Dollar Financial Corporation (NASDAQ: DLLR) provides check cashing services, money transfer and personal loans to those the company describes as "under-banked consumers." (Is that code for illegal aliens who do not have the paperwork necessary to open a checking account and need to send money back home?) Whatever its customer base, Dollar Financial posted record revenue in 4Q 2007. These numbers would be much more impressive if at least some of the increase in revenue came due to organic growth. All of Dollar Financial's growth seems to come from acquisitions, which the company finances through debt spending. But there is a limit to how big a debt load the company can take on and just how large a loan loss percentage it can withstand. Currently the consolidated loan loss stands at 21%.

Dollar Financial operates in Canada, United Kingdom and the United States. International revenues increased 39%, which helped to offset an 8% drop in US operations. Total revenues in 4Q were $109 million, and FY 2007 revenues were $400 million. Diluted EPS for 4Q were $0.42, more than 4X EPS of $0.10 in 4Q 2006. Dollar Financial acquired 115 locations during FY 2007 and opened 52 new stores. The company is presently completing the acquisition of 45 locations in the Midwest and Hawaii. In addition to more locations, Dollar Financial is also offering new products to its customers, including the test launch of an Internet payday loan in California. If the loan loss rate is low enough in California, CEO Jeff Weiss stated the company will expand the geographic market for this product.

That's the positive spin on Dollar Financial and its business model. The negative side is that companies like Dollar Financial have recently garnered lots of negative publicity for the outrageously high fees "under-banked consumers" must pay to cash checks and borrow against their next paycheck. Recently, the US Congress investigated companies offering exorbitant interest-rate payday loans to members of the US military. Provincial governments in Canada have opened similar investigations and are moving to cap the rates and fees companies may charge for payday loans.