their affiliation with certain professions, employers and organizations. For example, in January 2012, we began funding a limited number of retail installment contracts sourced through the Military Installment Lending and Education Service program (“MILES”), a third-party affinity network focused on providing non-prime active duty military personnel with information and education about automotive financing, owned by Dealers’ Financial Services, LLC (“DFS”). In

July 2013, we and DFS entered into an agreement that we believe positions us as the primary lender for all active duty military retail installment contracts sourced through MILES. The retail installment contracts marketed through MILES, or military borrower retail installment contracts, are originated to active duty military personnel by participating dealers that enter into dealer agreements with us. Our underwriting guidelines for military borrower retail installment contracts differ in some respects from our underwriting guidelines applicable to our other finance receivables. We may fund military borrower retail installment contracts sourced through MILES with a payment-to-income ratio that is higher than permitted by our underwriting guidelines for our other finance receivables. Although our scorecards are not applied to these retail installment contracts, such retail installment contracts are originated subject to program guidelines provided by us and in a manner that we believe is consistent with our credit philosophy. Based upon the historical performance data on the military borrower retail installment contracts available to us, we believe that the loss rates on military borrower retail installment contracts are generally consistent with loss rates on our other retail installment contacts. We continue to seek similar affinity relationships that provide access to borrowers that meet our underwriting criteria.

Our History

Our management team has significant experience in the non-prime automotive financing sector over multiple economic cycles. The Flagship brand was initially created in 1998 when our Chief Executive Officer and President, Michael Ritter, merged Franklin Acceptance Corporation and ProCredit, Inc. Under Mr. Ritter’s leadership, the finance receivables portfolio grew to $841 million prior to the sale of the company to Wells Fargo Financial, Inc. in 2000 to form its national indirect vehicle lending operations. The origins of our current business date back to 2005 when the Former FCC was founded by Michael Ritter. In August 2010, the ABV Funds formed FCA and acquired the assets of Former FCC. Our management team transitioned to FCA and continued to operate the business.

Similarly, CFC was founded and led by a team of automotive financing industry veterans that successfully managed automotive financing companies over multiple economic cycles. Members of the management team led Triad Financial Corporation, helping it grow to more than $4 billion of finance receivables. Members of the management team also founded RoadLoans.com, one of the earliest web-based, direct lending origination platforms. In 2011, the ABV Funds made an equity investment in CFC.

On January 1, 2015, we completed the merger of the parent entities of FCA and CFC within a single corporate entity, which is our ongoing company.

Our Principal Investors

Certain investment funds constituting part of the Perella Weinberg Partners Asset Based Value Strategy (the “ABV Funds”) are our indirect principal investors. The ABV Funds are managed by Perella Weinberg Partners Capital Management LP, an affiliate of Perella Weinberg Partners Group LP (together with its affiliates and designees, including the ABV Funds, “PWP”).

PWP was established in 2006 and is a leading independent, privately owned financial services firm that provides advisory and asset management services to a broad, global client base through a team of talented and experienced professionals. With more than 450 employees, PWP maintains a global presence with offices in New York, London, Abu Dhabi, Denver, Dubai, and San Francisco. PWP is a leading global institutional asset manager that, together with its affiliates, maintains approximately $11.0 billion (as of December 31, 2014) in capital commitments and managed assets. PWP participates on behalf of its investors in most major asset classes on a global basis, including equities, fixed income, asset based securities, distressed securities, private investments, and real estate. The ABV Funds are a leading alternative asset management strategy with the objective to achieve strong risk-adjusted returns with low volatility and low correlation to equity and fixed income capital markets. The ABV Funds pursue investments with limited downside, current cash yield and equity-like upside optionality. As of December 31, 2014, the Perella Weinberg Partners Asset Based Value Strategy manages over $2.1 billion in equity capital across multiple investment vehicles.

Our Competitive Strengths

Well positioned in an attractive, high growth market.

We provide automotive financing to borrowers that do not typically have access to prime credit lending terms for the purchase of affordable, late-model vehicles and the refinancing of existing automotive financings. Our typical borrowers, which we refer to as non-prime, represent a large market segment served by a fragmented group of lenders. Since the recession of 2008-2009, many of our competitors have exited our chosen market creating a significant opportunity for lenders with expertise and scale in this market segment. Through our nationwide network of more than 7,700 active dealer customers in our Indirect channel, we are one of the few scaled automotive financing providers focused on the non-prime market. Additionally, our Direct channel further differentiates us from our competitors and positions us to benefit from changing consumer behavior in the automotive purchase and financing process.

Full-service, scalable automotive financing platform.

Flexible business model tailored to the needs of our dealer customers and borrowers.

We believe we provide a differentiated, flexible approach to origination and underwriting that benefits our dealer customers and borrowers while providing attractive risk-adjusted financial returns. Our relationship-based model for working with dealer customers helps us understand each dealer customer’s individual needs allowing us to offer a competitive automotive financing product with superior customer service. While our larger competitors, primarily banks, tend to compete on cost of funds and speed of execution, we focus on better understanding the specific credit profile and particular financial circumstances of our borrowers. This allows us to offer borrowers market-competitive automotive financing options if they choose to accept our terms. Further, our flexible approach to both dealer customers and borrowers enables us to rapidly adapt to changing market conditions due to actions by our competitors or changing macroeconomic factors.

In our Direct channel, CarFinance.com, we similarly provide flexibility for our borrowers. CarFinance.com simplifies the automotive financing process by enabling borrowers to source refinancing for existing borrowings and financing for the purchase of new and used vehicles over the internet, including via a mobile device. In the context of a purchase transaction, CarFinance.com allows borrowers to receive pre-qualified automotive financing and approach a dealer as if they were a cash buyer, thereby freeing our borrowers to focus only on the vehicle purchase transaction.

Experienced management team.

Our senior management team is comprised of professionals with deep experience in automotive financing, commercial banking, accounting, and the financial industry. Led by our Chief Executive Officer and President, Michael Ritter, who has over 37 years of experience in the financial services industry, our management team has a proven track record of building and leading successful multi-billion dollar non-prime automotive and specialty finance businesses. Our management team has successfully managed credit risk and efficiently serviced retail installment contracts and loans through multiple economic cycles. Over our management’s collective professional history, they have identified attractive geographic markets for expansion, recruited top sales talent to service dealers, executed multiple national dealer roll-out strategies and built a national direct to consumer lending platform.

Access to robust financing markets to fund growth.

We rely primarily on secured warehouse facilities, the asset backed securities (“ABS”) market and residual interest credit facilities to fund our originations. Currently, we have six multinational banks in our warehouse facility and one multinational bank providing residual financing. We have successfully executed 11 ABS transactions from 2012 to March 31, 2015, raising approximately $2.7 billion in total proceeds. Historically, the secured lending markets for automotive receivables have been deep and liquid, with accessibility throughout different economic cycles. For example, automotive ABS issuances continued during the economic crisis in 2008-2009, enabling lenders to support new originations. We believe our proprietary underwriting and the forecasting abilities of our credit loss projection models have given us credibility with lenders, offering us access to funding through the economic cycle. In fact, all of our ABS issuances to-date have cumulative loss ratio performance in line with or better than expectations published at the time of the transaction from hired nationally recognized statistical ratings organizations. Further, we believe that as our business continues to build scale, we will have advantaged access to funding at lower cost and with deeper availability relative to many competitors.

Comprehensive risk management and compliance systems and processes.

Our Business and Growth Strategy

Continue national dealer roll-out.

Throughout our operating history, we have demonstrated an ability to grow our base of dealer customers, including having added more than 2,000 active dealer customers in 2014. Our base of dealer customers as of March 31, 2015 included more than 7,700 active dealer customers. In the U.S., according to CNW, there are approximately 15,500 franchised and 35,000 independent dealers, which offer us significant capacity for growth. We plan to build on our success by continuing our national roll-out strategy by expanding into new markets through our team of area sales managers. We have a methodical and targeted growth plan that carefully seeks to integrate each new sales territory with our team of trained credit analysts and funding analysts, as well as our supporting infrastructure. We believe that our systems, staffing and platform capabilities are sufficient to support our growth objectives.

Increase dealer penetration.

Expand our CarFinance.com platform.

Our Direct channel, CarFinance.com, accounted for 15% of our total originations in 2014. We believe we can continue to grow our direct originations through third-party application sources such as lead generation providers and pass-through applications from other financial institutions. However, we believe the larger, and more strategic, potential growth opportunity for our Direct channel is to increase traffic to CarFinance.com, our organic web portal. CarFinance.com positions us to benefit from changing consumer behavior in the automotive market. We believe there is an emerging group of consumers who prefer to use the internet, including via mobile devices, to research and arrange for vehicle purchases. According to AutoTrader.com, 76% of all automobile purchasers used the internet to shop for new and used vehicles in 2015, up from 75% in 2013 and 71% in 2011. According to a 2014 National Independent Automobile Dealers Association report, 32% of consumers use multiple internet enabled and mobile devices to shop for a vehicle, which is expected to grow to 52% by 2018. Our significant investment in CarFinance.com since its inception in 2011 will help us capitalize on this changing consumer purchase behavior and the evolution of the vehicle buying experience. In this environment, we believe CarFinance.com will increasingly be viewed as a value-added lead generation service by our dealer customers, thereby expanding our relationship with our dealer customers beyond traditional financing and offering us the potential for further growth.

Increase our affinity relationships.

Our Business Operations

Indirect Sales Strategy

Led by our senior vice president of sales, our sales team is segmented into three major U.S. markets, each overseen by a vice president, with three sales regions within each market. A regional sales manager oversees 8-10 area sales managers within each sales region. We originate retail installment contracts in our Indirect channel through the area sales managers who solicit our dealer customers to submit qualification applications to us. Each of our area sales managers is assigned to a territory, typically centered around a large metropolitan market or covering a rural area where a significant number of used vehicles are sold. Area sales managers are responsible for sourcing new dealer customer relationships as well as day-to-day coverage of our active dealer customers. As of March 31, 2015, we had 68 area sales managers.

For an automotive dealer to become a customer, the area sales manager assigned to the dealer’s territory must first complete a compatibility review. During this period, the area sales manager typically reviews such factors as the dealer’s demographics, inventory opportunity, sales process and market penetration. Once a dealer passes the compatibility review, the area sales manager will work with the dealer to complete a dealer enrollment application package.

We have two separate enrollment application packages, one for manufacturer-franchised dealers and another for independent dealers. Every dealer is required to complete the franchised enrollment application package which consists of a dealer profile, an executed dealer agreement, an Automated Clearing House (“ACH”) form for automated funding, a copy of a valid dealer license and a copy of a valid business license. For independent dealers, we also require financial information from the dealer, a review of vehicle inventory to determine appropriate fit with our desired customer base and evidence of stability and reputation within the market. Enrollment application packages for independent dealers must be approved by senior staff.

Once a dealer customer is approved, the dealer customer is assigned a primary credit analyst and a primary funding analyst who support the dealer customer’s area sales manager. We refer to this coverage team for each

dealer customer as the “Service Triangle.” The Service Triangle helps us to build stronger relationships with our dealer customers. Through the Service Triangle approach, active dealers customers are supported through development efforts to drive overall market penetration and per-store application volume. These efforts include marketing incentives and promotions, program training and brand awareness building.

Underwriting Approach

When evaluating an application, we rely on a highly disciplined credit and underwriting approach that employs a hybrid of advanced analytics, proprietary scorecards, workflow systems and review by trained and experienced credit analysts. Our loan origination systems (“LOS”) receive retail installment contract applications through industry standard online submission portals, including DealerTrack and RouteOne, which interface with our systems to process applications and display relevant credit information for review by a credit analyst.

Applications sourced through our Indirect and Direct channels that meet our minimum underwriting criteria are scored using one of our proprietary statistical scorecards and reviewed by a credit analyst. Our proprietary scorecards were internally developed by our risk management department with the support of third-party modeling and data providers. Using historical account data from 2006 through the present, we have developed and continually refine our credit scorecards to allow for sophisticated risk-based pricing. Our scorecards augment commonly applied credit factors, such as FICO^® scores, with additional credit characteristics. (including time in file, number of trades, number of inquiries and recent collections) and the specifics of each finance receivable structure (including term, loan to value, down payment and monthly payment), which are incorporated and weighted based on proprietary analysis of our historical performance data. Our Flagship brand is currently using its fifth generation scorecard, while our CarFinance brand is using its first generation scorecard. Prior to 2015, our CarFinance brand relied upon a FICO^® score-based underwriting approach.

Our credit analysts undergo specific training on the LOS, detailed regulatory training and a comprehensive series of compliance training modules before they are permitted to review retail installment contracts and loan applications.

Once scored, each application is reviewed by a credit analyst. Our credit department is responsible for processing retail installment contract and loan applications, communicating approval or decline decisions to dealer customers and consumers, as applicable, and structuring the retail installment contract and loan offers. The credit analyst determines if the financing terms are consistent with our underwriting guidelines based on the applicant’s credit history, debt level, and capacity to repay borrowings as well as an analysis of the loan structure and collateral. We have a staffing model that assumes each credit analyst can support 40 to 60 credit applications per day, after excluding the system automatic-declines. Each credit analyst is assigned to a team along with an area sales manager and a funding analyst to consider a specific group of dealer customers. We believe this team approach improves relationships with our dealer customers. As new dealer customers are projected to be added, or dealer penetration is improved, additional credit analysts are hired and trained to support the anticipated volume increase. As of March 31, 2015, we had 88 credit analysts.

Funding

In addition to validating that the documents are complete, our funding department also seeks to verify that retail installment contract and loan disclosures comply with federal and state requirements, terms and disclosures

are complete and correct, all documentation is accurate and all documentation is signed by all required parties. Our funding department also compares the approved terms and deal structure parameters to the original credit approval to ensure the information provided and the retail installment contract or loan structure are consistent with the terms offered by the credit analyst.

Our funding department is then responsible for reviewing insurance, employment and income information and determining if the retail installment contract or loan meets approved terms and guidelines. The terms of the retail installment contract or loan, down payment, and collateral are typically confirmed through a pre-funding interview with the applicant. If the retail installment contract or loan structure or terms are materially different from the approved terms, the application is returned to the credit department for review. During this review, the new structure may result in different pricing or terms being offered, the system-generated credit tier may change or the application may be rejected if outside of the terms offered by the credit analyst. After the information is confirmed to be within guidelines, the retail installment contract or loan is approved for funding and a payment request is submitted. As of March 31, 2015, we had 67 funding analysts.

Servicing

Funded retail installment contracts and loans are uploaded nightly to our servicing platforms, allowing us to generate all required analytical and operational reporting for our portfolio on a daily basis. Account-level transactional data is directly integrated into the accounting system, as well as used for risk management reporting on the accounts. Our servicing system, licensed through third-party vendors, is the industry-standard Shaw system which is used by certain of the largest automotive financing providers. Our servicing activity (including collections) is managed centrally, with our primary servicing center in Irving, Texas, with additional centers in Phoenix, Arizona and Chadds Ford, Pennsylvania. As of March 31, 2015, we had 29 servicing agents and 205 collections agents. We also rely on an outsourcing relationship for a portion of our early stage collections activities. Borrowers may submit payments on their retail installment contracts or loans through a number of payment platforms, including mail, online ACH, Western Union Quick Collect, Money Gram Express, and debit card processing, all payable via online access or through the phone.

Our servicing agents are focused on maintaining customer service-driven contact with borrowers while minimizing potential losses. If a borrower does not pay his or her monthly payment amount on the contractual due date, his or her account will be routed to a queue for collections activity. The collection process may begin when an account becomes one day past due, and generally never later than 15 days past due. Collections agents are assigned to accounts in 30-day delinquent groups (early stage, mid stage, late stage and loss mitigation) and work with the borrowers to identify the reason for the delinquency, determine if the account holder desires to maintain the account and work to resolve the delinquency status.

In an effort to maximize total payments received, as well as aid the borrower in working through disruptions in cash flow, our servicing agents may allow a due date change and/or extension to the retail installment contract or loan. A due date may generally be changed by the borrower to a date that is up to a maximum of 29 days from the original due date and requires the account to be current at the time of the request. Our servicing agents may also extend retail installment contracts or loans on a limited basis. To be eligible for an extension, a borrower must generally have made at least six payments since the account was originated and must not have received an extension in the immediately preceding twelve months. Additionally, the extension must bring the account current. No borrower is permitted more than five extensions over the life of the retail installment contract or loan or extensions totaling more than eight months’ duration.

If a borrower is determined to be incapable or unwilling to make a contractual payment, the vehicle repossession process will be initiated. The decision to repossess is based on the borrower’s capacity to bring the account up to date, whether or not the asset is in jeopardy, and the borrower’s willingness to continue to maintain contact with our collections agents. Once an account is approved for repossession, the loss mitigation team is responsible for managing the repossession and vehicle liquidation process through third-parties. The act of

repossessing the vehicle is assigned to national outsource partners who specialize in this activity. Vehicles that are recovered are then transported to a local auction and prepared for liquidation. Throughout the repossession process, state-required notifications are sent to the borrower. If appropriate, borrowers may also be contacted and may be offered settlements (depending on the realizable value of the vehicle) if they choose to redeem prior to liquidation. If the borrower forgoes the opportunity to redeem the vehicle, the vehicle is sold. Proceeds from the sale, net of auction fee and reconditioning and other costs, are then applied to the account. Our servicing agents also manage accounts that require additional specialized servicing or quality control and monitoring (including, for example, accounts subject to insurance losses, bankruptcies, and deficiency balances) in-house with the aid of outside vendors.

Risk Management

We have comprehensive risk management and compliance systems and processes with experienced leadership overseeing the core areas of enterprise-risk management, including credit risk, compliance and quality assurance.

Credit Risk

Our credit risk department is responsible for overseeing all portfolio risk, including developing pricing and internal economic models, maintaining our core reporting and analytical systems, modeling and developing our delinquency and credit loss forecasting, evaluating the performance of loans by credit tier to determine the effectiveness of our risk-based-pricing structures and conducting quantitative evaluations of departmental performance. Our credit risk department also develops our proprietary internal scorecards and directs the programming and configuration of our LOS. Additionally, we have a credit committee which reviews any proposed changes to our models or scorecards prior to implementation.

Compliance and Quality Assurance

Our compliance department is responsible for setting policy, reviewing processes, and measuring and evaluating adherence to regulatory requirements. Our compliance department seeks to ensure that all of our employees have adequate regulatory training and are compliant with all federal, state and local requirements. Oversight is administered through a comprehensive compliance management system, along with regularly scheduled meetings of our compliance committee. Our compliance committee is composed of the Chief Executive Officer, the Chief Operating Officer, the Chief Compliance Officer and the General Counsel. Our compliance department also reviews and approves of all internal policies and procedures, including manuals and training materials, and monitors documentation of all compliance related processes. Additionally, we use industry leading third-party compliance consulting firms to assess and review internal practices and controls.

