10q10k10q10k.net

What changed in WORLD ACCEPTANCE CORP's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of WORLD ACCEPTANCE CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+203 added−213 removedSource: 10-K (2024-05-23) vs 10-K (2023-06-01)

Top changes in WORLD ACCEPTANCE CORP's 2024 10-K

203 paragraphs added · 213 removed · 168 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

52 edited+6 added−8 removed71 unchanged
Biggest changeIn many cases the existing customer’s past performance and established creditworthiness with the Company qualifies that customer for a larger loan. For fiscal 2023, 2022, and 2021, the percentages of the Company's loan originations that were refinancings of existing loans were 71.4%, 63.9%, and 69.2%, respectively.
Biggest changeFor fiscal 2024, 2023, and 2022, the percentages of the Company's loan originations that were refinancings of existing loans were 67.3%, 71.4%, and 63.9%, respectively. The Company allows refinancing of delinquent loans on a case-by-case basis for those customers who otherwise satisfy the Company's credit standards.
The following table sets forth the composition of the Company's gross loans receivable by state at March 31 of each year from 2014 through 2023: At March 31, State 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Alabama 6 % 7 % 6 % 5 % 5 % 5 % 4 % 6 % 5 % 4 % Georgia 13 13 13 13 13 14 15 13 13 13 Idaho (1) 1 1 1 1 1 — — — — — Illinois 10 10 8 8 7 7 7 7 7 8 Indiana 2 3 2 2 2 2 2 1 1 1 Kentucky 6 6 7 8 8 9 10 10 10 9 Louisiana 4 3 3 3 3 2 2 2 2 2 Mississippi (2) 2 2 2 1 1 1 1 — — — Missouri 7 7 8 8 7 7 7 8 8 7 New Mexico 4 2 2 2 2 2 2 2 2 2 Oklahoma 6 6 6 6 7 7 7 8 8 7 South Carolina 8 8 10 10 9 10 11 10 11 12 Tennessee 9 10 11 11 12 13 13 13 13 13 Texas 20 20 19 19 21 19 18 19 19 21 Utah (3) 1 1 1 1 — — — — — — Wisconsin 1 1 1 2 2 2 1 1 1 1 Total 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % _______________________________________________________ (1) The Company commenced operations in Idaho in October 2014.
The following table sets forth the composition of the Company's gross loans receivable by state at March 31 of each year from 2015 through 2024: At March 31, State 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Alabama 6 % 6 % 7 % 6 % 5 % 5 % 5 % 4 % 6 % 5 % Georgia 12 13 13 13 13 13 14 15 13 13 Idaho (1) 1 1 1 1 1 1 — — — — Illinois 10 10 10 8 8 7 7 7 7 7 Indiana 3 2 3 2 2 2 2 2 1 1 Kentucky 6 6 6 7 8 8 9 10 10 10 Louisiana 4 4 3 3 3 3 2 2 2 2 Mississippi 2 2 2 2 1 1 1 1 — — Missouri 7 7 7 8 8 7 7 7 8 8 New Mexico 5 4 2 2 2 2 2 2 2 2 Oklahoma 6 6 6 6 6 7 7 7 8 8 South Carolina 7 8 8 10 10 9 10 11 10 11 Tennessee 9 9 10 11 11 12 13 13 13 13 Texas 20 20 20 19 19 21 19 18 19 19 Utah (2) 1 1 1 1 1 — — — — — Wisconsin 1 1 1 1 2 2 2 1 1 1 Total 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % _______________________________________________________ (1) The Company commenced operations in Idaho in October 2014.
This allows for more training opportunities to be available to all employees throughout the course of their career with the Company. Advertising. The Company actively advertises through direct mail, digital platforms and by email and SMS/text, targeting both its present and former customers and potential customers who have used other sources of consumer credit.
This allows for more training opportunities to be available to all employees throughout the course of their career with the Company. Advertising. The Company actively advertises through direct mail, digital platforms, email and SMS/text, targeting both its present and former customers and potential customers who have used other sources of consumer credit.
In addition to the general promotion of its loans for last-minute needs, back-to-school needs and other uses, the Company advertises extensively during the October through December holiday season and in connection with new branch openings. The Company believes its advertising contributes significantly to its ability to compete effectively with other providers of small-loan consumer credit.
In addition to the general promotion of its loans for last-minute needs, back-to-school needs and other uses, the Company advertises extensively during the October through December holiday season and in connection with new branch openings. The Company believes its advertising contributes to its ability to compete effectively with other providers of small-loan consumer credit.
The Company does not allow the amount of the new loan to exceed the original amount of the existing loan. The Company believes that refinancing delinquent loans for certain customers who have made periodic payments allows the Company to increase its average loans outstanding and its interest, fees and other income without experiencing a significant increase in loan losses.
The Company does not allow the amount of the new loan to exceed the original amount of the delinquent loan. The Company believes that refinancing delinquent loans for certain customers who have made periodic payments allows the Company to increase its average loans outstanding and its interest, fees and other income without experiencing a significant increase in loan losses.
We provide competitive pay, as well as a wide array of benefits including the following: • Healthcare benefits, including medical, dental and vision, and flexible spending accounts • A 401(k) Plan (with an employer matching contribution) • Company-paid basic life insurance and long-term and short-term disability • Vacation, sick and holiday paid-time off, as well as volunteer paid time off and paid parental leave • Time off donation program for Team Members experiencing medical emergencies • Financial assistance program for Team Members impacted by natural disasters Training and Development.
We provide competitive pay, as well as a wide array of benefits including the following: • Healthcare benefits, including medical, dental and vision, and flexible spending accounts • A 401(k) Plan (with an employer matching contribution) • Company-paid basic life insurance and long-term and short-term disability • Vacation, sick and holiday paid-time off, as well as volunteer paid time off and paid parental leave • Time off donation program for Team Members experiencing medical emergencies • Financial assistance program for Team Members impacted by natural disasters • Dependent Scholarship Program Training and Development.
The table below shows the types of insurance and ancillary products the Company sells by state as of March 31, 2023: Credit Life Credit Accident and Health Credit Property and Auto Unemployment Accidental Death & Dismemberment Non-file Automobile Club Membership Alabama (1) X X X X X Georgia X X X X X X Idaho X X X X X Illinois Indiana X X X X X X X Kentucky X X X X X X Louisiana X X X X X X Mississippi X X X X Missouri X X X X New Mexico Oklahoma (1) X X X X X South Carolina X X X X X X Tennessee (1) X X X X X Texas (1) X X X X X Utah X X X X X X Wisconsin X _______________________________________________________ (1) Credit insurance is offered for certain loans.
The table below shows the types of insurance and ancillary products the Company sells by state as of March 31, 2024: Credit Life Credit Accident and Health Credit Property and Auto Unemployment Accidental Death & Dismemberment Non-file Automobile Club Membership Alabama (1) X X X X X Georgia X X X X X X Idaho (1) X X X X X Illinois Indiana X X X X X X Kentucky X X X X X X Louisiana X X X X X X Mississippi X X X X Missouri (1) X X X X New Mexico Oklahoma (1) X X X X X South Carolina X X X X X X Tennessee (1) X X X X X Texas (1) X X X X X Utah (1) X X X X X X Wisconsin X _______________________________________________________ (1) Credit insurance is offered for certain loans.
Available Information . The Company maintains an Internet website, “www.LoansByWorld.com,” where interested persons will be able to access free of charge, among other information, the Company’s annual reports on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on Form 8-K as well as amendments to these filings via a link to a third-party website.
The Company maintains an Internet website, “www.LoansByWorld.com,” where interested persons will be able to access free of charge, among other information, the Company’s annual reports on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on Form 8-K, as well as any amendments to these filings via a link to a third-party website.
Any federal legislative or regulatory action that severely restricts or prohibits the provision of small-loan consumer credit and similar services on terms substantially similar to those we currently provide would, if enacted, have a material, adverse impact on our business, prospects, results of operations and financial condition.
Any federal legislative or regulatory action that severely restricts or prohibits the provision of small-loan consumer credit, similar services and related products on terms substantially similar to those we currently provide would, if enacted, have a material, adverse impact on our business, prospects, results of operations and financial condition.
Credit life insurance provides for the payment in full of the borrower's credit obligation to the lender in the event of death. The Company offers credit insurance for all loans originated in Alabama, Idaho, Indiana, Kentucky, New Mexico, Oklahoma, South Carolina, Tennessee, Texas and Utah, and on a more limited basis in Georgia, Louisiana, Mississippi, and Missouri.
Credit life insurance provides for the payment in full of the borrower's credit obligation to the lender in the event of death. The Company offers credit insurance for all loans originated in Georgia, Indiana, Kentucky, Louisiana, Mississippi and South Carolina, and on a more limited basis in Alabama, Idaho, Missouri, Oklahoma, Tennessee, Texas and Utah.
In fiscal 2024, the Company may open or acquire new branches in its existing market areas or commence operations in new states where it believes demographic profiles and state regulations are attractive. The Company may merge other branches on a case-by-case basis based on profitability or other factors.
In fiscal 2025, the Company may open or acquire new branches in its existing market areas or commence operations in new states where it believes demographic profiles and state regulations are attractive. The Company may merge other branches on a case-by-case basis based on profitability or other factors.
Scott McIntyre (46) Senior Vice President, Accounting • Senior Vice President of Accounting since October 2018 • Vice President of Accounting-US from June 2013 to October 2018 • Controller-US from June 2011 to June 2013. Government Regulation Small-loan consumer finance companies are subject to extensive regulation, supervision, and licensing under various federal and state statutes, ordinances, and regulations.
Scott McIntyre (47) Senior Vice President, Accounting • Senior Vice President of Accounting since October 2018 • Vice President of Accounting-US from June 2013 to October 2018 • Controller-US from June 2011 to June 2013. Government Regulation Small-loan consumer finance companies are subject to extensive regulation, supervision, and licensing under various federal and state statutes, ordinances, and regulations.
The Company's ability to continue existing operations and expand its operations in existing or new states is dependent upon, among other things, laws and regulations that permit the Company to operate its 2 Table of Contents business profitably and its ability to obtain necessary regulatory approvals and licenses.
The Company's ability to continue existing operations and expand its operations in existing or new states is dependent upon, among other things, laws and regulations that permit the Company to operate its 4 Table of Contents business profitably and its ability to obtain necessary regulatory approvals and licenses.
The Company, as an agent for an unaffiliated insurance company, markets and sells credit life, credit accident and health, credit property and auto, unemployment, and accidental death and dismemberment insurance in connection with its loans in selected states where the sale of such insurance is permitted by law.
Insurance Related Operations. The Company, as an agent for an unaffiliated insurance company, markets and sells credit life, credit accident and health, credit property and auto, unemployment, and accidental death and dismemberment insurance in connection with its loans in selected states where the sale of such insurance is permitted by law.
Chad Prashad (42) President and Chief Executive Officer • President and Chief Executive Officer since June 2018 • Senior Vice President, Chief Strategy & Analytics Officer from February 2018 to June 2018 • Vice President of Analytics from June 2014 to February 2018 • Senior Director of Strategy Development for Resurgent Capital Services (a consumer debt managing and servicing company) from 2013 to June 2014 • Director of Legal Strategy for Resurgent Capital Services from 2009 to 2013 John L.
Chad Prashad (43) President and Chief Executive Officer • President and Chief Executive Officer since June 2018 • Senior Vice President, Chief Strategy & Analytics Officer from February 2018 to June 2018 • Vice President of Analytics from June 2014 to February 2018 • Senior Director of Strategy Development for Resurgent Capital Services (a consumer debt managing and servicing company) from 2013 to June 2014 • Director of Legal Strategy for Resurgent Capital Services from 2009 to 2013 John L.
During fiscal 2023, our human capital efforts were focused on accelerating the transformation of our technology for workforce management through investments in upgraded systems and processes, and continuing to increase our agility to meet the quickly changing needs of the business.
During fiscal 2024, our human capital efforts were focused on accelerating the transformation of our technology for workforce management through investments in upgraded systems and processes, and continuing to increase our agility to meet the quickly changing needs of the business.
Umstetter (43) Senior Vice President, General Counsel, Chief Compliance Officer and Secretary • Senior Vice President, Secretary and General Counsel since August 2018 • General Counsel and Chief Compliance Officer for Shellpoint Mortgage Servicing from December 2015 to August 2018 • General Counsel for Global Lending Services from May 2015 to December 2015; Managing Counsel for Resurgent Capital Services, June 2009 to May 2015.
Umstetter (44) Senior Vice President, General Counsel, Chief Compliance Officer and Secretary • Senior Vice President, Secretary and General Counsel since August 2018 • General Counsel and Chief Compliance Officer for Shellpoint Mortgage Servicing from December 2015 to August 2018 • General Counsel for Global Lending Services from May 2015 to December 2015; Managing Counsel for Resurgent Capital Services, June 2009 to May 2015.
See Part I, Item 1A, “Risk Factors". 11 Table of Contents Various legislative proposals addressing consumer credit transactions have been passed in recent years or are currently pending in the U.S. Congress. Congressional members continue to receive pressure from consumer activists and other industry opposition groups to adopt legislation to address various aspects of consumer credit transactions.
See Part I, Item 1A, “Risk Factors". Various legislative proposals addressing consumer credit transactions have been passed in recent years or are currently pending in the U.S. Congress. Congressional members continue to receive pressure from consumer activists and other industry opposition groups to adopt legislation to address various aspects of consumer credit transactions.
Clinton Dyer (50) Executive Vice President and Chief Branch Operations Officer • Executive Vice President and Chief Branch Operations Officer since February 2018 • Executive Vice President of Branch Operations from September 2016 to February 2018 • Senior Vice President, Southeastern Division from November 2015 to September 2016 • Senior Vice President, Central Division from June 2005 to November 2015; Vice President, Operations –Tennessee and Kentucky from April 2002 to June 2005.
