QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
(Address of principal executive offices) | ||||||||
(Zip Code) |
(registrant's telephone number, including area code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Common Stock, no par value | WRLD | The NASDAQ Stock Market LLC (NASDAQ Global Select Market) |
☒ | Accelerated filer | ☐ | ||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company |
Item No. | Contents | Page | ||||||
GLOSSARY OF DEFINED TERMS | ||||||||
PART I - FINANCIAL INFORMATION | ||||||||
1. | Consolidated Financial Statements (unaudited): | |||||||
Consolidated Balance Sheets as of June 30, 2020 and March 31, 2020 | ||||||||
Consolidated Statements of Operations for the three months ended June 30, 2020 and June 30, 2019 | ||||||||
Consolidated Statements of Shareholders' Equity for the three months ended June 30, 2020 and June 30, 2019 | ||||||||
Consolidated Statements of Cash Flows for the three months ended June 30, 2020 and June 30, 2019 | ||||||||
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 |
Term | Definition | ||||
ACL | Allowance for Credit Losses | ||||
ASU | Accounting Standards Update | ||||
CDA | Collateral Dependent Asset | ||||
CECL | Current Expected Credit Loss | ||||
CEO | Chief Executive Officer | ||||
CFO | Chief Financial Officer | ||||
CFPB | U.S. Consumer Financial Protection Bureau | ||||
Compensation Committee | Compensation and Stock Option Committee | ||||
Customer Tenure | The number of years since a customer was first serviced by the Company | ||||
DOJ | U.S. Department of Justice | ||||
Exchange Act | Securities Exchange Act of 1934, as amended | ||||
FASB | Financial Accounting Standards Board | ||||
FCPA | U.S. Foreign Corrupt Practices Act of 1977, as amended | ||||
G&A | General and administrative | ||||
GAAP | U.S. generally accepted accounting principles | ||||
IRC | Internal Revenue Code of 1986, as amended | ||||
IRS | U.S. Internal Revenue Service | ||||
LIBOR | London Interbank Offered Rate | ||||
Option Measurement Period | The 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 | ||||
Performance Options | Performance-based stock options | ||||
Performance Share Measurement Period | The 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 Shares | Service- and performance-based restricted stock awards | ||||
Purchasers | Jointly, Astro Wealth S.A. de C.V. and Astro Assets S.A. de C.V. | ||||
Rehab Rate | Percentage of 90 days or more delinquent that do not charge off | ||||
Restricted Stock | Service-based restricted stock awards | ||||
SEC | U.S. Securities and Exchange Commission | ||||
Service Options | Service-based stock options | ||||
TAL | Tax Advance Loan | ||||
WAC de Mexico | WAC de México, S.A. de C.V., SOFOM, E.N.R., a former subsidiary of World Acceptance Corporation |
June 30, 2020 | March 31, 2020 | ||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Gross loans receivable | |||||||||||
Less: | |||||||||||
Unearned interest, insurance and fees | ( | ( | |||||||||
Allowance for credit losses | ( | ( | |||||||||
Loans receivable, net | |||||||||||
Right-of-use asset (Note 6) | |||||||||||
Property and equipment, net | |||||||||||
Deferred income taxes, net | |||||||||||
Other assets, net | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Assets held for sale (Note 2) | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES & SHAREHOLDERS' EQUITY | |||||||||||
Liabilities: | |||||||||||
Senior notes payable | $ | $ | |||||||||
Income taxes payable | |||||||||||
Lease liability (Note 6) | |||||||||||
Accounts payable and accrued expenses | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Notes 6 and 12) | |||||||||||
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 7,451,588 and 7,807,834 shares at June 30, 2020 and March 31, 2020, respectively | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Total shareholders' equity | |||||||||||
Total liabilities and shareholders' equity | $ | $ |
Three months ended June 30, | |||||||||||
2020 | 2019 | ||||||||||
Revenues: | |||||||||||
Interest and fee income | $ | $ | |||||||||
Insurance income, net and other income | |||||||||||
Total revenues | |||||||||||
Expenses: | |||||||||||
Provision for credit losses | |||||||||||
General and administrative expenses: | |||||||||||
Personnel | |||||||||||
Occupancy and equipment | |||||||||||
Advertising | |||||||||||
Amortization of intangible assets | |||||||||||
Other | |||||||||||
Total general and administrative expenses | |||||||||||
Interest expense | |||||||||||
Total expenses | |||||||||||
Income before income taxes | |||||||||||
Income taxes | |||||||||||
Net income | $ | $ | |||||||||
Net income per common share: | |||||||||||
Basic | $ | $ | |||||||||
Diluted | $ | $ | |||||||||
Weighted average common shares outstanding: | |||||||||||
Basic | |||||||||||
Diluted |
Three months ended June 30, 2020 | |||||||||||||||||||||||
Common Stock | |||||||||||||||||||||||
Shares | Additional Paid-in Capital | Retained Earnings | Total Shareholders' Equity | ||||||||||||||||||||
Balances at March 31, 2020 | $ | $ | |||||||||||||||||||||
Proceeds from exercise of stock options | — | ||||||||||||||||||||||
Common stock repurchases | ( | — | ( | ( | |||||||||||||||||||
Restricted common stock expense under stock option plan, net of cancellations ($119,865) | ( | — | |||||||||||||||||||||
Stock option expense | — | — | |||||||||||||||||||||
Cumulative effect of adoption of ASC 326 | — | — | ( | ( | |||||||||||||||||||
Net income | — | — | |||||||||||||||||||||
Balances at June 30, 2020 | $ | $ |
Three months ended June 30, 2019 | |||||||||||||||||||||||
Common Stock | |||||||||||||||||||||||
Shares | Additional Paid-in Capital | Retained Earnings | Total Shareholders' Equity | ||||||||||||||||||||
Balances at March 31, 2019 | $ | $ | |||||||||||||||||||||
Proceeds from exercise of stock options | — | ||||||||||||||||||||||
Common stock repurchases | ( | — | ( | ( | |||||||||||||||||||
Restricted common stock expense under stock option plan, net of cancellations ($238,168) | ( | — | |||||||||||||||||||||
Stock option expense | — | — | |||||||||||||||||||||
Net income | — | — | |||||||||||||||||||||
Balances at June 30, 2019 | $ | $ |
Three months ended June 30, | |||||||||||
2020 | 2019 | ||||||||||
Cash flow from operating activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Amortization of intangible assets | |||||||||||
Amortization of historical tax credits | |||||||||||
Amortization of debt issuance costs | |||||||||||
Provision for credit losses | |||||||||||
Depreciation | |||||||||||
Loss (gain) on sale of property and equipment | ( | ||||||||||
Deferred income tax benefit | ( | ||||||||||
Compensation related to stock option and restricted stock plans, net of taxes and adjustments | |||||||||||
Change in accounts: | |||||||||||
Other assets, net | |||||||||||
Income taxes payable | |||||||||||
Accounts payable and accrued expenses | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Decrease (increase) in loans receivable, net | ( | ||||||||||
Net assets acquired from branch acquisitions, primarily loans | ( | ( | |||||||||
Increase in intangible assets from acquisitions | ( | ( | |||||||||
Purchases of property and equipment | ( | ( | |||||||||
Proceeds from sale of property and equipment | |||||||||||
Net cash provided by (used in) investing activities | ( | ||||||||||
Cash flow from financing activities: | |||||||||||
Borrowings from senior notes payable | |||||||||||
Payments on senior notes payable | ( | ( | |||||||||
Debt issuance costs associated with senior notes payable | ( | ( | |||||||||
Proceeds from exercise of stock options | |||||||||||
Payments for taxes related to net share settlement of equity awards | ( | ( | |||||||||
Repurchase of common stock | ( | ( | |||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
Net change in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ | |||||||||
Supplemental Disclosures: | |||||||||||
Interest paid during the period | $ | $ | |||||||||
Income taxes paid during the period | $ | $ |
June 30, 2020 | ||||||||
Assets held for sale: | ||||||||
Property and equipment, net | $ | |||||||
Total assets held for sale | $ |
June 30, 2020 | March 31, 2020 | ||||||||||||||||||||||||||||
Input Level | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||||||
Cash and cash equivalents | 1 | $ | $ | ||||||||||||||||||||||||||
Loans receivable, net | 3 | ||||||||||||||||||||||||||||
LIABILITIES | |||||||||||||||||||||||||||||
Senior notes payable | 3 |
June 30, 2020 | March 31, 2020 | ||||||||||||||||||||||||||||
Input Level | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||||||
Assets held for sale | 2 | $ | $ | $ | $ |
Customer Tenure | June 30, 2020 | ||||
0 to 5 months | $ | ||||
6 to 17 months | |||||
18 to 35 months | |||||
36 to 59 months | |||||
60+ months | |||||
Tax advance loans | |||||
Total gross loans | $ |
Term Loans By Origination | ||||||||||||||||||||||||||
Loans | Up 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 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
30 - 60 days past due | ||||||||||||||||||||||||||
