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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

__________________________________
 Form 10-Q
__________________________________

(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934

For the transition period from ______________ to ______________
 
Commission File Number:  000-19599

WORLD ACCEPTANCE CORPORATION
(Exact name of registrant as specified in its charter.)
South Carolina
 57-0425114
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
104 S Main Street
Greenville,South Carolina29601
(Address of principal executive offices)
(Zip Code)
(864)298-9800
(registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, no par valueWRLD
The NASDAQ Stock Market LLC
(NASDAQ Global Select Market)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period than the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
1


Large Accelerated filerAccelerated filer
  
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No x

The number of outstanding shares of the issuer’s common stock, no par value, as of October 27, 2023 was 6,224,831.

2


 WORLD ACCEPTANCE CORPORATION
FORM 10-Q

TABLE OF CONTENTS
Item No.ContentsPage
GLOSSARY OF DEFINED TERMS
PART I - FINANCIAL INFORMATION 
1.Consolidated Financial Statements (unaudited):
 Consolidated Balance Sheets as of September 30, 2023 and March 31, 2023
 Consolidated Statements of Operations for the three and six months ended September 30, 2023 and September 30, 2022
 Consolidated Statements of Shareholders' Equity for the three and six months ended September 30, 2023 and September 30, 2022
 Consolidated Statements of Cash Flows for the six months ended September 30, 2023 and September 30, 2022
 Notes to Consolidated Financial Statements
2.Management's Discussion and Analysis of Financial Condition and Results of Operations
3.Quantitative and Qualitative Disclosures about Market Risk
4.Controls and Procedures
PART II - OTHER INFORMATION
1.Legal Proceedings
1A.Risk Factors
2.Unregistered Sales of Equity Securities and Use of Proceeds
3.Defaults Upon Senior Securities
4.Mine Safety Disclosures
5.Other Information
6.Exhibits
EXHIBIT INDEX
SIGNATURES

Introductory Note: As used herein, the "Company," "we," "our," "us," or similar formulations include World Acceptance Corporation and each of its subsidiaries, unless otherwise expressly noted or the context otherwise requires that it include only World Acceptance Corporation. All references in this report to "fiscal 2024" are to the Company’s fiscal year ending March 31, 2024; all references in this report to "fiscal 2023" are to the Company's fiscal year ended March 31, 2023; all references in this report to "fiscal 2022" are to the Company's fiscal year ended March 31, 2022; and all references to "fiscal 2019" are to the Company’s fiscal year ended March 31, 2019.


3

GLOSSARY OF DEFINED TERMS

The following terms may be used throughout this Report, including consolidated financial statements and related notes.
TermDefinition
ASCAccounting Standards Codification
ASUAccounting Standards Update
CECLCurrent Expected Credit Loss
CEOChief Executive Officer
CFOChief Financial Officer
CFPBU.S. Consumer Financial Protection Bureau
Compensation CommitteeCompensation and Stock Option Committee
Customer TenureThe number of years since a customer was first serviced by the Company
DOJU.S. Department of Justice
ERISAEmployee Retirement Income Security Act
Exchange ActSecurities Exchange Act of 1934, as amended
FASBFinancial Accounting Standards Board
FICOThe Fair Isaac Corporation
G&AGeneral and administrative
GAAPU.S. generally accepted accounting principles
HTCHistoric Tax Credit
IRSU.S. Internal Revenue Service
Notes$300 million in aggregate principal amount of 7.0% unsecured senior notes due 2026 issued on September 27, 2021
Option Measurement PeriodThe 6.5 year performance period beginning on September 30, 2018 and ending on March 31, 2025 over which the Performance Options are eligible to vest, following certification by the Compensation Committee of achievement
PCDPurchased Assets with Credit Deterioration
Performance OptionsPerformance-based stock options
Performance Share Measurement PeriodThe 6.5 year performance period beginning on September 30, 2018 and ending on March 31, 2025 over which the Performance Shares are eligible to vest, following certification by the Compensation Committee of achievement
Performance SharesService- and performance-based restricted stock awards
Rehab RatePercentage of 91 days or more delinquent that do not charge off
Restricted StockService-based restricted stock awards
SECU.S. Securities and Exchange Commission
Service OptionsService-based stock options
SOFRSecured Overnight Finance Rate
TALTax Advance Loan
4