Clinton Dyer (51) Executive Vice President and Chief Branch Operations Officer • Executive Vice President and Chief Branch Operations Officer since February 2018 • Executive Vice President of Branch Operations from September 2016 to February 2018 • Senior Vice President, Southeastern Division from November 2015 to September 2016 • Senior Vice President, Central Division from June 2005 to November 2015; Vice President, Operations –Tennessee and Kentucky from April 2002 to June 2005.
We value feedback from our team and participate in an annual engagement survey that resulted in being named by Energage as a Top Workplaces USA winner in 2023, 2022, and 2021.
We value feedback from our Team Members and participate in an annual engagement survey that resulted in being named by Energage as a Top Workplaces USA winner in 2024, 2023, 2022, and 2021.
Human Capital Resources Our Mission. At World Acceptance Corporation, our employees (who we call our “Team Members”) create possibilities by embracing our mission to partner with customers to unlock their financial good. Creating a culture of opportunity for our Team Members is key to supporting this mission. Team Members.
Human Capital Resources Our Mission. At World Acceptance Corporation, our employees (who we call our “Team Members”) create possibilities by embracing our mission to partner with customers to unlock their financial good. Creating a culture of opportunity for our Team Members is key to supporting this mission. 9 Table of Contents Team Members.
See Part I, Item 1A, “Risk Factors” - Federal legislative or regulatory proposals, initiatives, actions or changes that are adverse to our operations or result in adverse regulatory proceedings, or our failure to comply with existing or future federal laws and regulations, could force us to modify, suspend, or cease part or all of our nationwide operations,” for further information regarding the potential impact of adverse legislative and regulatory changes.
See Part I, Item 1A, “Risk Factors” - "Federal legislative or regulatory proposals, initiatives, actions or changes that are adverse to our operations or result in adverse regulatory proceedings, or our failure to comply with existing or future federal laws and regulations, could force us to modify, suspend, or cease part or all of our nationwide operations,” for further information regarding the potential impact of adverse legislative and regulatory changes. 13 Table of Contents Available Information .
Advertising expenses as a percent of revenue were approximately 1.0%, 3.1%, and 3.3% in fiscal 2023, 2022, and 2021, respectively. 7 Table of Contents Competition . The small-loan consumer finance industry is highly fragmented, with numerous competitors. The majority of the Company's competitors are independent operators with generally less than 100 branches.
Advertising expenses as a percent of revenue were approximately 1.7%, 1.0%, and 3.1% in fiscal 2024, 2023, and 2022, respectively. Competition . The small-loan consumer finance industry is highly fragmented, with numerous competitors. The majority of the Company's competitors are independent operators with generally less than 100 branches.
Federal laws also prohibit misleading advertising, protect against discriminatory lending practices and prohibit unfair, deceptive, and abusive credit practices. Branch Expansion and Consolidation. As of March 31, 2023, the Company had 1,073 branches in 16 states, with over 100 branches located in Texas and Georgia.
Federal laws also prohibit misleading advertising, protect against discriminatory lending practices and prohibit unfair, deceptive, and abusive credit practices. Branch Expansion and Consolidation. As of March 31, 2024, the Company had 1,048 branches in 16 states, with over 100 branches located in Texas and Georgia.
A Louisiana statute prohibits any person from acquiring control of 25% or more of the shares of stock of a licensed consumer lender, such as the Company, 10 Table of Contents without first obtaining a license as a consumer lender.
A Louisiana statute prohibits any person from acquiring control of 25% or more of the shares of stock of a licensed consumer lender, such as the Company, without first obtaining a license as a consumer lender.
These refinancings also provide a resolution to temporary financial setbacks for these borrowers and sustain their credit rating. Refinancings of delinquent loans represented 1.4%, 1.1%, and 1.5% of the Company’s loan volume in fiscal 2023, 2022, and 2021, respectively.
These refinancings also provide a resolution to temporary financial setbacks for these borrowers and sustain their credit rating. Refinancings of delinquent loans represented 1.3%, 1.4%, and 1.1% of the Company’s loan volume in fiscal 2024, 2023, and 2022, respectively.
We believe the development of our Team Members is key to our future success and are focused on delivering programs designed to increase our internal talent pools at all levels within the organization.
We believe the development of our Team Members is key to our future success and are focused on delivering programs designed to increase our internal talent pools at all levels within the organization. Information about our Executive Officers .
Jason E. Childers (48) Senior Vice President, Information Technology • Senior Vice President, Information Technology since October 2018 • Vice President of IT Strategic Solutions from April 2016 to October 2018 • Partner and Head of IT at Sabal Financial Group, LP from March 2009 until April 2016.
Childers (49) Senior Vice President, Information Technology • Senior Vice President, Information Technology since October 2018 • Vice President of IT Strategic Solutions from April 2016 to October 2018 • Partner and Head of IT at Sabal Financial Group, LP from March 2009 until April 2016.
Product Offerings Installment Loans. We primarily offer pre-computed and interest bearing consumer installment loans with interest and fee income from such loans accounting for 82.4%, 83.0%, and 85.4% of our total revenues in fiscal years 2023, 2022, and 2021, respectively.
Product Offerings Installment Loans. We primarily offer pre-computed and interest bearing consumer installment loans with interest and fee income from such loans accounting for 81.7%, 82.4%, and 83.0% of our total revenues in fiscal years 2024, 2023, and 2022, respectively.
Although these laws and regulations remained substantially unchanged for many years, over the last several years, the laws and regulations directly affecting our lending activities have been under review and are subject to change as a result of various developments and changes in economic conditions, the make-up of the executive and legislative branches of government, and the political and media focus on issues of consumer and borrower protection.
Over the last several years, the laws and regulations directly affecting our lending activities have been under review and are subject to change as a result of various developments and changes in economic conditions, the make-up of the executive and legislative branches of government, and the political and media focus on issues of consumer and borrower protection.
(43) Executive Vice President, Chief Financial and Strategy Officer, and Treasurer • Executive Vice President, Chief Financial and Strategy Officer and Treasurer since October 2018 • Senior Vice President, Chief Financial Officer and Treasurer from November 2015 to October 2018 • Vice President, Chief Financial Officer and Treasurer from December 2013 to November 2015 • Director of Finance - Corporate and Investment Banking Division of Bank of Tokyo-Mitsubishi UFJ in 2013 • Senior Manager of PricewaterhouseCoopers from 2011 to 2013; Manager of PricewaterhouseCoopers from 2008 to 2011. 9 Table of Contents D.
(44) Executive Vice President, Chief Financial and Strategy Officer, and Treasurer • Executive Vice President, Chief Financial and Strategy Officer and Treasurer since October 2018 • Senior Vice President, Chief Financial Officer and Treasurer from November 2015 to October 2018 • Vice President, Chief Financial Officer and Treasurer from December 2013 to November 2015 • Director of Finance - Corporate and Investment Banking Division of Bank of Tokyo-Mitsubishi UFJ in 2013 • Senior Manager of PricewaterhouseCoopers from 2011 to 2013; Manager of PricewaterhouseCoopers from 2008 to 2011.
The extent of such regulation varies by product and by state, but relate primarily to the following: licensing; conduct of business, including marketing and sales practices; periodic financial and market conduct examination of the affairs of insurers; form and content of required financial reports; standards of solvency; limitations on the payment of dividends and other affiliate transactions; types of products offered; approval of policy forms and premium rates; formulas used to calculate any unearned premium refund due to an insured customer; permissible investments; deposits of securities for the benefit of policyholders; reserve requirements for unearned premiums, losses, and other purposes; and claims processing.
The extent of such regulation varies by product and by state, but relate primarily to the following: licensing; conduct of business, including marketing and sales practices; periodic financial and market conduct examination of the affairs of insurers; form and content of required financial reports; standards of solvency; limitations on the payment of dividends and other affiliate transactions; types of products offered; approval of policy forms and premium rates; formulas used to calculate any unearned premium refund due to an insured customer; permissible investments; deposits of securities for the benefit of policyholders; reserve requirements for unearned premiums, losses, and other purposes; and claims processing. 12 Table of Contents Consumer finance companies are affected by changes in state and federal statutes and regulations.
The Company offers traditional installment loans generally between $500 and $6,000, with the average loan origination being $2,359 in fiscal 2023. The Company operates 1,073 branches in Alabama, Georgia, Idaho, Illinois, Indiana, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, South Carolina, Texas, Tennessee, Utah, and Wisconsin as of March 31, 2023.
The Company offers traditional installment loans generally between $350 and $6,000, with the average loan origination being $2,118 in fiscal 2024. The Company operates 1,048 branches in Alabama, Georgia, Idaho, Illinois, Indiana, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, South Carolina, Texas, Tennessee, Utah, and Wisconsin as of March 31, 2024.
Our loans are payable in fully-amortizing monthly installments with terms generally from 7 to 27 months and are prepayable at any time without penalty.
Our loans are payable in fully-amortizing monthly installments with terms generally from 6 to 14 months and are prepayable at any time without penalty.
Approximately 16.9%, 15.0%, and 14.7% of the Company's loans were generated through the origination of new loans to previous customers in fiscal 2023, 2022, and 2021, respectively. Collection Operations . To reduce late payment risk, local branch staff encourage customers to inform the Company in advance of expected payment problems.
Approximately 18.8%, 16.9%, and 15.0% of the Company's loans were generated through the origination of new loans to previous customers in fiscal 2024, 2023, and 2022, respectively. 8 Table of Contents Collection Operations . To reduce late payment risk, local branch staff encourage customers to inform the Company in advance of expected payment problems.
Lindsay Caulder (47) Senior Vice President, Human Resources • Senior Vice President, Human Resources since October 2018 • Vice President, Human Resources from February 2016 to October 2018 • Divisional Vice President - Human Resources of Family Dollar Corporation, a nationwide variety retail chain, from 2012 to 2016 • Director - Learning and Talent Acquisition of Family Dollar Corporation from 2009-2012.
Lindsay Caulder (48) Senior Vice President, Human Resources • Senior Vice President, Human Resources since October 2018 • Vice President, Human Resources from February 2016 to October 2018 • Divisional Vice President - Human Resources of Family Dollar Corporation, a nationwide variety retail chain, from 2012 to 2016 • Director - Learning and Talent Acquisition of Family Dollar Corporation from 2009-2012. 11 Table of Contents Jason E.
The following table sets forth information about our loan products for fiscal 2023: Minimum Origination (1) Maximum Origination (1) Minimum Term (Months) Maximum Term (Months) Small loans $ 500 $ 2,450 5 31 Large loans $ 2,500 $ 33,450 10 60 _______________________________________________________ (1) Gross loan net of finance charges. Specific allowable interest, fees, and other charges vary by state.
The following table sets forth information about our loan products for fiscal 2024: Minimum Origination (1) Maximum Origination (1) Minimum Term (Months) Maximum Term (Months) Small loans $ 250 $ 2,450 5 30 Large loans $ 2,500 $ 32,400 9 60 _______________________________________________________ (1) Gross loan net of finance charges. Specific allowable interest, fees, and other charges vary by state.
During fiscal 2023, the Company opened 2 new branches and merged 96 branches into other existing branches due to their inability to generate sufficient returns or for efficiency reasons.
During fiscal 2024, the Company opened 3 new branches and merged 28 branches into other existing branches due to their inability to generate sufficient returns or for efficiency reasons.
The following table sets forth information about our tax advance loan product for fiscal 2023: Minimum Origination Maximum Origination Minimum Term (Months) Maximum Term (Months) Tax advance loans $ 500 $ 5,000 8 8 Loan Receivables.
The following table sets forth information about our tax advance loan product for fiscal 2024: Minimum Origination Maximum Origination Minimum Term (Months) Maximum Term (Months) Tax advance loans $ 500 $ 7,000 8 35 6 Table of Contents Loan Receivables.
The names and ages, positions, terms of office and periods of service of each of the Company's executive officers (and other business experience for executive officers who have served as such for less than five years) are set forth below.
The names and ages, positions, terms of office and periods of service of each of the Company's executive officers (and other business experience for executive officers who have served as such for less than five years) are set forth below. 10 Table of Contents Name and Age Position Period of Service as Executive Officer and Pre-Executive Officer Experience (if an Executive Officer for Less Than Five Years) R.
As of March 31, 2023, we employed 3,075 full and part-time employees across our sixteen-state footprint, approximately 287 of whom were corporate Team Members located in our main corporate office in Greenville, South Carolina and approximately 2,788 of whom were branch-based Team Members located in 16 states throughout the United States.
As of March 31, 2024, we employed 2,872 full and part-time employees, approximately 272 of whom were corporate Team Members located in our main corporate office in Greenville, South Carolina and approximately 2,600 of whom were branch-based Team Members located in 16 states throughout the United States.
The Company is paid a commission on each membership sold, but has no 4 Table of Contents responsibility for administering the club, paying benefits or providing services to club members. The Company primarily sells automobile club memberships to borrowers. Tax Preparation Services and Advances. The Company also offers income tax return preparation and electronic filing services.
Club memberships entitle members to automobile breakdown coverage, towing reimbursement and related services. The Company is paid a commission on each membership sold, but has no responsibility for administering the club, paying benefits or providing services to club members. The Company primarily sells automobile club memberships to borrowers. Tax Preparation Services and Advances.
In determining whether to refinance existing loans, the Company typically requires loans to be current on a recency basis, and repeat customers are generally required to complete a new credit application if they have not completed one within the prior year. 6 Table of Contents A refinancing represents a new loan transaction with a present customer in which a portion of the new loan proceeds is used to repay the balance of an existing loan and the remaining portion is advanced to the customer.
In determining whether to refinance existing loans, the Company typically requires loans to be current on a recency basis, and repeat customers are generally required to complete a new credit application if they have not completed one within the prior year.
Consumer finance companies are affected by changes in state and federal statutes and regulations. The Company actively participates in trade associations and in lobbying efforts in the states in which it operates and at the federal level.
The Company actively participates in trade associations and in lobbying efforts in the states in which it operates and at the federal level.