61 - 90 days past due | ||||||||||||||||||||||||||
91 or more days past due | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Term Loans By Origination | ||||||||||||||||||||||||||
Tax advance loans | Up 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 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
30 - 60 days past due | ||||||||||||||||||||||||||
61 - 90 days past due | ||||||||||||||||||||||||||
91 or more days past due | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Total gross loans | $ |
Term Loans By Origination | ||||||||||||||||||||||||||
Loans | Up 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 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
30 - 60 days past due | ||||||||||||||||||||||||||
61 - 90 days past due | ||||||||||||||||||||||||||
91 or more days past due | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Term Loans By Origination | ||||||||||||||||||||||||||
Tax advance loans | Up 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 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
30 - 60 days past due | ||||||||||||||||||||||||||
61 - 90 days past due | ||||||||||||||||||||||||||
91 or more days past due | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Total gross loans | $ | 1,067,877,304 |
Three months ended June 30, | |||||||||||
2020 | 2019 | ||||||||||
Beginning balance, prior to adopting ASC 326 | $ | $ | |||||||||
Impact of ASC 326 | 28,628,369 | — | |||||||||
Provision for credit losses | |||||||||||
Charge-offs | ( | ( | |||||||||
Recoveries | |||||||||||
Net charge-offs | ( | ( | |||||||||
Ending Balance | $ | $ |
Days Past Due - Recency Basis | |||||||||||||||||||||||
Customer Tenure | Current | 30 - 60 | 61 - 90 | Over 90 | Total Past Due | Total Loans | |||||||||||||||||
0 to 5 months | $ | $ | $ | $ | $ | $ | |||||||||||||||||
6 to 17 months | |||||||||||||||||||||||
18 to 35 months | |||||||||||||||||||||||
36 to 59 months | |||||||||||||||||||||||
60+ months | |||||||||||||||||||||||
Tax advance loans | |||||||||||||||||||||||
Total gross loans | |||||||||||||||||||||||
Unearned interest, insurance and fees | ( | ( | ( | ( | ( | ( | |||||||||||||||||
Total net loans | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Percentage of period-end gross loans receivable |
Days Past Due - Contractual Basis | |||||||||||||||||||||||
Customer Tenure | Current | 30 - 60 | 61 - 90 | Over 90 | Total Past Due | Total Loans | |||||||||||||||||
0 to 5 months | $ | $ | $ | $ | $ | $ | |||||||||||||||||
6 to 17 months | |||||||||||||||||||||||
18 to 35 months | |||||||||||||||||||||||
36 to 59 months | |||||||||||||||||||||||
60+ months | |||||||||||||||||||||||
Tax advance loans | |||||||||||||||||||||||
Total gross loans | |||||||||||||||||||||||
Unearned interest, insurance and fees | ( | ( | ( | ( | ( | ( | |||||||||||||||||
Total net loans | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Percentage of period-end gross loans receivable |
Nonaccrual Financial Assets | ||||||||||||||||||||
Customer Tenure | As of June 30, 2020 | As of March 31, 2020 | Financial Assets 61 Days or More Past Due, Not on Nonaccrual Status | Nonaccrual Financial Assets With No Allowance as of June 30, 2020 | Interest Income Recognized | |||||||||||||||
0 to 5 months | $ | $ | $ | $ | $ | |||||||||||||||
6 to 17 months | ||||||||||||||||||||
18 to 35 months | ||||||||||||||||||||
36 to 59 months | ||||||||||||||||||||
60+ months | ||||||||||||||||||||
Tax advance loans | ||||||||||||||||||||
Unearned interest, insurance and fees | ( | ( | — | — | ||||||||||||||||
Total | $ | $ | $ | $ | $ |
March 31, 2020 | Loans individually evaluated for impairment (impaired loans) | Loans collectively evaluated for impairment | Total | ||||||||||||||
Gross loans in bankruptcy, excluding contractually delinquent | $ | ||||||||||||||||
Gross loans contractually delinquent | |||||||||||||||||
Loans not contractually delinquent and not in bankruptcy | |||||||||||||||||
Gross loan balance | |||||||||||||||||
Unearned interest and fees | ( | ( | ( | ||||||||||||||
Net loans | |||||||||||||||||
Allowance for credit losses | ( | ( | ( | ||||||||||||||
Loans, net of allowance for credit losses | $ |
June 30, 2019 | Loans individually evaluated for impairment (impaired loans) | Loans collectively evaluated for impairment | Total | ||||||||||||||
Gross loans in bankruptcy, excluding contractually delinquent | $ | ||||||||||||||||
Gross loans contractually delinquent | |||||||||||||||||
Loans not contractually delinquent and not in bankruptcy | |||||||||||||||||
Gross loan balance | |||||||||||||||||
Unearned interest and fees | ( | ( | ( | ||||||||||||||
Net loans | |||||||||||||||||
Allowance for losses | ( | ( | ( | ||||||||||||||
Loans, net of allowance for losses | $ |
March 31, 2020 | June 30, 2019 | ||||||||||
Credit risk | |||||||||||
Consumer loans- non-bankrupt accounts | $ | $ | |||||||||
Consumer loans- bankrupt accounts | |||||||||||
Total gross loans | $ | $ | |||||||||
Consumer credit exposure | |||||||||||
Credit risk profile based on payment activity, performing | $ | $ | |||||||||
Contractual non-performing, 61 or more days delinquent (1) | |||||||||||
Total gross loans | $ | $ | |||||||||
Credit risk profile based on customer type | |||||||||||
New borrower | $ | $ | |||||||||
Former borrower | |||||||||||
Refinance | |||||||||||
Delinquent refinance | |||||||||||
Total gross loans | $ | $ |
March 31, 2020 | June 30, 2019 | ||||||||||
Contractual basis: | |||||||||||
30-60 days past due | $ | $ | |||||||||
61-90 days past due | |||||||||||
91 days or more past due | |||||||||||
Total | $ | $ | |||||||||
Percentage of period-end gross loans receivable | % | % | |||||||||
Recency basis: | |||||||||||
30-60 days past due | $ | $ | |||||||||
61-90 days past due | |||||||||||
91 days or more past due | |||||||||||
Total | $ | $ | |||||||||
Percentage of period-end gross loans receivable | % | % |
Three months ended June 30, | |||||||||||
2020 | 2019 | ||||||||||
Lease Cost | |||||||||||
Operating lease cost | $ | $ | |||||||||
Short-term lease cost | |||||||||||
Variable lease cost | |||||||||||
Total lease cost | $ | $ |
Three months ended June 30, | |||||||||||
2020 | 2019 | ||||||||||
Other Lease Information | |||||||||||
Cash paid for amounts included in the measurement of lease liabilities | $ | $ | |||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities(1) | $ | $ | |||||||||
Weighted average remaining lease term — operating leases | |||||||||||
Weighted-average discount rate — operating leases | % | % |
June 30, 2020 | ||||||||
Operating lease liability maturity analysis | ||||||||
Fiscal 2021 | $ | |||||||
Fiscal 2022 | ||||||||
Fiscal 2023 | ||||||||
Fiscal 2024 | ||||||||
Fiscal 2025 | ||||||||
Fiscal 2026 | ||||||||
Thereafter | ||||||||
Total undiscounted lease liability | $ | |||||||
Imputed interest | ||||||||
Total discounted lease liability | $ |
Three months ended June 30, | |||||||||||
2020 | 2019 | ||||||||||
Basic: | |||||||||||
Weighted average common shares outstanding (denominator) | |||||||||||
Diluted: | |||||||||||
Weighted average common shares outstanding | |||||||||||
Dilutive potential common shares | |||||||||||
Weighted average diluted shares outstanding (denominator) |
Trailing 4-Quarter EPS Targets for September 30, 2018 through March 31, 2025 | Restricted Stock Eligible for Vesting (Percentage of Award) | ||||
$ | |||||
$ |
Trailing 4-Quarter EPS Targets for September 30, 2018 through March 31, 2025 | Options Eligible for Vesting (Percentage of Award) | ||||
$ |
Three months ended June 30, | |||||||||||
2020 | 2019 | ||||||||||
Dividend Yield | |||||||||||
Expected Volatility | |||||||||||
Average risk-free rate | |||||||||||
Expected Life |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||||||||||||
Options outstanding, beginning of period | $ | ||||||||||||||||||||||
Granted during period | |||||||||||||||||||||||
Exercised during period | |||||||||||||||||||||||
Forfeited during period | ( | ||||||||||||||||||||||
Expired during period | ( | ||||||||||||||||||||||
Options outstanding, end of period | $ | $ | |||||||||||||||||||||
Options exercisable, end of period | $ | $ |
June 30, 2020 | June 30, 2019 | ||||||||||
Three months ended | $ | $ |
Shares | Weighted Average Fair Value at Grant Date | ||||||||||
Outstanding at March 31, 2020 | $ | ||||||||||
Granted during the period | |||||||||||
Vested during the period | ( | ||||||||||
Forfeited during the period | ( | ||||||||||
Outstanding at June 30, 2020 | $ |
Three months ended June 30, | |||||||||||
2020 | 2019 | ||||||||||
Stock-based compensation related to equity classified awards: | |||||||||||
Stock-based compensation related to stock options | $ | $ | |||||||||
Stock-based compensation related to restricted stock, net of adjustments and exclusive of cancellations | |||||||||||
Total stock-based compensation related to equity classified awards | $ | $ |
Three months ended June 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
Acquisitions: | ||||||||||||||
Number of branches acquired through business combinations | ||||||||||||||