PART I.  FINANCIAL INFORMATION

WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 September 30, 2023March 31, 2023
ASSETS  
Cash and cash equivalents$18,785,970 $16,508,935 
Gross loans receivable1,379,513,967 1,390,015,568 
Less:  
Unearned interest, insurance and fees(370,312,342)(376,674,349)
Allowance for credit losses(128,892,192)(125,552,733)
Loans receivable, net880,309,433 887,788,486 
Operating lease right‐of‐use assets, net80,396,803 81,289,240 
Property and equipment, net23,695,862 23,926,080 
Deferred income taxes, net41,857,758 41,722,361 
Other assets, net40,125,544 43,422,669 
Goodwill7,370,791 7,370,791 
Intangible assets, net13,157,700 15,289,579 
Total assets$1,105,699,861 $1,117,318,141 
 
LIABILITIES & SHAREHOLDERS' EQUITY  
Liabilities:  
Senior notes payable$276,555,903 $307,910,824 
Senior unsecured notes payable, net284,378,749 287,352,892 
Income taxes payable1,946,851 2,532,766 
Operating lease liability82,948,163 83,735,002 
Accounts payable and accrued expenses49,847,400 50,559,920 
Total liabilities695,677,066 732,091,404 
Commitments and contingencies
Shareholders' equity:  
Preferred stock, no par value Authorized 5,000,000, no shares issued or outstanding
  
Common stock, no par value Authorized 95,000,000 shares; issued and outstanding 6,246,818 and 6,231,082 shares at September 30, 2023 and March 31, 2023, respectively
  
Additional paid-in capital287,246,730 288,071,839 
Retained earnings122,776,065 97,154,898 
Total shareholders' equity410,022,795 385,226,737 
Total liabilities and shareholders' equity$1,105,699,861 $1,117,318,141 

See accompanying notes to consolidated financial statements.

5

WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended September 30,Six months ended September 30,
2023202220232022
Revenues:  
Interest and fee income$116,953,114 $130,461,548 $233,572,028 $260,666,938 
Insurance and other income, net19,922,207 20,796,630 42,627,084 48,509,528 
Total revenues136,875,321 151,258,178 276,199,112 309,176,466 
Expenses:   
Provision for credit losses40,463,066 68,620,146 87,065,078 154,442,413 
General and administrative expenses:  
Personnel38,437,364 45,294,668 80,229,451 90,473,013 
Occupancy and equipment12,428,506 13,490,914 25,048,246 26,725,611 
Advertising2,241,707 1,009,797 4,991,251 3,218,192 
Amortization of intangible assets1,062,563 1,106,050 2,131,879 2,238,154 
Other8,777,372 8,792,876 18,671,889 18,689,730 
Total general and administrative expenses62,947,512 69,694,305 131,072,716 141,344,700 
Interest expense12,543,238 13,032,418 24,785,487 24,206,765 
Total expenses115,953,816 151,346,869 242,923,281 319,993,878 
Income (loss) before income taxes20,921,505 (88,691)33,275,831 (10,817,412)
Income tax expense (benefit)4,839,086 548,888 7,654,664 (1,613,361)
Net income (loss)$16,082,419 $(637,579)$25,621,167 $(9,204,051)
Net income (loss) per common share:   
Basic$2.78 $(0.11)$4.44 $(1.61)
Diluted$2.71 $(0.11)$4.33 $(1.61)
Weighted average common shares outstanding:  
Basic5,780,061 5,726,469 5,776,417 5,733,613 
Diluted5,938,705 5,726,469 5,915,023 5,733,613 

See accompanying notes to consolidated financial statements.