Our quality assurance department is responsible for measuring and evaluating departmental adherence to our policies and procedures, as well as providing operational department heads with reporting on the performance and effectiveness of staff. We believe that comprehensive and consistent measurement of policy adherence is critical to maintaining a disciplined risk management culture. Through the use of quality assurance reviews, we believe we can more quickly identify any area of policy ambiguity, need for increased training, or system processes that lack sufficient controls. In particular, our quality assurance department reviews our credit and servicing departments on an ongoing basis to determine whether application decisions and funded loans comply with our policy and whether collections actions comply with applicable regulations. The results of this review process are shared with the heads of the credit and servicing departments and are used as both a monitoring and training tool for our employees.

Our compliance and quality assurance departments coordinate to perform a number of scheduled audits and review all departmental manuals, all customer correspondence templates (including but not limited to adverse action letters, collections letters and contract assignment notifications), develop training programs, conduct vendor reviews and monitor ongoing compliance with federal and state regulatory requirements, as well as internal policies.

Competition

The automotive financing industry is highly competitive. In our Indirect channel, we compete on the pricing we offer on retail installment contracts, as well as the customer service we provide to our dealer customers. Pricing for these contracts is highly competitive and subject to bids by competing financing providers. Although pricing, both to the consumer and the dealer customer, is critical to our selection, other non-pricing elements may also impact the dealer customer’s determination. These factors may include the speed of decision, the ability to work with the dealer customer to structure the contract terms to meet the needs of the borrower, and the ability to tailor the transaction to accommodate differences in dealer customer process and documentation. As such, dealer customer relationships are important in the automotive financing industry. We have developed strong dealer customer relationships across the U.S. through our nationwide sales force and extensive history in the automotive financing space, which allows us to provide our automotive dealer customers with a high level of service. In addition, our proprietary scorecards, trained analysts and industry experience enable us to price risk appropriately, which allows us to offer borrowers competitive terms while maintaining the quality of our receivables portfolio. As such, we believe that we are well positioned to compete effectively in our market place.

Our primary competitors in the indirect automotive financing space are:

•

national and regional banks;

•

credit unions;

•

independent financing providers; and

•

the affiliated financing companies of automotive manufacturers.

Although the used automotive financing market is fragmented, in both the new and used automotive markets there are a number of competitors that have substantial positions nationally or in the markets in which they operate. Some of our competitors have lower cost structures and lower cost funding compared to us. We believe we can compete effectively by continuing to expand and deepen our relationships with dealer customers while leveraging our high service levels and extensive industry knowledge and experience.

In our Direct channel, Carfinance.com, we compete on the pricing we offer and the consumer experience associated with securing financing online for purchasing a new or used vehicle or refinancing existing automotive financings. Unlike our Indirect channel, our Direct channel relies less (or, in many cases, not at all) on the actual dealer to facilitate the financing transaction. Through our proprietary web-based application, document management and delivery system, we have developed an integrated buying and refinancing experience that allows consumers to quickly and efficiently apply for credit and receive a decision. Although subject to much of the same competition as our Indirect channel, we believe we have favorable advantages within the direct lending space due to our overall customer experience, and our ability to assess and price non-prime risk, and to integrate the process with our nationwide dealer base.

Our primary competitors in the online direct automotive financing markets are:

•

national and regional banks;

•

credit unions;

•

independent financing providers; and

•

online aggregators.

As more consumers migrate to transacting online, the consumer experience and ability to provide a compelling offer will continue to differentiate us from the competition.

100

Regulation

The U.S. consumer lending industry is highly regulated under numerous federal and state laws. We are subject to examination, supervision and regulation by each state in which we are licensed and operate. We are also currently regulated by the CFPB and may be subject to examination and supervision by the CFPB in the future.

State Lending Regulation

Various state laws and regulations govern our consumer finance operations. In general, state statutes establish maximum loan amounts, terms, interest rates and fees that may be charged for lending. Specific allowable charges vary by state and by type of license maintained. In addition, state laws regulate the keeping of books and records, disclosures and other aspects of the operations of consumer finance companies including collection practices.

We are separately licensed under the laws of each state in which we operate. Licenses granted by the regulatory agencies in these states are subject to renewal every year and may be revoked for failure to comply with applicable state and federal laws and regulations. We are also examined regularly by state regulators. There is a clear trend of increased state regulation, as well as more detailed reporting requirements, more detailed examinations and increased coordination of examinations among the states. The Dodd-Frank Act empowers state attorneys general and state regulators to bring actions to remedy violations of certain federal consumer financial protection laws and regulations, and some states are beginning to exercise this authority.

The CFPB

The Dodd-Frank Act, which was enacted in 2010, and its implementing regulations have affected and are likely to continue to affect our operations in terms of increased oversight of financial services products by the CFPB and the imposition of restrictions on lending practices, including the terms of certain loans. The CFPB, which was created by the Dodd-Frank Act, has broad regulatory and enforcement authority over entities offering consumer financial services or products, including non-bank commercial companies in the business of extending credit and servicing consumer loans, such as us. The CFPB is authorized to write regulations under federal consumer financial protection laws, including those prohibiting unfair, deceptive or abusive acts or practices, and to examine certain financial institutions for compliance with such laws. The CFPB can remediate violations of consumer protection laws in a number of ways, including imposing civil money penalties and requiring institutions to provide customer restitution and to improve their compliance management systems.

Although we are not currently under the supervision of the CFPB, we may come under the CFPB’s supervisory and examination authority with respect to compliance with federal consumer financial protection laws as a result of the agency’s authority to supervise non-depository “larger participants” in certain markets for consumer financial services and products, including the automotive financing business. In September 2014, the CFPB issued a proposed rule to implement its supervision of certain larger nonbank automotive financing companies, which as defined in the proposal would include us. We expect a final rule to be issued in 2015.

The CFPB has focused on the area of automotive financing, particularly with respect to indirect financing arrangements and fair lending compliance. In March 2013, the CFPB issued a bulletin stating that indirect automotive lenders, such as us, may be liable for ECOA fair lending violations based on dealer-specific and portfolio-wide disparities, on a prohibited basis, that result from allowing dealers to mark up the consumer’s interest rate above the indirect automotive lender’s buy rate, which is the minimum interest rate at which the lender is willing to purchase the retail installment contract, allowing the dealers a share of the increased revenue. The CFPB recommended that indirect automotive lenders take steps to ensure compliance with ECOA, which may include imposing controls on dealer markup, monitoring and addressing the effects of dealer markup policies, and eliminating dealer discretion to mark up buy rates and compensating dealers using a different

101

mechanism. In order to address the concerns raised in the bulletin, we have implemented a program to educate dealers and monitor dealer mark-up practices and are enhancing our fair lending compliance management system, including monitoring of buy rates and credit decisions.

The CFPB is also conducting supervisory audits of indirect automotive lenders for ECOA compliance and has taken public and non-public supervisory and enforcement actions where it has found violations. In December 2013, a large indirect lender entered into a settlement with the CFPB and the DOJ resolving allegations of “disparate impact” credit discrimination and agreed to pay damages and a monetary penalty and implement a detailed compliance plan. These actions by the CFPB could negatively impact the business of other lenders and dealers in the vehicle finance market, including increasing regulatory compliance requirements and associated costs.

The CFPB has also indicated a strong interest in debt collection and consumer credit reporting practices. In November 2013, the CFPB issued an advance notice of proposed rulemaking regarding debt collection, seeking input on, among other issues, whether it should issue rules to cover the conduct of creditors collecting in their own names on their own consumer loans and whether it should generally seek to harmonize any rules it develops for third-party collectors and first-party collectors. The CFPB has also increased scrutiny of the sale of certain ancillary products, such as debt protection products that cancel or suspend a borrower’s monthly payment or total indebtedness if certain life events occur. Regulators have questioned such products’ value and the tactics used by lenders to sell these bundled products.

In addition to its supervision and examination authority, the CFPB has enforcement authority. Under its enforcement authority, and irrespective of any direct supervisory authority, the CFPB is authorized to conduct investigations to determine whether any person is engaging in, or has engaged in, conduct that violates federal consumer financial protection laws and to initiate enforcement actions for such violations. Investigations may be conducted jointly with other regulators. The CFPB has the authority to obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief), order other forms of remediation, and impose monetary penalties of up to $1 million per day. Also, where a company has violated Title X of the Dodd-Frank Act or CFPB regulations implemented thereunder, the Dodd-Frank Act empowers state attorneys general and state regulators to bring civil actions to remedy violations of state law. If the CFPB or one or more state attorneys general or state regulators believe that we have violated any of the applicable laws or regulations, they could exercise their enforcement powers in ways that could have a material adverse effect on us or our business.

The CFPB has actively exercised its enforcement authority against financial institutions and consumer financial services providers, including by the imposition of significant monetary penalties, orders for restitution and orders requiring mandatory changes to compliance policies and procedures, enhanced oversight and control over affiliate and third-party vendor agreements and services, and mandatory review of business practices, policies and procedures by third-party auditors and consultants. If the CFPB were to conclude that our loan origination or servicing activities violate applicable laws or regulations, we could be subject to a formal or informal enforcement action. Formal enforcement actions are generally made public, which carries reputational risk. We have not been notified of any planned examinations or enforcement actions by the CFPB.

Other Federal Laws and Regulations

In addition to the Dodd-Frank Act and state and local laws and regulations, numerous other federal laws and regulations affect our lending operations. These laws and their implementing regulations include, among others, anti-money laundering requirements (Bank Secrecy Act and USA PATRIOT Act), ECOA, FDCPA, FCRA, privacy regulations (Gramm-Leach-Bliley Act and Right to Financial Privacy Act), EFTA, SCRA, TCPA, TILA, FIRREA and requirements relating to unfair, deceptive, or abusive acts or practices. For example:

Under ECOA and Regulation B promulgated thereunder, we cannot discriminate against any credit applicant on the basis of any protected category, such as race, color, religion, national origin, sex, marital status

102

or age. We are also required to make certain disclosures regarding consumer rights and advise customers whose credit applications are not approved of the reasons for the rejection.

Under the FCRA, we must provide certain information to customers whose credit applications are not approved on the basis of a report obtained from a consumer reporting agency, promptly update any credit information reported to a credit reporting agency about a customer and have a process by which customers may inquire about credit information furnished by us to a consumer reporting agency.

Under the Gramm-Leach-Bliley Act, we must protect the confidentiality of our customers’ nonpublic personal information and disclose information on our privacy policy and practices, including with regard to the sharing of customers’ nonpublic personal information with third-parties. This disclosure must be made to customers at the time the customer relationship is established and, in some cases, at least annually thereafter.

Under the SRCA, there are limits on interest rates chargeable to military personnel and civil judicial proceedings against them, and there may be limitations on our ability to collect on a loan originated with an obligor who is on active duty status and up to nine months thereafter.

Under the TCPA, we are prohibited from making unsolicited voice and text calls to cell phones through the use of an automatic telephone-dialing system unless the recipient has given prior consent. The TCPA also prohibits companies from initiating telephone solicitations to consumers on the national “Do-Not-Call” list and restricts the hours when such messages may be sent. Violations of the TCPA can result in statutory damages of $500 per violation (for example, for each individual text message). U.S. state laws impose additional regulations on telephone calls and text messages and many states also have their own “Do-Not-Call” lists.

Under the TILA and Regulation Z promulgated thereunder, we must disclose certain material terms related to a credit transaction, including, but not limited to, the APR, finance charge, amount financed, total number and amount of payments and payment due dates to repay the indebtedness.

Under FIRREA, we may be subject to civil penalties from the DOJ for fraudulent conduct.

Legal Proceedings

In the ordinary course of conducting our business, we may become involved in various legal actions and other claims. Litigation is subject to many uncertainties, the outcome of individual litigated matters is not predictable with assurance, and it is reasonably possible that some of these matters may be decided unfavorably to the Company. It is the opinion of management that the ultimate liability, if any, with respect to our current litigation outstanding will not have a material adverse effect on our business, results of operation and financial condition.

Properties

Our corporate headquarters are located in Chadds Ford, Pennsylvania where we lease approximately 30,348 square feet of office and operations space pursuant to a lease agreement expiring on March 31, 2025. We also lease a 40,190 square foot facility in Irving, Texas, a 33,413 square foot facility in Irvine, California, a 16,517 square foot facility in Phoenix, Arizona and a 1,040 square foot facility in Indianapolis, Indiana, under leases that expire at various dates through 2019.

103

Employees

As of March 31, 2015, we had 619 employees. None of our employees are covered by a collective bargaining agreement.

As of March 31, 2015, 316 of our employees, including Messrs. Ritter, Sicinski, Bertoncini and Keiser, are co-employees of Insperity, a professional employer organization. Under the terms of our agreement with Insperity, Insperity is responsible for administering all payroll, including tax withholding, and providing health insurance, retirement and other benefits for these individuals. We reimburse Insperity for these costs, and pay Insperity an administrative fee for its services. However, we are responsible for the hiring, retention, compensation, management and supervision of these individuals. See “Compensation Discussion and Analysis.”

104

MANAGEMENT

Executive Officers and Directors

The following table sets forth information regarding our executive officers and directors as of the date of this prospectus:


Name	Age		Position
Michael C. Ritter		65	Chief Executive Officer, President and Director
Jeffrey Butcher		50	Interim Co-Principal Financial Officer
Kenneth J. Sicinski		51	Interim Co-Principal Financial Officer
David Bertoncini		46	Chief Risk and Strategy Officer
Dennis Morris		50	Chief Operating Officer and Director
Debra Glasser		56	General Counsel and Secretary
Christopher Keiser		47	Chief Compliance Officer and Regulatory Counsel
David Schiff		44	Director
Andrew Dym		55	Director

Michael C. Ritter has served as our Chief Executive Officer, President and Director since January 2015. Mr. Ritter previously served as Flagship Credit Acceptance LLC’s (“FCA”) Chief Executive Officer and President since commencing employment with FCA in August 2010. Prior to this, Mr. Ritter launched and served as the Chief Executive Officer and President of the former Flagship Credit Corporation (“Former FCC”). Prior to launching the Former FCC in 2005, Mr. Ritter was Executive Vice President, Chief Financial Officer, Chairman of the Investment Committee and Member of the Executive Committee of ITOCHU International Inc. (“ITOCHU”), the U.S. subsidiary of Tokyo-based ITOCHU Corporation. Mr. Ritter holds a B.S. degree in Accounting from the University of Delaware and is a Certified Public Accountant.

Jeffrey Butcher has served as our Interim Co-Principal Financial Officer since January 2015. Mr. Butcher previously served as CarFinance Capital LLC’s (“CFC”) Chief Financial Officer since commencing employment with CFC in March 2011. Prior to this, Mr. Butcher served as the Controller of Santander Consumer USA from February 2010 until April 2011. From 2008 until 2010, Mr. Butcher served as Chief Financial Officer, and from 2003 until 2008, as Controller of Triad Financial Corporation. Mr. Butcher holds a B.S. degree in Accounting from Miami University of Ohio and is a Certified Public Accountant.

Kenneth J. Sicinski has served as our Interim Co-Principal Financial Officer since January 2015. Mr. Sicinski previously served as FCA’s Chief Financial Officer since commencing employment with FCA in September 2010. Prior to this, Mr. Sicinski served as Chief Financial Officer of the Former FCC since joining in 2005. Mr. Sicinski has also served as Chief Financial Officer of Flagship Financial Services Corporation, a subsidiary of ITOCHU, which performed management services for ITOCHU related to ITOCHU’s ownership of an automobile leasing company and automobile dealerships. Flagship Financial Services Corporation was not a predecessor to the Company and had no relationships with the Company. Mr. Sicinski holds a B.S. degree in Accounting from Temple University and is a Certified Public Accountant.

David Bertoncini has served as our Chief Risk and Strategy Officer since January 2015. Mr. Bertoncini previously served as FCA’s Chief Risk Officer since commencing employment with FCA in September 2010. Prior to this, Mr. Bertoncini served as Senior Vice President, Risk & Business Development of the Former FCC since joining in 2007. Mr. Bertoncini has also served as Chief Marketing Officer for a private student lending company and Partner and Chief Financial Officer for Bates White L.L.C., an economic consulting company. Mr. Bertoncini holds a B.S. degree in Economics from Santa Clara University and a M.S. in Economics from Duke University.

Dennis Morris has served as our Chief Operating Officer and Director since January 2015. Mr. Morris previously served as CFC’s Chief Operating Officer since commencing employment with CFC in March 2011.

105

Prior to this, Mr. Morris served as the Executive Vice President of Production at Fireside Bank, managing loan originations from 2007 until 2009. Prior to that, Mr. Morris was Senior Vice President and Chief Credit Officer of Triad Financial Corporation from 2003 until 2007 and the Group Director of Household Auto Finance from 2000 until 2003. Mr. Morris holds a B.S. degree in Business Administration and Accounting from San Diego State University.

Debra Glasser has served as our General Counsel & Secretary since January 2015. Ms. Glasser previously served as CFC’s General Counsel since commencing employment with CFC in October 2011. Prior to this, Ms. Glasser served as Managing Counsel of Toyota Financial Services from 2005 until 2011. Ms. Glasser also served as General Counsel of Triad Financial Corporation from 1997 until 2005. Ms. Glasser holds a B.A. degree from University of California, Los Angeles and a J.D. from Loyola Law School.

Christopher Keiser has served as our Chief Compliance Officer and Regulatory Counsel since January 2015. Mr. Keiser previously served as FCA’s General Counsel and Compliance Director since commencing employment with FCA in June 2014. Prior to this, from 1997 to 2014, Mr. Keiser held various managing counsel positions at Wells Fargo & Company, managing attorneys and support staff in the bank’s core consumer lending operations. Mr. Keiser holds a B.A. degree from Hope College and a J.D. from the University of Detroit.

David Schiff has served as a Director of us and CFC since September 2010. Mr. Schiff is a Partner at Perella Weinberg Partners and Portfolio Manager of the Perella Weinberg Partners Asset Based Value Strategy since its inception in 2008. Prior to joining Perella Weinberg, Mr. Schiff was Chief Investment Officer at Broadworth Capital and a Managing Director at Amaranth Advisors. From 2003 to 2005, Mr. Schiff was a Director at Wachovia Securities, where he was responsible for developing various structured principal finance opportunities. Mr. Schiff began his career at JP Morgan, where he spent eight years in various senior management positions in its ABS and securitization groups. Mr. Schiff holds a B.S. degree with distinction in Economics from Cornell University.