Number of loan portfolios acquired through asset purchases | ||||||||||||||
Total acquisitions | ||||||||||||||
Purchase price | $ | $ | ||||||||||||
Tangible assets: | ||||||||||||||
Loans receivable, net | ||||||||||||||
Property and equipment | ||||||||||||||
Total tangible assets | ||||||||||||||
Excess of purchase prices over carrying value of net tangible assets | $ | $ | ||||||||||||
Customer lists | $ | |||||||||||||
Non-compete agreements | $ | |||||||||||||
Goodwill | $ |
Three months ended June 30, | |||||||||||
2020 | 2019 | ||||||||||
(Dollars in thousands) | |||||||||||
Gross loans receivable | $ | 1,067,877 | $ | 1,222,696 | |||||||
Average gross loans receivable (1) | 1,113,530 | 1,173,917 | |||||||||
Net loans receivable (2) | 794,284 | 901,968 | |||||||||
Average net loans receivable (3) | 831,388 | 868,582 | |||||||||
Expenses as a percentage of total revenue: | |||||||||||
Provision for credit losses | 20.7 | % | 29.8 | % | |||||||
General and administrative | 57.8 | % | 59.1 | % | |||||||
Interest expense | 4.5 | % | 3.2 | % | |||||||
Operating income as a % of total revenue (4) | 21.5 | % | 11.1 | % | |||||||
Loan volume (5) | 463,484 | 752,148 | |||||||||
Net charge-offs as percent of average net loans receivable | 18.3 | % | 16.3 | % | |||||||
Return on average assets (trailing 12 months) | 3.4 | % | 7.5 | % | |||||||
Return on average equity (trailing 12 months) | 8.2 | % | 12.1 | % | |||||||
Branches opened or acquired (merged or closed), net | (3) | 25 | |||||||||
Branches open (at period end) | 1,240 | 1,218 |
Three months ended June 30, 2020 | |||||||||||||||||
As furnished July 30, 2020 | Adjustments | As revised | |||||||||||||||
Amortization of intangible assets | $ | 1,816,224 | (434,096) | $ | 1,382,128 | ||||||||||||
Other expense | $ | 9,376,059 | 434,096 | $ | 9,810,155 |
(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 | ||||||||||||||||||||
April 1 through April 30, 2020 | 254,886 | $ | 55.74 | 254,886 | $ | 8,407,321 | |||||||||||||||||
May 1 through May 31, 2020 | 12,398 | 74.99 | 12,398 | 7,477,619 | |||||||||||||||||||
June 1 through June 30, 2020 | 59,014 | 72.94 | 59,014 | 30,000,000 | |||||||||||||||||||
Total for the quarter | 326,298 | $ | 59.58 | 326,298 |
Exhibit Number | Exhibit Description | Filed Herewith | Incorporated by Reference | |||||||||||||||||
Form or Registration Number | Exhibit | Filing Date | ||||||||||||||||||
10.01 | 8-K | 10.1 | 04-30-20 | |||||||||||||||||
10.02 | 8-K | 10.1 | 07-24-20 | |||||||||||||||||
10.03 | 8-K | 10.1 | 08-06-20 | |||||||||||||||||
10.04 | 8-K | 10.2 | 08-06-20 | |||||||||||||||||
31.01 | * | |||||||||||||||||||
31.02 | * | |||||||||||||||||||
32.01 | * | |||||||||||||||||||
32.02 | * | |||||||||||||||||||
101.01 | The following materials from the Company's Quarterly Report for the fiscal quarter ended June 30, 2020, formatted in Inline XBRL: | * | ||||||||||||||||||
(i) | Consolidated Balance Sheets as of June 30, 2020 and March 31, 2020; | |||||||||||||||||||
(ii) | Consolidated Statements of Operations for the three months ended June 30, 2020 and June 30, 2019; | |||||||||||||||||||
(iii) | Consolidated Statements of Shareholders' Equity for the three months ended June 30, 2020 and June 30, 2019; | |||||||||||||||||||
(iv) | Consolidated Statements of Cash Flows for the three months ended June 30, 2020 and June 30, 2019; and | |||||||||||||||||||
(v) | Notes to the Consolidated Financial Statements. | |||||||||||||||||||
104.01 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | * |
* | Submitted electronically herewith. | ||||
+ | Management Contract or other compensatory plan required to be filed under Item 6 of this report and Item 601 of Regulation S-K of the Securities and Exchange Commission. |
WORLD ACCEPTANCE CORPORATION | |||||||||||
By: /s/ R. Chad Prashad | |||||||||||
R. Chad Prashad | |||||||||||
President and Chief Executive Officer | |||||||||||
Signing on behalf of the registrant and as principal executive officer | |||||||||||
Date: | August 13, 2020 | ||||||||||
By: /s/ John L. Calmes, Jr. | |||||||||||
John L. Calmes, Jr. | |||||||||||
Executive Vice President and Chief Financial and Strategy Officer | |||||||||||
Signing on behalf of the registrant and as principal financial officer | |||||||||||
Date: | August 13, 2020 | ||||||||||
By: /s/ Scott McIntyre | |||||||||||
Scott McIntyre | |||||||||||
Senior Vice President of Accounting | |||||||||||
Signing on behalf of the registrant and as principal accounting officer | |||||||||||
Date: | August 13, 2020 |
Dated: | August 13, 2020 | /s/ R. Chad Prashad | ||||||
R. Chad Prashad | ||||||||
President and Chief Executive Officer |
Dated: | August 13, 2020 | /s/ John L. Calmes, Jr. | ||||||
John L. Calmes, Jr. | ||||||||
Executive Vice President and Chief Financial and Strategy Officer |
Dated: | August 13, 2020 | /s/ R. Chad Prashad | ||||||
R. Chad Prashad | ||||||||
President and Chief Executive Officer |
Dated: | August 13, 2020 | /s/ John L. Calmes, Jr. | ||||||
John L. Calmes, Jr. | ||||||||
Executive Vice President and Chief Financial and Strategy Officer |
COVER PAGE - shares |
3 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jan. 31, 2020 |
|
Cover [Abstract] | ||
Document Type | 10-Q/A | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 000-19599 | |
Entity Registrant Name | WORLD ACCEPTANCE CORP | |
Entity Incorporation, State or Country Code | SC | |
Entity Tax Identification Number | 57-0425114 | |
Entity Address, Address Line One | 104 S Main Street | |
Entity Address, City or Town | Greenville, | |
Entity Address, State or Province | SC | |
Entity Address, Postal Zip Code | 29601 | |
City Area Code | (864) | |
Local Phone Number | 298-9800 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 7,420,482 | |
Entity Central Index Key | 0000108385 | |
Current Fiscal Year End Date | --03-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | true | |
Amendment Description | EXPLANATORY NOTEWorld Acceptance Corporation is filing this Amendment No. 1 (the "Form 10-Q/A") to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 (the "Original Filing"), filed with the Securities and Exchange Commission ("SEC") on August 7, 2020 (the “Original Filing Date”), for the sole purpose of reflecting corrections to Note 5 “Finance Receivables and Allowance for Credit Losses” contained in Part I, Item 1 “Financial Statements” of the Original Filing. Specifically, the tables presenting gross loans receivable by current payment performance on both a recency and contractual basis and the tables presenting an aging analysis of gross loans receivable on both a recency and contractual basis have been revised. Additionally, this Form 10-Q/A includes new certifications of our chief executive officer and chief financial officer set forth as Exhibits 31.01, 31.02, 32.01, and 32.02 hereto.For the convenience of the reader, this Form 10-Q/A includes the Original Filing in its entirety as amended as indicated above. No other changes have been made to the Original Filing other than those described above. This Form 10-Q/A continues to speak as of the Original Filing Date, does not reflect events that may have occurred subsequent to the Original Filing Date, and does not modify or update any related disclosures made in the Original Filing (including, but not limited to, any forward-looking statements made in the Original Filing, which have not been revised to reflect events that occurred or facts that became known after the Original Filing Date, and such forward-looking statements should be read in their historical context). Accordingly, this Form 10-Q/A should be read in conjunction with the Company’s other filings made with the SEC. |
LITIGATION |
3 Months Ended |
---|---|
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