6

WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)


Three months ended September 30, 2023
Common Stock
SharesAdditional Paid-in CapitalRetained EarningsTotal Shareholders' Equity
Balances at June 30, 20236,240,497 $290,193,831 $106,693,646 $396,887,477 
Proceeds from exercise of stock options4,203 360,676  360,676 
Stock-based compensation related to restricted stock, net of cancellations ($0)
2,118 1,066,500  1,066,500 
Stock-based compensation (reversal) related to stock options
 (4,374,277) (4,374,277)
Net income  16,082,419 16,082,419 
Balances at September 30, 20236,246,818 $287,246,730 $122,776,065 $410,022,795 

Three months ended September 30, 2022
Common Stock
SharesAdditional Paid-in CapitalRetained EarningsTotal Shareholders' Equity
Balances at June 30, 20226,280,721 $285,126,690 $67,356,437 $352,483,127 
Stock-based compensation related to restricted stock, net of cancellations ($0)
1,000 3,143,874 — 3,143,874 
Stock-based compensation related to stock options
— 676,704 — 676,704 
Net loss— — (637,579)(637,579)
Balances at September 30, 20226,281,721 $288,947,268 $66,718,858 $355,666,126 


Six months ended September 30, 2023
Common Stock
SharesAdditional Paid-in CapitalRetained EarningsTotal Shareholders' Equity
Balances at March 31, 20236,231,082 $288,071,839 $97,154,898 $385,226,737 
Proceeds from exercise of stock options
11,743 1,069,970  1,069,970 
Stock-based compensation related to restricted stock, net of cancellations ($0)
3,993 2,165,851  2,165,851 
Stock-based compensation (reversal) related to stock options
 (4,060,930) (4,060,930)
Net income  25,621,167 25,621,167 
Balances at September 30, 20236,246,818 $287,246,730 $122,776,065 $410,022,795 
7

Six months ended September 30, 2022
Common Stock
SharesAdditional Paid-in CapitalRetained EarningsTotal Shareholders' Equity
Balances at March 31, 20226,348,314 $280,907,085 $92,117,343 $373,024,428 
Proceeds from exercise of stock options4,300 403,547 — 403,547 
Common stock repurchases(73,643)— (14,314,088)(14,314,088)
Stock-based compensation related to restricted stock, net of cancellations ($0)
2,750 6,191,877 — 6,191,877 
Stock-based compensation related to stock options
— 1,444,759 — 1,444,759 
Cumulative effect of adoption of ASU 2023-02— — (1,880,346)(1,880,346)
Net loss— — (9,204,051)(9,204,051)
Balances at September 30, 20226,281,721 $288,947,268 $66,718,858 $355,666,126 

See accompanying notes to consolidated financial statements.

8

WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
9

(Unaudited)
Six months ended September 30,
 20232022
Cash flow from operating activities:  
Net income (loss)$25,621,167 $(9,204,051)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:  
Amortization of intangible assets2,131,879 2,238,154 
Accrued unearned interest(1,861,155)(3,205,855)
Amortization of deferred loan cost6,613,208 8,007,538 
Gain on extinguishment of senior unsecured notes payable(621,776) 
Amortization of debt issuance costs995,155 745,810 
Provision for credit losses87,065,078 154,442,413 
Depreciation3,230,062 3,016,033 
Amortization of finance leases 204,552 
Gain on asset acquisitions, net of income tax (3,708,344)
Gain on sale of property and equipment(62,085)(29,962)
Deferred income tax benefit(135,397)(8,579,264)
Stock-based compensation (reversal) related to stock option and restricted stock plans, net of cancellations(1,895,079)7,636,636 
Change in accounts:  
Other assets, net3,303,326 (6,307,587)
Income taxes payable(585,915)(5,067,372)
Accounts payable and accrued expenses(712,520)(3,531,037)
Net cash provided by operating activities123,085,948 136,657,664 
Cash flows from investing activities:  
Increase in loans receivable, net(84,338,078)(149,437,154)
Cash paid for acquisitions, primarily loans (22,314,902)
Purchases of property and equipment(3,198,907)(3,132,033)
Proceeds from the sale of property and equipment261,148 283,927 
Net cash used in investing activities(87,275,837)(174,600,162)
Cash flow from financing activities:  
Borrowings from senior notes payable123,726,963 182,426,096 
Payments on senior notes payable(155,081,884)(128,500,000)
Payments for extinguished senior unsecured notes payable(2,829,375) 
Debt issuance costs associated with senior unsecured notes payable (104,656)
Payments for debt extinguishment costs(8,750) 
Debt issuance costs associated with senior notes payable(410,000)(430,136)
Proceeds from exercise of stock options1,069,970 403,547 
Repayment of finance lease (80,067)
Repurchase of common stock (14,314,088)
Net cash provided by (used in) financing activities(33,533,076)39,400,696 
Net change in cash and cash equivalents2,277,035 1,458,198 
Cash and cash equivalents at beginning of period16,508,935 19,236,322 
Cash and cash equivalents at end of period$18,785,970 $20,694,520 
Supplemental Disclosures:
Interest paid during the period$24,526,424 $24,513,429 
Income taxes paid during the period$7,171,889 $10,772,869 
Finance lease right-of-use assets, net transferred to property and equipment, net$ $402,960 
10