Andrew Dym has served as a Director of our and our predecessor companies since September 2010. Mr. Dym is a Partner of Perella Weinberg Partners and since 2008 has been a member of the Perella Weinberg Partners Asset Based Value Strategy Investment Team. Prior to joining Perella Weinberg Partners, Mr. Dym was Global Head of Structured Finance and Capital Markets at CIFG Services Inc. From 1994 until 2005, Mr. Dym held various senior management positions at J.P. Morgan Securities the most recent of which was Group Co-Head for three main business lines: North American Term Asset-Backed Securities, Asset-Backed Commercial Paper Conduits and Principal Investments. Mr. Dym holds a B.S. degree in Accounting from the State University of New York at Albany and a M.B.A. in Finance from The Wharton School of Business at the University of Pennsylvania.

Board Structure

Upon completion of the offering, our board of directors will consist of members. Our board has determined that each of and , is independent under applicable rules.

Our directors will be divided into three classes serving staggered three-year terms. Class I, Class II and Class III directors will serve until our annual meetings of stockholders in 2016, 2017 and 2018, respectively. At each annual meeting of stockholders, directors will be elected to succeed the class of directors whose terms have expired. This classification of our board of directors could have the effect of increasing the length of time necessary to change the composition of a majority of the board of directors. In general, at least two annual meetings of stockholders will be necessary for stockholders to effect a change in a majority of the members of the board of directors. In addition, we intend to enter into a stockholders agreement with the ABV Funds in connection with this offering. This agreement will grant the ABV Funds the right to designate nominees to our board of directors subject to the maintenance of certain ownership requirements in us. See “Certain Relationships and Related Party Transactions—Stockholders Agreement.”

106

Controlled Company Exception

After the completion of this offering, the ABV Funds will hold substantially all of our issued and outstanding Class B common stock and will control more than a majority of the combined voting power of our common stock. As a result, (x) under the terms of the Stockholders Agreement, the ABV Funds will be entitled to nominate of the members of our board of directors (see “Certain Relationships and Related Party Transactions—Stockholders Agreement”) and (y) we will be a “controlled company” within the meaning of the listing standards. Under the listing standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance standards, including (1) the requirement that a majority of the board of directors consist of independent directors, (2) the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities, (3) the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities and (4) the requirement for an annual performance evaluation of the nominating and corporate governance and compensation committees. Following this offering, we intend to utilize these exemptions. As a result, following this offering, we will not have a majority of independent directors on our board of directors; and we will not have a nominating and corporate governance committee or a compensation committee that is composed entirely of independent directors. Also, such committee will not be subject to annual performance evaluations. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of corporate governance standards. In the event that we cease to be a “controlled company,” we will be required to comply with these provisions within the transition periods specified in listing standards.

Board Committees

Audit Committee

The members of our audit committee will be , and . is the chairman of our audit committee. Messrs. and qualify as independent directors under the listing standards and SEC rules and regulations. We expect a new third independent member to be placed on the audit committee within one year of the completion of this offering so that all of our audit committee members will be independent as such term is defined under the listing standards and SEC rules and regulations. Each member of our audit committee is financially literate. In addition, our board of directors has determined that is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K promulgated under the Securities Act. This designation does not impose on him any duties, obligations or liabilities that are greater than are generally imposed on members of our audit committee and our board of directors. Our audit committee is directly responsible for, among other things:

•

selecting a firm to serve as the independent registered public accounting firm to audit our financial statements;

•

ensuring the independence of the independent registered public accounting firm;

•

discussing the scope and results of the audit with the independent registered public accounting firm and reviewing, with management and that firm, our interim and year-end operating results;

•

establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters;

•

considering the adequacy of our internal controls and internal audit function;

•

reviewing material related party transactions or those that require disclosure; and

•

approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm.

107

Compensation Committee

The members of our compensation committee will be , and . is the chairman of our compensation committee. Our compensation committee is responsible for, among other things:

•

reviewing and approving, or recommending that our board of directors approve, the compensation of our executive officers;

•

reviewing and recommending to our board of directors the compensation of our directors;

•

administering our stock and equity incentive plans;

•

reviewing and approving, or making recommendations to our board of directors with respect to, incentive compensation and equity plans; and

•

reviewing our overall compensation philosophy.

Nominating and Governance Committee

The members of our nominating and governance committee will be , and . is the chairman of our nominating and governance committee. Our nominating and governance committee is responsible for, among other things:

•

identifying and recommending candidates for membership on our board of directors;

•

reviewing and recommending our corporate governance guidelines and policies;

•

reviewing proposed waivers of the code of conduct for directors and executive officers;

•

overseeing the process of evaluating the performance of our board of directors; and

•

assisting our board of directors on corporate governance matters.

Code of Ethics

In connection with this offering, our board of directors will adopt a code of ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer and other executive and senior financial officers. Upon completion of this offering, the full text of our codes of business conduct and ethics will be posted on the investor relations section of our website. We intend to disclose future amendments to our codes of business conduct and ethics, or any waivers of such code, on our website or in public filings.

108

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

The Issuer was formed on March 16, 2015. Our predecessor, FC HoldCo, was formed on January 1, 2015 when FC HoldCo LLC, the holding company of FCA, was merged into CF Capital Holdings LLC, the holding company of CFC, with CF Capital Holdings LLC as the entity surviving the merger under the changed name “FC HoldCo LLC” (the “Merger”). See “Business—Our History” for information regarding the history of our formation. Prior to the Merger, each of FCA and CFC had separate management teams and different compensation programs. Following the Merger, and in preparation for this offering, a new management structure for the combined business was put in place.

Currently, our management consists of the individuals listed below. In this prospectus, we refer to these individuals as our named executive officers (or “NEOs”). We are currently in the process of recruiting a new Chief Financial Officer to complete our management team.

This section and the tables that follow focus on the compensation that has been or is scheduled to be paid to or earned by our NEOs with respect to fiscal year 2015 under our newly-developed compensation program; however, this compensation is subject to change during fiscal year 2015. Our named executive officers are:


Name		Title
Michael C. Ritter		Chief Executive Officer and President
Jeffrey Butcher		Interim Co-Principal Financial Officer
Kenneth J. Sicinski		Interim Co-Principal Financial Officer
David Bertoncini		Chief Risk and Strategy Officer
Dennis Morris		Chief Operating Officer
Debra Glasser		General Counsel and Secretary
Christopher Keiser		Chief Compliance Officer and Regulatory Counsel

Elements of Compensation and Benefits

We intend to provide our NEOs with base salaries, annual cash bonuses, equity-based compensation awards and health and welfare benefits. Following this offering, we expect that these elements will remain the elements of our compensation program going forward, although the relative proportions of each element and the design of each element, will evolve as we work towards combining the companies and we become a more established public company. See below for additional information on these elements of compensation and benefits.

Offer Letters / Retention Letters

Offer Letters with Messrs. Ritter, Sicinski, Bertoncini and Keiser

Prior to the Merger, each of Messrs. Ritter, Sicinski, Bertoncini and Keiser entered into an offer letter with FCA. The material terms of these offer letters are summarized below.

Positions. Prior to the Merger, Messrs. Ritter, Sicinski, Bertoncini and Keiser served in the following positions at FCA: President and Chief Executive Officer (Mr. Ritter); Senior Vice President and Chief Financial Officer (Mr. Sicinski); Executive Vice President and Chief Risk Officer (Mr. Bertoncini); and General Counsel and Compliance Director (Mr. Keiser). Since the Merger, Messrs. Ritter, Sicinski, Bertoncini and Keiser have served in the positions set forth in the table above.

Base Salary. For 2015, Messrs. Ritter, Sicinski, Bertoncini and Keiser are receiving annual base salaries in the amounts set forth in the “2015 Summary Compensation Table,” which are subject to review on an annual basis and may be adjusted by the Compensation Committee.

109

Annual Bonus. For 2015, Messrs. Ritter, Sicinski, Bertoncini and Keiser are eligible to receive discretionary annual bonuses in a target amount equal to 60% of their base salaries based upon achievement of certain individual and company performance metrics as determined by the Compensation Committee.

Benefits. Messrs. Ritter, Sicinski, Bertoncini and Keiser are entitled to participate in the various employee benefits that are, from time to time, generally available to our employees. In addition, Messrs. Ritter, Sicinski and Bertoncini are entitled to supplemental medical coverage that covers out-of-pocket medical, dental and vision expenses within annual limits.

Retention Letters with Messrs. Butcher and Morris and Ms. Glasser

In connection with the Merger, each of Messrs. Butcher and Morris and Ms. Glasser entered into a retention letter with CFC. The material terms of these retention letters are summarized below.

Positions. Prior to the Merger, Messrs. Butcher and Morris and Ms. Glasser served in the following positions at CFC: Chief Financial Officer (Mr. Butcher); Chief Operating Officer (Mr. Morris); and General Counsel and Secretary (Ms. Glasser). Since the Merger, Messrs. Butcher and Morris and Ms. Glasser have served in the positions set forth in the table above.

Base Salary. For 2015, Messrs. Butcher and Morris and Ms. Glasser are receiving annual base salaries in the amounts set forth in the “2015 Summary Compensation Table,” which are subject to review on an annual basis and may be adjusted by the Compensation Committee.

Annual Bonus. For 2015, Messrs. Butcher and Morris and Ms. Glasser are entitled to receive an annual bonus of not less than $100,000 (Mr. Butcher and Ms. Glasser) or $150,000 (Mr. Morris), which such amount may be increased in the discretion of our board of directors. Messrs. Butcher and Morris and Ms. Glasser are entitled to receive their 2015 annual bonus if their employment is terminated without “cause” (as defined in the NEO’s retention letter and summarized under “—Potential Payments Upon Termination or Change in Control—NEO Retention Letters”) at any time prior to the date on which such bonuses are paid to employees generally. Beginning in 2016, Messrs. Butcher and Morris and Ms. Glasser will be eligible to receive a bonus under our annual bonus plan based on the achievement of certain individual and company performance metrics as determined by the Compensation Committee.

Benefits. Messrs. Butcher and Morris and Ms. Glasser are entitled to participate in the various employee benefits that are, from time to time, generally available to our employees.

Restrictive Covenants. Messrs. Butcher and Morris and Ms. Glasser are subject to the restrictive covenants set forth in their retention letters as well as in the limited liability company agreement of FC HoldCo (the “FC HoldCo LLC Agreement”). For additional information, see “—Restrictive Covenants.”

Termination of Employment. Payments and benefits to which Messrs. Butcher and Morris and Ms. Glasser would be entitled upon termination of their employment are discussed and quantified under “—Potential Payments Upon Termination or Change in Control—NEO Retention Letters.”

Equity-Based Compensation Awards

Incentive units representing profits interests have historically been granted to our executives to encourage the creation of value over the long term and to align the rewards of our NEOs with the returns to the ABV Funds.

Pre-Merger Incentive Unit Awards

Prior to the Merger, each of our NEOs, except for Mr. Keiser, was awarded incentive units representing profits interests in FCA or CFC, as applicable (the “Original Incentive Units”). Mr. Keiser was not awarded any

110

Original Incentive Units because he joined FCA after the awards were granted. The Original Incentive Units that were outstanding immediately prior to the effective time of the Merger were converted into senior incentive units in FC HoldCo (the “Senior Incentive Units”) based on a value of the Original Incentive Units that was determined on a fully vested basis using a deemed stand-alone liquidation value of FCA and CFC, as applicable, at the effective time of the Merger. The Senior Incentive Units remain subject to the same vesting schedule applicable to the Original Incentive Units prior to the Merger, which vest in equal installments over the first four anniversaries of a specified vesting commencement date (Messrs. Butcher and Morris and Ms. Glasser) or over the first five anniversaries of the grant date (Messrs. Ritter, Sicinski and Bertoncini).

The Senior Incentive Units provide the NEOs with the right to receive a certain percentage of distributions from FC HoldCo up to a fixed dollar amount following distribution to the holders of preferred units in FC HoldCo of all amounts to which such holders are entitled under the FC HoldCo LLC Agreement.

Upon termination of employment of a Senior Incentive Unit holder (including the NEOs) for any reason, such holder’s right to receive distributions in respect of his or her Senior Incentive Units, if any, will be reduced as set forth in the FC HoldCo LLC Agreement, and the amount by which such holder’s distributions were reduced will be reallocated on a pro rata basis among the remaining holders of Senior Incentive Units (including the NEOs).

In connection with this offering, the Senior Incentive Units held by our NEOs will convert into restricted LLC Units as more fully described under “Organizational Structure—Reorganization Transactions.” The restricted LLC Units will have the same time-based vesting schedule applicable to the Senior Incentive Units as described above.

The table below sets forth the number of Senior Incentive Units held by each of our named executive officers.


Name	Senior Incentive Units (#)
Michael C. Ritter		1,159.13
Jeffrey Butcher		274.95
Kenneth J. Sicinski		675.62
David Bertoncini		863.41
Dennis Morris		274.95
Debra Glasser		137.48
Christopher Keiser		—

Post-Merger Incentive Unit Awards

Following the Merger, each of our NEOs received an award of new incentive units representing profits interests in FC HoldCo (the “New Incentive Units”), which are governed by the FC HoldCo LLC Agreement and individual award agreements. For additional information on the New Incentive Units, see the “—2015 Grants of Plan-Based Awards” table.

The New Incentive Units provide the NEOs with the right to receive, in the aggregate on a fully-vested basis, up to 10% of distributions from FC HoldCo following distribution to the holders of preferred units, senior common units and Senior Incentive Units of all amounts to which such holders are entitled under the FC HoldCo LLC Agreement. The New Incentive Units, together with the Senior Incentive Units, are intended to align our NEOs’ interests with those of the ABV Funds by tying a substantial portion of their equity holdings to our long-term success. In connection with this offering, the New Incentive Units held by our NEOs will convert into restricted LLC Units as more fully described under “Organizational Structure—Reorganization Transactions.” The restricted LLC Units will have the same time-based vesting schedule applicable to the New Incentive Units as described below.

111

The New Incentive Units granted to the NEOs vest in equal installments on each of the first four anniversaries of the grant date. Upon termination of an NEO’s employment for any reason, all unvested New Incentive Units will be forfeited. Upon termination of an NEO’s employment for cause (as defined in the FC HoldCo LLC Agreement and summarized under “—Restrictive Covenants—FC HoldCo LLC Agreement”), all vested New Incentive Units will be also forfeited. Vesting of the unvested New Incentive Units will fully accelerate on a “sale” of FC HoldCo (as defined in the FC HoldCo LLC Agreement and summarized under “—Potential Payments Upon Termination or Change in Control—Incentive Awards”). A sale of FC HoldCo excludes this offering.

For estimates of the amounts that would payable to the NEOs in respect of the New Incentive Units on a sale of FC HoldCo, see “—Potential Payments Upon Termination or Change in Control—Incentive Awards.”

Restrictive Covenants

NEO Retention Letters

Under their retention letters, Messrs. Butcher and Morris and Ms. Glasser are subject to perpetual restrictions on disclosing confidential information or disparaging us. They are also prohibited from soliciting any of our (a) customers, prospective customers or subcontractors during their employment and for six months after termination of their employment and (b) employees, consultants or other service providers during their employment and for 18 months after termination of their employment.

The retention letters with Messrs. Butcher and Morris and Ms. Glasser also prohibit them from competing with us during their employment and, if their employment is terminated under circumstances in which they are automatically entitled to severance, for six months after such termination of employment. If their employment is terminated under circumstances in which they are not automatically entitled to severance, we may elect to have them remain subject to this prohibition on competition for up to six months after such termination, provided that we continue to pay them their base salary during such six-month period. However, as such prohibitions on competition are generally unenforceable in California, the retention letters provide that Messrs. Butcher and Morris and Ms. Glasser will not be subject to this prohibition on competition so long as they continue to work in California.

For additional information, see “—Potential Payments Upon Termination or Change in Control—NEO Retention Letters.”

FC HoldCo LLC Agreement

Under the FC HoldCo LLC Agreement, to which each of our NEOs is subject, during their employment and for a period of 12 months thereafter, the NEOs are prohibited from competing with us, soliciting any of our customers, prospective customers or subcontractors, disclosing our confidential information or disparaging us. In addition, the NEOs are prohibited from soliciting or hiring any of our employees, consultants or other service providers during their employment and for 18 months after termination of their employment.

An NEO will not be subject to the covenant not to compete if he or she resigns his or her employment for “good reason” (as defined in the FC HoldCo LLC Agreement and summarized below). However, an NEO will be subject to such covenant following termination of employment if such NEO’s employment is terminated without “cause” (as defined in the FC HoldCo LLC Agreement and summarized below) and we elect to enforce the covenant by continuing the NEO’s base salary for up to six months after termination of employment. As such covenants not to compete are generally unenforceable in California, the FC HoldCo LLC Agreement provides that Messrs. Butcher and Morris and Ms. Glasser will not be subject to the covenant not to compete so long as they continue to work in California.

“Cause” has the same meaning as described under “—Potential Payments Upon Termination or Change in Control—NEO Retention Letters.”

112

“Good Reason” generally means (a) a material reduction in the NEO’s job responsibilities; (b) a relocation of the NEO’s principal location of employment to a location more than 60 miles from the NEO’s then location of employment; (c) a reduction of the NEO’s base salary by more than 10% (except to the extent that such reduction is part of an across-the-board reduction in the base salaries of other similarly situated employees); or (d) a material breach by us of the NEO’s offer letter or retention letter, if we do not cure such breach within 30 business days.

For estimates of the amounts that would payable to the NEOs if the NEO is entitled to severance or if we elect to enforce the covenant not to compete, see the “—Potential Payments Table” below.

Benefit Arrangements

Retirement Plans

We maintain qualified defined contribution 401(k) plans for all of our employees. Under the plans, we match 50% of the first 6% of eligible compensation deferred by participants. Our NEOs are entitled to participate in the 401(k) plans on the same basis as our employees generally.

Other Benefits

As Messrs. Butcher and Morris and Ms. Glasser are partners of FC HoldCo LLC for tax purposes, they are subject to complex tax reporting requirements and are liable for self-employment taxes. As a result, we reimburse Messrs. Butcher and Morris and Ms. Glasser for the costs of tax preparation services as well as for the employer portion of their self-employment taxes. Lastly, for Messrs. Ritter and Sicinski, we pay the premiums of their life insurance policies and reimburse them for the taxes associated with the premium payments. Each life insurance policy has a face value of $500,000. For estimates of the amounts of these benefits, see footnote 3 to the “2015 Summary Compensation Table.”

Compensation Decision-Making Process

Following this offering, our Compensation Committee, in consultation with our Chief Executive Officer as to executives other than himself, will determine the compensation of our NEOs.

