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Community Choice Financial was poised in early May to go public, however, it claims the volatility in the financial markets made it cancel its plans. It seems that was a great idea, considering the hit the financial markets took on Friday stemming from JPMorgan Chase & Co (NYSE:JPM) revealing that it was still active in the derivative market that led to the financial collapse of the banking system in 2008.

Community Choice Financial, whose products include payday loans, applied with the Securities and Exchange Commission last year to trade its shares on the NASDAQ. The goal at the time was to raise $230 million to provide much needed cash for its business, which was struggling to keep up with its growth.

According to MarketWatch, the company's profits dropped 46% for the six months ended June 30. At the same time, its expenses had increased 25%, the online news site reported.

So it's clear that the IPO would have raised much-needed cash as it continues to service the growing industry sometimes referred to as alternative banking.

It settled on May 8 as the date for the IPO, but as that date approached, Community Choice Financial saw that the volatility in the financial markets was too strong to support the price range of $13 to $15 a share that it had set. In response, it reduced the price to $12. Even with that reduction, the company worried that the demand for financial stocks would still not be strong enough, so it decided to postpone the IPO.

A few days later, the company quashed the IPO altogether. It released a statement saying that it was voluntarily requesting that it be delisted from the NASDAQ, where it would have traded under the symbol CCFI. About 11 million shares had been planned to be sold.

If Community Choice Financial had come to market with this deal, it would have been significant. The company is a part of a growing industry that is capitalizing on serving the so-called unbanked and underbanked. These consumers often have poor or bad credit, and are unable to obtain financial services through large, traditional banks.

Community Choice Financial, and companies like it, provide short-term consumer loans, check cashing, prepaid debit cards, money transfers, bill payments, and money orders. These companies tout themselves as being important because they fill a void left by big banks that make it nearly impossible for a large and growing number of consumers to conduct their basic financial business.

These companies have come under fire because of the exorbitant amount of fees they charge their customers for providing their services. The payday lending industry has especially come under fire for what it charges. A customer that borrows $100 could end up owing $130 when the loan comes due, typically two weeks later. That could amount to an annual interest rate of 650%.

Sure, this is steep, but to the person who can't pay their phone bill, the amount is often worth it. Unfortunately, as the economy tanked, more people have been put in the harrowing position of living from paycheck to paycheck. Some fall victim to scams that only aggravate the situation. States have taken steps to ban companies like Community Choice Financial to protect consumers. Also, the Federal Trade Commission has even sued companies over their practices, and this includes Community Choice Financial.

It remains to be seen if Community Choice Financial will attempt to go public again. Considering how this industry is growing by leaps and bounds, it will not be a surprise if more such companies attempt to go public.

Source: Community Choice Financial Cancels IPO