See accompanying notes to consolidated financial statements.
11

WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)

NOTE 1 – BASIS OF PRESENTATION

The consolidated financial statements of the Company at September 30, 2023 and 2022 and for the three and six months then ended were prepared in accordance with the instructions for Form 10-Q and are unaudited; however, in the opinion of management, all adjustments (consisting only of items of a normal, recurring nature) necessary for a fair presentation of the financial position at September 30, 2023, and the results of operations and cash flows for the periods ended September 30, 2023 and 2022, have been included. The results for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates.

The consolidated financial statements do not include all disclosures required by GAAP and should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the fiscal year ended March 31, 2023, included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2023, as filed with the SEC. The Company applies the accounting policies contained in Note 1 to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended March 31, 2023. The Company believes that the disclosures are adequate to make the information presented not misleading.

NOTE 2 – SUMMARY OF SIGNIFICANT POLICIES

Nature of Operations

The Company is a small-loan consumer finance company headquartered in Greenville, South Carolina that offers short-term small loans, medium-term larger loans, related credit insurance products and ancillary products and services to individuals who have limited access to other sources of consumer credit. The Company offers income tax return preparation services to its loan customers and other individuals.

Seasonality

The Company's loan volume and corresponding loans receivable follow seasonal trends. The Company's highest loan demand generally occurs from October through December, its third fiscal quarter. Loan demand is generally lowest and loan repayment highest from January to March, its fourth fiscal quarter. Loan volume and average balances remain relatively level during the remainder of the year. Consequently, the Company experiences significant seasonal fluctuations in its operating results and cash needs. Operating results for the Company's third fiscal quarter are generally lower than in other quarters, and operating results for its fourth fiscal quarter are generally higher than in other quarters.

Loans receivable, net

Loans receivable are carried at the gross amount outstanding, reduced by unearned interest and insurance income, net of deferred origination fees and direct costs, and an allowance for credit losses. Fees received and direct costs incurred for the origination of loans are deferred and amortized to interest income over the contractual lives of the loans using the interest method. Unamortized amounts are recognized in income at the time that loans are refinanced or paid in full except for those refinancings that do not constitute a more than minor modification. Net unamortized deferred origination costs were $5.4 million and $4.9 million as of September 30, 2023 and March 31, 2023, respectively.

From time to time, the Company may sell charged off loans receivable, which are accounted for as a sale in accordance with ASC 860, Transfers and Servicing.

Allowance for credit losses

Refer to Note 4, “Loans Receivable and Allowance for Credit Losses,” for information regarding the Company's CECL allowance model and a description of the methodology it utilizes.
12


Reclassification

Certain prior period amounts have been reclassified to conform to the current presentation. Such reclassifications had no impact on previously reported net income (loss) or shareholders' equity, with the exception of the following.

As a result of adopting ASU 2023-02, Investments- Equity Method and Joint Venture (Topic 323), in March 2023 with an effective date of April 1, 2022, previously reported net loss for the three and six months ended September 30, 2022 and shareholders' equity as of September 30, 2022 were immaterially impacted to conform to the modified retrospective application of this newly adopted ASU.

Recently Adopted Accounting Standards

Troubled Debt Restructurings and Vintage Disclosures

In March 2022, the FASB issued ASU 2022-02, Troubled Debt Restructurings and Vintage Disclosures. The amendments in this update eliminated the accounting guidance for troubled debt restructurings by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Additionally, for public business entities, the amendments in this update require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. The adoption of ASU 2022-02 on April 1, 2023 expanded our write-off disclosures, but had no other impact on the Company’s Consolidated Financial Statements.