In fiscal 2023, the captive insurance subsidiary reinsured approximately 11.1% of the credit insurance sold by the Company and contributed approximately $3.1 million to the Company's total revenue.
In fiscal 2024, the captive insurance subsidiary reinsured 5 Table of Contents approximately 12.6% of the credit insurance sold by the Company and contributed approximately $2.9 million to the Company's total revenue.
As of March 31, 2023, our Team Members had the following gender, race and ethnicity demographics: Gender - All Team Members Female 85.94% Male 13.96% Undeclared 0.10% Race/Ethnicity - All Team Members White 55.76% Hispanic or Latino 22.27% Black or African American 16.31% 8 Table of Contents Other Race/Ethnicity 4.65% Not provided 1.01% Total Rewards.
As of March 31, 2024, our Team Members had the following gender, race and ethnicity demographics: Gender - All Team Members Female 85.38% Male 14.59% Undeclared 0.03% Race/Ethnicity - All Team Members White 55.27% Hispanic or Latino 20.71% Black or African American 16.08% Other Race/Ethnicity 4.77% Not provided 3.17% Total Rewards.
In addition, our tax customers are eligible to receive an interest and fee-free tax advance loan which is generally a percentage of the anticipated tax refund amount. The Company believes that this is a beneficial service for its existing customer base as well as non-loan customers, and it plans to continue to promote this program.
The Company believes that this is a beneficial service for its existing customer base as well as non-loan customers, and it plans to continue to promote this program.
The Company also offers automobile club memberships to its borrowers in Alabama, Georgia, Idaho, Indiana, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, Tennessee, Texas, South Carolina, Utah and Wisconsin, as an agent for an unaffiliated automobile club. Club memberships entitle members to automobile breakdown coverage, towing reimbursement and related services.
The Company does not profit from the purchase of non-file other than through an offset to its charge-offs. Automobile Club Memberships. The Company also offers automobile club memberships to its borrowers in Alabama, Georgia, Idaho, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Oklahoma, Tennessee, Texas, South Carolina, Utah and Wisconsin, as an agent for an unaffiliated automobile club.
The Company also has a centralized collections team that primarily focuses on customers who have become more than 90 days past due on a recency basis.
Delinquent customers are promptly contacted following any payment due date through phone calls, letters, emails, or texts until payment is received or some other resolution is reached. The Company also has a centralized collections team that primarily focuses on customers who have become more than 90 days past due on a recency basis.
(2) The Company commenced operations in Mississippi in September 2013.
(2) The Company commenced operations in Utah in October 2018.
This program is provided in all but a few of the Company’s branches. The Company prepared approximately 75,000, 81,000 and 77,000 returns in fiscal years 2023, 2022, and 2021, respectively. Net revenue generated by the Company from this program during fiscal 2023, 2022, and 2021 amounted to approximately $24.0 million, $24.5 million, and $20.6 million, respectively.
The Company also offers income tax return preparation and electronic filing services. This program is provided in all but a few of the Company’s branches. The Company prepared approximately 83,000, 75,000 and 80,000 returns in fiscal years 2024, 2023, and 2022, respectively.
The Company allows refinancing of delinquent loans on a case-by-case basis for those customers who otherwise satisfy the Company's credit standards. Each such refinancing is carefully examined before approval in an effort to avoid increasing credit risk.
Each such refinancing is carefully examined before approval in an effort to avoid increasing credit risk.
Removed
As of March 31, 2021, we no longer offered loans with annual percentage rates, including interest, fees and other charges as calculated in accordance with the Federal Truth in Lending Act, above 100%. The average annual percentage rate of our portfolio was 45.8% as of March 31, 2023.
Added
As of March 31, 2024, annual percentage rates applicable to our gross loans receivable as defined by the Truth in Lending Act were as follows: Amount Percentage of total gross loans receivable 0 to 36% $ 595,445,625 46.5 % Greater than 36% 681,703,631 53.5 % $ 1,277,149,256 100.0 % The average annual percentage rate of our portfolio was 47.5% as of March 31, 2024.
Removed
As of March 31, 2023, annual percentage rates applicable to our gross loans receivable as defined by the Truth in Lending Act were as follows: Low High Amount Percentage of total gross loans receivable — % 36 % $ 680,805,765 48.9 37 % 50 % 316,345,789 22.8 51 % 60 % 121,292,968 8.7 61 % 70 % 57,976,907 4.2 71 % 80 % 19,808,244 1.4 81 % 90 % 91,386,549 6.6 91 % 100 % 102,377,024 7.4 101 % 120 % 9,556 1 — 121 % >121% 12,766 2 — $ 1,390,015,568 100 1 Gross loans receivable with an APR between 101% and 120% are a result of acquired loans receivable, and not loans originated by the Company. 2 Gross loans receivable with an APR of 121% or greater are a result of acquired loans receivable, and not loans originated by the Company. 3 Table of Contents Insurance Related Operations.
Added
Non-Filing Insurance. Non-filing insurance premiums are charged to customers where allowed by state law in lieu of recording and perfecting the Company's security interest in the assets pledged. In the event of default, rather than exercising rights in a lien as a lender might otherwise do, the insured can file a claim with the insurer for reimbursement.
Removed
Non-Filing Insurance. The Company typically does not perfect its security interest in collateral securing its smaller loans by filing UCC financing statements. Non-filing insurance premiums are equal in aggregate amount to the premiums paid by the Company to purchase non-filing insurance coverage from an unaffiliated insurance company.
Added
Non-filing insurance premiums are equal in aggregate amount to the premiums paid by the Company and are passed through to a third-party insurance company. Certain losses related to such loans, which are not recoverable through life, accident and health, property, or unemployment insurance claims, are reimbursed through non-filing insurance claims subject to policy limitations.
Removed
Under its non-filing insurance coverage, the Company is reimbursed for losses on loans resulting from its policy not to perfect its security interest in collateral securing the loans. Automobile Club Memberships.
Added
Net revenue generated by the Company from this program during fiscal 2024, 2023, and 2022 amounted to approximately $29.5 million, $24.0 million, and $24.5 million, respectively. In addition, our tax customers are eligible to receive an interest and fee-free tax advance loan which is generally a percentage of the anticipated tax refund amount.
Removed
(3) The Company commenced operations in Utah in October 2018. 5 Table of Contents The following table sets forth the total number of loans, the average gross loan balance, and the gross loan balance by state at March 31, 2023: Total Number of Loans Average Gross Loan Balance Gross Loan Balance (thousands) Alabama 46,330 $ 1,889 $ 87,538 Georgia 82,572 2,182 180,202 Idaho 6,366 1,709 10,877 Illinois 43,232 3,185 137,705 Indiana 19,835 1,723 34,176 Kentucky 42,577 2,096 89,235 Louisiana 29,886 1,752 52,368 Mississippi 21,252 1,348 28,650 Missouri 32,402 2,992 96,944 New Mexico 25,979 2,164 56,230 Oklahoma 40,078 2,014 80,718 South Carolina 50,623 2,141 108,365 Tennessee 60,203 2,050 123,409 Texas 162,921 1,698 276,596 Utah 4,389 2,017 8,854 Wisconsin 9,300 1,952 18,149 Total 677,945 $ 2,050 $ 1,390,016 Seasonality .
Added
The following table sets forth the total number of loans, the average gross loan balance, and the gross loan balance by state at March 31, 2024: Total Number of Loans Average Gross Loan Balance Gross Loan Balance (thousands) Alabama 44,958 $ 1,637 $ 73,610 Georgia 84,411 1,826 154,146 Idaho 6,175 1,654 10,216 Illinois 44,301 2,974 131,744 Indiana 19,923 1,609 32,050 Kentucky 42,450 1,913 81,197 Louisiana 30,702 1,743 53,528 Mississippi 20,795 1,336 27,773 Missouri 31,562 2,885 91,051 New Mexico 28,933 1,998 57,802 Oklahoma 37,939 1,944 73,746 South Carolina 49,158 2,076 102,049 Tennessee 55,143 2,002 110,416 Texas 162,542 1,586 257,838 Utah 4,073 1,819 7,409 Wisconsin 7,095 1,772 12,574 Total 670,160 $ 1,906 $ 1,277,149 7 Table of Contents Seasonality .
Removed
Local branch staff also promptly contact delinquent customers following any payment due date and thereafter remain in close contact with such customers through phone calls or letters until payment is received or some other resolution is reached.
Added
A refinancing represents a new loan transaction with a present customer in which a portion of the new loan proceeds is used to repay the balance of an existing loan and the remaining portion is advanced to the customer. In many cases the existing customer’s past performance and established creditworthiness with the Company qualifies that customer for a larger loan.
Removed
Some examples of these programs include: • BOLT – developing high performing and high potential Account Specialists to prepare them for Branch Manager roles • Emerging Leaders – developing high performing and high potential Branch Managers to prepare them for District Manager roles Information about our Executive Officers .
Removed
The term of office for each executive officer expires upon the earlier of the appointment and qualification of a successor or such officer's death, resignation, retirement, or removal. Name and Age Position Period of Service as Executive Officer and Pre-Executive Officer Experience (if an Executive Officer for Less Than Five Years) R.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

51 edited+17 added−17 removed182 unchanged
Biggest changeWe can give no assurance that the laws and regulations that govern our business, or the interpretation or administration of those laws and regulations, will remain unchanged or that any such future changes will not materially and adversely affect or in the worst case, eliminate the Company’s lending practices, operations, profitability, or prospects. 22 Table of Contents In addition, any adverse change in existing laws or regulations, or any adverse interpretation or litigation relating to existing laws and regulations in any state in which we operate, could subject us to liability for prior operating activities or could lower or eliminate the profitability of our operations going forward by, among other things, reducing the amount of interest and fees we can charge in connection with our loans.
Biggest changeIn addition, any adverse change in existing laws or regulations, or any adverse interpretation or litigation relating to existing laws and regulations in any state in which we operate, could subject us to liability for prior operating activities or could lower or eliminate the profitability of our operations going forward by, among other things, reducing the amount of interest and fees we can charge in connection with our loans.
Our staff, technologies, systems, networks, and those of third-parties we utilize also may become the target of cyber-attacks, unauthorized access, malicious code, computer viruses, denial of service attacks, ransomware, and physical attacks that could result in information security breaches, the unauthorized release, gathering, monitoring, misuse, loss or destruction of our or our customers’ confidential, proprietary and other information, or otherwise disrupt our or our customers’ operations.
Our staff, technologies, systems, networks, and those of third-parties we utilize also may become the target of cyber-attacks, unauthorized access, malicious code, computer viruses, denial of service attacks, ransomware, and physical attacks that could result in information security breaches, the unauthorized release, gathering, monitoring, misuse, loss or destruction of our or our customers’ confidential, proprietary and other information, or otherwise disrupt our or our vendors’ operations.
In addition, we may be unable to identify, or may be significantly delayed in identifying, cyber-attacks and incidents due to the increasing use of techniques and tools that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic artifacts.
We may be unable to identify, or may be significantly delayed in identifying, cyber-attacks and incidents due to the increasing use of techniques and tools that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic artifacts.
In addition, if we cannot locate original documents (or copies, in some cases) for certain loans receivables, we may not be able to collect on those loans receivables. Our off-site data center and centralized IT functions are susceptible to disruption by catastrophic events, which could have a material adverse effect on our business, results of operations, and financial condition.
In addition, if we cannot locate original documents (or copies, in some cases) for certain loans receivables, we may not be able to collect on those loans receivables. Our off-site data centers and centralized IT functions are susceptible to disruption by catastrophic events, which could have a material adverse effect on our business, results of operations, and financial condition.
Other risks relating to our insurance operations include changes to laws and regulations applicable to us, as well as changes to the regulatory environment, such as: changes to laws or regulations affecting capital and reserve requirements; frequency and type of regulatory monitoring and reporting; consumer privacy, use of customer data and data security; benefits or loss ratio requirements; insurance producer licensing or appointment requirements; required disclosures to consumers; and collateral protection insurance (i.e., insurance some of our lender companies purchase, at the customer’s expense, on that customer’s loan collateral for the periods of time the customer fails to adequately, as required by his loan, insure his collateral).
Other risks relating to our insurance operations include changes to laws and regulations applicable to us, as well as changes to the regulatory environment, such as: changes to laws or regulations affecting capital and reserve requirements; frequency and type of regulatory monitoring and reporting; restrictions on sales process, consumer privacy, use of customer data and data security; benefits or loss ratio requirements; insurance producer licensing or appointment requirements; required disclosures to consumers; and collateral protection insurance (i.e., insurance some of our lender companies purchase, at the customer’s expense, on that customer’s loan collateral for the periods of time the customer fails to adequately, as required by his loan, insure his collateral).
Additionally, any further regulatory changes could have effects beyond those currently contemplated that could further materially and adversely impact our business and operations. In addition to the specific matters described above, other aspects of our business may be the subject of future CFPB rule-making.
Additionally, any further regulatory changes to the Rule could have effects beyond those currently contemplated that could further materially and adversely impact our business and operations. In addition to the specific matters described above, other aspects of our business may be the subject of future CFPB rulemaking.
Any of the risk factors described in this annual report, as well as other risks, uncertainties, and possibly inaccurate assumptions underlying our plans and expectations, could result in 12 Table of Contents harm to our business, results of operations and financial condition and cause the value of our securities to decline, which in turn could cause investors to lose all or part of their investment in our Company.
Any of the risk factors described in this annual report, as well as other risks, uncertainties, and possibly inaccurate assumptions underlying our plans and expectations, could result in harm to our business, results of operations and financial condition and cause the value of our securities to decline, which in turn could cause investors to lose all or part of their investment in our Company.
Furthermore, we may not be able to immediately detect any such breach, which may increase the losses that we would suffer. In addition, our existing insurance policies may not reimburse us for all of the damages that we might incur as a result of a breach or other information system failure or network disruption.