LITIGATION | Mexico Investigation As previously disclosed, the Company retained outside legal counsel and forensic accountants to conduct an investigation of its operations in Mexico, focusing on the legality under the FCPA, and certain local laws of certain payments related to loans, the maintenance of the Company’s books and records associated with such payments, and the treatment of compensation matters for certain employees. The investigation addressed whether and to what extent improper payments, which may violate the FCPA and other local laws, were made approximately between 2010 and 2017 by or on behalf of WAC de Mexico, to government officials in Mexico relating to loans made to unionized employees. The Company voluntarily contacted the SEC and the DOJ in June 2017 to advise both agencies that an internal investigation was underway and that the Company intended to cooperate with both agencies. The SEC issued a formal order of investigation. The Company has cooperated with both agencies. On August 6, 2020, the Company announced that it reached resolution with both the SEC and the DOJ regarding allegations primarily involving the Company’s former subsidiary in Mexico. In connection with the resolution of the investigations, the Company agreed to the terms contained in a Declination Letter with the DOJ, dated August 5, 2020 (the “Declination Letter”). Pursuant to the terms of the Declination Letter, the DOJ declined to prosecute the Company and closed its investigation into the Company citing as the bases for this decision, among other things, the following: prompt, voluntary self-disclosure of the misconduct; full and proactive cooperation in this matter (including its provision of all known relevant facts about the misconduct); and full remediation, including the additional FCPA training added to the Company’s compliance program, separation from executives under whom the misconduct took place; and discontinuing relationships with third parties in Mexico involved in the misconduct. The SEC approved the Offer of Settlement on August 6, 2020 and issued an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order (the “SEC Order”). Pursuant to the terms of the SEC Order, the Company consented to 1) cease and desist from committing or causing any violations and any future violations of Sections 30A, 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act of 1934, and 2) pay, within fourteen days, disgorgement, prejudgment interest and civil penalties totaling $21,726,000 to the SEC. As previously disclosed, the Company has accrued $21.7 million for such matters. The Company could still face fines, sanctions, and other penalties from authorities in Mexico, as well as third-party claims by shareholders and/or other stakeholders of the Company. Disclosure of the disposition of the SEC and DOJ investigations could adversely affect the Company’s reputation and its ability to obtain new business or retain existing business from its current customers and potential customers, to attract and retain employees, and to access the capital markets. Further, under the terms of the stock purchase agreement among the Company and the Purchasers in connection with the sale of our Mexico operations, we are obligated to indemnify the Purchasers for claims and liabilities relating to certain investigations of our former Mexico operations, the Company, and its affiliates by the DOJ or the SEC that commenced prior to July 1, 2018. Any such indemnification claims could have a material adverse effect on our financial condition, including liquidity, and results of operations. General 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. Estimating an amount or range of possible losses resulting from litigation, government actions and other legal proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the matters involve indeterminate claims for monetary damages, may involve fines, penalties or damages that are discretionary in amount, involve a large number of claimants or significant discretion by regulatory authorities, represent a change in regulatory policy or interpretation, present novel legal theories, are in the early stages of the proceedings, are subject to appeal or could result in a change in business practices. In addition, because most legal proceedings are resolved over extended periods of time, potential losses are subject to change due to, among other things, new developments, changes in legal strategy, the outcome of intermediate procedural and substantive rulings and other parties’ settlement posture and their evaluation of the strength or weakness of their case against us. However, in light of the inherent uncertainties involved, an adverse outcome in one or more of these matters could materially and adversely affect the Company’s financial condition, results of operations or cash flows in any particular reporting period.
|
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Jun. 30, 2020 |
Mar. 31, 2020 |
---|---|---|
Shareholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 95,000,000 | 95,000,000 |
Common stock, shares issued (in shares) | 7,451,588 | 7,807,834 |
Common stock, shares outstanding (in shares) | 7,451,588 | 7,807,834 |
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) |
3 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Revenues: | ||
Interest and fee income | $ 109,860,456 | $ 122,910,149 |
Insurance commissions and other income | 14,006,346 | 15,531,834 |
Total revenues | 123,866,802 | 138,441,983 |
Expenses: | ||
Provision for loan losses | 25,660,660 | 41,291,071 |
General and administrative expenses: | ||
Personnel | 44,622,023 | 52,459,445 |
Occupancy and equipment | 13,181,506 | 13,356,302 |
Advertising | 2,612,167 | 6,109,827 |
Amortization of intangible assets | 1,382,128 | 954,641 |
Other | 9,810,155 | 8,896,148 |
Total general and administrative expenses | 71,607,979 | 81,776,363 |
Interest expense | 5,561,877 | 4,403,328 |
Total expenses | 102,830,516 | 127,470,762 |
Income before income taxes | 21,036,286 | 10,971,221 |
Income taxes | 5,526,637 | 2,362,822 |
Net income | $ 15,509,649 | $ 8,608,399 |
Net income per common share: | ||
Basic (in dollars per share) | $ 2.26 | $ 1.01 |
Diluted (in dollars per share) | $ 2.24 | $ 0.97 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 6,867,457 | 8,507,121 |
Diluted (in shares) | 6,928,121 | 8,866,250 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) |
3 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Net income | $ 15,509,649 | $ 8,608,399 |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (Parenthetical) - USD ($) |
3 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Increase (Decrease) in Shareholders' Equity [Roll Forward] | ||
Proceeds from exercise of stock options (in shares) | 0 | 39,766 |
Adjustments Related to Tax Withholding for Share-based Compensation | $ 119,865 | $ 238,168 |
Segments Statement - USD ($) |
3 Months Ended | ||
---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Mar. 31, 2020 |
|
Segment Reporting Information [Line Items] | |||
Revenues | $ 123,866,802 | $ 138,441,983 | |
Provision for loan losses | 25,660,660 | 41,291,071 | |
General and Administrative Expense | 71,607,979 | 81,776,363 | |
Interest Expense | 5,561,877 | 4,403,328 | |
Income Tax Expense (Benefit) | 5,526,637 | 2,362,822 | |
Net Income (Loss) Attributable to Parent | 15,509,649 | $ 8,608,399 | |
Assets | $ 902,644,599 | $ 1,030,086,435 |
BASIS OF PRESENTATION |
3 Months Ended |
---|---|
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The consolidated financial statements of the Company at June 30, 2020, and for the three 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 June 30, 2020, and the results of operations and cash flows for the periods ended June 30, 2020 and 2019, 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, 2020, included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020, as filed with the SEC. In addition to the "Critical Accounting Policies" impacted by the new CECL standard described below, 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, 2020. The Company believes that the disclosures are adequate to make the information presented not misleading. Certain reclassifications have been made to the amounts previously reported to conform to the current period presentation.
|
SUMMARY OF SIGNIFICANT POLICIES |
3 Months Ended |
---|---|
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT POLICIES | 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. Allowance for credit losses Refer to Note 5, “Finance Receivables and Allowance for Credit Losses,” in this Quarterly Report on Form 10-Q for information regarding the Company's adoption of the CECL allowance model on April 1, 2020 and a description of the methodology it utilizes. Reclassification Certain prior period amounts have been reclassified to conform to the current presentation. Such reclassifications had no impact on previously reported net income or shareholders' equity. Recently Adopted Accounting Standards Measurement of Credit Losses on Financial Instruments ASU 2016-13 (and all subsequent ASUs on this topic) introduce the CECL model, a new credit loss methodology, replacing multiple existing impairment methods in current GAAP, which generally require that a loss be incurred before it is recognized. The amendments in this ASU require loss estimates be determined over the lifetime of the asset and broaden the information that an entity must consider in developing its expected credit losses. The ASU does not specify a method for measuring expected credit losses and allows an entity to apply methods that reasonably reflect its expectations of the credit loss estimate based on the entity’s size, complexity, and risk profile. In addition, the disclosures of credit quality indicators in relation to the amortized cost of financing receivables, a current disclosure requirement, are further disaggregated by year of origination. The Company adopted this ASU (and all subsequent ASUs on this topic) as of April 1, 2020 using the modified retrospective approach. The adoption of this pronouncement resulted in the recognition of a $28.6 million increase in the allowance for credit losses on our opening balance sheet as of April 1, 2020, with a corresponding net-of-tax $21.2 million reduction in retained earnings and a $7.4 million increase to deferred income taxes, net. 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.