Compensation Peer Groups

As part of its decision-making process, the Compensation Committee will use a peer group of companies for comparisons of compensation and performance. In approving a peer group, we considered the size, complexity and mix of business of potential peers. The peer group for 2015 will be:


America’s Car-Mart Inc.	Atlanticus Holdings Corporation	Cash America International, Inc.
Consumer Portfolio Services, Inc.	Credit Acceptance Corp.	Encore Capital Group, Inc.
Enova International, Inc.	EZCORP, Inc.	Nicholas Financial Inc.
PHH Corporation	Regional Management Corp.	World Acceptance Corp.

Co-Employer Arrangement

All of our personnel who are employed by FCA, including Messrs. Ritter, Sicinski, Bertoncini and Keiser, are co-employees of Insperity, a professional employer organization. Under the terms of our arrangement with Insperity, Insperity is responsible for administering all payroll, including tax withholding, and providing health insurance, retirement and other benefits for the FCA employees. We reimburse Insperity for these costs, and pay Insperity an administrative fee for its services. For 2015, the administrative fee is estimated to be $577,536. Our relationship with Insperity includes a contractual allocation and sharing of employer responsibilities between Insperity and us. As co-employer of the FCA employees, Insperity contractually assumes substantial rights,

113

responsibilities and risks through the establishment and maintenance of an employer relationship with the FCA employees whereby it: reserves a right of direction and control of the FCA employees; retains a right to hire, reassign and fire the employees; shares employer responsibilities with FCA; pays wages and employment taxes of the FCA employees out of its own accounts; reports, collects and deposits employments taxes with federal and state authorities; provides and administers certain employee benefits for the FCA employees; and provides human resources consulting, compliance and training services. However, we are responsible for the hiring, retention, compensation, management and supervision of FCA’s personnel. Both FCA and Insperity are jointly responsible for compliance with all applicable federal, state and local employment laws. We consider the terms of our contract with Insperity to be reasonable and customary and believe this arrangement provides substantial benefit to us, in the form of lower costs for employee benefits and reduced administrative burden on us.

Please note that because the NEOs received no compensation for services to us prior to 2015, the following tables summarize the NEOs’ compensation only for 2015.

Summary Compensation Table

The table below summarizes the total compensation paid to or earned (or that is scheduled to be paid or earned) by each named executive officer in 2015.

2015 SUMMARY COMPENSATION TABLE


Name and Principal Position	Year		Salary ($)		Bonus ($)(1)		Stock Awards ($)(2)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Changes in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)(3)		Total ($)
Michael C. Ritter, Chief Executive Officer and President		2015		425,000		255,000		1,914,000		—		—		—		30,895		2,624,895
Jeffrey Butcher, Interim Co-Principal Financial Officer		2015		225,000		100,000		174,000		—		—		—		24,523		523,523
Kenneth J. Sicinski, Interim Co-Principal Financial Officer		2015		260,000		156,000		348,000		—		—		—		26,166		790,166
David Bertoncini, Chief Risk and Strategy Officer		2015		300,000		180,000		922,200		—		—		—		17,058		1,419,258
Dennis Morris, Chief Operating Officer		2015		300,000		150,000		922,200		—		—		—		17,962		1,390,162
Debra Glasser, General Counsel		2015		225,000		100,000		174,000		—		—		—		23,769		522,769
Christopher Keiser, Chief Compliance Officer and Regulatory Counsel		2015		225,000		135,000		174,000		—		—		—		7,950		541,950

(1)

The amounts in this column represent the following: (a) a minimum annual bonus of $100,000 (for Mr. Butcher and Ms. Glasser) and $150,000 (for Mr. Morris) and (b) an annual bonus for Messrs. Ritter, Sicinski, Bertoncini and Keiser assuming that the performance metrics are attained at the target level. Messrs. Butcher and Morris and Ms. Glasser are entitled to receive an annual bonus in excess of their minimum annual bonuses, in the discretion of our board of directors. The actual amounts of the annual bonuses for Messrs. Ritter, Sicinski, Bertoncini and Keiser will vary based on attainment of certain individual and company performance metrics as determined by the Compensation Committee.

(2)

114

(3)	The amounts in this column reflect the estimated aggregate incremental cost of certain benefits that are scheduled to be provided to the NEOs in 2015, as follows:


Name	401(k) Matching Contributions ($)(a)		Supplemental Medical Coverage ($)		Tax Planning ($)		Life Insurance Coverage ($)		Self- Employment Tax Reimbursements ($)		Total ($)
Michael C. Ritter		7,950		9,108		—		13,837		—		30,895
Jeffrey Butcher		7,950		—		2,800		—		13,773		24,523
Kenneth J. Sicinski		7,950		14,856		—		3,360		—		26,166
David Bertoncini		7,950		9,108		—		—		—		17,058
Dennis Morris		—		—		2,520		—		15,442		17,962
Debra Glasser		7,950		—		2,170		—		13,649		23,769
Christopher Keiser		7,950		—		—		—		—		7,950

(a)	It is currently not anticipated that Mr. Morris will participate in any 401(k) plan for 2015.

Grants of Plan-Based Awards

The table below provides information about equity and non-equity awards granted to each named executive officer in 2015. The equity awards were granted in the form of incentive units in FC HoldCo (the New Incentive Units) and these awards will convert into restricted LLC Units as more fully described under “Organizational Structure—Reorganization Transactions.”

2015 GRANTS OF PLAN-BASED AWARDS


Name	Grant Date(1)		Estimated Future Payouts Under Non-Equity Incentive Plan Awards ($)						All Other Stock Awards: Number of Shares of Stock or Units (#)		Grant Date Fair Value of Stock and Option Awards(3)
Name	Grant Date(1)		Threshold ($)		Target ($)(2)		Maximum ($)				Grant Date Fair Value of Stock and Option Awards(3)
Michael C. Ritter		3/1/2015		—		255,000		—		2,750		1,914,000
Jeffrey Butcher		3/1/2015		—		100,000		—		250		174,000
Kenneth J. Sicinski		3/1/2015		—		156,000		—		500		348,000
David Bertoncini		3/1/2015		—		180,000		—		1,325		922,200
Dennis Morris		3/1/2015		—		150,000		—		1,325		922,200
Debra Glasser		3/1/2015		—		100,000		—		250		174,000
Christopher Keiser		3/1/2015		—		135,000		—		250		174,000

(1)	The New Incentive Units are scheduled to vest in equal installments on each of the first four anniversaries of the grant date.

(2)

(3)

The amounts in this column reflect the aggregate grant date fair value (calculated in accordance with FASB ASC Topic 718) of the New Incentive Units that were granted to the NEOs on March 1, 2015. The grant date fair value was calculated using the Black-Scholes pricing model. The Black-Scholes values were determined using the following assumptions: volatility of 35%; risk-free rate of return of 1.26%; and expected exercise period of four years.

115

Outstanding Equity Awards at Fiscal Year End

The table below provides information on the Senior Incentive Units and New Incentive Units that each named executive officer is projected to hold on December 31, 2015. These awards will convert into restricted LLC Units as more fully described under “Organizational Structure—Reorganization Transactions.”

OUTSTANDING EQUITY AWARDS AT 2015 FISCAL YEAR END


	Stock Awards
Name	Number of Shares or Units of Stock That Have Not Vested (#)(1)(2)			Market Value of Shares or Units of Stock That Have Not Vested ($)(1)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Michael C. Ritter		2,750	(a)		1,914,000		—		—
Jeffrey Butcher		250	(a)		174,000		—		—
Kenneth J. Sicinski		500	(a)		348,000		—		—
David Bertoncini		1,325	(a)		922,200		—		—
Dennis Morris		1,325	(a)		922,200		—		—
Debra Glasser		284	(b)		183,857		—		—
Christopher Keiser		250	(c)		174,000		—		—

(1)	The amounts in these columns reflect the number and value of Senior Incentive Units and New Incentive Units that are scheduled to be unvested as of December 31, 2015:


Name	Senior Incentive Units				New Incentive Units
Name	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)(a)		Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)(b)
Michael C. Ritter		—		—		2,750		1,914,000
Jeffrey Butcher		—		—		250		174,000
Kenneth J. Sicinski		—		—		500		348,000
David Bertoncini		—		—		1,325		922,200
Dennis Morris		—		—		1,325		922,200
Debra Glasser		34		9,857		250		174,000
Christopher Keiser		—		—		250		174,000

(a)

At the effective time of the Merger, the value of the Senior Incentive Units was determined on a fully vested basis using a deemed liquidation value of FCA and CFC, as applicable, at the effective time of the Merger. The actual value of the Senior Incentive Units as of December 31, 2015 (as converted into restricted LLC Units) will depend on the value of the restricted LLC Units as of December 31, 2015.

(b)

The amounts in this column reflect the aggregate grant date fair value (calculated in accordance with FASB ASC Topic 718) of the New Incentive Units that were granted to the NEOs on March 1, 2015. The actual value of the New Incentive Units as of December 31, 2015 (as converted into restricted LLC Units) will depend on the value of the restricted LLC Units as of December 31, 2015.

(2)

The New Incentive Units vest in equal installments on each of the first four anniversaries of March 1, 2015 and therefore no portion of the New Incentive Units is scheduled to be vested as of December 31, 2015. The Senior Incentive Units vest in equal installments over the first four anniversaries of a specified vesting commencement date (Messrs. Butcher and Morris and Ms. Glasser) or in equal installments over the first five anniversaries of the grant date (Messrs. Ritter, Sicinski and Bertoncini), as follows:

(a)

The Senior Incentive Units held by Messrs. Ritter, Butcher, Sicinski, Bertoncini and Morris are previously vested in accordance with their terms.

116

(b)

The first three installments of the Senior Incentive Units granted to Ms. Glasser vested on February 1 of each of 2013, 2014 and 2015, and the remaining one installment is scheduled to vest on February 1, 2016.

(c)

Mr. Keiser does not hold any Senior Incentive Units because he joined FCA after the awards were granted.

Pension Plans

We do not maintain any defined benefit pension plans.

Nonqualified Deferred Compensation

We do not maintain any nonqualified deferred compensation plans.

Potential Payments Upon Termination or Change in Control

The material terms of the retention letters with certain of our NEOs that provide for severance payments are described below. See the “—Potential Payments Table” below for estimates of the amounts of the payments provided under the retention letters and the terms of the Senior Incentive Units and New Incentive Units that would be made to our NEOs under various termination scenarios or on a change in control, assuming such event occurred on December 31, 2015.

NEO Retention Letters

Messrs. Butcher and Morris and Ms. Glasser are entitled to receive the severance payments described below (a) upon a termination of employment by us without “cause” (as defined in the NEO’s retention letter and summarized below) or (b) as a result of a termination of employment by the NEO arising solely due to our decision to relocate the NEO’s principal place of employment by at least 50 miles (other than in connection with a relocation of the Irvine, California office for all employees), in each case, prior to December 31, 2015.

Upon such terminations, Messrs. Butcher and Morris and Ms. Glasser are entitled to receive:

•

base salary continuation until the later of (i) December 31, 2015 and (ii) six months following the date of termination of employment; and

•

annual bonus amounts for 2015, payable at the same time as bonuses are generally paid to our similarly situated employees.

In order to receive such amounts, the NEOs must execute a release of claims in our favor and comply with the restrictive covenants described under “—Restrictive Covenants—NEO Retention Letters.”

As the triggering events described above must occur prior to December 31, 2015 for Messrs. Butcher and Morris and Ms. Glasser to receive the severance benefits under their retention letters and the “—Potential Payments Table” assumes a termination of employment on December 31, 2015, no severance amounts payable under the retention letters are included in the table.

In addition, if the employment of Messrs. Butcher and Morris and Ms. Glasser is terminated for any reason other than for “cause” (in which case they will be entitled to the severance payments described above) and we elect to enforce the covenant not to compete, they will be entitled to receive base salary continuation for the period during which such covenant not to compete is enforced by us (up to a maximum of six months).

“Cause” generally means an NEO’s (a) conviction of a plea of guilty, or nolo contendere, to a felony or a crime involving moral turpitude or dishonesty; (b) commission of any act of dishonesty, fraud, misappropriation

117

of funds, embezzlement or breach of a duty of loyalty owed to us; (c) act or failure to act that constitutes gross negligence or intentional misconduct with respect to us or that the NEO knew or should have known would cause us to violate any laws or company policy; (d) breach of any material term of the NEO’s retention letter; (e) continued failure or refusal to perform the reasonable and lawful duties assigned to the NEO by our board of directors or any action that adversely affects us; or (f) abuse of alcohol or illegal drugs in a manner that interferes with the performance of the NEO’s duties.

Incentive Awards

Each of our NEOs, other than Mr. Keiser, holds Senior Incentive Units that are scheduled to be either partially or fully vested on December 31, 2015 and each of our NEOs holds New Incentive Units that are scheduled to be unvested on December 31, 2015. For additional information, see “—Equity-Based Compensation Awards.” Under the FC HoldCo LLC Agreement and the individual award agreements, the New Incentive Units will vest on December 31, 2015 if on such date there is a “sale” of FC HoldCo (as defined in the FC HoldCo LLC Agreement and summarized below). The vesting of the Senior Incentive Units will not accelerate on a sale of FC HoldCo.

“Sale” generally means the sale of FC HoldCo in one or more bona fide arm’s length transactions to a third party (or group of third parties), pursuant to which such third party acquires (a) all or substantially all of the interests of FC HoldCo (whether by merger, consolidation, equity security exchange, or sale or transfer of the interests), or (b) substantially all of FC HoldCo’s assets. A sale of FC HoldCo will exclude this offering.

In addition, as discussed above under “—Restrictive Covenants,” under the FC HoldCo LLC Agreement, the NEOs may also receive severance if we elect to enforce the covenant not to compete.

Potential Payments Table

The following table sets forth estimates of the amounts of the payments, as provided for under the NEO retention letters and the terms of the Senior Incentive Units and New Incentive Units that would be made to our NEOs under various termination scenarios or on a change in control, assuming such event occurred on December 31, 2015. All amounts are estimates only, and the actual amounts will vary depending on the facts and circumstances applicable at the time of the triggering event.


Name	Termination without Cause ($)(1)		Change in Control ($)(2)
Michael C. Ritter		212,500		1,914,000
Jeffrey Butcher		112,500		174,000
Kenneth J. Sicinski		130,000		348,000
David Bertoncini		150,000		922,200
Dennis Morris		150,000		922,200
Debra Glasser		112,500		174,000
Christopher Keiser		112,500		174,000

(1)	The amounts in this column assume that we elect to enforce the covenants not to compete against the NEOs by paying them six months of their base salary under the terms of the FC HoldCo LLC Agreement.

(2)

As described above under “—Potential Payments Upon Termination or Change in Control—Incentive Awards,” pursuant to the FC HoldCo LLC Agreement and the individual award agreements, the New Incentive Units held by each of our NEOs would have accelerated had a “sale” of FC HoldCo occurred on December 31, 2015. The amounts in this column reflect the aggregate grant date fair value (calculated in accordance with FASB ASC Topic 718) of the New Incentive Units that were granted to the NEOs on March 1, 2015. The actual value of the New Incentive Units will depend on the value of the restricted LLC Units on December 31, 2015.

118

Director Compensation

Following this offering, our non-employee directors are expected to receive compensation that is commensurate with the compensation offered to directors of companies that are similar to ours, including equity-based awards granted under a director stock incentive plan that we will adopt. We will not separately compensate our employee directors for their service on our board of directors. We expect to reimburse our non-employee directors for reasonable out-of-pocket expenses they incur in connection with their service as directors, in accordance with our general expense reimbursement policies.

Compensation Committee Interlocks and Insider Participation

None of our executive officers has served as a member of a compensation committee (or if no committee performs that function, the board of directors) of any other entity that has an executive officer serving as a member of our board of directors.

119

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

We describe below transactions and series of similar transactions, during our last three fiscal years or currently proposed, to which we were a party or will be a party, in which:

•

the amounts involved exceeded or will exceed $120,000; and

•

any of our directors, executive officers or beneficial holders of more than 5% of any class of our capital stock had or will have a direct or indirect material interest.

Other than as described below, there have not been, nor are there any currently proposed, transactions or series of similar transactions meeting this criteria to which we have been or will be a party other than compensation arrangements, which are described where required under “Compensation Discussion and Analysis.”

Investors’ Reorganization Transactions

Prior to the consummation of this offering, we will consummate the Investors’ Reorganization Transactions described under “Organizational Structure.”

FC HoldCo Amended and Restated Limited Liability Company Agreement

As a result of the Investors’ Reorganization Transactions, we will directly or indirectly through our wholly owned subsidiary Flagship Holdings, hold LLC Units in FC HoldCo and will be the sole managing member of FC HoldCo. Accordingly, we will operate and control all of the business and affairs of FC HoldCo and, through FC HoldCo and its operating subsidiaries, conduct our business.

Through its subsidiary Flagship Holdings, the sole managing member of FC HoldCo, the Issuer will have the right to determine when distributions will be made to the members of FC HoldCo and the amount of any such distributions (subject to the requirements with respect to the tax distributions described below). If the Issuer authorizes a distribution, such distribution will be made to the unit holders of FC HoldCo, including the Issuer and Flagship Holdings, pro rata in accordance with their respective ownership interest in FC HoldCo, provided that Flagship Holdings as sole managing member will be entitled to non-pro rata distributions for certain fees and expenses of the Issuer and Flagship Holdings.

The New LLC Agreement will also provide that as a general matter a Continuing LLC Owner will not have the right to transfer LLC Units if we determine that such transfer would be prohibited by law or regulation or would violate other agreements with us to which the Continuing LLC Owner may be subject.

120

Stockholders Agreement

Prior to the consummation of this offering, we will enter into a stockholders agreement with the ABV Funds. The stockholders agreement, as further described below, will contain specific rights, obligations and agreements of these parties as owners of our Class A common stock and Class B common stock. We use the term “on an As-Exchanged Basis” to mean our outstanding shares of Class A common stock including those shares of Class A common stock issuable upon exchange of our Class B common stock pursuant to the Exchange Agreement.

Board Nomination Rights

Under the stockholders agreement, the ABV Funds will have the right to nominate to our board of directors a number of designees equal to: (i) a majority of the total number of directors comprising our board of directors as long as the ABV Funds beneficially own at least 25% of the outstanding shares of our Class A common stock on an As-Exchanged Basis entitled to vote generally in the election of our directors and (ii) one director as long as the ABV Funds beneficially own at least 5% but less than 25% of the outstanding shares of our Class A common stock on an As-Exchanged Basis entitled to vote generally in the election of our directors.

In addition, in the event a vacancy on the board of directors is caused by the death, retirement or resignation of a director-designee of the ABV Funds, the ABV Funds shall, to the fullest extent permitted by law, have the right to have the vacancy filled by a new director-designee of the ABV Funds.