Furthermore, we may not be able to immediately detect any such breach, 18 Table of Contents which may increase the losses that we would suffer. In addition, our existing insurance policies may not reimburse us for all of the damages that we might incur as a result of a breach or other information system failure or network disruption.
The loss or theft of customer information and data from our branch offices, headquarters, or other storage 17 Table of Contents locations 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 results of operations, financial condition and liquidity.
The loss or theft of customer information and data from our branch offices, headquarters, or other storage locations 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 results of operations, financial condition and liquidity.
Any such catastrophic event or other unexpected disruption of our headquarters' functions or off-site data center could have a material adverse effect on our business, results of operations, and financial condition.
Any such catastrophic event or other unexpected disruption of our headquarters' functions or off-site data centers could have a material adverse effect on our business, results of operations, and financial condition.
Statements other than those of historical fact, including, but not limited to those identified by the use of words such as “anticipate,” “estimate,” “intend,” “plan,” “expect,” “believe,” “may,” “will,” “should,” “would,” “could,” and any variations of the foregoing and similar expressions, are forward-looking statements.
Statements other than those of historical fact, including, but not limited to those identified by the use of words such as “anticipate,” “estimate,” “intend,” “plan,” “expect,” "project," “believe,” “may,” “will,” “should,” “would,” “could,” "continue," "forecast," and any variations of the foregoing and similar expressions, are forward-looking statements.
The new approach requires entities to measure all expected credit losses for financial assets based on historical experience, current conditions, and reasonable forecasts of collectability. As such, the expected credit loss model requires earlier recognition of credit losses than the incurred loss approach. CECL became effective for the Company April 1, 2020.
The new approach requires entities to measure all expected credit losses for financial assets based on historical experience, current conditions, and reasonable forecasts of collectability. As such, the 15 Table of Contents expected credit loss model requires earlier recognition of credit losses than the incurred loss approach. CECL became effective for the Company April 1, 2020.
The enactment of one or more of such regulatory changes, or the exercise of broad regulatory authority by regulators, including but not limited to, the CFPB, having jurisdiction or supervisory authority over the Company’s business or discretionary consumer financial transactions, generically, could materially and adversely affect our business, results of 21 Table of Contents operations and prospects.
The enactment of one or more of such regulatory changes, or the exercise of broad regulatory authority by regulators, including but not limited to, the CFPB, having jurisdiction or supervisory authority over the Company’s business or discretionary consumer financial transactions, generically, could materially and adversely affect our business, results of operations and prospects.
Thus, any developments, whether regulatory, economic or otherwise, that would hinder, reduce the profitability of, or limit our ability to operate our small consumer installment loan business on the terms currently conducted would have a direct and adverse impact on our business, profitability, and perhaps even our viability.
Thus, any developments, whether regulatory, economic or otherwise, that would hinder, reduce the profitability of, or limit our ability to operate our small consumer installment loan business on the terms currently conducted 16 Table of Contents would have a direct and adverse impact on our business, profitability, and perhaps even our viability.
While we commit resources to the design, implementation, maintenance, and monitoring of our networks and systems, we may be required to expend significant additional resources in the future to modify and enhance our security controls in response to new or more sophisticated threats, new regulations related to cybersecurity and other developments.
While we commit resources to the design, implementation, maintenance, testing, and monitoring of our networks and systems and training of our employees, we may be required to expend significant additional resources in the future to modify and enhance our security controls in response to new or more sophisticated threats, new regulations related to cybersecurity and other developments.
Changes in monetary policy, including changes in interest rates, could influence the amount of interest we pay on our revolving credit facility or any other floating interest rate obligations we may incur. Our profitability and liquidity could be materially adversely affected during any period of higher interest rates.
Changes in monetary policy, including changes 14 Table of Contents in interest rates, could influence the amount of interest we pay on our revolving credit facility or any other floating interest rate obligations we may incur. Our profitability and liquidity could be materially adversely affected during any period of higher interest rates.
Currently, due to a number of factors, the global economy is experiencing inflationary pressures not seen in a significant period of time. We cannot predict the timing or the 14 Table of Contents duration of any inflation or downturn in the economy and we are not immune to the effects of general worldwide economic conditions.
Currently, due to a number of factors, the global economy is experiencing inflationary pressures not seen in a significant period of time. We cannot predict the timing or the duration of any inflation or downturn in the economy and we are not immune to the effects of general worldwide economic conditions.
In the event our creditors accelerate the repayment of our debt, there can be no assurance that we would have sufficient assets to repay that debt, and our financial condition, liquidity and results of operations would suffer. A breach of our covenants under the Notes would have similar consequences.
In the event our creditors accelerate the repayment of our debt, there can be no assurance that we would have sufficient assets to repay that debt, and our financial condition, liquidity and results of operations would suffer. A breach of our 21 Table of Contents covenants under the Notes would have similar consequences.
Employee or third-party 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 23 Table of Contents violations of such rules.
Employee or third-party 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 violations of such rules.
Absence of dividends could reduce our attractiveness to investors. Since 1989, we have not declared or paid cash dividends on our common stock and may not pay cash dividends in the foreseeable future. As a result, our common stock may be less attractive to certain investors than the stock of dividend-paying companies.
Since 1989, we have not declared or paid cash dividends on our common stock and may not pay cash dividends in the foreseeable future. As a result, our common stock may be less attractive to certain investors than the stock of dividend-paying companies.
The loss of services of one or more other members of senior management, or the inability to attract qualified permanent replacements, could have a material adverse effect on our business.
The loss of services of one or more other members of senior management, or the inability to attract qualified permanent replacements, could have a 25 Table of Contents material adverse effect on our business.
Any shares of common stock issued in connection with acquisitions, the exercise of outstanding stock options, or otherwise would dilute the percentage ownership held by our existing shareholders. 26 Table of Contents
Any shares of common stock issued in connection with acquisitions, the exercise of outstanding stock options, or otherwise would dilute the percentage ownership held by our existing shareholders.
Additional information regarding our liquidity risk is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources.” Our current debt and any additional debt we may incur in the future could negatively impact our business, prevent us from satisfying our debt obligations and adversely affect our financial condition. 18 Table of Contents We may incur a substantial amount of debt in the future.
Additional information regarding our liquidity risk is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources.” Our current debt and any additional debt we may incur in the future could negatively impact our business, prevent us from satisfying our debt obligations and adversely affect our financial condition.
If such improper applications were to increase, delinquency and losses on our loan portfolio could increase and could increase significantly. In addition, we rely on certain third-party service providers in connection with loan 15 Table of Contents underwriting and origination.
If such improper applications were to increase, delinquency and losses on our loan portfolio could increase and could increase significantly. In addition, we rely on certain third-party service providers in connection with loan underwriting and origination.
In 2022, the CFPB announced that it has begun using this “dormant authority” to examine nonbank entities and the CFPB is attempting to expand the number of nonbank entities it currently supervises. Specifically, the CFPB has notified the Company that it is seeking to establish such supervisory authority over the Company.
In 2022, the CFPB announced that it has begun using this “dormant authority” to examine nonbank entities and the CFPB is attempting to expand the number of nonbank entities it currently supervises. Specifically, the CFPB previously 22 Table of Contents notified the Company that it was seeking to establish such supervisory authority over the Company.
Risks Related to our Indebtedness We depend to a substantial extent on borrowings under our revolving credit agreement to fund our liquidity needs. Our revolving credit agreement allows us to borrow up to $685.0 million, with an accordion feature permitting the maximum aggregate commitments to increase to $785.0 million provided that certain conditions are met, through June 7, 2024.
Risks Related to our Indebtedness We depend to a substantial extent on borrowings under our revolving credit agreement to fund our liquidity needs. Our revolving credit agreement allows us to borrow up to $580.0 million, with an accordion feature permitting the maximum aggregate commitments to increase to $730.0 million provided that certain conditions are met.
As of March 31, 2023, based on filings made with the SEC and other information made available to us, Prescott General Partners, LLC and its affiliates beneficially owned approximately 43.8% of our common stock.
As of March 31, 2024, based on filings made with the SEC and other information made available to us, Prescott General Partners, LLC and its affiliates beneficially owned approximately 46.0% of our common stock.
Although these laws and regulations have remained substantially unchanged for many years, the laws and regulations directly affecting our lending activities have been under review and subject to change in recent years as a result of various developments and changes in economic conditions, the make-up of the executive and legislative branches of government, and the political and 20 Table of Contents media focus on issues of consumer and borrower protection.
The laws and regulations directly affecting our lending activities have been under review and subject to change in recent years as a result of various developments and changes in economic conditions, the make-up of the executive and legislative branches of government, and the political and media focus on issues of consumer and borrower protection.
Pursuant to the terms of our revolving credit agreement, we are required to comply with a number of covenants and conditions, including a minimum borrowing base calculation.
The maturity date of the revolving credit agreement is June 7, 2026. Pursuant to the terms of our revolving credit agreement, we are required to comply with a number of covenants and conditions, including a minimum borrowing base calculation.
As of March 31, 2023, we had $318.7 million available for borrowing under our revolving credit agreement, subject to borrowing base limitations and other specified terms and conditions.
As of March 31, 2024, we had $355.9 million available for borrowing under our revolving credit agreement, subject to borrowing base limitations and other specified terms and conditions.
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 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.
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 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. 27 Table of Contents 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.
Securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as general economic, market, or political conditions, could reduce the market price of shares of our common stock in spite of our operating performance.
The Company’s common stock price has been and is likely to continue to be subject to significant volatility. Securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as general economic, market, or political conditions, could reduce the market price of shares of our common stock in spite of our operating performance.
We also routinely transmit and receive personal, confidential and proprietary information through third parties, which may be vulnerable to interception, misuse, or mishandling. 16 Table of Contents If one or more of such events occur, personal, confidential, and other information processed and stored in, and transmitted through our computer systems and networks, or those of third-party vendors, could be compromised or could cause interruptions or malfunctions in our operations that could result in significant losses, loss of confidence and business from customers, customer dissatisfaction, significant litigation, regulatory exposures, and harm to our reputation and brand.
If one or more of such events occur, personal, confidential, and other information processed and stored in, and transmitted through our computer systems and networks, or those of third-party vendors, could be compromised or could cause interruptions or malfunctions in our operations that could result in significant losses, loss of confidence and business from customers, customer dissatisfaction, significant litigation, regulatory exposures, and harm to our reputation and brand.
In 2017, the CFPB issued a final rule (the "Rule") under its unfair, deceptive and abusive acts and practices rulemaking authority relating to payday, vehicle title, and similar loans.
In 2017, the CFPB issued a final rule under its unfair, deceptive and abusive acts and practices rulemaking authority relating to payday and certain high-cost installment loans (the "Rule").
Additional information regarding the similar effect of laws in certain states in which we operate is described in Part 1, Item 1, “Description of Business - Government Regulation.” Overall stock market volatility may materially and adversely affect the market price of our common stock. 25 Table of Contents The Company’s common stock price has been and is likely to continue to be subject to significant volatility.
Additional information regarding the similar effect of laws in certain states in which we operate is described in Part 1, Item 1, “Description of Business - Government Regulation.” Overall stock market volatility may materially and adversely affect the market price of our common stock.
The final rule also curtails repeated unsuccessful attempts to debit consumers’ accounts for short-term loans, balloon payment loans, and installment loans that involve a payment authorization and an annual percentage rate over 36% (“payment requirements”).
The Rule curtails repeated unsuccessful attempts to debit consumers’ accounts for short-term loans, balloon payment loans, and installment loans that involve a payment authorization and an annual percentage rate over 36% (“payment requirements”). The Rule's ability to repay requirements were rescinded in July 2020.
If in any legal proceeding we incur liability or defense costs that exceed our insurance coverage or that are not within the scope of our insurance coverage, it could have a material adverse effect on our business, financial condition, and results of operations.
If in any legal proceeding we incur liability or defense costs that exceed our insurance coverage or that are not within the scope of our insurance coverage, it could have a material adverse effect on our business, financial condition, and results of operations. 23 Table of Contents Certain legal actions include claims for substantial compensatory and punitive damages, or claims for indeterminate amounts of damages.
Our revolving credit agreement contains covenants that restrict our ability to, among other things: • incur and guarantee debt; • pay dividends or make other distributions on or redeem or repurchase our stock; • make investments or acquisitions; • create liens on our assets; • sell assets; • merge with or into other companies; • enter into transactions with shareholders and other affiliates; and • make capital expenditures. 19 Table of Contents Our revolving credit agreement also imposes requirements that we maintain specified financial measures not in excess of, or not below, specified levels.
Our revolving credit agreement contains covenants that restrict our ability to, among other things: • incur and guarantee debt; • pay dividends or make other distributions on or redeem or repurchase our stock; • make investments or acquisitions; • create liens on our assets; • sell assets; • merge with or into other companies; • enter into transactions with shareholders and other affiliates; and • make capital expenditures.
Negative publicity regarding our Company (or others engaged in a similar business or similar 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. 24 Table of Contents We have goodwill, which is subject to periodic review and testing for impairment.
Negative publicity regarding our Company (or others engaged in a similar business or similar 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.
We depend on secure information technology, and an attack on or a breach of those systems or those of third-party vendors could result in significant losses, unauthorized disclosure of confidential customer information, and reputational damage, which could materially adversely affect our business, financial condition and/or results of operations, and could lead to significant financial and legal exposure and reputational harm.
We depend on secure information technology, and an attack on or a breach of those systems or those of third-party vendors could result in significant losses, unauthorized disclosure of confidential customer information, and reputational damage, which could materially adversely affect our business, financial condition and/or results of operations, and could lead to significant financial and legal exposure and reputational harm. 17 Table of Contents Our operations rely heavily on the secure collection, processing, storage, and transmission of personal, confidential, and other information about us, our customers and third parties with which we do business.