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FAIR VALUE |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE | 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, and senior notes payable. Fair value approximates carrying value for all of these instruments. Loans receivable are originated at prevailing market rates and have an average life of approximately eight months. Given the short-term nature of these loans, they are continually repriced at current market rates. The Company’s revolving credit facility has a variable rate based on a margin over LIBOR and reprices with any changes in LIBOR. The Company also considers its creditworthiness in its estimation of fair value. 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.
The carrying amounts and estimated fair values of amounts the Company measures at fair value on a non-recurring basis, which are limited to the Company's assets held for sale, are summarized below.
The Company re-valued its corporate headquarters in Greenville, South Carolina as of March 31, 2020 in conjunction with its reclassification of the related assets as held for sale. The observable inputs the Company used in its revaluation were the agreed-upon prices to sell the assets. There were no other significant assets or liabilities measured at fair value on a non-recurring basis as of June 30, 2020 or March 31, 2020.
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ALLOWANCE FOR LOAN LOSSES |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Receivables | ALLOWANCE FOR CREDIT LOSSES The following is a summary of gross loans receivable by customer tenure as of:
During the first quarter of fiscal 2020, we adopted ASU 2016-13, which replaces the incurred loss methodology for determining our provision for credit losses and allowance for credit losses with an expected loss methodology that is referred to as the CECL model, using the modified retrospective approach. Upon adoption, the total allowance for credit losses increased by $28.6 million, with no impact to the consolidated statement of operations. The Company elected not to record an allowance for credit losses for accrued interest as outlined in ASC 326-20-30-5A. The accrual of interest is discontinued when a loan is 61 days or more past the contractual due date. When the interest accrual is discontinued, all unpaid accrued interest is reversed against interest income. While a loan is on nonaccrual status, interest revenue is recognized only when a payment is received. Once a loan moves to nonaccrual status, it remains in nonaccrual status until it is paid out, charged off or refinanced. During the three months ended June 30, 2020, the Company reversed a total of $5.5 million of unpaid accrued interest against interest income. Based on the Company’s loan products, the purpose and the term, current payment performance is used to assess the capability of the borrower to repay contractual obligations of the loan agreements as scheduled. Current payment performance 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 tables provide a breakdown of the Company’s gross loans receivable by current payment performance on a recency basis and year of origination at June 30, 2020:
The following tables provide a breakdown of the Company’s gross loans receivable by current payment performance on a contractual basis and year of origination at June 30, 2020:
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, adjusted for seasonality. 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. Management considers whether current credit conditions might suggest a change is needed to the allowance for credit losses by monitoring trends in 60-day delinquencies, FICO scores and average loan size as compared to metrics in the historical migration period. 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 6-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 an adjustment is made as a result of the forecast, then the Company has elected to immediately revert back to historical experience past the forecast period. The fiscal 2021 provision includes a $4.6 million increase to the allowance for forecasted losses as a result of the economic impact of COVID-19 on loans originated during the quarter. This is in addition to an $8.3 million COVID-19 related increase to the allowance on April 1, 2020, to adjust forecast expected losses as required under CECL. The following table presents a roll forward of the allowance for credit losses on our gross loans receivable for the three months ended June 30, 2020 and 2019.
Loans are placed on nonaccrual status when management determines that the full payment of principal and collection of interest according to contractual terms is no longer likely. This occurs when the loan becomes 61 days or more past due on a contractual basis. When loans are placed on nonaccrual status, interest receivable is reversed against interest income recognized in the current period. Interest payments received thereafter are applied as a reduction of the remaining principal balance as long as doubt exists as to the ultimate collection of principal. Once a loan moves to nonaccrual status, it remains in nonaccrual status until it is paid out, written off or refinanced. The following table is an aging analysis on a recency basis at amortized cost of the Company’s gross loans receivable at June 30, 2020:
The following table presents the amortized cost basis of loans on nonaccrual status as of the beginning of the reporting period and the end of the reporting period and the amortized cost basis of nonaccrual loans without related expected credit loss. It also shows year-to-date interest income recognized on nonaccrual loans:
Under the prior incurred loss methodology, loss contingencies were evaluated as: probable, reasonably possible, or remote. If, at the date of financial statement presentation, information was available that indicated an asset had been impaired and the amount of loss could be reasonably estimated, then an allowance for that loss could be recorded. Recording an allowance for a loss that was considered reasonably possible or remote was not permitted. With the adoption of ASC 326, the Company considers the lifetime potential for losses at the point of origination and records an allowance for that potential, at that point in time, removing the necessity of differentiation between the three loss contingency concepts and impairment. The following disclosures are presented under previously applicable GAAP. The following is a summary of loans individually and collectively evaluated for impairment for the periods indicated:
The average net balance of impaired loans was $51.1 million for the three-month period ended June 30, 2019. It is not practical to compute the amount of interest earned on impaired loans. The following is an assessment of the credit quality of loans for the periods indicated:
_______________________________________________________ (1) Loans in non-accrual status. The following is a summary of the past due receivables as of:
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AVERAGE SHARE INFORMATION |
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AVERAGE SHARE INFORMATION | AVERAGE SHARE INFORMATION The following is a summary of the basic and diluted average common shares outstanding:
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STOCK-BASED COMPENSATION | NOTE 8 – STOCK-BASED COMPENSATION Stock Incentive Plans The Company has a 2005 Stock Option Plan, a 2008 Stock Option Plan, a 2011 Stock Option Plan and a 2017 Stock Incentive Plan for the benefit of certain non-employee directors, officers, and key employees. Under these plans, a total of 4,350,000 shares of common stock have been authorized and reserved for issuance pursuant to grants approved by the Compensation Committee of the Board of Directors. Stock options granted under these plans have a maximum duration of 10 years, may be subject to certain vesting requirements, which are generally to five years for officers, non-employee directors, and key employees, and are priced at the market value of the Company's common stock on the option's grant date. At June 30, 2020, there were a total of 215,674 shares of common stock available for grant under the plans. Stock-based compensation is recognized as provided under FASB ASC Topic 718-10 and FASB ASC Topic 505-50. FASB ASC Topic 718-10 requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense over the requisite service period (generally the vesting period) in the consolidated financial statements based on their grant date fair values. The Company has applied the Black-Scholes valuation model in determining the grant date fair value of the stock option awards. Compensation expense is recognized only for those options expected to vest. Long-term Incentive Program and Non-Employee Director Awards On October 15, 2018, the Compensation Committee and Board approved and adopted a new long-term incentive program that seeks to motivate and reward certain employees and to align management’s interest with shareholders' interest by focusing executives on the achievement of long-term results. The program is comprised of four components: Service Options, Performance Options, Restricted Stock, and Performance Shares. Pursuant to this program, the Compensation Committee approved certain grants of Service Options, Performance Options, Restricted Stock and Performance Shares under the World Acceptance Corporation 2011 Stock Option Plan and the World Acceptance Corporation 2017 Stock Incentive Plan to certain employee directors, vice presidents of operations, vice presidents, senior vice presidents, and executive officers. Separately, the Compensation Committee approved certain grants of Service Options and Restricted Stock to certain of the Company's non-employee directors. Under the long-term incentive program, up to 100% of the shares of restricted stock subject to the Performance Shares shall vest, if at all, based on the achievement of two trailing earnings per share performance targets established by the Compensation Committee that are based on earnings per share (measured at the end of each calendar quarter, commencing with the calendar quarter ending September 30, 2019) for the previous four calendar quarters. The Performance Shares are eligible to vest over the Performance Share Measurement Period and subject to each respective employee’s continued employment at the Company through the last day of the applicable Performance Share Measurement Period (or as otherwise provided under the terms of the applicable award agreement or applicable employment agreement). The Performance Share performance targets are set forth below.
The Restricted Stock awards vest in six equal annual installments, beginning on the first anniversary of the grant date, subject to each respective employee’s continued employment at the Company through each applicable vesting date or otherwise provided under the terms of the applicable award agreement or applicable employment agreement. The Service Options vest in six equal annual installments, beginning on the first anniversary of the grant date, subject to each respective employee’s continued employment at the Company through each applicable vesting date or otherwise provided under the terms of the applicable award agreement or applicable employment agreement. The option price is equal to the fair market value of the common stock on the grant date and the Service Options have a 10-year term. The Performance Options will fully vest if the Company attains the trailing earnings per share target over four consecutive calendar quarters occurring between September 30, 2018 and March 31, 2025 described below. Such performance target was established by the Compensation Committee and will be measured at the end of each calendar quarter commencing on September 30, 2019. The Performance Options are eligible to vest over the Option Measurement Period, subject to each respective employee’s continued employment at the Company through the last day of the Option Measurement Period or as otherwise provided under the terms of the applicable award agreement or applicable employment agreement. The option price is equal to the fair market value of the common stock on the grant date and the Performance Options have a 10-year term. The Performance Option performance target is set forth below.