Recently Issued Accounting Standards Not Yet Adopted

We reviewed all newly issued accounting pronouncements and concluded that they are either not applicable to our business or are not expected to have a material effect on the Consolidated Financial Statements as a result of future adoption.

NOTE 3 – FAIR VALUE

Fair Value Disclosures

The Company may carry certain financial instruments and derivative assets and liabilities at fair value measured on a recurring or nonrecurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Company measures the fair values of its financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Fair value measurements are grouped in three levels. The levels prioritize the inputs used to measure the fair value of the assets or liabilities. These levels are:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices that are observable for assets and liabilities, either directly or indirectly. These inputs include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are less active.
Level 3 – Unobservable inputs for assets or liabilities reflecting the reporting entity’s own assumptions.

The Company’s financial instruments consist of cash and cash equivalents, loans receivable, net, senior notes payable, and senior unsecured notes payable. Loans receivable are originated at prevailing market rates and have an average life of approximately less than twelve months. Given the short-term nature of these loans, they are continually repriced at current market rates. The Company’s senior notes payable, consisting of a senior revolving credit facility has a variable rate based on a margin over SOFR and reprices with any changes in SOFR. The fair value of the senior unsecured notes payable is estimated based on quoted prices in markets that are not active. The Company also considers its creditworthiness in its estimation of fair value.

13

The carrying amounts and estimated fair values of financial assets and liabilities disclosed but not carried at fair value and their level within the fair value hierarchy are summarized below.
September 30, 2023March 31, 2023
Input LevelCarrying ValueEstimated Fair ValueCarrying ValueEstimated Fair Value
ASSETS
Cash and cash equivalents1$18,785,970 $18,785,970 $16,508,935 $16,508,935 
Loans receivable, net3880,309,433 880,309,433 887,788,486 887,788,486 
LIABILITIES
Senior unsecured notes payable2287,360,000 246,175,565 290,860,000 218,127,548 
Senior notes payable3276,555,903 276,555,903 307,910,824 307,910,824 

There were no significant assets or liabilities measured at fair value on a non-recurring basis as of September 30, 2023 or March 31, 2023.

NOTE 4 – LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES

The following is a summary of gross loans receivable by Customer Tenure as of:
Customer TenureSeptember 30, 2023March 31, 2023
0 to 5 months$78,905,707 $81,803,668 
6 to 17 months98,860,782 133,650,188 
18 to 35 months151,877,424 135,396,187 
36 to 59 months226,824,412 244,414,255 
60+ months822,888,964 792,189,216 
Tax advance loans156,678 2,562,054 
Total gross loans$1,379,513,967 $1,390,015,568 

Current payment performance is used to assess the capability of the borrower to repay contractual obligations of the loan agreements as scheduled, which is monitored by management on a daily basis. On an as needed basis, qualitative information may be taken into consideration if new information arises related to the customer’s ability to repay the loan. The Company’s payment performance buckets are as follows: current, 30-60 days past due, 61-90 days past due, 91 days or more past due.

The following table provides a breakdown of the Company’s gross loans receivable by current payment performance on a recency basis and year of origination at September 30, 2023:
14

Term Loans By Origination
LoansUp to
1
Year Ago
Between
1 and 2
Years Ago
Between
2 and 3
Years Ago
Between
3 and 4
Years Ago
Between
4 and 5
Years Ago
More than
5
Years Ago
Total
Current$1,169,455,712 $72,966,809 $4,066,741 $113,411 $22,705 $6,064 $1,246,631,442 
30 - 60 days past due44,868,140 6,430,788 458,895 53,300 24,474 2,567 51,838,164 
61 - 90 days past due26,627,657 3,480,427 143,063 5,984 9,473 4,000 30,270,604 
91 or more days past due42,123,820 8,031,158 446,165 13,578 2,358  50,617,079 
Total$1,283,075,329 $90,909,182 $5,114,864 $186,273 $59,010 $12,631 $1,379,357,289 
Term Loans By Origination
Tax advance loansUp to
1
Year Ago
Between
1 and 2
Years Ago
Between
2 and 3
Years Ago
Between
3 and 4
Years Ago
Between
4 and 5
Years Ago
More than
5
Years Ago
Total
Current$33,367 $1,850 $ $ $ $ $35,217 
30 - 60 days past due34,884      34,884 
61 - 90 days past due27,612 188     27,800 
91 or more days past due58,777      58,777 
Total$154,640 $2,038 $ $ $ $ $156,678 
Total gross loans$1,379,513,967 