Additional information regarding our credit risk is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation-Allowance for Credit Losses.” Our insurance operations are subject to a number of risks and uncertainties, including claims, catastrophic events, underwriting risks and dependence on a primary distribution channel. 13 Table of Contents Insurance claims and policyholder liabilities are difficult to predict and may exceed the related reserves set aside for claims (losses) and associated expenses for claims adjudication (loss adjustment expenses).
Additional information regarding our credit risk is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation-Allowance for Credit Losses.” Our insurance operations are subject to a number of risks and uncertainties, including claims, catastrophic events, underwriting risks and dependence on a primary distribution channel.
This turnover increases our cost of operations and makes it more difficult to operate our branches. If we are unable to keep our employee turnover rates consistent with historical levels or if unanticipated problems arise from our high employee turnover, our business, results of operations, and financial condition could be adversely affected.
If we are unable to keep our employee turnover rates consistent with historical levels or if unanticipated problems arise from our high employee turnover, our business, results of operations, and financial condition could be adversely affected. Absence of dividends could reduce our attractiveness to investors.
Although the terms of our revolving credit agreement contain restrictions on our ability to incur additional debt, as well as any future debt that we incur, these restrictions are subject, or likely to be subject, in the case of any future debt, to exceptions that could permit us to incur a substantial amount of additional debt.
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. 20 Table of Contents Although the terms of our revolving credit agreement contain restrictions on our ability to incur additional debt, as well as any future debt that we incur, these restrictions are subject, or likely to be subject, in the case of any future debt, to exceptions that could permit us to incur a substantial amount of additional debt.
If we are unable to maintain effective controls and procedures we could lose investor confidence in the accuracy and completeness of our financial reports, and we may be subject to investigation or sanctions by the SEC. Any such consequence or other negative effect could adversely affect our operations, financial condition, and the trading price of our common stock.
If we are unable to maintain effective controls and procedures we could lose investor confidence in the accuracy and completeness of our financial reports, and we may be subject to investigation or sanctions by the SEC.
Certain legal actions include claims for substantial compensatory and punitive damages, or claims for indeterminate amounts of damages. While the arbitration provisions in our customer agreements historically have limited our exposure to consumer class action litigation, there can be no assurance that we will be successful in enforcing our arbitration clause in the future.
While the arbitration provisions in our customer agreements historically have limited our exposure to consumer class action litigation, there can be no assurance that we will be successful in enforcing our arbitration clause in the future.
As of March 31, 2023, the Company's debt outstanding was $595.3 million, net of $3.5 million unamortized debt issuance costs related to the unsecured senior notes payable, and a total debt-to-equity ratio of approximately 1.6 to 1.
We may incur a substantial amount of debt in the future. As of March 31, 2024, the Company's debt outstanding was $496.0 million, net of $2.4 million unamortized debt issuance costs related to the unsecured senior notes payable, and a total debt-to-equity ratio of approximately 1.2 to 1.0.
Changes in laws or regulations may have a material adverse effect on all aspects of our business in a particular state and on our overall business, financial condition, and results of operations, including our ability to generate new loans and the manner in which existing loans are serviced and collected.
Relocation of an existing branch may also hinder our collection abilities, as our business model relies in part on the locations of our branches being close to where our customers live in order to successfully collect on outstanding loans. 24 Table of Contents Changes in laws or regulations may have a material adverse effect on all aspects of our business in a particular state and on our overall business, financial condition, and results of operations, including our ability to generate new loans and the manner in which existing loans are serviced and collected.
Regular turnover among our managers and other employees at our branches makes it more difficult for us to operate our branches and increases our costs of operations, which could have an adverse effect on our business, results of operations and financial condition. The annual turnover as of March 31, 2023 among our branch employees was approximately 47.1%.
Any such consequence or other negative effect could adversely affect our operations, financial condition, and the trading price of our common stock. 26 Table of Contents Regular turnover among our managers and other employees at our branches makes it more difficult for us to operate our branches and increases our costs of operations, which could have an adverse effect on our business, results of operations and financial condition.
We have previously acquired, and in the future may acquire, assets or businesses, including large portfolios of loans receivables, either through the direct purchase of such assets or the purchase of the equity of a company with such a portfolio.
Initiating and processing potential acquisitions may be unsuccessful or difficult, leading to losses and increased delinquencies, which could have a material adverse effect on our results of operations. 19 Table of Contents We have previously acquired, and in the future may acquire, assets or businesses, including large portfolios of loans receivables, either through the direct purchase of such assets or the purchase of the equity of a company with such a portfolio.
Misconduct by our employees or third-party contractors, or even unsubstantiated allegations of misconduct, could result in a material adverse effect on our reputation and our business. General Risk Factor s Our risk management efforts may not be effective.
Misconduct by our employees or third-party contractors, or even unsubstantiated allegations of misconduct, could result in a material adverse effect on our reputation and our business. We sell loan accounts that are charged-off, which may result in increased regulator scrutiny, potential reputational damage and financial loss.
Additionally, events such as cyber security attacks and breaches and other types of catastrophes, and prolonged economic downturns, could adversely affect our financial condition and results of operations.
Insurance claims and policyholder liabilities are difficult to predict and may exceed the related reserves set aside for claims (losses) and associated expenses for claims adjudication (loss adjustment expenses). Additionally, events such as cybersecurity attacks and breaches and other types of catastrophes, and prolonged economic downturns, could adversely affect our financial condition and results of operations.
Removed
Our operations rely heavily on the secure collection, processing, storage, and transmission of personal, confidential, and other information about us, our customers and third parties with which we do business.
Added
Additionally, there is no guarantee that our security controls can provide absolute security or that our cybersecurity risk management program will be fully implemented, complied with or effective in preventing or mitigating future cybersecurity risks or successfully protect the confidentiality, integrity, and availability of our critical systems and information.
Removed
Additionally, there is no guarantee that our security controls can provide absolute security.
Added
In addition, while we have a third-party risk management process for service providers, suppliers, and vendors, we cannot guarantee that their security controls and other protective measures will be successful in preventing an attack on their systems, which could negatively impact our operations or data.
Removed
Their interests may conflict with the interests of our other security holders. Initiating and processing potential acquisitions may be unsuccessful or difficult, leading to losses and increased delinquencies, which could have a material adverse effect on our results of operations.
Added
We also routinely transmit and receive personal, confidential and proprietary information through third parties, which may be vulnerable to interception, misuse, or mishandling.
Removed
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.
Added
Their interests may conflict with the interests of our other security holders.
Removed
The Company disagrees that the CFPB has reasonable cause to to supervise the Company, has responded to the CFPB's notice, and is awaiting further response from the CFPB. If the CFPB ultimately determines it has supervisory authority over the Company, then the Company may be subject to, among other things, examination by the CFPB.
Added
Our revolving credit agreement also imposes requirements that we maintain specified financial measures not in excess of, or not below, specified levels.
Removed
The final rule originally required lenders originating short-term loans and longer-term balloon payment loans to first make a good-faith reasonable determination that the consumer has the ability to repay the covered loan along with current obligations and expenses (“ability to repay requirements”); however, the ability to repay requirements was rescinded in July 2020.
Added
See Part I, Item 1, “Description of Business-Government Regulation” for more information regarding legislation we are subject to and related risks. The Company is under the supervisory authority of the CFPB. Regulations issued by the CFPB or examinations by the CFPB could adversely impact earnings due to, among other things, increased compliance costs or costs due to noncompliance.
Removed
Although the Company does not make loans with terms of 45 days or less or obtain access to a customer’s bank account or paycheck for repayment of any of its loans, it does make some vehicle-secured loans with an annual percentage rate within the scope of the final rule.
Added
Since then, the CFPB has issued a public designation order setting forth its determination that the Company has met the legal requirements for supervision (the "Order"). Pursuant to the terms of the Order, the CFPB has supervisory authority over the Company until such time as the Order is terminated.
Removed
The final rule has significant differences from the CFPB’s proposed rules announced on June 2, 2016.
Added
Importantly, while the Order establishes that the CFPB has supervisory authority over the Company, it does not constitute a finding that the Company has engaged in wrongdoing, nor does it require any immediate action on the part of the Company.
Removed
Relocation of an existing branch may also hinder our collection abilities, as our business model relies in part on the locations of our branches being close to where our customers live in order to successfully collect on outstanding loans.
Added
However, the outcome of such supervision could result in operational changes which could reduce our ability to operate profitably or increase compliance costs.
Removed
We may be exposed to liabilities under follow-on litigation from our previous settlement with the SEC and DOJ for our previously disclosed FCPA issue in Mexico, which could have a material adverse effect on our business and liquidity.
Added
The supervision could also result in additional examinations, litigation, consent orders or administrative proceedings, which could require considerable resources, time, effort and attention from our management, and may result in operational changes, monetary penalties or declines in our stock price.
Removed
On August 6, 2020, the Company announced that it had reached resolution with both the SEC and the DOJ with respect to the FCPA matter in Mexico. See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Regulatory Matters,” for more information.
Added
We can give no assurance that the laws and regulations that govern our business, or the interpretation or administration of those laws and regulations, will remain unchanged or that any such future changes will not materially and adversely affect or in the worst case, eliminate the Company’s lending practices, operations, profitability, or prospects.
Removed
The Company could face additional third-party claims by shareholders and/or other stakeholders of the Company relating to this settlement. Any such litigation may be expensive and would likely consume significant time and attention of the Company’s senior management. We may incur substantial expenses responding to such actions, which may have a material impact on our business.
Added
Defaults by, or force majeure events involving, our third-party vendors and service providers could adversely impact our business. We rely upon third parties for the performance of certain functions within our operations.
Removed
Our use of third-party vendors and service providers is subject to regulatory review.
Added
If the third-party contracts were breached or disrupted by events of force majeure, we may be unable to service the needs of our customers or replace the third party with an alternative provider in a timely manner. Such failure could have a material adverse impact on our business, results of operations, and financial condition.
Removed
The CFPB and other regulators have issued regulatory guidance focusing on the need for financial institutions to perform due diligence and ongoing monitoring of third-party vendor and service provider relationships, which increases the scope of management involvement and decreases the benefit that we receive from using third-party vendors.
Added
As part of our business, from time to time, we may sell loans that are charged off. If we do not appropriately assess a debt buyer’s collection practices for compliance with laws and regulations, there is risk potential.
Removed
Moreover, if our regulators conclude that we have not met the standards for oversight of our third-party vendors, we could be subject to enforcement actions, civil monetary penalties, supervisory orders to cease and desist or other remedial actions, which could have a material adverse effect on our business, reputation, financial condition and operating results.

… 5 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeAs of March 31, 2023, we had 1,073 branches, most of which are leased and are classified as operating leases. Our branch leases generally provide for an initial three-to-five-year term with renewal options. Our branches are typically located in shopping centers, malls and the first floors of downtown buildings. Branches have an average size of 1,600 square feet.
Biggest changeAs of March 31, 2024, we had 1,048 branches, most of which are leased and are classified as operating leases. Our branch leases generally provide for an initial three-to-five-year term with renewal options. Our branches are typically located in shopping centers, malls and the first floors of downtown buildings. Branches have an average size of 1,600 square feet.
We own all of the furniture, fixtures and computer terminals located in each of its branches.
We own all of the furniture, fixtures and computer terminals located in each of our branches.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−3 removed5 unchanged
Biggest changeGeneral In addition, from time to time the Company is involved in litigation matters relating to claims arising out of its operations in the normal course of business.
Biggest changeItem 3. Legal Proceedings 29 Table of Contents From time to time, the Company is involved in litigation matters relating to claims arising out of its operations in the normal course of business.
Removed
Item 3. Legal Proceedings Derivative Litigation On September 25, 2020, a shareholder filed a derivative complaint in South Carolina state court, Paul Parshall v. World Acceptance et al. , against the Company as the nominal defendant and certain current and former directors and officers as defendants.
Removed
Pointing to the Company’s resolution with the SEC and DOJ of the Mexico investigation previously disclosed, and summarized below under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Regulatory Matters,” the complaint alleges violations of South Carolina law, including breaches of fiduciary duties and corporate waste, and that the Company has suffered damages as a result of those alleged breaches.
Removed
On April 19, 2023, the Court preliminarily approved a Stipulation and Agreement of Settlement dated March 31, 2023 (the “Stipulation”), by and among: the plaintiff, derivatively on behalf of the Company; (ii) the individual defendants; and (iii) the Company. If approved, the Stipulation will result in a non-material payment by the Company.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed5 unchanged
Biggest changeThe following table details purchases of the Company's common stock, if any, made by the Company during the three months ended March 31, 2023: (a) Total number of shares purchased (b) Average price paid per share (c) Total number of shares purchased as part of publicly announced plans or programs (d) Approximate dollar value of shares that may yet be purchased under the plans or programs January 1 through January 31, 2023 — $ — — $ 1,123,544 February 1 through February 28, 2023 — — — 1,123,544 March 1 through March 31, 2023 — — — 1,123,544 Total for the quarter — $ — — 28 Table of Contents Stock Performance Graph
Biggest changeThe following table details purchases of the Company's common stock, if any, made by the Company during the three months ended March 31, 2024: (a) Total number of shares purchased (b) Average price paid per share (c) Total number of shares purchased as part of publicly announced plans or programs (d) Approximate dollar value of shares that may yet be purchased under the plans or programs January 1 through January 31, 2024 1,383 $ 129.99 1,383 $ 2,649,704 February 1 through February 29, 2024 — — — 2,649,704 March 1 through March 31, 2024 145,053 129.94 145,053 11,151,669 Total for the quarter 146,436 $ 129.94 146,436 31 Table of Contents Stock Performance Graph
Issuer Purchases of Equity Securities On February 24, 2022, the Board of Directors authorized the Company to repurchase up to $30.0 million of the Company’s outstanding common stock, inclusive of the amount that remained available for repurchase under prior repurchase authorizations.
Issuer Purchases of Equity Securities On February 24, 2024, the Board of Directors authorized the Company to repurchase up to $30.0 million of the Company’s outstanding common stock, inclusive of the amount that remained available for repurchase under prior repurchase authorizations.