Stock Options The weighted-average fair value at the grant date for options issued during the three months ended June 30, 2020 and 2019 was $30.39 and $68.63, respectively. Fair value was estimated at grant date using the weighted-average assumptions listed below:
The expected stock price volatility is based on the historical volatility of the Company's common stock for a period approximating the expected life. The expected life represents the period of time that options are expected to be outstanding after the grant date. The risk-free rate reflects the interest rate at grant date on zero coupon U.S. governmental bonds having a remaining life similar to the expected option term. Option activity for the three months ended June 30, 2020 was as follows:
The aggregate intrinsic value reflected in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price on June 30, 2020 and the exercise price, multiplied by the number of in-the-money options) that would have been received by option holders had all option holders exercised their options as of June 30, 2020. This amount will change as the market price of the common stock changes. The total intrinsic value of options exercised during the periods ended June 30, 2020 and 2019 was as follows:
As of June 30, 2020, total unrecognized stock-based compensation expense related to non-vested stock options amounted to approximately $9.6 million, which is expected to be recognized over a weighted-average period of approximately 4.0 years. Restricted Stock During the first three months of fiscal 2021, the Company granted 2,055 shares of restricted stock (which are equity classified) to certain vice presidents, senior vice presidents, executive officers and non-employee directors, with a grant date weighted average fair value of $59.02 per share. During fiscal 2020, the Company granted 11,223 shares of restricted stock (which are equity classified) to certain executive officers, with a grant date weighted average fair value of $90.23 per share. One-third of these awards vest on each anniversary of the grant date over the three years following the grant date. During fiscal 2019, the Company granted 760,420 shares of restricted stock (which are equity classified), to certain vice presidents, senior vice presidents, executive officers, and non-employee directors with a grant date weighted average fair value of $101.61. Compensation expense related to restricted stock is based on the number of shares expected to vest and the fair market value of the common stock on the grant date. The Company recognized compensation expense of $3.5 million and $6.7 million for the three months ended June 30, 2020 and 2019, respectively, which is included as a component of general and administrative expenses in the Company’s consolidated statements of operations. As of June 30, 2020, there was approximately $36.9 million of unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over the next 3.2 years based on current estimates. A summary of the status of the Company’s restricted stock as of June 30, 2020, and changes during the three months ended June 30, 2020, are presented below:
Total Stock-Based Compensation Total stock-based compensation included as a component of net income during the three month periods ended June 30, 2020 and 2019 was as follows:
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ACQUISITIONS |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS | ACQUISITIONSThe Company evaluates each set of assets and activities it acquires to determine if the set meets the definition of a business according to FASB ASC Topic 805-10-55. Acquisitions meeting the definition of a business are accounted for as a business combination while all other acquisitions are accounted for as asset purchases. The following table sets forth the Company's acquisition activity for the three months ended June 30, 2020 and 2019.
Acquisitions that are accounted for as business combinations typically result in one or more new branches. In such cases, the Company typically retains the existing employees and the branch location from the acquisition. The purchase price is allocated to the tangible assets and intangible assets acquired based upon their estimated fair market values at the acquisition date. The remainder is allocated to goodwill. Acquisitions that are accounted for as asset purchases are typically limited to acquisitions of loan portfolios. The purchase price is allocated to the tangible assets and intangible assets acquired based upon their estimated fair market values at the acquisition date. In an asset purchase, no goodwill is recorded. The Company’s acquisitions include tangible assets (generally loans and furniture and equipment) and intangible assets (generally non-compete agreements, customer lists, and goodwill), both of which are recorded at their fair values, which are estimated pursuant to the processes described below. Acquired loans are valued at the net loan balance. Given the short-term nature of these loans, generally eight months, and that these loans are priced at current rates, management believes the net loan balances approximate their fair value. Under CECL, acquired loans are included in the reserve calculations for all other loan types (excluding TALs). Management includes recent acquisition activity compared to historical activity when considering reasonable and supportable forecasts as it relates to assessing the adequacy of the allowance for expected credit losses. The Company did not acquire any loans that would qualify as PCD's during the period. Furniture and equipment are valued at the specific purchase price as agreed to by both parties at the time of acquisition, which management believes approximates their fair values. Non-compete agreements are valued at the stated amount paid to the other party for these agreements, which the Company believes approximates their fair value. Customer lists are valued with a valuation model that utilizes the Company’s historical data to estimate the value of any acquired customer lists. Customer lists are allocated at a branch level and are evaluated for impairment at a branch level when a triggering event occurs in accordance with FASB ASC Topic 360-10-05. If a triggering event occurs, the impairment loss to the customer list is generally the remaining unamortized customer list balance. In most acquisitions, the original fair value of the customer list allocated to a branch is less than $100,000, and management believes that in the event a triggering event were to occur, the impairment loss to an unamortized customer list would be immaterial. The results of all acquisitions have been included in the Company’s Consolidated Financial Statements since the respective acquisition date. The pro forma impact of these branches as though they had been acquired at the beginning of the periods presented would not have a material effect on the results of operations as reported.
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DEBT |
3 Months Ended |
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Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Senior Notes Payable; Revolving Credit Facility At June 30, 2020 the Company's notes payable consisted of a $685.0 million senior revolving credit facility, which has an accordion feature permitting the maximum aggregate commitments to increase to $685.0 million provided that certain conditions are met. At June 30, 2020 $352.2 million was outstanding under the Company's revolving credit facility, not including a $300.0 thousand outstanding standby letter of credit related to workers compensation. To the extent that the letter of credit is drawn upon, the disbursement will be funded by the credit facility. There are no amounts due related to the letter of credit as of June 30, 2020. The letter of credit expires on December 31, 2020; however, it automatically extends for one year on the expiration date. Subject to a borrowing base formula, the Company may borrow at the rate of LIBOR plus an applicable margin between 3.0% and 4.0% based on certain EBITDA related metrics set forth in the revolving credit agreement, which are determined and adjusted on a monthly basis with a minimum rate of 4.0%. The revolving credit facility has a commitment fee of 0.50% per annum on the unused portion of the commitment. Commitment fees on the unused portion of the borrowing totaled $0.4 million and $0.3 million for the three months ended June 30, 2020 and 2019, respectively. For the three months ended June 30, 2020 and fiscal year ended March 31, 2020, the Company’s effective interest rate, including the commitment fee and amortization of debt issuance costs, was 5.6% annualized and 5.8%, respectively, and the unused amount available under the revolver at June 30, 2020 was $212.8 million. The Company also had $119.7 million that may become available under the revolving credit facility if it grows the net eligible finance receivables. Borrowings under the revolving credit facility mature on June 7, 2022. Substantially all of the Company’s assets are pledged as collateral for borrowings under the revolving credit agreement. Debt Covenants The agreement governing the Company’s revolving credit facility contains affirmative and negative covenants, including covenants that generally 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 agreement also contains financial covenants, including: (i) a minimum consolidated net worth of $365.0 million (subsequently amended to $325.0 million on July 24, 2020; (ii) a minimum fixed charge coverage ratio of (a) 2.25 to 1.0 for the fiscal quarters ending March 31, 2020, June 30, 2020 and September 30, 2020 and (b) 2.75 to 1.0 for each fiscal quarter thereafter; (iii) a maximum ratio of total debt to consolidated adjusted net worth of 2.0 to 1.0; (iv) as of the end of each fiscal quarter, provision for credit losses for the four fiscal quarters then ending shall equal or exceed the net loan charge-off for the corresponding period (any shortfalls are required to be deducted in the determination of net income and consolidated net worth); and (v) a maximum collateral performance indicator of 23.0%, as of the end of each calendar month. 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 agreement allows the Company to incur subordinated debt that matures after the termination date for the revolving credit facility and that contains specified subordination terms, subject to limitations on amount imposed by the financial covenants under the agreement. The Company was in compliance with these covenants at June 30, 2020 and March 31, 2020 and does not believe that these covenants will materially limit its business and expansion strategy. The agreement contains events of default including, without limitation, nonpayment of principal, interest or other obligations, violation of covenants, misrepresentation, cross-default to other debt, bankruptcy and other insolvency events, judgments, certain ERISA events, actual or asserted invalidity of loan documentation, invalidity of subordination provisions of subordinated debt, certain changes of control of the Company, and the occurrence of certain regulatory events (including the entry of any stay, order, judgment, ruling or similar event related to the Company’s or any of its subsidiaries’ originating, holding, pledging, collecting or enforcing its eligible finance receivables that is material to the Company or any subsidiary) which remains unvacated, undischarged, unbonded or unstayed by appeal or otherwise for a period of 60 days from the date of its entry and is reasonably likely to cause a material adverse change. If it is determined that a violation of any applicable law has occurred, such violation may give rise to an event of default under our credit agreement if such violation were to result in a material adverse effect on our business, properties, results of operations, assets, liabilities, or condition (financial or otherwise), or a material impairment of the Company’s and the subsidiaries’ ability to perform their obligations under the agreement or related documents, or if the amount of any settlement, penalties, fines, or other payments resulted in the Company failing to satisfy any financial covenants.
