1216752--11/30/2010--PIONEER_FINANCIAL_SERVICES

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{regulation, change, law}

{loan, real, estate}

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{capital, credit, financial}

{personnel, key, retain}

{debt, indebtedness, cash}

{cost, contract, operation}

Financial reform legislation recently enacted by Congress will, among other things, eliminate the Office of Thrift Supervision, increase capital requirements, create a new Consumer Financial Protection Bureau and result in many new laws and regulations that will likely increase our costs of operations. We may experience limited availability of financing and variation in our funding costs, which may materially impact our results of operations, profits and ability to grow. We are dependent on our key officers and the loss of services of any member of our team may have an adverse effect on our operations. MBD may modify underwriting and servicing standards and does not have to lend to the traditional customers who meet our business model and lending guidelines, which may materially adversely affect our business operations, cash flow, results of operations, financial condition and profitability. MCB and MCFC have each entered into a separate confidential Memorandum of Understanding (each, a MOU and together, the MOUs ) with the OTS, which such MOUs contain requirements that MCB and MCFC may not be able to continue to satisfy. We, MBD and our retail merchants are subject to extensive laws, regulations and governmental supervision by federal and state agencies in the conduct of our business operations, which regulations are costly, time consuming and intended to protect depositors; failure to comply with regulatory policies and rules could result in further restrictions on our business and reputation. As long as the investment notes are outstanding, we are subject to federal and state securities laws and regulations and failure to comply with or changes in such laws and regulations may adversely affect us or increase substantially the disclosure required by us. A significant portion of MBD s loan customers are active-duty military or federal government employees who could be instructed not to do business with MBD or us, or our access to the Government Allotment System could be denied. If a customer leaves the military prior to repaying the military loan, there is an increased risk that loan will not be repaid. We have limited restrictions on the payments we may make to our parent, MCFC. Our ability to disperse our working capital could reduce our profitability and diminish our ability to pay interest and principal on the investment notes. We face risks of interest rate fluctuations and if we are not able to adequately protect our portfolio from changes in interest rates, our results of operations could be adversely affected and impair our ability to pay interest and principal on the investment notes. We purchase loans that were made exclusively to the military market, which traditionally has higher delinquencies than customers in other markets, resulting in higher charge-offs, a reduction in profitability and impairment of our ability to pay interest and principal on the investment notes. If a large number of borrowers are wounded in combat, our profits may be adversely affected.

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1216752--11/30/2010--PIONEER_FINANCIAL_SERVICES_INC