The following table provides a breakdown of the Company’s gross loans receivable by current payment performance on a recency basis and year of origination at March 31, 2023:
15

Term Loans By Origination
LoansUp to
1
Year Ago
Between
1 and 2
Years Ago
Between
2 and 3
Years Ago
Between
3 and 4
Years Ago
Between
4 and 5
Years Ago
More than
5
Years Ago
Total
Current$1,200,504,088 $62,076,656 $1,998,218 $148,662 $23,046 $6,863 $1,264,757,533 
30 - 60 days past due40,791,746 4,689,867 160,956 42,700 8,504 2,988 45,696,761 
61 - 90 days past due26,319,250 2,572,733 92,088 40,281 884  29,025,236 
91 or more days past due41,832,821 5,944,645 160,361 29,494 4,430 2,233 47,973,984 
Total$1,309,447,905 $75,283,901 $2,411,623 $261,137 $36,864 $12,084 $1,387,453,514 
Term Loans By Origination
Tax advance loansUp to
1
Year Ago
Between
1 and 2
Years Ago
Between
2 and 3
Years Ago
Between
3 and 4
Years Ago
Between
4 and 5
Years Ago
More than
5
Years Ago
Total
Current$1,932,607 $3,524 $ $ $ $ $1,936,131 
30 - 60 days past due609,844 736     610,580 
61 - 90 days past due 4,845     4,845 
91 or more days past due409 10,089     10,498 
Total$2,542,860 $19,194 $ $ $ $ $2,562,054 
Total gross loans$1,390,015,568 

The following table provides a breakdown of the Company’s gross loans receivable by current payment performance on a contractual basis and year of origination at September 30, 2023:

16

Term Loans By Origination
LoansUp to
1
Year Ago
Between
1 and 2
Years Ago
Between
2 and 3
Years Ago
Between
3 and 4
Years Ago
Between
4 and 5
Years Ago
More than
5
Years Ago
Total
Current$1,148,997,074 $63,198,145 $3,210,332 $36,714 $12,494 $296 $1,215,455,055 
30 - 60 days past due49,700,949 5,031,320 205,934 1,533  3,082 54,942,818 
61 - 90 days past due32,676,887 4,570,414 146,508 2,939 1,218  37,397,966 
91 or more days past due51,700,417 18,109,303 1,552,092 145,088 45,298 9,252 71,561,450 
Total$1,283,075,327 $90,909,182 $5,114,866 $186,274 $59,010 $12,630 $1,379,357,289 
Term Loans By Origination
Tax advance loansUp to
1
Year Ago
Between
1 and 2
Years Ago
Between
2 and 3
Years Ago
Between
3 and 4
Years Ago
Between
4 and 5
Years Ago
More than
5
Years Ago
Total
Current$21,277 $ $ $ $ $ $21,277 
30 - 60 days past due24,279      24,279 
61 - 90 days past due27,076      27,076 
91 or more days past due82,008 2,038     84,046 
Total$154,640 $2,038 $ $ $ $ $156,678 
Total gross loans$1,379,513,967 

The following table provides a breakdown of the Company’s gross loans receivable by current payment performance on a contractual basis and year of origination at March 31, 2023:
17