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INCOME TAXES |
3 Months Ended |
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Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES As of June 30, 2020 and March 31, 2020, the Company had $5.9 million and $5.8 million, respectively, of total gross unrecognized tax benefits including interest. Approximately $5.3 million and $5.2 million, respectively, represent the amount of net unrecognized tax benefits that are permanent in nature and, if recognized, would affect the annual effective tax rate. At June 30, 2020, approximately $2.9 million of gross unrecognized tax benefits are expected to be resolved during the next twelve months through the expiration of the statute of limitations and settlement with taxing authorities. The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. As of June 30, 2020, the Company had approximately $1.5 million accrued for gross interest, of which $77.2 thousand was accrued during the three months ended June 30, 2020. The Company is subject to U.S. income taxes, as well as various other state and local jurisdictions. With the exception of a few states, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2016, although carryforward attributes that were generated prior to 2016 may still be adjusted upon examination by the taxing authorities if they either have been or will be used in a future period. The Company’s effective income tax rate increased to 26.3% for the quarter ended June 30, 2020 compared to 21.5% for the prior year quarter. The increase is primarily due to lower than estimated Federal Historic Tax Credits for fiscal 2020 with the correction being treated as a discrete event in the current year quarter and a reduction in the permanent tax benefit related to the exercise of non-qualified stock options when compared to the prior year quarter.
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Subsequent Events (Notes) |
3 Months Ended |
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Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | NOTE 13 – SUBSEQUENT EVENTS Resolution of Mexico Investigation As further described in Note 12, on August 6, 2020, the Company announced that it reached agreements with the SEC and DOJ to resolve allegations primarily involving the Company’s former subsidiary in Mexico. The agreements concluded investigations into alleged violations of the FCPA involving the Company’s former WAC de Mexico subsidiary through June 2017. The Company has made improvements in operations and management since the allegations were made, including naming R. Chad Prashad as President and Chief Executive Officer; naming Luke J. Umstetter as General Counsel, Chief Compliance Officer and Secretary; and selling its Mexican subsidiary in July 2018. The Company has no remaining foreign subsidiaries, and it conducts no business outside of the United States. Under the terms of the settlement with the SEC, the Company has agreed to disgorge approximately $17.8 million earned by the Viva division of its former Mexican subsidiary and pay an additional $3.9 million in prejudgment interest and civil penalties. This amount is consistent with the accrual previously disclosed and recorded by the Company. The SEC resolution acknowledges the Company’s remedial acts and cooperation. In connection with this settlement, the Company has neither admitted nor denied the underlying allegations. Third Amendment to Amended and Restated Revolving Credit Facility On July 24, 2020, the Company entered into the Third Amendment to Amended and Restated Revolving Credit Agreement (the “Third Amendment”), among the Company, the lenders named therein, and Wells Fargo Bank, National Association, as Administrative Agent and Collateral Agent. The Third Amendment amends its Amended and Restated Revolving Credit Agreement to, among other things: i.Reduce the Advance Rate associated with the Collateral Performance Indicator; ii.Increase the Applicable Margin associated with the EBITDA Ratio by 50 bps; iii.Change the Financial Covenant associated with required “Minimum Net Worth” from $365,000,000 to $325,000,000, and iv.Allow the Company to make additional purchases of any class or series of capital stock or other equity in the amount of up to $50 million through March 31, 2021 plus 50% of cumulative Consolidated Net Income, subject to certain restrictions. The foregoing description of the Third Amendment to the Amended and Restated Revolving Credit Agreement is only a summary and is qualified in its entirety by reference to the full text of the Amended and Restated Revolving Credit Agreement, which is incorporated by reference as Exhibit 10.02 to this Quarterly Report on Form 10-Q. Management is not aware of any other significant events occurring subsequent to the balance sheet date that would have a material effect on the financial statements thereby requiring adjustment or disclosure.
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Leases (Notes) |
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Leases of Lessee Disclosure [Text Block] | Accounting Policies and Matters Requiring Management's Judgment When determining the economic life of a lease the Company adopts a convention of applying an economic life equal to the useful life as specified in its accounting policy. Refer to Note 1, “Property and Equipment,” to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2020 for a description of the Company's accounting policy regarding useful lives. The Company uses its effective annual interest rate as the discount rate when evaluating leases under Topic 842. Management applies its effective annual interest rate to leases entered for the entirety of the subsequent year. For example, fiscal 2020’s annual effective interest rate of 5.8% will be used in the determination of lease type as well as the discount rate when calculating the present value of lease payments for all leases entered into in fiscal 2021 or until a new annual effective interest rate is available for application. Based on its historical practice, the Company believes it is reasonably certain to exercise a given option associated with a given office space lease. Therefore, the Company classifies all lease options for office space as “reasonably certain” unless it has specific knowledge to the contrary for a given lease. The Company does not believe it is reasonably certain to exercise any options associated with its office equipment leases. Periodic Disclosures The Company's leases consist of real estate leases for office space as well as office equipment leases, all of which were classified as operating at June 30, 2020. Both the real estate and office equipment leases range from three years to five years, and generally contain options to extend which mirror the original terms of the lease. The following table reports information about the Company's lease cost for the three months ended June 30, 2020 and 2019:
The following table reports other information about the Company's leases for the three months ended June 30, 2020 and 2019:
_______________________________________________________ (1) In May 2019 the Company executed a new 10 year lease agreement for its corporate headquarters in Greenville, South Carolina. The lease payments commenced in December 2019; however, execution of the lease agreement triggered recognition of the right-of-use asset in May 2019 for approximately $15.6 million. The following table reports information about the maturity of the Company's operating leases as of June 30, 2020:
The Company had no leases with related parties at June 30, 2020.
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Discontinued Operations and Disposal Groups |
3 Months Ended |
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Jun. 30, 2019 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposal Groups, Including Discontinued Operations, Disclosure | NOTE 2 – ASSETS HELD FOR SALE |
FAIR VALUE (Tables) |
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Fair Value Measurements, Recurring and Nonrecurring | 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.
The carrying amounts and estimated fair values of amounts the Company measures at fair value on a non-recurring basis, which are limited to the Company's assets held for sale, are summarized below.
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ALLOWANCE FOR LOAN LOSSES (Tables) |
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Jun. 30, 2020 |
Jun. 30, 2019 |
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Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | The following is a summary of gross loans receivable by customer tenure as of:
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Summary of changes in the allowance for loan losses | he following table presents a roll forward of the allowance for credit losses on our gross loans receivable for the three months ended June 30, 2020 and 2019.
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Summary of loans individually and collectively evaluated for impairment | The following is a summary of loans individually and collectively evaluated for impairment for the periods indicated:
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Assessment of the credit quality | The following tables provide a breakdown of the Company’s gross loans receivable by current payment performance on a recency basis and year of origination at June 30, 2020:
The following tables provide a breakdown of the Company’s gross loans receivable by current payment performance on a contractual basis and year of origination at June 30, 2020:
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The following is an assessment of the credit quality of loans for the periods indicated:
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Summary of the past due receivables | The following table is an aging analysis on a recency basis at amortized cost of the Company’s gross loans receivable at June 30, 2020:
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The following is a summary of the past due receivables as of:
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Financing Receivable, Nonaccrual | It also shows year-to-date interest income recognized on nonaccrual loans:
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AVERAGE SHARE INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of basic and diluted average common shares outstanding | The following is a summary of the basic and diluted average common shares outstanding:
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STOCK-BASED COMPENSATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value [Table Text Block] | Fair value was estimated at grant date using the weighted-average assumptions listed below:
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Tabular disclosure of performance shares vesting based on EPS targets [Table Text Block] | The Performance Option performance target is set forth below.
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Summary schedule of stock option activity | ption activity for the three months ended June 30, 2020 was as follows:
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Intrinsic value of options exercised | The total intrinsic value of options exercised during the periods ended June 30, 2020 and 2019 was as follows:
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Summary of the status and changes restricted stock | A summary of the status of the Company’s restricted stock as of June 30, 2020, and changes during the three months ended June 30, 2020, are presented below:
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Share-based compensation included as a component of net income | Total stock-based compensation included as a component of net income during the three month periods ended June 30, 2020 and 2019 was as follows:
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tabular disclosure of performance shares vesting based on EPS targets [Table Text Block] | The Performance Share performance targets are set forth below.
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ACQUISITIONS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition activity | ACQUISITIONSThe Company evaluates each set of assets and activities it acquires to determine if the set meets the definition of a business according to FASB ASC Topic 805-10-55. Acquisitions meeting the definition of a business are accounted for as a business combination while all other acquisitions are accounted for as asset purchases. The following table sets forth the Company's acquisition activity for the three months ended June 30, 2020 and 2019.