The ABV Funds’ Approvals

Under the stockholders agreement and subject to our amended and restated certificate of incorporation, our amended and restated bylaws and applicable law, the actions listed below by us or any of our subsidiaries will require the approval of the ABV Funds for so long as the ABV Funds beneficially own at least 25% of the outstanding shares of our Class A common stock on an As-Exchanged Basis entitled to vote following this offering. The actions include:

•

change in control transactions;

•

initiating any liquidation, dissolution, bankruptcy or other insolvency proceeding;

•

acquiring or disposing of assets or entering into joint ventures with a value in excess of $50 million;

•

incurring indebtedness in an aggregate principal amount in excess of $50 million;

•

equity issuances in excess of $50 million (other than pursuant to executive or employee compensation arrangements or upon exchange of Class A common stock for Class B common stock pursuant to the Exchange Agreement);

•

redeeming or repurchasing equity interests (other than in connection with terms of equity compensation plans);

•

establishing or amending any equity, purchase or bonus plan for benefits of employees, consultants, officers or directors;

•

approving and registering equity securities in connection with a public offering;

•

terminating the employment of our chief executive officer or chief financial officer or other change to senior management (including terms of compensation);

•

engaging in certain transactions with affiliates;

•

approving the capital expenditure budget for any fiscal year;

•

loans, advances or capital contributions in excess of $50 million;

•

extraordinary dividends or pro rata share repurchases;

121

•

making any material change in the nature of our business;

•

commencement or settlement of litigation over $50 million;

•

increasing or decreasing the size of our board of directors;

•

changing the jurisdiction of incorporation;

•

approval of the annual budget;

•

amendments to our governing documents;

•

changes to the fiscal year; and

•

any merger, consolidation, liquidation, dissolution or winding up of FC HoldCo, or creating any new class of equity securities of FC HoldCo.

Other Provisions

The stockholders agreement will contain a covenant that requires our amended and restated certificate of incorporation to provide for a renunciation of corporate opportunities presented to the ABV Funds, directors affiliated with the ABV Funds and their affiliates and any other non-employee directors to the maximum extent permitted by Section 122(17) of the Delaware General Corporation Law (“DGCL”). See “Risk Factors—Risks Relating to Our Organization and Structure—If the ownership of our common stock continues to be highly concentrated, it may prevent you and other minority stockholders from influencing significant corporate decisions and may result in conflicts of interest.” and “Description of Capital Stock—Corporate Opportunity.”

Under the stockholders agreement, we will agree, subject to certain exceptions, to indemnify the ABV Funds from certain losses arising out of the ABV Funds’ investment in, or actual, alleged or deemed control or ability to influence, us.

Registration Rights Agreement

After the completion of this offering, certain holders of our Class A common stock (including those holders of our shares of Class B common stock exchangeable along with LLC Units for shares of our Class A common stock pursuant to the Exchange Agreement) will be entitled to rights with respect to the registration of their shares under the Securities Act. These registration rights are contained in our registration rights agreement and are described in additional detail below. We have entered into such registration rights agreement with certain of our existing owners pursuant to which we have granted them, their affiliates and certain of their transferees the right, under certain circumstances and subject to certain restrictions, to require us to register under the Securities Act shares of Class A common stock delivered upon exchange of LLC Units and shares of our Class B common stock held by them. We will not be obligated to register any shares pursuant to any demand registration rights or S-3 registration rights if the holder of such shares is able to sell all of its shares for which it requests registration in any 90-day period pursuant to Rule 144 or Rule 145 of the Securities Act. We will pay the registration expenses (other than underwriting discounts and applicable selling commissions) of the holders of the shares registered pursuant to the registrations described below. In an underwritten offering, the managing underwriter, if any, has the right, subject to specified conditions, to limit the number of shares such holders may include. In connection with the completion of this offering, each holder that has registration rights has agreed not to sell or otherwise dispose of any securities without the prior written consent of , subject to certain exceptions, for a period ending 180 days from the date of this prospectus (subject to extension). See “Underwriting” for additional information.

Exchange Agreement

Prior to the consummation of this offering, we and the Continuing LLC Owners will enter into the Exchange Agreement under which they (or certain permitted transferees thereof) will have the right, subject to the terms of the Exchange Agreement, to exchange their LLC Units, together with a corresponding number of shares of Class

122

B common stock, for shares of our Class A common stock on a one-for-one basis, or, at our election, a cash payment equal to a volume weighted average market price of one share of Class A common stock for each LLC Unit exchanged, subject to customary conversion rate adjustments for stock splits, stock dividends, reclassifications and other similar transactions. The Exchange Agreement will provide, however, that such exchanges must be for a minimum of the lesser of LLC Units or all of the vested LLC Units held by such owner. The New LLC Agreement will provide that as a general matter a Continuing LLC Owner will not have the right to exchange LLC Units if we determine that such exchange would be prohibited by law or regulation or would violate other agreements with us to which the Continuing LLC Owner may be subject. We may impose additional restrictions on exchange that we determine to be necessary or advisable so that FC HoldCo is not treated as a “publicly traded partnership” taxable as a corporation for U.S. federal income tax purposes. As a Continuing LLC Owner exchanges LLC Units (and Class B common stock) for shares of Class A common stock or cash, the number of LLC Units held by the Issuer will be correspondingly increased as it acquires the exchanged LLC Units, and a corresponding number of shares of Class B common stock are cancelled.

Tax Receivable Agreement

Pursuant to the Exchange Agreement described above, from time to time we may be required to acquire LLC Units of FC HoldCo from the Continuing LLC Owners upon exchange of their LLC Units (and Class B common stock) for shares of our Class A common stock on a one-for-one basis, or, at our election, a cash payment equal to a volume weighted average market price of one share of Class A common stock for each LLC Unit exchanged. Additionally, as described under “Organizational Structure—Reorganization Transactions—Investors’ Reorganization Transactions,” Flagship Holdings will have acquired interests in FC HoldCo held by certain of the ABV Funds prior to this offering. FC HoldCo has had and intends to have an election under Code Section 754 in effect for the taxable year in which such acquisitions have occurred and will occur. Pursuant to the Code Section 754 election, transfers and exchanges of common interests in FC HoldCo, preferred interests in FC HoldCo and LLC Units will have resulted or are expected to result in an increase in the tax basis of tangible and intangible assets of FC HoldCo. These basis adjustments will increase (for tax purposes) our depreciation and amortization deductions and therefore reduce the amount of income tax we would otherwise be required to pay in the future. The increased tax basis may also decrease gain (or increase loss) on future dispositions of certain assets to the extent tax basis is allocated to those assets.

We will be a party to the TRA. Under this agreement, we generally expect to retain the benefit of 15% of the applicable tax savings after our payment obligations below are taken into account. We generally will be required to pay to the TRA Parties 85% of the applicable savings, if any, in income tax that we actually realize (or in certain circumstances are deemed to realize) as a result of (1) any step-up in tax basis that was created as a result of transfers of common and preferred interests in FC HoldCo to Flagship Holdings in the Reorganization Transactions, (2) any step-up in tax basis that is created as a result of future exchanges by the Continuing LLC Owners of their LLC Units (and Class B common stock) for shares of our Class A common stock or cash, (3) tax benefits related to imputed interest arising from payments under the TRA and (4) payments under the TRA.

The increase in tax basis resulting from the exchange of FC HoldCo interests prior to this offering and future exchanges of LLC Units (and Class B common stock) for shares of Class A common stock or cash, as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, including the timing of exchanges by the Continuing LLC Owners, the price of our Class A common stock at the time of the exchange, whether such exchanges are taxable, the amount and timing of the taxable income we generate in the future, the federal, state and local tax rates then applicable and the portion of our payments under the TRA constituting imputed interest.

The term of the TRA will commence upon completion of the acquisition of the common interests in FC HoldCo held by ABVF Delaware Blocker, ABVO 2 Delaware Blocker and ABVO 3 Master Fund (as described in “Organizational Structure—Reorganization Transactions—Investors’ Reorganization Transactions”) and will continue until all tax benefits covered by the TRA have been utilized or expired, unless payments under the

123

agreement are accelerated in the event that we exercise our rights to terminate the agreement or materially breach any of our material obligations under the agreement (as described below) or on the occurrence of certain mergers, asset sales, other forms of business combinations or other changes of control (as described below). Under the terms of the TRA, we may not elect an early termination of the TRA without the consent of each of certain ABV Funds until such ABV Fund has exchanged all of its LLC Units (and Class B common stock) for shares of Class A common stock or cash.

The payment obligation under the TRA is an obligation of the Issuer and Flagship Holdings, not FC HoldCo, and we expect that the payments we will be required to make under the TRA will be substantial. Assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize all tax benefits that are subject to the TRA, we estimate that the tax savings we will realize associated with (1) the acquisition of common and preferred interests in FC HoldCo in the Reorganization Transactions and (2) future exchanges of LLC Units (and Class B common stock) as described above would aggregate approximately $ over years from the date of this offering, based on the initial public offering price of $ per share of our Class A common stock and assuming all future exchanges would occur one year after this offering. Under such scenario we would be required to pay the TRA Parties 85% of such amount, or $ , over the year period from the date of this offering. The actual amounts may materially differ from these hypothetical amounts, as potential future tax savings we will be deemed to realize, and TRA payments by us, will be calculated based in part on the market value of our Class A common stock at the time of purchase or exchange and the prevailing federal, state and local tax rates applicable to us over the life of the TRA, and will generally be dependent on us generating sufficient future taxable income to realize the benefit (subject to the exceptions described below) of the increases in tax basis and other tax attributes subject to the TRA. Payments under the TRA are not conditioned on our existing owners’ continued ownership of us.

If the IRS challenges any increases in tax basis or other tax attributes subject to the TRA and any such increases in tax basis, including any increases in tax basis resulting from the consummation of the Investors’ Reorganization Transactions, or other benefits are subsequently disallowed, we would not be reimbursed for any payments previously made under the TRA (although we would reduce future amounts otherwise payable under the TRA). As a result, payments could be made under the TRA in excess of the tax savings that we actually realize in respect of the attributes to which the TRA relates.

The TRA provides that (1) in the event that we materially breach any of our material obligations under the agreements, whether as a result of failure to make any payment within three months of when due, failure to honor any other material obligation required thereunder or by operation of law as a result of the rejection of the agreements in a bankruptcy or otherwise, (2) upon certain mergers, asset sales, other forms of business combinations or other changes in control or (3) if, at any time, we elect an early termination of the agreement, our (or our successor’s) obligations under the TRA (with respect to all LLC Units, whether or not LLC Units have been exchanged or acquired before or after such transaction) would accelerate and become payable in a lump sum amount equal to the present value of the anticipated future tax benefits calculated based on certain assumptions, including that we would have sufficient taxable income to fully utilize the deductions arising from the tax basis and other tax attributes subject to the TRA. Under the terms of the TRA, we may not elect an early termination of the TRA without the consent of each of certain ABV Funds until such ABV Fund has exchanged all of its LLC Units (and Class B common stock) for shares of Class A common stock or cash. Accordingly, we may be prevented from terminating the TRA in circumstances where we determine it would be beneficial for us to do so, including potentially in connection with future strategic transactions. Furthermore, we will calculate our tax savings under the TRA by excluding certain tax attributes that we obtain the use of after the closing date of this offering as a result of acquiring other entities to the extent that such tax attributes are the subject of the TRA that we enter into in connection with such acquisitions.

124

present value of the anticipated future tax savings, which payment may be made significantly in advance of the actual realization of such future tax savings. In these situations, our obligations under the TRA could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. There can be no assurance that we will be able to fund or finance our obligations under the TRA. If we were permitted to elect to terminate the TRA immediately after this offering, based on an assumed initial public offering price of $ per share of our Class A common stock, which is the midpoint of the range set forth on the cover page of this prospectus, and a discount rate equal to , we estimate that we would be required to pay $ in the aggregate under the TRA.

Subject to the discussion above regarding the acceleration of payments under the TRA, payments under the TRA, if any, will generally be made on an annual basis to the extent we have sufficient taxable income to utilize the increased depreciation and amortization charges and other tax attributes subject to the TRA. The availability of sufficient taxable income to utilize the increased depreciation and amortization expense and other tax attributes will not be determined until such time as the financial results for the year in question are known and tax estimates prepared. We expect to make payments under the TRA, to the extent they are required, within days after our federal income tax return is filed for each fiscal year. Interest on such payments will begin to accrue at a rate equal to from the due date (without extensions) of such tax return.

The impact that the TRA will have on our consolidated financial statements will be the establishment of a liability, which will be increased upon exchanges of LLC Units (and Class B common stock) for our Class A common stock or cash, representing 85% of the estimated future tax savings we will realize, if any, relating to the increased tax basis associated with our acquisition of common and preferred interests in FC HoldCo pursuant to the Reorganization Transactions and future exchanges of LLC Units (and Class B common stock) for our Class A common stock or cash, as well as the other tax attributes that are subject to the TRA. Because the amount and timing of any payments will vary based on a number of factors (including the timing of future exchanges, the price of our Class A common stock at the time of any exchange, whether such exchanges are taxable and the amount and timing of our income), depending upon the outcome of these factors, we may be obligated to make substantial payments pursuant to the TRA. In light of the numerous factors affecting our obligation to make such payments, however, the timing and amount of any such actual payments are not certain at this time.

Decisions made by our existing owners in the course of running our business, such as with respect to mergers, asset sales, other forms of business combinations or other changes in control, may influence the timing and amount of payments that are received by an exchanging or selling existing owner under the TRA. For example, the earlier disposition of assets following an acquisition by us of interests in FC HoldCo will generally accelerate payments under the TRA and increase the present value of such payments, and the disposition of assets before such an acquisition will increase an existing owner’s tax liability without giving rise to any rights of an existing owner to receive payments under the TRA.

Because of our structure, our ability to make payments under the TRA is dependent on the ability of FC HoldCo to make distributions to us. The ability of FC HoldCo to make such distributions will be subject to, among other things, restrictions in our debt documents and the applicable provisions of Delaware law that may limit the amount of funds available for distribution to its members. To the extent that we are unable to make payments under the TRA for any reason, such payments will be deferred and will accrue interest at a rate equal to until paid (although a rate equal to will apply if the inability to make payments under the TRA is due to limitations imposed on us or any of our subsidiaries by a debt agreement in effect on the date of this prospectus).

Term Loan

On August 23, 2012, we issued $142.8 million in Class A Notes under a loan agreement with two multinational banks. Under the agreement, we also issued $17.5 million in Class B Notes to affiliates of the ABV Funds. On October 24, 2013, the Class B Notes were exchanged for notes issued in the CFCAT 2013-2 securitization transaction. Affiliates of the ABV Funds sold the notes issued in the CFCAT 2013-2 securitization transaction on April 22, 2014.

125

Limitation of Liability and Indemnification of Executive Officers and Directors

Our amended and restated certificate of incorporation and our amended and restated bylaws, both of which will become effective prior to the completion of this offering, will contain provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. See “Description of Capital Stock—Limitation of Liability of Directors and Officers.”

Further, prior to the completion of this offering, we expect to enter into indemnification agreements with each of our directors and executive officers that may be broader than the specific indemnification provisions contained in the DGCL. These indemnification agreements will require us, among other things, to indemnify our directors and executive officers against liabilities that may arise by reason of their status or service. These indemnification agreements will also require us to advance all expenses incurred by the directors and executive officers in investigating or defending any such action, suit, or proceeding. We believe that these agreements are necessary to attract and retain qualified individuals to serve as directors and executive officers.

Policies and Procedures for Related Party Transactions

Following the completion of this offering, the audit committee will have the primary responsibility for reviewing and approving or disapproving “related party transactions,” which are transactions between us and related persons in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. We intend to adopt a policy regarding transactions between us and related persons. For purposes of this policy, a related person is defined as a director, executive officer, nominee for director, or greater than 5% beneficial owner of our Class A common stock on an As-Exchanged Basis, in each case since the beginning of the most recently completed year, and their immediate family members. Our audit committee charter that will be in effect upon the completion of this offering provides that the audit committee shall review and approve or disapprove any related party transactions.

126

PRINCIPAL AND SELLING STOCKHOLDERS

The following tables set forth information regarding beneficial ownership of our common stock as of March 31, 2015, by:

•

each selling stockholder;

•

each person whom we know to own beneficially more than 5% of any class of our common stock;

•

each of the directors and named executive officers individually; and

•

all directors and executive officers as a group.

The numbers of shares of Class A common stock and Class B common stock (together with the same amount of LLC Units) beneficially owned and percentages of beneficial ownership before this offering that are set forth below are based on the number of shares and LLC Units to be issued and outstanding prior to this offering after giving effect to the Reorganization Transactions. See “Organizational Structure.” The numbers of shares of Class A common stock and Class B common stock (together with the same amount of LLC Units) beneficially owned and percentages of beneficial ownership after this offering that are set forth below are based on (a) the number of shares and LLC Units to be issued and outstanding immediately after this offering and (b) an assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus).

The amounts and percentages of Class A common stock and Class B common stock (together with the same amount of LLC Units) beneficially owned are reported on the basis of the rules and regulations of the SEC governing the determination of beneficial ownership of securities. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of such security, or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days, including those shares of our Class A common stock issuable upon exchange of LLC Units (together with corresponding shares of our Class B common stock) on a one-for-one basis, subject to the terms of the Exchange Agreement. See “Certain Relationships and Related Party Transactions—Exchange Agreement.” Under these rules, more than one person may be deemed to be a beneficial owner of the same securities.

Unless otherwise indicated, the address for each listed stockholder is: c/o Flagship Credit Corporation, 3 Christy Drive, Suite 201, Chadds Ford, PA 19317. To our knowledge, except as indicated in the footnotes to the tables and pursuant to applicable community property laws, the persons named in the tables have sole voting and investment power with respect to all shares of common stock.

127

Class A Common Stock Beneficially Owned(1)(2)(3)

After Giving Effect to
the Reorganization
Transactions and Prior
to this Offering

After Giving Effect to
the Reorganization
Transactions and this
Offering Assuming
Underwriters’ Option is
Not Exercised

After Giving Effect to
the Reorganization
Transactions and this
Offering Assuming
Underwriters’ Option is
Exercised in Full

Name of Beneficial Owner

Number

Percent

Number

Percent

Number

Percent

Directors and Executive Officers

Michael C. Ritter

Jeffrey Butcher

Kenneth J. Sicinski

David Bertoncini

Dennis Morris

Debra Glasser

Christopher Keiser

David Schiff

Andrew Dym

All executive officers and directors as a group (9 persons)

5% Equityholders

ABV Funds(4)

Class B Common Stock Beneficially Owned(1)

After Giving Effect to
the Reorganization
Transactions and Prior
to this Offering

After Giving Effect to
the Reorganization
Transactions and this
Offering Assuming
Underwriters’ Option is
Not Exercised

After this Offering
Assuming Underwriters’
Option is Exercised in
Full

Name of Beneficial Owner

Number

Percent

Number

Percent

Number

Percent

Directors and Executive Officers

Michael C. Ritter

Jeffrey Butcher

Kenneth J. Sicinski

David Bertoncini

Dennis Morris

Debra Glasser

Christopher Keiser

David Schiff

Andrew Dym

All executive officers and directors as a group (9 persons)

5% Equityholders

ABV Funds(4)

*	Represents beneficial ownership of less than 1%

(1)

Subject to the terms of the Exchange Agreement, shares of our Class B common stock (together with the corresponding LLC Units) are exchangeable for shares of our Class A common stock on a one-for-one basis, or, at our election, a cash payment equal to a volume weighted average market price of one share of Class A common stock for each LLC Unit exchanged. See “Certain Relationships and Related Party Transactions—Exchange Agreement.” Beneficial ownership of Class A common stock reflected in the Class A Common Stock Beneficially Owned table above reflects beneficial ownership of LLC Units and shares of Class B common stock exchangeable for shares of Class A common stock immediately following this offering.