Term Loans By Origination
LoansUp to
1
Year Ago
Between
1 and 2
Years Ago
Between
2 and 3
Years Ago
Between
3 and 4
Years Ago
Between
4 and 5
Years Ago
More than
5
Years Ago
Total
Current$1,174,237,761 $53,652,011 $1,554,144 $64,233 $5,142 $1,491 $1,229,514,782 
30 - 60 days past due47,346,331 3,661,493 77,857 6,714   51,092,395 
61 - 90 days past due33,012,804 3,030,052 44,129 7,643   36,094,628 
91 or more days past due54,851,010 14,940,345 735,493 182,547 31,721 10,593 70,751,709 
Total$1,309,447,906 $75,283,901 $2,411,623 $261,137 $36,863 $12,084 $1,387,453,514 
Term Loans By Origination
Tax advance loansUp to
1
Year Ago
Between
1 and 2
Years Ago
Between
2 and 3
Years Ago
Between
3 and 4
Years Ago
Between
4 and 5
Years Ago
More than
5
Years Ago
Total
Current$1,932,607 $ $ $ $ $ $1,932,607 
30 - 60 days past due609,844      609,844 
61 - 90 days past due       
91 or more days past due409 19,194     19,603 
Total$2,542,860 $19,194 $ $ $ $ $2,562,054 
Total gross loans$1,390,015,568 

The following table provides a breakdown of the Company’s gross charge-offs by year of origination for the three and six months ended September 30, 2023:

Three months ended September 30,Six months ended September 30,
Gross Charge-offs by OriginationGross Charge-offs by Origination
Origination by Calendar YearLoansTax advance loansTotalLoansTax advance loansTotal
2018 and prior$2,721 $ $2,721 $7,728 $ $7,728 
20194,811  4,811 17,538  17,538 
202040,176  40,176 144,463  144,463 
20211,703,191  1,703,191 4,646,557  4,646,557 
202233,423,002 621 33,423,623 80,819,818 5,248 80,825,066 
202315,457,320 1,138,748 16,596,068 15,710,532 1,141,748 16,852,280 
Total$50,631,221 $1,139,369 $51,770,590 $101,346,636 $1,146,996 $102,493,632 
The following table provides a breakdown of the Company’s gross charge-offs by year of origination for the three and six months ended September 30, 2022:

18

Three months ended September 30,Six months ended September 30,
Gross Charge-offs by OriginationGross Charge-offs by Origination
Origination by Calendar YearLoansTax advance loansTotalLoansTax advance loansTotal
2017 and prior$3,783 $ $3,783 $9,446 $ $9,446 
20186,739  6,739 20,594  20,594 
201937,082  37,082 175,745  175,745 
2020640,303  640,303 2,150,295  2,150,295 
202140,824,718 5,459 40,830,177 106,691,918 19,622 106,711,540 
202229,602,144 1,962,912 31,565,056 31,251,886 2,030,016 33,281,902 
Total$71,114,769 $1,968,371 $73,083,140 $140,299,884 $2,049,638 $142,349,522 
The allowance for credit losses is applied to amortized cost, which is defined as the amount at which a financing receivable is originated, and net of deferred fees and costs, collection of cash, and charge-offs. Amortized cost also includes interest earned but not collected.

Credit Risk is inherent in the business of extending loans to borrowers and is continuously monitored by management and reflected within the allowance for credit losses for loans. The allowance for credit losses is an estimate of expected losses inherent within the Company’s gross loans receivable portfolio. In estimating the allowance for credit losses, loans with similar risk characteristics are aggregated into pools and collectively assessed. The Company’s loan products have generally the same terms therefore the Company looked to borrower characteristics as a way to disaggregate loans into pools sharing similar risks.

In determining the allowance for credit losses, the Company examined four borrower risk metrics as noted below.

1.Borrower type
2.Active months
3.Prior loan performance
4.Customer Tenure

To determine how well each metric predicts default risk the Company uses loss rate data over an observation period of twelve months at the loan level.

The information value was then calculated for each metric. From this analysis management determined the metric that had the strongest predictor of default risk was Customer Tenure. The Customer Tenure buckets used in the allowance for credit loss calculation are:

1.0 to 5 months
2.6 to 17 months
3.18 to 35     months
4.36 to 59 months
5.60+ months

Management will continue to monitor this credit metric on a quarterly basis.