Holders As of May 26, 2023, there were 23 holders of record of our common stock and a significant number of persons or entities who hold their stock in nominee or “street” names through various brokerage firms. Dividends Since April 1989, the Company has not declared or paid any cash dividends on its common stock.
Holders As of May 17, 2024, there were 23 holders of record of our common stock and a significant number of persons or entities who hold their stock in nominee or “street” names through various brokerage firms. Dividends Since April 1989, the Company has not declared or paid any cash dividends on its common stock.
As of March 31, 2023, the Company had $1.1 million in aggregate remaining repurchase capacity under its current share repurchase program.
As of March 31, 2024, the Company had $11.2 million in aggregate remaining repurchase capacity under its current share repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

56 edited+12 added−17 removed46 unchanged
Biggest changeThe agreement's 36 Table of Contents financial covenants include (i) a minimum consolidated net worth of $325.0 million on and after December 31, 2020; (ii) a maximum ratio of total debt to consolidated adjusted net worth of 2.5 to 1.0 (decreasing to 2.25 to 1.0 for the fiscal quarters ending March 31, 2023 and June 30, 2023, 2.0 to 1.0 for the fiscal quarter ending September 30, 2023, and 2.25 to 1.0 for the fiscal quarter ending December 31, 2023); (iii) a maximum collateral performance indicator of 26.0% as of the end of each calendar month (increasing to 28.0% for the calendar months ending October 31, 2022 through June 30, 2023); and (iv) a minimum fixed charges coverage ratio of 1.25 to 1.0 for the fiscal quarter ended December 31, 2022, 1.15 to 1.0 for the fiscal quarters ending March 31, 2023 and June 30, 2023, 1.50 to 1.0 for the fiscal quarter ending September 30, 2023, 2.0 to 1.0 for the fiscal quarter ending December 31, 2023, and 2.75 to 1.0 for each fiscal quarter thereafter, where the ratio for the most recent four consecutive fiscal quarters must be at least 2.0 to 1.0 in order for the Company to declare dividends or purchase any class or series of its capital stock or other equity.
Biggest changeThe agreement's financial covenants include (i) a minimum consolidated net worth of $325.0 million; (ii) a maximum ratio of total debt to consolidated adjusted net worth of 2.25 to 1.0 for the fiscal quarter ended December 31, 2023 and each fiscal quarter thereafter); (iii) a maximum collateral performance indicator of 26.0% as of the end of each calendar month; and (iv) a minimum fixed charges coverage ratio of 2.0 to 1.0 for the fiscal quarters ending December 31, 2023 through December 31, 2024, and 2.25 to 1.0 for each fiscal quarter thereafter, where the ratio for the most recent four consecutive fiscal quarters (other than for the fiscal quarter ended September 30, 2023) must be at least 2.0 to 1.0 in order for the Company to declare dividends or purchase any class or series of its capital stock or other equity.
However, our revolving credit facility and the Notes limit share repurchases up to $90.0 million from March 26, 2021 through June 30, 2022 plus up to 50% of consolidated adjusted net income for the period commencing January 1, 2019.
However, our revolving credit facility and the Notes limit share repurchases to up to $90.0 million from March 26, 2021 through June 30, 2022 plus up to 50% of consolidated adjusted net income for the period commencing January 1, 2019.
On September 27, 2021, we issued $300 million in aggregate principal amount of 7.0% senior notes due 2026 (the “Notes”). The Notes were sold in a private placement in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended.
On September 27, 2021, we issued $300 million in aggregate principal amount of 7.0% senior notes due 2026. The Notes were sold in a private placement in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended.
The borrowing base limitation is equal to the product of (a) the Company’s eligible loans receivables, less unearned finance charges, insurance premiums and insurance commissions, and (b) an advance rate percentage that ranges from 70% (decreasing to as low as 62% for the calendar months ending October 31, 2022 through June 30, 2023) to 80% based on a collateral performance indicator, as more completely described below.
The borrowing base limitation is equal to the product of (a) the Company’s eligible loans receivables, less unearned finance charges, insurance premiums and insurance commissions, and (b) an advance rate percentage that ranges from 70% (decreasing to as low as 62% for the calendar months ended October 31, 2022 through June 30, 2023) to 80% based on a collateral performance indicator, as more completely described below.
The collateral performance indicator is equal to the sum of (a) a three-month rolling average rate of receivables at least sixty days past due and (b) an eight-month rolling average net charge-off rate. The Company was in compliance with these covenants at March 31, 2023 and does not believe that these covenants will materially limit its business and expansion strategy.
The collateral performance indicator is equal to the sum of (a) a three-month rolling average rate of receivables at least sixty days past due and (b) an eight-month rolling average net charge-off rate. The Company was in compliance with these covenants at March 31, 2024 and does not believe that these covenants will materially limit its business and expansion strategy.
Income Taxes 34 Table of Contents Management uses certain assumptions and estimates in determining income taxes payable or refundable, deferred income tax liabilities and assets for events recognized differently in its financial statements and income tax returns, and income tax expense. Determining these amounts requires analysis of certain transactions and interpretation of tax laws and regulations.
Income Taxes 37 Table of Contents Management uses certain assumptions and estimates in determining income taxes payable or refundable, deferred income tax liabilities and assets for events recognized differently in its financial statements and income tax returns, and income tax expense. Determining these amounts requires analysis of certain transactions and interpretation of tax laws and regulations.
Management will continue to monitor the Company's debt-to-equity ratio and is committed to maintaining a debt level that will allow the Company to continue to execute its business objectives, while not putting undue stress on its consolidated balance sheet.
Management will continue to monitor the Company's debt-to-equity ratio and is committed to maintaining a debt level that will allow the Company to continue to execute its business objectives, while not putting undue stress on its Consolidated Balance Sheets.
As expected, the change resulted in an increase in accounts 91 31 Table of Contents days or more past due and fewer net charge-offs during fiscal 2015. We estimate the net charge-off rate would have been approximately 14.0% for fiscal 2015 excluding the impact of the change. 2023 In fiscal 2023, the Company's net charge-off rate increased to 23.7%.
As expected, the change resulted in an increase in accounts 91 days or more past due and fewer net charge-offs during fiscal 2015. We estimate the net charge-off rate would have been approximately 14.0% for fiscal 2015 excluding the impact of the change. 2023 In fiscal 2023, the Company's net charge-off rate increased to 23.7%.
In July 2020, the CFPB rescinded provisions of the Rule governing the ability to repay requirements. Currently, the payment requirements are scheduled to take effect in June 2022. However, on October 19, 2022, a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit ruled, in Community Financial Services Association of America v.
In July 2020, the CFPB rescinded provisions of the Rule governing the ability to repay requirements. The payment requirements were scheduled to take effect in June 2022. However, on October 19, 2022, a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit ruled, in Community Financial Services Association of America v.
Although inflation would increase the Company’s operating costs in absolute terms and may impact the ability or willingness of borrowers to repay their loans, the Company expects that the same decrease in the value of money 37 Table of Contents would result in an increase in the size of loans demanded by its customer base.
Although inflation would increase the Company’s operating costs in absolute terms and may impact the ability or willingness of borrowers to repay their loans, the Company expects that the same decrease in the value of money would result in an increase in the size of loans demanded by its customer base.
The net charge-off rate for the past ten fiscal years averaged 16.0%, with a high of 23.7% (fiscal 2023) and a low of 12.8% (fiscal 2015). In fiscal 2023 the charge-off rate was 23.7%. The following table presents the Company's net charge-off ratios since 2013. _______________________________________________________ 2015 In fiscal 2015, the Company's net charge-off rate decreased to 12.8%.
The net charge-off rate for the past ten fiscal years averaged 16.3%, with a high of 23.7% (fiscal 2023) and a low of 12.8% (fiscal 2015). The following table presents the Company's net charge-off ratios since 2013. _______________________________________________________ 2015 In fiscal 2015, the Company's net charge-off rate decreased to 12.8%.
Consequently, operating results for the Company's third fiscal quarter generally are significantly lower than in other quarters and operating results for its fourth fiscal quarter are significantly higher than in other quarters. 33 Table of Contents The following table sets forth, on a quarterly basis, certain items included in the Company's unaudited Consolidated Financial Statements and shows the number of branches open during fiscal years 2023 and 2022.
Consequently, operating results for the Company's third fiscal quarter generally are significantly lower than in other quarters and operating results for its fourth fiscal quarter are significantly higher than in other quarters. 36 Table of Contents The following table sets forth, on a quarterly basis, certain items included in the Company's unaudited Consolidated Financial Statements and shows the number of branches open during fiscal years 2024 and 2023.
Further, under the amended and restated revolving credit agreement, the administrative agent has the right to set aside reasonable reserves against the available borrowing base in such amounts as it may deem appropriate, including, without limitation, reserves with respect to certain regulatory events or any increased operational, legal, or regulatory risk of the Company and its subsidiaries.
Further, under the revolving credit facility, the administrative agent has the right to set aside reasonable reserves against the available borrowing base in such amounts as it may deem appropriate, including, without limitation, reserves with respect to certain regulatory events or any increased operational, legal, or regulatory risk of the Company and its subsidiaries.
In addition, at any time prior to November 1, 2023, the Company may use the proceeds of certain equity offerings to redeem up to 40% of the aggregate principal amount of the Notes issued under the indenture at a redemption price equal to 107.0% of the principal amount of Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.
In addition, at any time prior to November 1, 2023, the Company could have used the proceeds of certain equity offerings to redeem up to 40% of the aggregate principal amount of the Notes issued under the indenture at a redemption price equal to 107.0% of the principal amount of Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.
No assurance can be given that either the tax returns submitted by management or the income tax reported on the Consolidated Financial Statements will not be adjusted by either adverse rulings, changes in the tax code, or assessments made by the Internal Revenue Service or by state or foreign taxing authorities.
No assurance can be given that either the tax returns submitted by management or the income tax reported on the Consolidated Financial Statements will not be adjusted by either adverse rulings, changes in the tax code, or assessments made by the IRS or by state or foreign taxing authorities.
In 2022, the CFPB announced that it has begun using this “dormant authority” to examine nonbank entities and the CFPB is attempting to expand the number of nonbank entities it currently supervises. Specifically, the CFPB has notified the Company that it is seeking to establish such supervisory authority over the Company.
In 2022, the CFPB announced that it had begun using this “dormant authority” to examine nonbank entities and the CFPB is attempting to expand the number of nonbank entities it currently supervises. Specifically, the CFPB previously notified the Company that it was seeking to establish such supervisory authority over the Company.
For the year ended March 31, 2023, the effective interest rate, including the commitment fee, on borrowings under the revolving credit facility was 7.0%. The Company pays a commitment fee equal to 0.50% per annum of the daily unused portion of the commitments.
For the year ended March 31, 2024, the effective interest rate, including the commitment fee, on borrowings under the revolving credit facility was 9.9%. The Company pays a commitment fee equal to 0.50% per annum of the daily unused portion of the commitments.
At any time prior to November 1, 2023, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus a make-whole premium, as described in the indenture, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.
At any time prior to November 1, 2023, the Company could have redeemed the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus a make-whole premium, as described in the indenture, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.
The Company plans to enter into new markets through opening new branches and acquisitions as opportunities arise. The Company offers an income tax return preparation and electronic filing program in all but a few of its branches. The Company prepared approximately 75,000, 81,000, and 77,000 returns in each of the fiscal years 2023, 2022, and 2021, respectively.
The Company plans to enter into new markets through opening new branches and acquisitions as opportunities arise. The Company offers an income tax return preparation and electronic filing program in all but a few of its branches. The Company prepared approximately 83,000, 75,000, and 80,000 returns in each of the fiscal years 2024, 2023, and 2022, respectively.
As of March 31, 2023, subject to further approval from our Board of Directors, we could repurchase approximately $29.2 million of shares under the terms of our debt facilities. Additional share repurchases can be made subject to compliance with, among other things, applicable restricted payment covenants under the revolving credit facility and the Notes.
As of March 31, 2024, subject to further approval from our Board of Directors, we could repurchase approximately $30.1 million of shares under the terms of our debt facilities. Additional share repurchases can be made subject to compliance with, among other things, applicable restricted payment covenants under the revolving credit facility and the Notes.
We used the net proceeds from this offering to repay a portion of the outstanding indebtedness under our revolving credit facility and for general corporate purposes. 35 Table of Contents During fiscal 2023, the Company repurchased and extinguished $9.0 million of its Notes, net of $0.1 million unamortized debt issuance costs related to the extinguished debt, on the open market for a reacquisition price of $7.2 million.
We used the net proceeds from this offering to repay a portion of the outstanding indebtedness under our revolving credit facility and for general corporate purposes. 38 Table of Contents During fiscal 2024, the Company repurchased and extinguished $15.7 million of its Notes, net of $0.2 million unamortized debt issuance costs related to the extinguished debt, on the open market for a reacquisition price of $14.1 million.
Share Repurchase Program On February 24, 2022, the Board of Directors authorized the Company to repurchase up to $30.0 million of the Company’s outstanding common stock, inclusive of the amount that remains available for repurchase under prior repurchase authorizations. As of March 31, 2023, the Company had $1.1 million in aggregate remaining repurchase capacity under its current share repurchase program.
Share Repurchase Program On February 24, 2024, the Board of Directors authorized the Company to repurchase up to $30.0 million of the Company’s outstanding common stock, inclusive of the amount that remains available for repurchase under prior repurchase authorizations. As of March 31, 2024, the Company had $11.2 million in aggregate remaining repurchase capacity under its current share repurchase program.
Accounts that were 91 days or more past due represented 3.5% and 4.5% of our loan portfolio on a recency basis at March 31, 2023 and March 31, 2022, respectively.
Accounts that were 91 days or more past due represented 3.1% and 3.5% of our loan portfolio on a recency basis at March 31, 2024 and March 31, 2023, respectively.