128

(2)

Following the Reorganization Transactions, the Reorganization Parties will hold shares of our Class A common stock and will be entitled to one vote for each share of Class A common stock held by them. The Continuing LLC Owners will own LLC Units and a corresponding number of shares of our Class B common stock and will be entitled to one vote for each share of Class B common stock held by them.

(3)	Represents percentage of voting power of the Class A common stock and Class B common stock of Flagship voting together as a single class. See “Description of Capital Stock—Class B Common Stock.”

(4)

The ABV Funds are managed by Perella Weinberg Partners Capital Management LP (“PWPCM”), an affiliate of Perella Weinberg Partners Group LP. Perella Weinberg Partners Group LP is a broker-dealer and, accordingly, each of the ABV Funds is an affiliate of a broker-dealer. Each of the ABV Funds has represented to us that it (i) purchased the common stock it is offering under this prospectus in the ordinary course of business and (ii) had no agreements or understandings, directly or indirectly, with any person to distribute such common stock at the time of its purchase. PWPCM has delegated certain investment authority over the shares of our Class A and Class B common stock held by the ABV Funds to David Schiff as Portfolio Manager of the ABV Funds. As such, Mr. Schiff may be deemed to have voting and dispositive power over such shares. Mr. Schiff disclaims beneficial ownership of the shares held by the ABV Funds.

129

DESCRIPTION OF CAPITAL STOCK

The following descriptions are summaries of the material terms of our amended and restated certificate of incorporation and amended and restated bylaws. Reference is made to the more detailed provisions of, and the descriptions are qualified in their entirety by reference to, these documents, copies of which are filed with the SEC as exhibits to the registration statement of which this prospectus is a part, and applicable law.

General

Immediately following the completion of this offering, our authorized capital stock will consist of shares of Class A common stock, $.001 par value per share, shares of Class B common stock, $.001 par value per share, and shares of preferred stock, $.001 par value per share. No shares of preferred stock will be issued or outstanding immediately following the completion of this offering.

Common Stock

We have two classes of common stock: Class A and Class B, each of which has one vote per share, except that no stockholder or group (other than the ABV Funds or their affiliates) which acquires more than 9.99% of our capital stock shall have the right to vote more than 9.99% of our capital stock entitled to vote on matters presented to our stockholders for their vote or approval without the required notice or consent for the purchase of such shares having been provided or obtained as required by any federal, state or local consumer or other law, regulation or regulatory authority applicable to or having jurisdiction over us or any of our subsidiaries. The Class A and Class B common stock will vote together as a single class on all matters submitted to a vote of stockholders, except as otherwise required by applicable law.

Class A Common Stock

Voting rights. The holders of Class A common stock are entitled to one vote per share on all matters to be voted upon by the stockholders except as described above under “—Common Stock.”

Dividend rights. Subject to preferences that may be applicable to any outstanding preferred stock, the holders of Class A common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the board of directors out of funds legally available therefor. See “Dividend Policy.”

Rights upon liquidation. In the event of liquidation, dissolution or winding up of Flagship, the holders of Class A common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock, if any, then outstanding.

No Preemptive or Similar Rights. The holders of our Class A common stock have no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the Class A common stock.

Class B Common Stock

Voting rights. The holders of Class B common stock are entitled to one vote per share on all matters to be voted upon by the stockholders except as described above under “—Common Stock.”

Dividend rights. The holders of Class B common stock do not have any rights to receive dividends.

Rights upon liquidation. The holders of Class B common stock do not have any rights to receive a distribution upon liquidation, dissolution or winding up of Flagship.

No Preemptive or Similar Rights. The holders of our Class B common stock have no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the Class B common stock.

130

Conversion and Transferability. Shares of Class B common stock are not transferable except together with an equal number of LLC Units.

Regulations Concerning Change of Control

Our amended and restated certificate of incorporation will provide that no stockholder or group (other than the ABV Funds or their affiliates) which acquires more than 9.99% of our capital stock shall have the right to vote more than 9.99% of our capital stock entitled to vote on matters presented to our stockholders for their vote or approval without the required notice or consent for the purchase of such shares having been provided or obtained as required by any federal, state or local consumer or other law, regulation or regulatory authority applicable to or having jurisdiction over us or any of our subsidiaries.

Preferred Stock

Our amended and restated certificate of incorporation authorizes our board of directors to establish one or more series of preferred stock (including convertible preferred stock). Unless required by law or by the , the authorized shares of preferred stock will be available for issuance without further action by stockholders. Our board of directors is able to determine, with respect to any series of preferred stock, the powers (including voting powers), preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, including, without limitation:

•

the designation of the series;

•

the number of shares of the series, which our board of directors may, except where otherwise provided in the preferred stock designation, increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares then outstanding);

•

whether dividends, if any, will be cumulative or non-cumulative and the dividend rate of the series;

•

the dates at which dividends, if any, will be payable;

•

the redemption rights and price or prices, if any, for shares of the series;

•

the terms and amounts of any sinking fund provided for the purchase or redemption of shares of the series;

•

the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding-up of our affairs;

•

whether the shares of the series will be convertible into shares of any other class or series, or any other security, of ours or any other corporation, and, if so, the specification of the other class or series or other security, the conversion price or prices or rate or rates, any rate adjustments, the date or dates as of which the shares will be convertible and all other terms and conditions upon which the conversion may be made;

•

restrictions on the issuance of shares of the same series or of any other class or series; and

•

the voting rights, if any, of the holders of the series.

131

We could issue a series of preferred stock that could, depending on the terms of the series, impede or discourage an acquisition attempt or other transaction that some, or a majority, of the holders of our Class A and Class B common stock might believe to be in their best interests or in which the holders of our Class A common stock might receive a premium for their Class A common stock over the market price of the Class A common stock.

Additionally, the issuance of preferred stock may adversely affect the holders of our Class A and Class B common stock by restricting dividends on the Class A common stock, diluting the voting power of the Class A and Class B common stock or subordinating the liquidation rights of the Class A common stock. As a result of these or other factors, the issuance of preferred stock could have an adverse impact on the market price of our Class A common stock

Anti-Takeover Effects of Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws and Certain Provisions of Delaware Law

Our amended and restated certificate of incorporation, amended and restated bylaws and the DGCL contain provisions, which are summarized in the following paragraphs, that are intended to enhance the likelihood of continuity and stability in the composition of our board of directors. These provisions are intended to avoid costly takeover battles, reduce our vulnerability to a hostile change of control and enhance the ability of our board of directors to maximize stockholder value in connection with any unsolicited offer to acquire us. However, these provisions may have an anti-takeover effect and may delay, deter or prevent a merger or acquisition of us by means of a tender offer, a proxy contest or other takeover attempt that a stockholder might consider in its best interest, including those attempts that might result in a premium over the prevailing market price for the shares of Class A common stock held by stockholders.

Authorized but Unissued Capital Stock

Our board of directors may generally issue preferred shares on terms calculated to discourage, delay or prevent a change of control of us or the removal of our management. Moreover, our authorized but unissued shares of preferred stock will be available for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, to facilitate acquisitions and employee benefit plans.

One of the effects of the existence of unissued and unreserved common stock or preferred stock may be to enable our board of directors to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive our stockholders of opportunities to sell their shares of Class A common stock at prices higher than prevailing market prices.

Classified Board of Directors

Our amended and restated certificate of incorporation provides that our board of directors will be divided into three classes of directors, with the classes to be as nearly equal in number as possible, and with the directors serving three-year terms. As a result, approximately one-third of our board of directors will be elected each year. The classification of directors will have the effect of making it more difficult for stockholders to change the composition of our board of directors. Our amended and restated certificate of incorporation and amended and restated bylaws provide that the number of directors will be fixed and may only be changed pursuant to a vote of a majority of our board of directors.

Limitation on Voting

Because certain of the states in which we are licensed to provide consumer finance services have laws or regulations which require regulatory notice or consent for the acquisition of “control” of regulated entities, our amended and restated certificate of incorporation will provide that no stockholder or group (other than the ABV

132

Funds or their affiliates) which acquires more than 9.99% of our capital stock shall have the right to vote more than 9.99% of our capital stock entitled to vote on matters presented to our stockholders for their vote or approval without the required notice or consent for the purchase of such shares having been provided or obtained as required by any federal, state or local consumer or other law, regulation or regulatory authority applicable to or having jurisdiction over us or any of our subsidiaries.

Business Combinations

We have opted out of Section 203 of the DGCL; however, our amended and restated certificate of incorporation contains similar provisions providing that we may not engage in certain “business combinations” with any “interested stockholder” for a three-year period following the time that the stockholder became an interested stockholder, unless:

•

prior to such time, our board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

•

upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding certain shares; or

•

at or subsequent to that time, the business combination is approved by our board of directors and by the affirmative vote of holders of at least 66 ²/₃% of our outstanding voting stock that is not owned by the interested stockholder.

Generally, a “business combination” includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together with that person’s affiliates and associates, owns, or within the previous three years owned, 15% or more of our outstanding voting stock. For purposes of this section only, “voting stock” has the meaning given to it in Section 203 of the DGCL.

Under certain circumstances, this provision will make it more difficult for a person who would be an “interested stockholder” to effect various business combinations with us for a three-year period. This provision may encourage companies interested in acquiring us to negotiate in advance with our board of directors because the stockholder approval requirement would be avoided if our board of directors approves either the business combination or the transaction which results in the stockholder becoming an interested stockholder. These provisions also may have the effect of preventing changes in our board of directors and may make it more difficult to accomplish transactions which stockholders may otherwise deem to be in their best interests.

Our amended and restated certificate of incorporation provides that the ABV Funds, and any of their respective direct or indirect transferees and any group as to which such persons are a party, do not constitute “interested stockholders” for purposes of this provision.

Removal of Directors; Vacancies

Under the DGCL, unless otherwise provided in our amended and restated certificate of incorporation, directors serving on a classified board may be removed by the stockholders only for cause. Our amended and restated certificate of incorporation provides that directors may be removed only for cause upon the affirmative vote of holders of at least 66 ²/₃% of our outstanding voting stock entitled to vote thereon, voting together as a single class; provided, however, at any time when the ABV Funds beneficially own, in the aggregate, greater than 40% of our outstanding voting stock entitled to vote generally in the election of directors, directors may be removed with or without cause, and by an affirmative vote of a majority of the outstanding shares entitled to vote thereon, voting together as a single class.

133

In addition, our amended and restated certificate of incorporation also provides that, subject to the rights granted to one or more series of preferred stock then outstanding or the rights granted under the stockholders agreement with the ABV Funds, any newly created directorship on the board of directors that results from an increase in the number of directors and any vacancies on our board of directors will be filled: (i) when the ABV Funds beneficially own at least 40% of our outstanding voting stock, by a majority of the remaining directors, even if less than a quorum, by a sole remaining director or by the stockholders and (ii) when the ABV Funds beneficially own less than 40% of our outstanding voting stock, by a majority of the directors then in office, although less than a quorum, or by a sole remaining director (and not by the stockholders).

No Cumulative Voting

Under Delaware law, the right to vote cumulatively does not exist unless the certificate of incorporation specifically authorizes cumulative voting. Our amended and restated certificate of incorporation does not authorize cumulative voting. Therefore, stockholders holding a majority of our outstanding voting stock entitled to vote generally in the election of directors will be able to elect all our directors.

Special Stockholder Meetings

Our amended and restated certificate of incorporation does not provide for the ability of stockholders to call special meetings; provided, however, at any time when the ABV Funds beneficially own, in the aggregate, at least 40% of our outstanding voting stock entitled to vote generally in the election of directors, special meetings of our stockholders may be requested by the ABV Funds, by the board of directors or by the chairman of the board of directors. Our amended and restated bylaws prohibit the conduct of any business at a special meeting other than as specified in the notice for such meeting. These provisions may have the effect of deferring, delaying or discouraging hostile takeovers, or changes in control or management of us.

Requirements for Advance Notification of Director Nominations and Stockholder Proposals

Our amended and restated bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of directors. In order for any matter to be “properly brought” before a meeting, a stockholder will have to comply with advance notice requirements and provide us with certain information. Generally, to be timely, a stockholder’s notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of stockholders. Our amended and restated bylaws also specify requirements as to the form and content of a stockholder’s notice. Our amended and restated bylaws allow the chairman of the meeting at a meeting of the stockholders to adopt rules and regulations for the conduct of meetings which may have the effect of precluding the conduct of certain business at a meeting if the rules and regulations are not followed. These provisions will not apply to the ABV Funds so long as the stockholders agreement remains in effect. These provisions may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to influence or obtain control of us.

Stockholder Action by Written Consent

Pursuant to Section 228 of the DGCL, any action required to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of our stock entitled to vote thereon were present and voted, unless our amended and restated certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation will preclude stockholder action by written consent at any time when the ABV Funds beneficially own, in the aggregate, less than 40% of our outstanding voting stock entitled to vote generally in the election of directors.

134

Supermajority Provisions

Our amended and restated certificate of incorporation and amended and restated bylaws will provide that the board of directors is expressly authorized to make, alter, amend, change, add to, rescind or repeal, in whole or in part, our bylaws without a stockholder vote in any matter not inconsistent with the laws of the State of Delaware and our amended and restated certificate of incorporation. For as long as the ABV Funds beneficially own, in the aggregate, at least 40% of our outstanding voting stock entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of our bylaws by our stockholders will require the affirmative vote of a majority of our outstanding voting stock entitled to vote on such amendment, alteration, change, addition, rescission or repeal. At any time when the ABV Funds beneficially own, in the aggregate, less than 40% of our outstanding voting stock entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of our bylaws by our stockholders will require the affirmative vote of the holders of at least 66²/₃% of our outstanding voting stock entitled to vote thereon, voting together as a single class.

The DGCL provides generally that the affirmative vote of a majority of the outstanding shares entitled to vote thereon, voting together as a single class, is required to amend a corporation’s certificate of incorporation, unless the certificate of incorporation requires a greater percentage.

Our amended and restated certificate of incorporation provides that at any time when the ABV Funds beneficially own, in the aggregate, less than 40% of our outstanding voting stock entitled to vote generally in the election of directors, the following provisions in our amended and restated certificate of incorporation may be amended, altered, repealed or rescinded only by the affirmative vote of the holders of at least 66²/₃% of our outstanding voting stock entitled to vote thereon, voting together as a single class:

•

the provision requiring a 66²/₃% supermajority vote for stockholders to amend our amended and restated bylaws;

•

the provisions providing for a classified board of directors (the election and term of our directors);

•

the provisions regarding resignation and removal of directors;

•

the provisions regarding competition and corporate opportunities;

•

the provisions regarding entering into business combinations with interested stockholders;

•

the provisions regarding calling special meetings of stockholders;

•

the provisions regarding filling vacancies on our board of directors and newly created directorships;

•

the provisions eliminating monetary damages for breaches of fiduciary duty by a director; and

•

the amendment provision requiring that the above provisions be amended only with a 66 ²/₃% supermajority vote.

The combination of the classification of our board of directors, the lack of cumulative voting and the supermajority voting requirements will make it more difficult for our existing stockholders to replace our board of directors as well as for another party to obtain control of us by replacing our board of directors. Because our board of directors has the power to retain and discharge our officers, these provisions could also make it more difficult for existing stockholders or another party to effect a change in management.

These provisions may have the effect of deterring hostile takeovers or delaying or preventing changes in control of our management or us, such as a merger, reorganization or tender offer. These provisions are intended to enhance the likelihood of continued stability in the composition of our board of directors and its policies and to discourage certain types of transactions that may involve an actual or threatened acquisition of us. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions are also intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our shares that could result from actual or rumored takeover attempts.

135

Dissenters’ Rights of Appraisal and Payment

Under the DGCL, with certain exceptions, our stockholders will have appraisal rights in connection with a merger or consolidation of us. Pursuant to the DGCL, stockholders who properly request and perfect appraisal rights in connection with such merger or consolidation will have the right to receive payment of the fair value of their shares as determined by the Delaware Court of Chancery.

Stockholders’ Derivative Actions

Under the DGCL, any of our stockholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the stockholder bringing the action is a holder of our shares at the time of the transaction to which the action relates or such stockholder’s stock thereafter devolved by operation of law.

Limitation of Liability of Directors and Officers

Our amended and restated certificate of incorporation will provide that no director will be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except as required by applicable law, as in effect from time to time. Currently, Delaware law requires that liability be imposed for the following:

•

any breach of the director’s duty of loyalty to our company or our stockholders;

•

any act or omission not in good faith or which involved intentional misconduct or a knowing violation of law;

•

unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; and

•

any transaction from which the director derived an improper personal benefit.

As a result, neither we nor our stockholders have the right, through stockholders’ derivative suits on our behalf, to recover monetary damages against a director for breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior, except in the situations described above.

Our amended and restated bylaws will provide that, to the fullest extent permitted by law, we will indemnify any officer or director of our company against all damages, claims and liabilities arising out of the fact that the person is or was our director or officer, or served any other enterprise at our request as a director, officer, employee, agent or fiduciary. We will reimburse the expenses, including attorneys’ fees, incurred by a person indemnified by this provision when we receive an undertaking to repay such amounts if it is ultimately determined that the person is not entitled to be indemnified by us. Amending this provision will not reduce our indemnification obligations relating to actions taken before an amendment.

Forum Selection

The Delaware Court of Chancery will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of Flagship, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of Flagship to Flagship or Flagship’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, or (iv) any action asserting a claim governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of Flagship shall be deemed to have notice of and consented to the foregoing forum selection provisions.