Acquisitions that are accounted for as business combinations typically result in one or more new branches. In such cases, the Company typically retains the existing employees and the branch location from the acquisition. The purchase price is allocated to the tangible assets and intangible assets acquired based upon their estimated fair market values at the acquisition date. The remainder is allocated to goodwill. Acquisitions that are accounted for as asset purchases are typically limited to acquisitions of loan portfolios. The purchase price is allocated to the tangible assets and intangible assets acquired based upon their estimated fair market values at the acquisition date. In an asset purchase, no goodwill is recorded. The Company’s acquisitions include tangible assets (generally loans and furniture and equipment) and intangible assets (generally non-compete agreements, customer lists, and goodwill), both of which are recorded at their fair values, which are estimated pursuant to the processes described below. Acquired loans are valued at the net loan balance. Given the short-term nature of these loans, generally eight months, and that these loans are priced at current rates, management believes the net loan balances approximate their fair value. Under CECL, acquired loans are included in the reserve calculations for all other loan types (excluding TALs). Management includes recent acquisition activity compared to historical activity when considering reasonable and supportable forecasts as it relates to assessing the adequacy of the allowance for expected credit losses. The Company did not acquire any loans that would qualify as PCD's during the period. Furniture and equipment are valued at the specific purchase price as agreed to by both parties at the time of acquisition, which management believes approximates their fair values. Non-compete agreements are valued at the stated amount paid to the other party for these agreements, which the Company believes approximates their fair value. Customer lists are valued with a valuation model that utilizes the Company’s historical data to estimate the value of any acquired customer lists. Customer lists are allocated at a branch level and are evaluated for impairment at a branch level when a triggering event occurs in accordance with FASB ASC Topic 360-10-05. If a triggering event occurs, the impairment loss to the customer list is generally the remaining unamortized customer list balance. In most acquisitions, the original fair value of the customer list allocated to a branch is less than $100,000, and management believes that in the event a triggering event were to occur, the impairment loss to an unamortized customer list would be immaterial. The results of all acquisitions have been included in the Company’s Consolidated Financial Statements since the respective acquisition date. The pro forma impact of these branches as though they had been acquired at the beginning of the periods presented would not have a material effect on the results of operations as reported.
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Schedule of Business Acquisitions, by Acquisition [Table Text Block] | The following table sets forth the Company's acquisition activity for the three months ended June 30, 2020 and 2019.
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Leases (Tables) |
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost [Table Text Block] | The following table reports information about the Company's lease cost for the three months ended June 30, 2020 and 2019:
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Lessee, Operating Lease, Disclosure [Table Text Block] | The following table reports other information about the Company's leases for the three months ended June 30, 2020 and 2019:
_______________________________________________________ (1) In May 2019 the Company executed a new 10 year lease agreement for its corporate headquarters in Greenville, South Carolina. The lease payments commenced in December 2019; however, execution of the lease agreement triggered recognition of the right-of-use asset in May 2019 for approximately $15.6 million.
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Lessee, Operating Lease, Liability, Maturity [Table Text Block] | The following table reports information about the maturity of the Company's operating leases as of June 30, 2020:
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Discontinued Operations and Disposal Groups (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations | The following table reconciles the major classes of assets held for sale to the amounts presented in the Consolidated Balance Sheets:
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SUMMARY OF SIGNIFICANT POLICIES Accounting Standards (Details) - USD ($) |
Jun. 30, 2020 |
Mar. 31, 2020 |
---|---|---|
Item Effected [Line Items] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ (21,242,249) | |
Operating Lease, Right-of-Use Asset | 96,579,022 | $ 101,686,918 |
Operating Lease, Liability | $ 97,615,646 | $ 102,759,386 |
ALLOWANCE FOR LOAN LOSSES (Details) - USD ($) |
3 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Receivables [Abstract] | ||||
Loans and Leases Receivable, Allowance | $ 112,686,597 | $ 87,353,087 | $ 96,487,856 | $ 81,519,624 |
Provision for loan losses | 25,660,660 | 41,291,071 | ||
Allowance for Loan and Lease Losses, Write-offs | (43,831,942) | (39,523,987) | ||
Recoveries | 5,741,654 | 4,066,379 | ||
Allowance for Loan and Lease Losses Write-offs, Net | (38,090,288) | $ (35,457,608) | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ (21,242,249) |
AVERAGE SHARE INFORMATION (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Basic: | ||
Weighted average common shares outstanding (in shares) | 6,867,457 | 8,507,121 |
Diluted: | ||
Weighted average common shares outstanding (in shares) | 6,867,457 | 8,507,121 |
Dilutive potential common shares stock options (in shares) | 60,664 | 359,129 |
Weighted average diluted shares outstanding (in shares) | 6,928,121 | 8,866,250 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 642,011 | 683,442 |
Net Income (Loss) Attributable to Parent | $ 15,509,649 | $ 8,608,399 |
Earnings Per Share, Basic | $ 2.26 | $ 1.01 |
Earnings Per Share, Diluted | $ 2.24 | $ 0.97 |
ACQUISITIONS (Details) |
3 Months Ended | |
---|---|---|
Jun. 30, 2020
USD ($)
acquisition
|
Jun. 30, 2019
USD ($)
acquisition
|
|
Business Acquisition [Line Items] | ||
Number of offices purchased | acquisition | 0 | 21 |
Number Of Offices Purchased and Merged into Existing Offices | acquisition | 13 | 94 |
Total acquisitions | acquisition | 13 | 115 |
Business Combination, Acquired Receivable, Fair Value | $ 4,776,558 | $ 30,726,192 |
Intangible Assets, Net (Including Goodwill) | 985,354 | 9,468,683 |
Furniture, fixtures & equipment | 0 | 69,000 |
Total tangible assets | 4,776,558 | 30,795,192 |
Finite-Lived Customer Lists, Gross | 915,354 | 8,689,024 |
Finite-Lived Noncompete Agreements, Gross | 70,000 | 575,000 |
Goodwill, Fair Value Disclosure | $ 0 | 204,659 |
Loans and Leases Receivable, Average Loan Period | 8 months | |
Series of Individually Immaterial Business Acquisitions [Member] | ||
Business Acquisition [Line Items] | ||
Purchase Price | $ 5,761,912 | $ 40,263,875 |
DEBT (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Mar. 31, 2020 |
|
Line of Credit Facility [Line Items] | |||
Letters of Credit Outstanding, Amount | $ 300,000.0 | ||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.50% | ||
Debt Instrument, Interest Rate, Effective Percentage | 5.60% | 5.80% | |
Debt Instrument, Unused Borrowing Capacity, Fee | $ 400,000 | $ 300,000 | |
Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | 685,000,000.0 | ||
Amount outstanding | $ 352,200,000 | ||
Reference rate | LIBOR | ||
Unused amount available | $ 212,800,000 | ||
Expiration date | Jun. 07, 2022 | ||
Minimum [Member] | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 3.00% | ||
Maximum [Member] | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.00% |
INCOME TAXES (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Mar. 31, 2020 |
|
Income Tax Contingency [Line Items] | |||
Total gross unrecognized tax benefits including interest | $ 5,900,000 | $ 5,800,000 | |
Unrecognized tax benefits that are permanent in nature and, if recognized, would affect the annual effective tax rate | 5,300,000 | $ 5,200,000 | |
Gross unrecognized tax benefits expected to be resolved during the next 12 months through settlements with taxing authorities or the expiration of the statute of limitations | 2,900,000 | ||
Accrued gross interest | 1,500,000 | ||
Current period gross interest expense | $ 77,200 | ||
Effective Income Tax Rate Reconciliation, Percent | 26.30% | 21.50% |
Leases Operating lease future maturities (Details) |
Jun. 30, 2020
USD ($)
|
---|---|
Lessee, Lease, Description [Line Items] | |
Finance Lease, Liability, Payments, Due Next Twelve Months | $ 19,920,292 |
Operating Leases, Future Minimum Payments, Due in Two Years | 23,646,592 |
Finance Lease, Liability, Payments, Due Year Two | 19,363,738 |
Lessee, Operating Lease, Liability, Payments, Due Year Three | 15,435,761 |
Lessee, Operating Lease, Liability, Payments, Due Year Four | 11,176,842 |
Finance Lease, Liability, Payments, Due Year Five | 7,578,950 |
Operating Leases, Future Minimum Payments, Due Thereafter | $ 28,338,811 |
Discontinued Operations and Disposal Groups (Details) |
Jun. 30, 2020
USD ($)
|
---|---|
Discontinued Operations and Disposal Groups [Abstract] | |
Assets Held-for-sale, Not Part of Disposal Group, Other | $ 3,991,498 |
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