Comparison of Fiscal 2022 Versus Fiscal 2021 For a comparison of our results of operations for the years ended March 31, 2022 and March 31, 2021, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended March 31, 2022 (which was filed with the SEC on May 27, 2022).
Comparison of Fiscal 2023 Versus Fiscal 2022 For a comparison of our results of operations for the years ended March 31, 2023 and March 31, 2022, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 (which was filed with the SEC on June 1, 2023).
Subject to a borrowing base formula, the Company may borrow at the rate of one month SOFR plus 0.10% and an applicable margin of 3.5% with a minimum rate of 4.5%. At March 31, 2023, the aggregate commitments under the revolving credit facility were $685.0 million.
Subject to a borrowing base formula, the Company may borrow at the rate of one month SOFR plus a spread adjustment of 0.10% and an applicable margin of 3.5% with a minimum rate of 4.5%. At March 31, 2024, the aggregate commitments under the revolving credit facility were $580.0 million.
CFPB Rulemaking Initiative 32 Table of Contents On October 5, 2017, the CFPB issued a final rule (the "Rule") imposing limitations on (i) short-term consumer loans, (ii) longer-term consumer installment loans with balloon payments, and (iii) higher-rate consumer installment loans repayable by a payment authorization.
Regulatory Matters CFPB Rulemaking Initiative On October 5, 2017, the CFPB issued a final rule (the "Rule") imposing limitations on (i) short-term consumer loans, (ii) longer-term consumer installment loans with balloon payments, and (iii) higher-rate consumer installment loans repayable by a payment authorization.
The following table sets forth certain information derived from the Company's consolidated statements of operations and balance sheets, as well as operating data and ratios, for the periods indicated: 29 Table of Contents Years Ended March 31, 2023 2022 2021 (Dollars in thousands) Gross loans receivable $ 1,390,016 $ 1,522,789 $ 1,104,746 Average gross loans receivable (1) $ 1,555,655 $ 1,377,740 $ 1,143,186 Net loans receivable (2) $ 1,013,341 $ 1,119,758 $ 825,382 Average net loans receivable (3) $ 1,133,051 $ 1,014,984 $ 848,732 Expenses as a percentage of total revenue: Provision for credit losses 42.1 % 31.8 % 16.3 % General and administrative 45.3 % 51.3 % 57.7 % Interest expense 8.2 % 5.7 % 4.9 % Operating income as a % of total revenue (4) 12.6 % 16.9 % 26.0 % Loan volume (5) 3,078,672 3,267,860 2,371,981 Net charge-offs as percent of average net loans receivable 23.7 % 14.2 % 14.1 % Return on average assets (trailing 12 months) 1.7 % 4.8 % 9.1 % Return on average equity (trailing 12 months) 5.8 % 13.4 % 22.8 % Branches opened or acquired (merged or closed), net (94) (38) (38) Branches open (at period end) 1,073 1,167 1,205 _______________________________________________________ (1) Average gross loans receivable have been determined by averaging month-end gross loans receivable over the indicated period, excluding tax advances.
The following table sets forth certain information derived from the Company's Consolidated Statements of Operations and Balance Sheets, as well as operating data and ratios, for the periods indicated: 32 Table of Contents Years Ended March 31, 2024 2023 2022 (Dollars in thousands) Gross loans receivable $ 1,277,149 $ 1,390,016 $ 1,522,789 Average gross loans receivable (1) $ 1,378,329 $ 1,555,655 $ 1,377,740 Net loans receivable (2) $ 950,403 $ 1,013,341 $ 1,119,758 Average net loans receivable (3) $ 1,012,544 $ 1,133,051 $ 1,014,984 Expenses as a percentage of total revenue: Provision for credit losses 27.4 % 42.1 % 31.8 % General and administrative 46.9 % 45.3 % 51.3 % Interest expense 8.4 % 8.2 % 5.7 % Operating income as a % of total revenue (4) 25.8 % 12.6 % 16.9 % Loan volume (5) 2,758,260 3,078,672 3,267,860 Net charge-offs as percent of average net loans receivable 17.7 % 23.7 % 14.2 % Return on average assets (trailing 12 months) 7.0 % 1.7 % 4.8 % Return on average equity (trailing 12 months) 19.1 % 5.8 % 13.4 % Branches opened or acquired (merged or closed), net (25) (94) (38) Branches open (at period end) 1,048 1,073 1,167 _______________________________________________________ (1) Average gross loans receivable have been determined by averaging month-end gross loans receivable over the indicated period, excluding tax advances.
Since March 31, 2019, gross loans receivable have increased at a 5.36% annual compounded rate from $1.13 billion to $1.39 billion at March 31, 2023. We believe we were able to improve our gross loans receivable growth rates through acquisitions, improved marketing processes, and analytics.
Since March 31, 2020, gross loans receivable have increased at a 1.36% annual compounded rate from $1.21 billion to $1.28 billion at March 31, 2024. We believe we were able to improve our gross loans receivable growth rates through acquisitions, improved marketing processes, and analytics.
General and administrative expenses, when divided by average open branches, increased 0.3% from fiscal 2022 to fiscal 2023 and, overall, general and administrative expenses as a percent of total revenues decreased to 45.3% in fiscal 2023 from 51.3% in fiscal 2022. The change in general and administrative expense is explained in greater detail below.
General and administrative expenses, when divided by average open branches, increased 1.6% from fiscal 2023 to fiscal 2024 and, overall, general and administrative expenses as a percent of total revenues increased to 46.9% in fiscal 2024 from 45.3% in fiscal 2023. The change in general and administrative expense is explained in greater detail below.
As the Company's gross loans receivable increased from $1.21 billion at March 31, 2020 to $1.39 billion at March 31, 2023, net cash provided by operating activities for fiscal years 2023, 2022, and 2021 was $291.6 million, $272.4 million, and $227.0 million, respectively.
As the Company's gross loans receivable increased from $1.10 billion at March 31, 2021 to $1.28 billion at March 31, 2024, net cash provided by operating activities for fiscal years 2024, 2023, and 2022 was $265.8 million, $291.6 million, and $272.4 million, respectively.
The decrease was primarily due to decreased spending in our digital marketing and new customer acquisition programs. Amortization of intangible assets totaled $4.5 million for fiscal 2023, a $0.5 million, or 10.9%, decrease over fiscal 2022, which primarily relates to a corresponding decrease in intangible assets acquired in the current fiscal year compared to the previous fiscal year.
The increase was primarily due to increased spending in our new customer acquisition programs. Amortization of intangible assets totaled $4.2 million for fiscal 2024, a $0.2 million, or 5.5%, decrease over fiscal 2023, which primarily relates to a corresponding decrease in intangible assets acquired in the current fiscal year compared to the previous fiscal year.
As of March 31, 2023, the Company's debt outstanding was $595.3 million, net of $3.5 million unamortized debt issuance costs related to the unsecured senior notes payable, and its shareholders' equity was $385.2 million resulting in a debt-to-equity ratio of 1.6:1.0.
As of March 31, 2024, the Company's debt outstanding was $496.0 million, net of $2.4 million unamortized debt issuance costs related to the unsecured senior notes payable, and its shareholders' equity was $424.4 million resulting in a debt-to-equity ratio of 1.2:1.0.
The timing and actual number of shares of common stock repurchased will depend on a variety of factors, including the stock price, corporate and regulatory requirements, restrictions under the Company's debt agreements and other market and economic conditions.
The timing and actual number of shares of common stock repurchased will depend on a variety of factors, including the stock price, corporate and regulatory requirements, restrictions under the Company's debt agreements and other market and economic conditions. The Company’s stock repurchase program may be suspended or discontinued at any time.
Revenues from the Company’s tax preparation business in fiscal 2023 amounted to approximately $24.0 million, a 2.2% decrease over the $24.5 million earned during fiscal 2022.
Revenues from the Company’s tax preparation business in fiscal 2024 amounted to approximately $29.5 million, a 23.1% increase over the $24.0 million earned during fiscal 2023.
The Company has a revolving credit facility with a syndicate of banks. The revolving credit facility provides for revolving borrowings of up to the lesser of (a) the aggregate commitments under the facility and (b) a borrowing base, and it includes a $300,000 letter of credit under a $1.5 million subfacility.
The revolving credit facility provides for revolving borrowings of up to the lesser of (a) the aggregate commitments under the facility and (b) a borrowing base, and it includes a $725.8 thousand letter of credit under a $1.5 million subfacility.
The agreement governing the Company’s revolving credit facility contains affirmative and negative covenants, including covenants that restrict the ability of the Company and its subsidiaries to, among other things, incur or guarantee indebtedness, incur liens, pay dividends and repurchase or redeem capital stock, dispose of assets, engage in mergers and consolidations, make acquisitions or other investments, redeem or prepay subordinated debt, amend subordinated debt documents, make changes in the nature of its business, and engage in transactions with affiliates.
The obligations of the Company and the subsidiary guarantors under the revolving credit facility, together with such treasury management and hedging obligations, are secured by a first-priority security interest in substantially all assets of the Company and the subsidiary guarantors. 39 Table of Contents The agreement governing the Company’s revolving credit facility contains affirmative and negative covenants, including covenants that restrict the ability of the Company and its subsidiaries to, among other things, incur or guarantee indebtedness, incur liens, pay dividends and repurchase or redeem capital stock, dispose of assets, engage in mergers and consolidations, make acquisitions or other investments, redeem or prepay subordinated debt, amend subordinated debt documents, make changes in the nature of its business, and engage in transactions with affiliates.
Occupancy and equipment expense is generally a function of the number of branches the Company has open throughout the year. In fiscal 2023, the expense per average open branch increased to $46.7 thousand, up from $43.4 thousand in fiscal 2022. Advertising expense totaled $6.1 million for fiscal 2023, a $12.2 million, or 66.7%, decrease over fiscal 2022.
Occupancy and equipment expense is generally a function of the number of branches the Company has open throughout the year. In fiscal 2024, the expense per average open branch increased to $47.2 thousand, up from $46.7 thousand in fiscal 2023. Advertising expense totaled $9.9 million for fiscal 2024, a $3.8 million, or 62.9%, increase over fiscal 2023.
Consumer Financial Protection Bureau, that the funding mechanism for the CFPB violates the appropriations clause of the U.S. Constitution, and as a result vacated the Rule. On February 27, 2023, the U.S. Supreme Court announced that it would grant the CFPB’s petition for certiorari, to decide the constitutionality of the CFPB’s funding mechanism.
Consumer Financial Protection Bureau, that the funding mechanism for the CFPB violates the appropriations clause of the U.S. Constitution, and as a result, vacated the Rule. On October 3, 2023, the U.S. Supreme Court held oral argument to decide the constitutionality of the CFPB's funding mechanism.
On March 31, 2023, $307.9 million was outstanding under this facility, and there was $318.7 million of unused borrowing availability under the borrowing base limitations.
On March 31, 2024, $223.4 million was outstanding under this facility, and there was $355.9 million of unused borrowing availability under the borrowing base limitations.
Other expense totaled $39.1 million for fiscal 2023, a $2.4 million, or 5.8%, decrease over fiscal 2022. Interest expense increased by $17.0 million, or 51.0%, during fiscal 2023 when compared to the previous fiscal year as a result of an increase in average debt outstanding of 26.1% and an increase in the effective interest rate from 5.7% to 7.1%.
Other expense totaled $40.2 million for fiscal 2024, a $1.1 million, or 2.8%, increase over fiscal 2023. Interest expense decreased by $2.2 million, or 4.4%, during fiscal 2024 when compared to the previous fiscal year as a result of a 21.1% decrease in average debt outstanding, partially offset by an increase in the effective interest rate from 7.1% to 8.6%.
Interest and fee income during fiscal 2023 increased by $22.7 million, or 4.7%, from fiscal 2022. The increase was primarily due to an increase in average net loans receivable, which increased 11.6% during fiscal 2023 compared to fiscal 2022. Interest and fee income was also impacted by a shift to larger, lower interest rate loans.
Interest and fee income during fiscal 2024 decreased by $39.8 million, or 7.8%, from fiscal 2023. The decrease was primarily due to a decrease in average net loans receivable, which decreased 10.6% during fiscal 2024 compared to fiscal 2023. Interest and fee income was also impacted by a shift away from larger, lower interest rate loans.
Operating income (revenues less provision for credit losses and general and administrative expenses) during fiscal 2023 decreased $21.4 million. Total revenues increased $31.36 million, or 5.4%, to $616.55 million in fiscal 2023, from $585.19 million in fiscal 2022. At March 31, 2023, the Company had 1,073 branches in operation, a decrease of 94 branches from March 31, 2022.
Operating income (revenues less provision for credit losses and general and administrative expenses) during fiscal 2024 increased $70.0 million. Total revenues decreased $43.33 million, or 7.0%, to $573.21 million in fiscal 2024, from $616.55 million in fiscal 2023. At March 31, 2024, the Company had 1,048 branches in operation, a decrease of 25 branches from March 31, 2023.
Comparison of Fiscal 2023 Versus Fiscal 2022 Net income for fiscal 2023 was $21.2 million, a 60.6% decrease from the $53.9 million earned during fiscal 2022. The decrease in net income from was primarily due to a $73.3 million increase in the provision for credit losses partially offset by a $31.4 million increase in revenue.
Comparison of Fiscal 2024 Versus Fiscal 2023 Net income for fiscal 2024 was $77.3 million, a 264.3% increase from the $21.2 million earned during fiscal 2023. The increase in net income was primarily due to a $102.5 million decrease in the provision for credit losses partially offset by a $43.3 million decrease in revenue.
In accordance with ASC 470, the Company recognized the $1.8 million gain on extinguishment as a component of interest expense in the Company's Consolidated Statements of Operations.
As a result, the Company recognized a $1.6 million and $1.8 million gain on extinguishment for the years ended March 31, 2024 and 2023, respectively. In accordance with ASC 470, the Company recognized the gain on extinguishment as a component of interest expense in the Company's Consolidated Statements of Operations.