136

Corporate Opportunity

Delaware law permits corporations to adopt provisions renouncing any interest or expectancy in certain opportunities that are presented to the corporation or its officers, directors or stockholders. Our amended and restated certificate of incorporation will, to the maximum extent permitted from time to time by Delaware law, renounce any interest or expectancy that we have in, or right to be offered an opportunity to participate in, specified business opportunities that are from time to time presented to the ABV Funds, directors affiliated with the ABV Funds and their affiliates and any other non-employee directors. Our amended and restated certificate of incorporation will provide that, to the fullest extent permitted by law, such persons will have no duty to refrain from (i) engaging in any transaction or matter that may be an investment or corporate or business opportunity or offer a prospective economic or competitive advantage in which we or any of our subsidiaries could have an interest or expectancy (a “Corporate Opportunity”) or (ii) otherwise competing with us or our affiliates. In addition, to the fullest extent permitted by law, in the event that the ABV Funds, directors affiliated with the ABV Funds and their affiliates or any non-employee directors acquire knowledge of a Corporate Opportunity for themselves or their affiliates or for us or our affiliates, such persons will have no duty to communicate or offer such Corporate Opportunity to us or any of our affiliates and they may take any such Corporate Opportunity for themselves or offer it to another person or entity. Our amended and restated certificate of incorporation will not renounce our interest in any Corporate Opportunity that is expressly offered to a non-employee director solely in his or her capacity as our director. No business opportunity will be deemed to be a potential Corporate Opportunity for us unless we would be permitted to undertake the opportunity under our amended and restated certificate of incorporation, we have sufficient financial resources to undertake the opportunity and the opportunity would be in line with our business or is an opportunity in which we have no interest or reasonable expectancy.

Listing

We intend to apply to list the Class A common stock on the under the symbol “ .”

Transfer Agent and Registrar

The transfer agent and registrar for the Class A common stock is .

137

U.S. FEDERAL TAX CONSIDERATIONS FOR

NON-U.S. HOLDERS OF CLASS A COMMON STOCK

The following is a general discussion of certain material U.S. federal income and estate tax consequences of the ownership and disposition of our Class A common stock by a “non-U.S. holder.” A “non-U.S. holder” is a beneficial owner of a share of our Class A common stock that is, for U.S. federal income tax purposes:

•

a non-resident alien individual, other than a former citizen or resident of the United States subject to U.S. tax as an expatriate,

•

a foreign corporation, or

•

a foreign estate or trust.

If a partnership or other pass-through entity (including an entity or arrangement treated as a partnership or other type of pass-through entity for U.S. federal income tax purposes) owns our Class A common stock, the tax treatment of a partner or beneficial owner of the entity may depend upon the status of the owner, the activities of the entity and certain determinations made at the partner or beneficial owner level. Partners and beneficial owners in partnerships or other pass-through entities that own our Class A common stock should consult their own tax advisors as to the particular U.S. federal income and estate tax consequences applicable to them.

This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), and administrative pronouncements, judicial decisions and final, temporary and proposed Treasury Regulations, changes to any of which subsequent to the date of this prospectus may affect the tax consequences described herein (possibly with retroactive effect). This discussion does not address all aspects of U.S. federal income and estate taxation that may be relevant to non-U.S. holders in light of their particular circumstances and does not address any tax consequences arising under the laws of any state, local or foreign jurisdiction. Prospective holders are urged to consult their tax advisors with respect to the particular tax consequences to them of owning and disposing of our Class A common stock, including the consequences under the laws of any state, local or foreign jurisdiction.

Dividends

As discussed under “Dividend Policy” above, we do not currently expect to pay dividends. In the event that we do pay dividends out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles), such dividends paid to a non-U.S. holder generally will be subject to U.S. federal withholding tax at a 30% rate, or a reduced rate specified by an applicable income tax treaty, subject to the discussion of FATCA withholding taxes below. In order to obtain a reduced rate of withholding under an applicable income tax treaty, a non-U.S. holder generally will be required to provide a properly executed IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, certifying its entitlement to benefits under the treaty.

No amounts in respect of U.S. federal withholding tax will be withheld from dividends paid to a non-U.S. holder if the dividends are effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the United States) and the non-U.S. holder provides a properly executed IRS Form W-8ECI. Instead, the effectively connected dividends will generally be subject to regular U.S. income tax as if the non-U.S. holder were a U.S. person as defined under the Code. A non-U.S. holder that is a treated as a corporation for U.S. federal income tax purposes receiving effectively connected dividends may also be subject to an additional “branch profits tax” imposed at a rate of 30% (or a lower treaty rate) on its effectively connected earnings and profits (subject to certain adjustments).

138

Gain on Disposition of Class A Common Stock

Subject to the discussions of backup withholding and FATCA withholding taxes below, a non-U.S. holder generally will not be subject to U.S. federal income tax on gain realized on a sale or other disposition of Class A common stock unless:

•

the gain is effectively connected with a trade or business of the non-U.S. holder in the United States, subject to an applicable income tax treaty providing otherwise, in which case the gain will be subject to U.S. federal income tax generally in the same manner as effectively connected dividend income as described above;

•

the non-U.S. holder is an individual present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met, in which case the gain (net of certain US-source losses) generally will be subject to U.S. federal income tax at a rate of 30% (or a lower treaty rate); or

•

we are or have been a United States real property holding corporation (as described below), at any time within the five-year period preceding the disposition or the non-U.S. holder’s holding period, whichever period is shorter, and either (i) our Class A common stock is not regularly traded on an established securities market prior to the beginning of the calendar year in which the sale or disposition occurs or (ii) the non-U.S. holder has owned or is deemed to have owned, at any time within the five-year period preceding the disposition or the non-U.S. holder’s holding period, whichever period is shorter, more than 5% of our Class A common stock.

We will be a United States real property holding corporation at any time that the fair market value of our “United States real property interests,” as defined in the Code and applicable Treasury Regulations, equals or exceeds 50% of the aggregate fair market value of our worldwide real property interests and our other assets used or held for use in a trade or business. We believe that we are not, and do not anticipate becoming in the foreseeable future, a United States real property holding corporation.

Information Reporting Requirements and Backup Withholding

Information returns are required to be filed with the IRS in connection with payments of dividends. A non-U.S. holder may have to comply with certification procedures to establish that it is not a United States person in order to avoid additional information reporting and backup withholding. The certification procedures required to claim a reduced rate of withholding under a treaty will generally satisfy the certification requirements necessary to avoid backup withholding as well. The amount of any backup withholding from a payment to a non-U.S. holder will be allowed as a credit against the non-U.S. holder’s U.S. federal income tax liability and may entitle the non-U.S. holder to a refund, provided that the required information is furnished to the IRS in a timely manner.

FATCA Withholding Taxes

Payments to certain foreign entities of dividends on and the gross proceeds of dispositions of Class A common stock of a U.S. issuer will be subject to a withholding tax (separate and apart from, but without duplication of, the withholding tax described above) at a rate of 30%, unless various U.S. information reporting and due diligence requirements (generally relating to ownership by U.S. persons of interests in or accounts with those entities) have been satisfied or an exemption from these rules applies. The IRS has announced that Treasury Regulations implementing this withholding tax will defer the withholding obligation until January 1, 2017 for gross proceeds from dispositions of common stock of a U.S. issuer. An intergovernmental agreement between the United States and an applicable foreign country may modify these requirements. Non-U.S. holders should consult their tax advisors regarding the possible implications of this withholding tax on their investment in our Class A common stock.

139

Federal Estate Tax

Individual non-U.S. holders (as specifically defined for U.S. federal estate tax purposes) and entities the property of which is potentially includible in such an individual’s gross estate for U.S. federal estate tax purposes (for example, a trust funded by such an individual and with respect to which the individual has retained certain interests or powers) should note that the Class A common stock will be treated as U.S. situs property subject to U.S. federal estate tax, unless an applicable estate tax treaty provides otherwise.

140

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no market for our Class A common stock. Future sales of substantial amounts of our Class A common stock in the public market could adversely affect market prices prevailing from time to time. Furthermore, because only a limited number of shares will be available for sale shortly after this offering due to existing contractual and legal restrictions on resale as described below, there may be sales of substantial amounts of our Class A common stock in the public market after the restrictions lapse. This may adversely affect the prevailing market price and our ability to raise equity capital in the future.

Assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), we will have shares of Class A common stock outstanding upon completion of this offering, assuming the exercise of the underwriters’ option to purchase additional shares of Class A common stock in full. Of these shares, the shares, or shares if the underwriters exercise their option to purchase additional shares of Class A common stock in full, sold in this offering will be freely transferable without restriction or registration under the Securities Act, except for any shares purchased by one of our existing “affiliates,” as that term is defined in Rule 144 under the Securities Act. The remaining shares of Class A common stock existing are “restricted shares” as defined in Rule 144. Restricted shares may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 of the Securities Act.

As a result of the contractual 180-day lock-up period described below and the provisions of Rule 144, these shares will be available for sale in the public market as follows: shares on the date of this prospectus; shares after 90 days from the date of this prospectus; shares after 180 days from the date of this prospectus (subject, in some cases, to volume limitations); and shares at various times after 180 days from the date of this prospectus (subject, in some cases, to volume limitations).

Rule 144

In general, a person who has beneficially owned restricted shares of our Class A common stock for at least six months would be entitled to sell such securities, provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the 90 days preceding, a sale and (ii) we are subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale. Persons who have beneficially owned restricted shares of our Class A common stock for at least six months but who are our affiliates at the time of, or any time during the 90 days preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three month period only a number of securities that does not exceed the greater of either of the following:

•

1% of the number of shares of our Class A common stock then outstanding, which will equal approximately shares immediately after this offering, assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus) and no exercise of the underwriters’ option to purchase additional shares of Class A common stock; or

•

the average weekly trading volume of our Class A common stock on the during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale;

provided, in each case, that we are subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale. Such sales both by affiliates and by non-affiliates must also comply with the manner of sale, current public information and notice provisions of Rule 144 to the extent applicable.

Registration Rights

Assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), upon completion of this offering, the holders of shares of Class A common stock

141

or their transferees, will be entitled to various rights with respect to the registration of these shares under the Securities Act. Registration of these shares under the Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by affiliates.

Lock-up Agreements

We, all of our directors and executive officers, the selling stockholders and other holders of our Class A common stock (including shares of Class A common stock issuable upon exchange of LLC Units), have agreed subject to certain exceptions, not to offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, or enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any shares of Class A common stock or any securities convertible into or exercisable or exchangeable for shares of Class A common stock for a period of 180 days after the date of this prospectus, without the prior written consent of . See “Underwriting.”

142

UNDERWRITING

Under the terms and subject to the conditions contained in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom are acting as representatives, have severally agreed to purchase, and we and the selling stockholders have agreed to sell to them, severally, the number of shares of our Class A common stock indicated below:


Name		Number of Shares


Total

are the joint book-running managers of this offering.

The underwriters are offering the shares of Class A common stock subject to their acceptance of the shares from us and the selling stockholders and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of our Class A common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of Class A common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ option to purchase additional shares of Class A common stock described below. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may also be increased or this offering may be terminated.

The underwriters initially propose to offer part of the shares of our Class A common stock directly to the public at the public offering price listed on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of $ a share under the public offering price. Any underwriter may allow, and such dealers may reallow, a concession not in excess of $ a share to other underwriters or to certain dealers. After the initial offering of the shares of our Class A common stock, the offering price and other selling terms may from time to time be varied by the representatives. Sales of Class A common stock made outside of the United States may be made by affiliates of the underwriters. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.

The selling stockholders have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to an aggregate of additional shares of our Class A common stock at the initial public offering price set forth on the cover page of this prospectus, less underwriting discounts and commissions. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of our Class A common stock as the number listed next to the underwriter’s name in the preceding table bears to the total number of shares of our Class A common stock listed next to the names of all underwriters in the preceding table.

The underwriting discounts and commissions will be determined by negotiations among us and the representatives and are a percentage of the offering price to the public. Among the factors to be considered in determining the discounts and commissions will be the size of this offering, the nature of the security to be offered and the discounts and commissions charged in comparable transactions.

The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters, assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares of Class A common stock from the selling stockholders.

Paid by Us

Paid by the Selling
Stockholders

No Exercise

Full Exercise

No Exercise

Full Exercise

Per Share

Total

143

The estimated offering expenses are approximately $ , which includes legal, accounting and printing costs and various other fees associated with registering and listing our Class A common stock. All offering expenses will be payable by us. We have agreed to reimburse the underwriters for certain expenses relating to the offering up to $ .

We intend to apply to list our shares of Class A common stock on the under the symbol “ .”

A prospectus in electronic format may be made available on web sites maintained by one or more underwriters. The underwriters may agree to allocate a number of shares to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the joint book-running managers to underwriters that may make Internet distributions on the same basis as other allocations.

Each of the Company, its directors and executive officers, the selling stockholders and other holders of our Class A common stock (including shares of Class A common stock issuable upon exchange of LLC Units) have agreed, subject to certain exceptions, without the prior written consent of , it will not, during the period ending 180 days after the date of this prospectus:

•

offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of directly or indirectly, any shares of Class A common stock or any securities convertible into or exercisable or exchangeable for Class A common stock;

•

file or cause to be filed any registration statement with the SEC relating to this offering of any shares of Class A common stock or any securities convertible into or exercisable or exchangeable for Class A common stock; or

•

enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our Class A common stock or such other securities,

whether any such transaction described above is to be settled by delivery of Class A common stock or such other securities, in cash or otherwise.

The 180-day restricted period described above is subject to extension such that, in the event that either (i) during the last 17 days of the 180-day restricted period, we issue an earnings release or material news or a material event relating to us occurs or (ii) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 15-day period beginning on the last day of the 180-day period, the “lock-up” restrictions described above will continue to apply until the expiration of the 18-day period beginning on the earnings release or the occurrence of the material news or material event. , in their sole discretion, may release the Class A common stock and other securities subject to the lock-up agreements described above in whole or in part at any time with or without notice.

In order to facilitate this offering of Class A common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the Class A common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale or position may be either “covered” or “naked.” A short sale is covered if the aggregate short position is no greater than the number of shares available for purchase by the underwriters under the option to purchase additional shares of Class A common stock from the selling stockholders described above. The underwriters can close out a covered short sale by exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the option to purchase additional shares of Class A common stock described above. The underwriters may also sell shares in excess of their option to purchase additional shares of Class A common stock, creating a naked short position to the extent of the excess. The underwriters must close out any naked short position by purchasing

144

shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the Class A common stock in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of Class A common stock in the open market to stabilize the price of the Class A common stock. The underwriting syndicate may also reclaim selling concessions allowed to an underwriter or a dealer for distributing the Class A common stock in this offering, if the syndicate repurchases previously distributed Class A common stock to cover syndicate short positions or to stabilize the price of the Class A common stock. These activities may raise or maintain the market price of the Class A common stock above independent market levels or prevent or retard a decline in the market price of the Class A common stock. The underwriters are not required to engage in these activities, and may end any of these activities at any time. These transactions may be effected on the , in the over-the-counter market or otherwise.

The underwriters do not expect sales to discretionary accounts to exceed five percent of the total number of shares of Class A common stock offered.

We, the underwriters and the selling stockholders have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.

Restrictions with Respect to Investors Owning or Controlling More than 9.99% of Our Voting Stock

Because certain of the states in which we are licensed to provide consumer finance services have laws or regulations which require regulatory notice or consent for the acquisition of “control” of regulated entities, we and the underwriters have agreed that we and the underwriters will not knowingly make a stock allocation in this offering to any investor (including any known subsidiary and affiliate) that results in a stockholder or group (other than the ABV Funds or their affiliates) owning or controlling more than 9.99% of our capital stock entitled to vote on matters presented to our stockholders for their vote or approval that is outstanding following this offering. Further, our amended and restated certificate of incorporation will provide that no stockholder or group (other than the ABV Funds or their affiliates) which acquires more than 9.99% of our capital stock shall have the right to vote more than 9.99% of our capital stock entitled to vote on matters presented to our stockholders for their vote or approval without the required notice or consent for the purchase of such shares having been provided or obtained as required by any federal, state or local consumer or other law, regulation or regulatory authority applicable to or having jurisdiction over us or any of our subsidiaries.

Selling Restrictions

Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to this offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

European Economic Area

In relation to each Member State of the European Economic Area (each, a “Relevant Member State”), no offer of shares may be made to the public in that Relevant Member State other than:

(a)

to any legal entity which is a qualified investor as defined in the Prospectus Directive;

145

(b)

to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives); or

(c)

in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of shares shall require us or the representatives to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

Each person in a Relevant Member State who initially acquires any shares or to whom any offer is made will be deemed to have represented, acknowledged and agreed that it is a “qualified investor” within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive. In the case of any shares being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the shares acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any shares to the public other than their offer or resale in a Relevant Member State to qualified investors as so defined or in circumstances in which the prior consent of the representatives has been obtained to each such proposed offer or resale.

We, the representatives and their affiliates will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements.

This prospectus has been prepared on the basis that any offer of shares in any Relevant Member State will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of shares. Accordingly any person making or intending to make an offer in that Relevant Member State of shares which are the subject of the offering contemplated in this prospectus may only do so in circumstances in which no obligation arises for us or any of the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Directive in relation to such offer. Neither we nor the underwriters have authorized, nor do they authorize, the making of any offer of shares in circumstances in which an obligation arises for us or the underwriters to publish a prospectus for such offer.

For the purpose of the above provisions, the expression “an offer to the public” in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in the Relevant Member State by any measure implementing the Prospectus Directive in the Relevant Member State and the expression “Prospectus Directive” means Directive 2003/71/EC (including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member States) and includes any relevant implementing measure in the Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

United Kingdom

In the United Kingdom, this document is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are “qualified investors” (as defined in the Prospectus Directive) (i) who have professional experience in matters relating to investments falling within Article 19 (5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”).

146

Any person in the United Kingdom that is not a relevant person should not act or rely on the information included in this document or use it as basis for taking any action. In the United Kingdom, any investment or investment activity that this document relates to may be made or taken exclusively by relevant persons. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents.

Hong Kong

The shares of Class A common stock have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document relating to the shares has been or may be issued or has been or may be in the possession of any person for the purposes of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.

Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares Securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is: (i) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (ii) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Non-CIS Securities pursuant to an offer made under Section 275 of the SFA except: (a) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA; (b) where no consideration is or will be given for the transfer; (c) where the transfer is by operation of law; (d) as specified in Section 276(7) of the SFA; or (e) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.