Management estimates an allowance for each Customer Tenure bucket by performing a historical migration analysis of loans in that bucket for the twelve most recent historical twelve-month migration periods. All loans that are greater than 90 days past due on a recency basis and not written off as of the reporting date are reserved for at 100% of the outstanding balance, net of a calculated Rehab Rate. Loans are charged-off at the earlier of 120 days past due on a recency basis or when deemed uncollectible. Management considers whether current credit conditions might suggest a change is needed to the allowance for credit losses by monitoring trends in first pay success for new borrowers, 60-89 day delinquencies on a recency basis, FICO scores, percent of loan balances that are paying and percentage of gross loans that are acquired loans. From time to time, the Company will make changes, as deemed appropriate, to our new borrower underwriting guidance. As a result, management also considers whether a change in our new borrower underwriting might suggest a change is needed to the allowance for credit losses. If a change is determined necessary, then the Company has elected to immediately revert back to historical experience past the forecast period.

19

Due to the short term nature of the loan portfolio, forecasted changes in macroeconomic variables such as unemployment do not have a significant impact on loans outstanding at the end of a particular reporting period. Therefore, management develops a reasonable and supportable forecast of losses by comparing the most recent six-month loss curves as compared to historical loss curves to see if there are significant changes in borrower behavior that may indicate the historical migration rates should be adjusted. If management determines that historical migration rates should be adjusted to reflect expected credit losses, a qualitative adjustment is made to reflect management's judgment regarding observable changes in recent or expected economic trends and conditions, portfolio composition, or other significant events or conditions that affect the current estimate.

The following table presents a roll forward of the allowance for credit losses for the three and six months ended September 30, 2023 and 2022:
Three months ended September 30,Six months ended September 30,
2023202220232022
Beginning balance$129,342,988 $155,650,679 $125,552,733 $134,242,862 
Provision for credit losses40,463,066 68,620,146 87,065,078 154,442,413 
Charge-offs(51,770,590)(73,083,140)(102,493,632)(142,349,522)
Recoveries110,856,728 4,704,415 18,768,013 9,556,347 
Net charge-offs(40,913,862)(68,378,725)(83,725,619)(132,793,175)
Ending Balance$128,892,192 $155,892,100 $128,892,192 $155,892,100 

The following table is an aging analysis on a recency basis at amortized cost of the Company’s gross loans receivable at September 30, 2023:
Days Past Due - Recency Basis
Customer TenureCurrent30 - 6061 - 90Over 90Total Past DueTotal Loans
0 to 5 months$61,025,284 $5,443,334 $4,574,581 $7,862,508 $17,880,423 $78,905,707 
6 to 17 months83,064,106 5,500,634 3,587,259 6,708,783 15,796,676 98,860,782 
18 to 35 months133,577,220 6,989,457 4,294,465 7,016,282 18,300,204 151,877,424 
36 to 59 months203,744,178 9,098,337 5,316,135 8,665,762 23,080,234 226,824,412 
60+ months765,220,654 24,806,402 12,498,164 20,363,744 57,668,310 822,888,964 
Tax advance loans35,217 34,884 27,800 58,777 121,461 156,678 
Total gross loans1,246,666,659 51,873,048 30,298,404 50,675,856 132,847,308 1,379,513,967 
Unearned interest, insurance and fees(336,723,807)(10,890,630)(8,467,754)(14,230,151)(33,588,535)(370,312,342)
Total net loans$909,942,852 $40,982,418 $21,830,650 $36,445,705 $99,258,773 $1,009,201,625 
Percentage of period-end gross loans receivable3.8%2.2%3.7%9.6%

The following table is an aging analysis on a recency basis at amortized cost of the Company’s gross loans receivable at March 31, 2023:

1 Recoveries during the six months ended September 30, 2023 include $12.5 million in proceeds related to the sales of charge-offs, for which $4.9 million relates to bulk sales of charge-offs from prior periods and $7.6 million relates to recurring sales of charge-offs. This gain on sale is included as a component of Provision for credit losses in the Consolidated Statements of Operations. There were no sales of charge-offs during the six months ended September 30, 2022.
20

Days Past Due - Recency Basis
Customer TenureCurrent30 - 6061 - 90Over 90Total Past DueTotal Loans
0 to 5 months$64,615,314 $5,451,276 $4,407,751 $7,329,327 $17,188,354 $81,803,668 
6 to 17 months113,946,833 6,527,355 4,655,441 8,520,559 19,703,355 133,650,188 
18 to 35 months120,125,821 5,336,994 3,727,331 6,206,041 15,270,366 135,396,187 
36 to 59 months223,734,062 8,070,011 4,839,000 7,771,182