The large loan portfolio increased from 51.8% of the overall portfolio as of March 31, 2022, to 58.1% as of March 31, 2023. Insurance commissions and other income increased by $8.7 million, or 8.7%, from fiscal 2022 to fiscal 2023.
The large loan portfolio decreased from 58.1% of the overall portfolio as of March 31, 2023, to 55.8% as of March 31, 2024. Insurance revenue and other income decreased by $3.5 million, or 3.3%, from fiscal 2023 to fiscal 2024.
The Company acquired $28.3 million in loans receivable, net during fiscal 2023. The Company believes that attractive opportunities to acquire new branches or receivables from its competitors or to acquire branches in communities not currently served by the Company will continue to become available as conditions in local economies and the financial circumstances of owners change.
The Company believes that attractive opportunities to acquire new branches or receivables from its competitors or to acquire branches in communities not currently served by the Company will continue to become available as conditions in local economies and the financial circumstances of owners change. The Company has a revolving credit facility with a syndicate of banks.
The provision for losses during fiscal 2023 increased by $73.3 million, or 39.3%, from the previous year. This increase can mostly be attributed to an increase in charge-off rates during the year.
The provision for credit losses during fiscal 2024 decreased by $102.5 million, or 39.5%, from the previous year. This decrease can mostly be attributed to a decrease in charge-off rates during the year.
Personnel expense totaled $177.7 million for fiscal 2023, a $5.4 million, or 2.9%, decrease over fiscal 2022. The decrease was largely due to an $8.5 million decrease in stock compensation expense and a $6.8 million decrease in bonus expense, offset by an $8.5 million increase in salary expense.
Personnel expense totaled $164.5 million for fiscal 2024, a $13.2 million, or 7.4%, decrease over fiscal 2023. The decrease was largely due to a $10.7 million decrease in stock compensation expense and a $2.2 million decrease in bonus expense. Occupancy and equipment expense totaled $49.8 million for fiscal 2024, a 2.3 million, or 4.5%, decrease over fiscal 2023.
Income tax expense decreased $5.7 million, or 49.3% for fiscal 2023 compared to the prior fiscal year. The effective tax rate increased to 21.8% for fiscal 2023 compared to 17.8% for fiscal 2022.
Income tax expense increased $16.1 million for fiscal 2024 compared to the prior fiscal year. The effective tax rate increased to 22.2% for fiscal 2024 compared to 21.8% for fiscal 2023.
The Company continues to believe stock repurchases are a viable component of the Company’s long-term financial strategy and an excellent use of excess cash when the opportunity arises.
The Company continues to believe stock repurchases are a viable component of the Company’s long-term financial strategy and an excellent use of excess cash when the opportunity arises. Additional share repurchases can be made subject to compliance with, among other things, applicable restricted payment covenants under the revolving credit facility and the Notes.
The Company's year-over-year net charge-off ratio (net charge-offs as a percentage of average net loans receivable) increased from 14.2% for the year ended March 31, 2022 to 23.7% for the year ended March 31, 2023. Net charge-offs and the net charge-off rate were negatively impacted by a higher proportion of new borrowers at the beginning of the current fiscal year.
The Company's year-over-year net charge-off ratio (net charge-offs as a percentage of average net loans receivable) decreased from 23.7% for the year ended March 31, 2023 to 17.7% for the year ended March 31, 2024.
Other income decreased by $2.2 million, or 5.1%, from fiscal 2022 to fiscal 2023 primarily due to a decrease in tax preparation income of $0.5 million and a decrease in revenue from the Company's motor club product of $5.1 million offset by a $4.0 million gain from acquisitions.
The sale of insurance products is limited to large loans in several states in which we operate. Other income increased by $4.4 million, or 10.7%, from fiscal 2023 to fiscal 2024 primarily due to an increase in tax preparation revenue of $5.5 million, partially offset by a decrease in revenue from the Company's motor club product of $1.6 million.
At or for the Three Months Ended 2023 2022 June 30, September 30, December 31, March 31, June 30, September 30, December 31, March 31, (Dollars in thousands) Total revenues $ 157,918 $ 151,258 $ 146,532 $ 160,837 $ 129,659 $ 137,827 $ 149,046 $ 168,656 Provision for credit losses $ 85,822 $ 68,620 $ 59,609 $ 45,412 $ 30,266 $ 42,044 $ 56,459 $ 57,439 General and administrative expenses $ 73,174 $ 71,218 $ 66,475 $ 68,607 $ 73,351 $ 74,989 $ 74,703 $ 76,934 Net income (loss) $ (8,803) $ (1,366) $ 5,759 $ 25,643 $ 15,771 $ 12,439 $ 7,327 $ 18,382 Gross loans receivable $ 1,641,798 $ 1,598,362 $ 1,553,985 $ 1,390,016 $ 1,223,139 $ 1,394,827 $ 1,606,111 $ 1,522,789 Number of branches open 1,146 1,104 1,084 1,073 1,205 1,202 1,202 1,167 Critical Accounting Policies The Company’s accounting and reporting policies are in accordance with GAAP and conform to general practices within the finance company industry.
At or for the Three Months Ended Fiscal 2024 Fiscal 2023 June 30, September 30, December 31, March 31, June 30, September 30, December 31, March 31, (Dollars in thousands) Total revenues $ 139,324 $ 136,875 $ 137,749 $ 159,265 $ 157,918 $ 151,258 $ 146,533 $ 160,837 Provision for credit losses $ 46,602 $ 40,463 $ 40,632 $ 29,276 $ 85,822 $ 68,620 $ 59,609 $ 45,412 General and administrative expenses $ 68,125 $ 62,948 $ 65,909 $ 71,619 $ 71,650 $ 69,694 $ 64,951 $ 73,178 Net income (loss) $ 9,539 $ 16,082 $ 16,665 $ 35,058 $ (8,566) $ (637) $ 5,806 $ 24,632 Gross loans receivable $ 1,397,966 $ 1,379,514 $ 1,400,622 $ 1,277,149 $ 1,641,798 $ 1,598,362 $ 1,553,985 $ 1,390,016 Number of branches open 1,055 1,053 1,052 1,048 1,146 1,104 1,084 1,073 Critical Accounting Policies The Company’s accounting and reporting policies are in accordance with GAAP and conform to general practices within the finance company industry.
Our first priority is to ensure we have enough capital to fund loan growth. To the extent we have excess capital, we may repurchase stock, if appropriate and as authorized by our Board of Directors.
Our first priority is to ensure we have enough capital to fund loan growth. As of March 31, 2024, subject to further approval from our Board of Directors, we could repurchase approximately $30.1 million of shares under the terms of our debt facilities.
Insurance commissions increased by $10.9 million, or 19.3%, from fiscal 2022 to fiscal 2023 due to an increase in loan volume in states where we offer our insurance products along with the shift towards larger loans. The sale of insurance products is limited to 30 Table of Contents large loans in several states in which we operate.
See Note 7 to the Consolidated Financial Statements for the material components of Insurance and other income for the fiscal years ended March 31, 2024, 2023 and 2022. 33 Table of Contents Insurance revenue decreased by $7.9 million, or 11.8%, from fiscal 2023 to fiscal 2024 due to a decrease in loan volume in states where we offer our insurance products along with the shift away from larger loans.
This increase is primarily attributable to the higher proportion of new borrowers at the beginning of the current fiscal year. Additionally, new borrowers originated in the prior fiscal year performed worse than expected due to macro-economic factors. General and administrative expenses during fiscal 2023 decreased by $20.5 million, or 6.8%, over the previous fiscal year.
This increase is primarily attributable to the higher proportion of NBs at the beginning of the current fiscal year. Additionally, NBs originated in the prior fiscal year performed worse than expected as a result of the rapid rise in inflation during Q4 of fiscal 2022. 2024 In fiscal 2024, the Company's net charge-off rate decreased to 17.7%.
Removed
New borrowers are our riskiest customer type and typically perform worse than our longer tenured customers. Additionally, new borrowers originated in the prior fiscal year performed worse than expected due to macro-economic factors.
Added
This decrease is primarily attributable to the Company's continued focus on credit quality and a conservative approach to its lending operations. 34 Table of Contents General and administrative expenses during fiscal 2024 decreased by $10.9 million, or 3.9%, over the previous fiscal year.
Removed
Customers who are new borrowers to the Company (less than two years since their first origination at the time of their current loan) as a percentage of the year-end portfolio decreased 20.8% year over year. These "new to World" customers now account for 25.1% of the portfolio, a decrease from 31.7% last year.
Added
The effective tax rate remained substantially unchanged from prior year with the slight increase related to the effects of increased pretax book earnings relative to the effect of permanent items included in the current fiscal year.
Removed
Customers who were with the Company for less than five months have decreased 54.9% from 13.1% to 5.9%. The reduction of new borrowers in the portfolio as well as better performance of the new borrowers originated in the current fiscal year should result in lower net-charge offs in fiscal year 2024.
Added
On May 16, 2024, the Supreme Court held that the funding mechanism for the CFPB complies with the appropriations clause of the U.S. Constitution, reversing the judgment of the Court of Appeals, and remanding the 35 Table of Contents cause for further proceedings.
Removed
On July 1, 2022, we increased base wages for our financial service representatives to a minimum of approximately $15 an hour and eliminated the monthly bonus for the same position. Occupancy and equipment expense totaled $52.1 million for fiscal 2023, remaining relatively flat when compared to fiscal year 2022.
Added
Since then, the CFPB issued a public designation order setting forth its determination that the Company has met the legal requirements for supervision (the "Order").
Removed
The increase was primarily due to the Adoption of ASU 2023-02 in the current fiscal year which requires the recognition of tax credit investments as a portion of income tax expense rather than pretax other expense, along with a decrease in the permanent tax benefit related to non-qualified stock option exercises and vesting of restricted stock recognized in the current fiscal year.
Added
Pursuant to the terms of the Order, the CFPB has supervisory authority over the Company pursuant to section 1024(a)(1)(C) of the Consumer Financial Protection Act of 2010 until such time as the Order is terminated consistent with 12 C.F.R. 1091.113.
Removed
This was partially offset by a decrease in the disallowed executive compensation under Section 162(m) in the current fiscal year.
Added
Importantly, while the Order establishes that the CFPB has supervisory authority over the Company, it does not constitute a finding that the Company has engaged in wrongdoing, nor does it require any immediate action on the part of the Company.
Removed
Regulatory Matters Mexico Investigation As previously disclosed, in August 2020, the Company reached a resolution with both the SEC and the DOJ regarding allegations primarily involving the Company's former subsidiary in Mexico (the Company divested its operations in Mexico in 2018). The DOJ declined to prosecute the Company given its voluntary self-disclosure and full remediation.
Added
However, the outcome of such supervision could result in operational changes which could reduce our ability to operate profitably or increase compliance costs.
Removed
Pursuant to a settlement and cease and desist order with the SEC, the Company paid $21,726,000 to the SEC in August of 2020.
Added
The supervision could also result in additional examinations, investigations, litigation, consent orders or administrative proceedings, which could require considerable resources, time, effort and attention from our management, and may result in operational changes, monetary penalties or declines in our stock price.
Removed
Because all CFPB rulemakings depend on the expenditure of CFPB funds, there is a risk that if the Court finds the CFPB’s funding mechanism to be unconstitutional, prior CFPB activities, including the promulgation of regulations impacting the lending market and upon which lenders, such as the Company, have relied in conducting their activities, may also be deemed unconstitutional.
Added
During fiscal 2023, the Company repurchased and extinguished $9.0 million of its Notes, net of $0.1 million unamortized debt issuance costs related to the extinguished debt, on the open market for a reacquisition price of $7.2 million.
Removed
Although the Court could issue is decision at any time after oral argument, which is anticipated to occur as part of the Court’s October 2023 Term, it is possible that a decision may not be issued until the end of the Court’s term in June 2024.
Added
The Company acquired $2.1 million and $28.3 million in loans receivable, net during fiscal 2024 and 2023, respectively.
Removed
The Company disagrees that the CFPB has reasonable cause to to supervise the Company, has responded to the CFPB's notice, and is awaiting further response from the CFPB. If the CFPB ultimately determines it has supervisory authority over the Company, then the Company may be subject to, among other things, examination by the CFPB.
Added
The Company had $725.8 thousand in outstanding standby letters of credit which include (i) $300.0 thousand related to worker's compensation expiring on December 31, 2024 and (ii) $425.8 thousand related to the Company's investment in captive insurance expiring on April 12, 2024. Both letters of credit automatically extend for one year on their expiration dates.
Removed
As discussed in Note 1 to the Consolidated Financial Statements included in this report, our policies related to the allowances for credit losses changed on April 1, 2020 in connection with the adoption of a new accounting standard update as codified in ASC 326.
Added
To the extent we have excess capital, we may repurchase stock, if appropriate and as authorized by our Board of Directors. Inflation 40 Table of Contents The Company does not believe that inflation will have a materially adverse effect on its financial condition, unless changes in inflation are particularly severe and sudden in nature.

… 5 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed1 unchanged
Biggest changeBased on the outstanding balance under the Company's revolving credit facility at March 31, 2023, a change of 1% in the interest rate would cause a change in interest expense of approximately $3.1 million on an annual basis. 38 Table of Contents Part II
Biggest changeBased on the outstanding balance under the Company's revolving credit facility at March 31, 2024, a change of 1% in the interest rate would cause a change in interest expense of approximately $2.2 million on an annual basis. 41 Table of Contents Part II
Interest Rate Risk The Company’s outstanding debt under its revolving credit facility was $307.9 million at March 31, 2023. Interest on borrowings under this facility is based on the greater of 4.5% or one month SOFR plus 0.10% and an applicable margin of 3.5%.
Interest Rate Risk The Company’s outstanding debt under its revolving credit facility was $223.4 million at March 31, 2024. Interest on borrowings under this facility is based on the greater of 4.5% or one month SOFR plus 0.10% and an applicable margin of 3.5%.

Other WRLD 10-K year-over-year comparisons