Japan

The shares have not been and will not be registered under the Financial Instruments and Exchange Law of Japan. Accordingly, the shares may not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to or for the benefit of a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

147

Australia

No prospectus or other disclosure document (as defined in the Corporations Act 2001 (Cth) of Australia (“Corporations Act”)) in relation to the Class A common stock has been or will be lodged with the Australian Securities & Investments Commission (“ASIC”). This document has not been lodged with ASIC and is only directed to certain categories of exempt persons. Accordingly, if you receive this document in Australia:

you confirm and warrant that you are either:

a “sophisticated investor” under section 708(8)(a) or (b) of the Corporations Act;

ii.

a “sophisticated investor” under section 708(8)(c) or (d) of the Corporations Act and that you have provided an accountant’s certificate to us which complies with the requirements of section 708(8)(c)(i) or (ii) of the Corporations Act and related regulations before the offer has been made;

iii.

a person associated with the company under section 708(12) of the Corporations Act; or

iv.

a “professional investor” within the meaning of section 708(11)(a) or (b) of the Corporations Act, and to the extent that you are unable to confirm or warrant that you are an exempt sophisticated investor, associated person or professional investor under the Corporations Act any offer made to you under this document is void and incapable of acceptance; and

you warrant and agree that you will not offer any of the Class A common stock for resale in Australia within 12 months of that Class A common stock being issued unless any such resale offer is exempt from the requirement to issue a disclosure document under section 708 of the Corporations Act.

Switzerland

The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or this offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to this offering, us or the shares of our Class A common stock have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares of our Class A common stock will not be supervised by, the Swiss Financial Market Supervisory Authority (“FINMA”), and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (“CISA”). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares.

Dubai International Financial Centre (“DFIC”)

This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (“DFSA”). This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.

148

In relation to its use in the DIFC, this document is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose. The interests in the securities may not be offered or sold directly or indirectly to the public in the DIFC.

Relationships with Underwriters

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to the issuer and to persons and entities with relationships with the issuer, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the issuer (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the issuer. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

Pricing of the Offering

Prior to this offering, there has been no public market for shares of our Class A common stock. The initial public offering price will be determined by negotiations among us, the selling stockholders and the representatives of the underwriters. Among the factors to be considered in determining the initial public offering price will be our future prospects and those of our industry in general, our net interest income and net earnings, the information set forth in this prospectus and otherwise available, an assessment of our management, the general condition of the securities market at the time of the offering, certain of our other financial operating information in recent periods, the price-earnings ratios, price-to-book-value ratios, market prices of comparable companies, certain other financial and operating information of companies engaged in activities similar to us and other factors deemed relevant by the underwriters and us. The estimated initial public offering price range set forth on the cover page of this preliminary prospectus is subject to change as a result of market conditions and other factors. Neither we nor the underwriters can assure investors that an active trading market will develop for our Class A common stock, or that the shares will trade in the public market at or above the initial public offering price.

149

LEGAL MATTERS

The validity of the issuance of the shares of Class A common stock offered hereby will be passed upon for Flagship by Davis Polk & Wardwell LLP. Skadden, Arps, Slate, Meagher & Flom LLP is representing the underwriters.

EXPERTS

The combined consolidated financial statements of FC HoldCo LLC at December 31, 2014 and 2013, and for each of the three years in the period ended December 31, 2014, appearing in this prospectus and registration statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the Class A common stock offered hereby. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. For further information with respect to the company and its Class A common stock, reference is made to the registration statement and the exhibits and any schedules filed therewith. Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete and in each instance, if such contract or document is filed as an exhibit, reference is made to the copy of such contract or other document filed as an exhibit to the registration statement, each statement being qualified in all respects by such reference. A copy of the registration statement, including the exhibits and schedules thereto, may be read and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site at www.sec.gov, from which interested persons can electronically access the registration statement, including the exhibits and any schedules thereto.

As a result of the offering, we will be required to file periodic reports and other information with the SEC.

150

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FC HoldCo LLC


Unaudited Consolidated Interim Financial Statements
Consolidated Financial Statements
Consolidated Balance Sheets			F-2
Consolidated Statements of Operations			F-3
Consolidated Statements of Members’ Equity			F-4
Consolidated Statements of Cash Flows			F-5
Notes to the Consolidated Interim Financial Statements			F-6

Audited Combined Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm			F-17
Combined Consolidated Financial Statements
Combined Consolidated Balance Sheets			F-18
Combined Consolidated Statements of Operations			F-19
Combined Consolidated Statements of Members’ Equity			F-20
Combined Consolidated Statements of Cash Flows			F-21
Notes to the Combined Consolidated Financial Statements			F-22

F-1

FC HoldCo LLC

Consolidated Balance Sheets

(Dollars in Thousands)


	March 31, 2015		December 31, 2014
	(Unaudited)
Assets
Cash and cash equivalents	$	6,366	$	11,071
Cash and cash equivalents—restricted		168,376		120,785
Finance receivables held for investment, net of allowance for credit losses of $79,522 and $71,174 at March 31, 2015 and December 31, 2014, respectively		2,078,564		1,890,607
Accrued interest		18,127		17,213
Fixed assets, net of accumulated depreciation of $2,603 and $2,244 at March 31, 2015 and December 31, 2014, respectively		4,353		4,038
Capitalized debt issuance costs		18,678		15,815
Other assets		12,350		12,622

Total assets	$	2,306,814	$	2,072,151

Liabilities and members’ equity
Liabilities:
Warehouse credit facilities	$	61,237	$	257,932
Term debt, net of discount of $2,071 and $2,198 at March 31, 2015 and December 31, 2014, respectively		1,988,593		1,558,992
Accounts payable, accrued expenses and other liabilities		16,586		16,064

Total liabilities		2,066,416		1,832,988
Commitments and contingencies (Note 10)
Members’ equity:
Common units, no par value; 223,379 and 228,101 units authorized, issued and outstanding in 2015 and 2014, respectively		—		—
Senior common units, no par value; 72,359 units authorized, issued and outstanding in 2015 and 2014		—		—
Preferred units, $1,000 par value; 223,379 and 228,101 units authorized, issued and outstanding in 2015 and 2014, respectively		223,379		228,101
Incentive common units		295		169
Retained earnings		16,724		10,893

Total members’ equity		240,398		239,163

Total liabilities and members’ equity	$	2,306,814	$	2,072,151

See accompanying notes.

F-2

FC HoldCo LLC

Consolidated Statements of Operations

(Dollars in Thousands)


	Quarter Ended March 31,
	2015		2014
	(Unaudited)		(Unaudited)
Financing and other interest income	$	64,667	$	42,920
Interest expense		15,537		9,034

Net interest income		49,130		33,886
Provision for credit losses		27,989		19,360

Net interest income after provision for credit losses		21,141		14,526
Other income		1,408		1,157
Operating expenses:
Compensation and benefits		9,473		6,685
General and administrative		6,883		5,117
Depreciation and amortization		362		220

Total operating expenses		16,718		12,022

Net income	$	5,831	$	3,661

See accompanying notes.

F-3

FC HoldCo LLC

Consolidated Statements of Members’ Equity

(Dollars in Thousands)


	Common Units		Preferred Units			Incentive Common Units		Retained Earnings (Accumulated Deficit)		Total

Balance at December 31, 2014	$	—	$	228,101		$	169	$	10,893	$	239,163
Issuance of preferred units		—		420			—		—		420
Distributions		—		(142	)		—		—		(142	)
Equity based compensation		—		—			126		—		126
Repurchase of preferred units		—		(5,000	)		—		—		(5,000	)
Net income		—		—			—		5,831		5,831

Balance at March 31, 2015 (Unaudited)	$	—	$	223,379		$	295	$	16,724	$	240,398

See accompanying notes.

F-4

FC HoldCo LLC

Consolidated Statements of Cash Flows

(Dollars in Thousands)


	Quarter Ended March 31,
	2015			2014
	(Unaudited)			(Unaudited)
Operating activities
Net income	$	5,831		$	3,661
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses		27,989			19,360
Amortization of deferred premiums, discounts, origination costs and debt issuance costs		11,023			6,549
Depreciation of fixed assets and amortization of intangibles		362			220
Equity based compensation		126			28
Loss on derivative financial instruments		113			49
Other, net		(706	)		(1,356	)

Net cash provided by operating activities		44,738			28,511

Investing activities
Originations and purchases of finance receivables held for investment		(382,090	)		(308,123	)
Collections on finance receivables held for investment		157,123			97,652
Purchases of derivative financial instruments		(32	)		(47	)
Purchases of fixed assets		(673	)		(583	)

Net cash used in investing activities		(225,672	)		(211,101	)

Financing activities
(Repayments) advances on warehouse credit facility, net		(196,695	)		83,472
Issuance of term debt		596,652			229,765
Repayment of term debt		(167,191	)		(89,966	)
Debt issuance costs		(4,224	)		(1,828	)
Increase in restricted cash		(47,591	)		(59,562	)
Issuance of preferred units		420			15,000
Repurchase of preferred units		(5,000	)		—
Distributions		(142	)		—

Net cash provided by financing activities		176,229			176,881

(Decrease) increase in cash		(4,705	)		5,709
Cash:
Beginning of period		11,071			10,506

End of period	$	6,366		$	4,797

Supplemental cash flow information
Interest paid	$	13,333		$	7,580

See accompanying notes.

F-5

FC HoldCo LLC

Notes to Consolidated Interim Financial Statements

March 31, 2015

(Unaudited)

1. Organization and Nature of Business

FC HoldCo LLC was formed on August 10, 2010, as a Delaware limited liability company. CF Capital Holdings LLC was formed on March 7, 2011, as a Delaware limited liability company. Both FC HoldCo LLC and CF Capital Holdings LLC are majority owned by investment funds constituting part of the Perella Weinberg Partners’ Asset Based Value Strategy.

Pursuant to a Merger Agreement dated November 5, 2014, FC HoldCo LLC merged with and into CF Capital Holdings LLC effective January 1, 2015, with CF Capital Holdings LLC surviving under the new name FC HoldCo LLC (the Company).

The Company’s Indirect business originates retail installment sales contracts through franchised automobile dealerships in connection with their sale of new and used automobiles and light-duty trucks to consumers with limited credit histories, modest incomes or those who have experienced prior credit difficulties, generally referred to as nonprime borrowers. The Company’s Direct business originates receivables directly to nonprime borrowers obtained through the Company’s website and through referrals from other lenders and intermediaries.

2. Accounting Policies

Basis of Presentation

The January 1, 2015 merger was accounted for as a reorganization of entities under common control in a manner similar to a pooling of interest. Under the pooling of interest method, the assets and liabilities of the combining entities are carried forward at their carrying amounts, income and expenses are combined from the beginning of the period in which the combination occurred, and prior periods are presented as if the entities were combined as of the earliest period presented. The financial statements for the periods prior to January 1, 2015 are presented on a combined consolidated basis and the financial statements for the periods subsequent to December 31, 2014 are presented on a consolidated basis.

The consolidated financial statements as of March 31, 2015 include the accounts of FC HoldCo LLC and CF Capital Holdings LLC. FC HoldCo LLC includes its wholly owned subsidiaries, Flagship Credit Acceptance LLC and FC Funding LLC, both of which are Delaware limited liability companies. CF Capital Holdings LLC includes its wholly owned subsidiaries, CarFinance Capital LLC and CFC Funding LLC, both of which are Delaware limited liability companies. All intercompany transactions have been eliminated in the preparation of these consolidated financial statements.

Cash, Cash Equivalents, and Restricted Cash

Investments in highly liquid securities with original maturities of 90 days or less are included in cash and cash equivalents.

Cash pledged to support the Company’s warehouse credit and term debt facilities is deposited into restricted reserve accounts and recorded on the Company’s consolidated balance sheets as restricted cash. Restricted cash also includes amounts deposited into the Company’s lockbox and collections accounts totaling $83.5 million and $71.3 million at March 31, 2015 and December 31, 2014, respectively, as the majority of these funds may only be used for certain purposes, including payment of interest and servicing fees and repayment of debt.

F-6

FC HoldCo LLC

Notes to Consolidated Interim Financial Statements (continued)

2. Accounting Policies (continued)

Finance Receivables

Finance receivables are classified as held for investment and carried at amortized cost, net of an allowance for credit losses, as the Company has both the ability and intent to hold these receivables until maturity. Most of the Company’s finance receivables have been pledged as collateral under its warehouse credit facilities and securitized borrowing arrangements. Purchase premiums, discounts and origination costs are deferred and amortized as adjustments to financing income over the estimated life of the related receivables.

Certain of the Company’s finance receivables portfolios were purchased from third parties at either a discount or a premium, the aggregate purchase price of which represents the fair value of the portfolio purchased. For those portfolios purchased at a discount, the discount primarily represents a credit discount necessary such that the portfolio will have a market rate of return after contemplating the credit losses on the acquired loans. Losses incurred on the loans are recorded against the credit discount. Losses anticipated incremental to the credit discount are recorded against the allowance. A portion of the discount for purchased portfolios represents anticipated credit losses on the acquired finance receivables.

Interest is accrued when earned in accordance with the contractual terms of the finance receivables. The accrual of interest is discontinued once a finance receivable becomes more than 60 days past due. These loans are designated as nonaccrual loans. The Company generally recognizes interest income on nonaccrual loans on a cash basis when received. Interest accruals are resumed when the receivable becomes 60 days or less past due and when, in the judgment of management, the receivable is estimated to be fully collectible as to principal and interest.

Allowance for Credit Losses

The Company evaluates its finance receivables portfolio on a collective basis, due to it being comprised of smaller balance, homogeneous loans with similar general credit risk characteristics. The allowance for credit losses is maintained at a level considered adequate to cover probable losses in the portfolio of finance receivables held for investment that have been incurred as of the financial statement date. Provisions for credit losses are charged to operations in amounts sufficient to maintain the allowance at the required level. Probable losses are estimated based on quantitative analysis taking into account the following:

•

Historical loss experience

•

Probability of default based on various factors including FICO score, loan-to-value ratio, payment-to-income ratio and amount of down payment

•

Estimated value of underlying collateral

•

Underwriting and collection practices including any recent changes or trends

The Company performs detailed comparisons of its historical loss experience since formation, including timing of losses, to its projections to determine if any adjustments need to be made to its loss estimates. We update these loss estimates on a quarterly basis. We also consider qualitative factors in determining the adequacy of the allowance for credit losses. The qualitative factors we consider include trends in projected used car values and macroeconomic trends, including unemployment rates and energy prices. Management continually evaluates the credit quality of the Company’s finance receivables portfolio and conducts a quarterly review of the adequacy of the allowance for loan losses using these quantitative and qualitative factors.

F-7

FC HoldCo LLC

Notes to Consolidated Interim Financial Statements (continued)

2. Accounting Policies (continued)

For portfolio acquisitions, the discount between the portfolio principal balance and the initial purchase price primarily represents a credit discount necessary such that the portfolio will have a market rate of return, contemplating the credit discount. Actual credit losses incurred on the portfolio are recorded against the discount. The Company will establish an allowance for credit losses to the extent that management’s estimate of losses inherent in an individual purchased portfolio at the balance sheet date exceeds the remaining unaccreted discount.

Large groups of smaller balance homogeneous loans, such as the Company’s finance receivables portfolio, are collectively evaluated for impairment. Loans that have been modified and, based upon an evaluation, determined that a concession has been granted to a borrower experiencing financial difficulty are generally considered troubled debt restructurings and classified as impaired.

Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Accounting principles generally accepted in the United States (GAAP) establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Fair value hierarchy classifications are reviewed on a quarterly basis. Changes related to the observable inputs to a fair value measurement may result in a reclassification between hierarchy levels.

Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measurement. Therefore, even when market assumptions are not readily available, management’s own assumptions attempt to reflect those that market participants would use in pricing the asset or liability at the measurement date. During the quarters ended March 31, 2015 and 2014, there were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy for financial assets and financial liabilities, which have been recorded at fair value.

F-8

FC HoldCo LLC

Notes to Consolidated Interim Financial Statements (continued)

2. Accounting Policies (continued)

Fixed Assets

Fixed assets are carried at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:


Furniture and fixtures		3–5 years
Computer hardware and software		3–5 years
Telecommunications		3–5 years
Systems development		5 years
Leasehold improvements		Lesser of useful life or remaining lease term

Depreciation and amortization expense totaled $0.4 million and $0.2 million for the quarters ended March 31, 2015 and 2014, respectively. Repairs and maintenance expenses are charged to operations as incurred.

Derivative Financial Instruments

The Company has entered into interest rate cap and interest rate swap agreements related to its warehouse credit facilities in order to reduce the risk of an increase in interest rates. These derivative financial instruments are recorded at fair value based on Level 2 inputs. These derivative financial instruments have not been designated as hedges for accounting purposes and accordingly, any gains or losses are included in the Company’s results of operations.

Goodwill

Goodwill represents the excess of consideration paid over the fair value of net assets acquired in business combinations. As of March 31, 2015 and December 31, 2014, the Company had $0.5 million of goodwill, which was included in other assets. The Company reviews its goodwill for impairment annually and when events or changes in circumstances indicate the carrying amount may not be recoverable. No impairment expense was recorded during the quarters ended March 31, 2015 or 2014.

Income Taxes

The Company is treated as a partnership for tax purposes and any taxable income or loss generated is passed through and reported by the respective owners of the Company.

Use of Estimates in the Preparation of Consolidated Financial Statements

The preparation of the consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting year. Actual results could differ from those estimates.

F-9

FC HoldCo LLC

Notes to Consolidated Interim Financial Statements (continued)

3. Finance Receivables

Finance receivables are summarized as follows:


	March 31, 2015			December 31, 2014
	(Dollars in Thousands)
	(Unaudited)
Finance receivables held for investment	$	169,464		$	345,724
Finance receivables held for investment, pledged to securitized borrowing arrangements		1,921,794			1,557,172
Deferred premiums, discounts and origination costs, net		66,828			58,885

Finance receivables held for investment, gross		2,158,086			1,961,781
Allowance for credit losses		(79,522	)		(71,174	)

Finance receivables held for investment, net	$	2,078,564		$	1,890,607

At March 31, 2015, the Company’s finance receivables held for investment were to borrowers located primarily in Texas (20.6%), California (12.8%), Florida (10.6%), Arizona (7.4%) and Georgia (6.8%). Borrowers in each of the remaining states comprised less than 5% of total finance receivables held for investment.

Finance receivables are summarized as follows:


	March 31, 2015		December 31, 2014
	(Dollars in Thousands)
	(Unaudited)
Current	$	1,575,221	$	1,337,684
1–30 days		385,645		418,093
31–60 days		68,313		84,422
Greater than 60 days		39,173		42,726

Total	$	2,068,352	$	1,882,925

The delinquency aging includes all past-due finance receivables except those finance receivables currently in bankruptcy status totaling $23.1 million and $20.2 million at March 31, 2015 and December 31, 2014, respectively.

The gross principal balance of nonaccrual finance receivables totaled $52.9 million and $54.4 million at March 31, 2015

Large accelerated filer

Accelerated filer

Non-accelerated filer

x (Do not check if a smaller reporting company)

Smaller reporting company

Flagship Credit Corp. S-1/A