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 | ||||||
The (NASDAQ Global Select Market) |
Large 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, 2023 and March 31, 2023 | ||||||||
Consolidated Statements of Operations for the three months ended June 30, 2023 and June 30, 2022 | ||||||||
Consolidated Statements of Shareholders' Equity for the three months ended June 30, 2023 and June 30, 2022 | ||||||||
Consolidated Statements of Cash Flows for the three months ended June 30, 2023 and June 30, 2022 | ||||||||
Notes to Consolidated Financial Statements | ||||||||
2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |||||||
3. | Quantitative and Qualitative Disclosures about Market Risk | |||||||
4. | Controls and Procedures | |||||||
PART II - OTHER INFORMATION | ||||||||
1. | Legal Proceedings | |||||||
1A. | Risk Factors | |||||||
2. | Unregistered Sales of Equity Securities and Use of Proceeds | |||||||
3. | Defaults Upon Senior Securities | |||||||
4. | Mine Safety Disclosures | |||||||
5. | Other Information | |||||||
6. | Exhibits | |||||||
EXHIBIT INDEX | ||||||||
SIGNATURES |
Term | Definition | ||||
ASC | Accounting Standards Codification | ||||
ASU | Accounting Standards Update | ||||
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 | ||||
ERISA | Employee Retirement Income Security Act | ||||
Exchange Act | Securities Exchange Act of 1934, as amended | ||||
FASB | Financial Accounting Standards Board | ||||
FICO | The Fair Isaac Corporation | ||||
G&A | General and administrative | ||||
GAAP | U.S. generally accepted accounting principles | ||||
HTC | Historic Tax Credit | ||||
IRS | U.S. Internal Revenue Service | ||||
Notes | $300 million in aggregate principal amount of 7.0% unsecured senior notes due 2026 issued on September 27, 2021 | ||||
Option Measurement 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 | ||||
PCD | Purchased Assets with Credit Deterioration | ||||
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 | ||||
Rehab Rate | Percentage of 91 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 | ||||
SOFR | Secured Overnight Finance Rate | ||||
TAL | Tax Advance Loan |
June 30, 2023 | March 31, 2023 | ||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Gross loans receivable | |||||||||||
Less: | |||||||||||
Unearned interest, insurance and fees | ( | ( | |||||||||
Allowance for credit losses | ( | ( | |||||||||
Loans receivable, net | |||||||||||
Operating lease right‐of‐use assets, net | |||||||||||
Property and equipment, net | |||||||||||
Deferred income taxes, net | |||||||||||
Other assets, net | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES & SHAREHOLDERS' EQUITY | |||||||||||
Liabilities: | |||||||||||
Senior notes payable | $ | $ | |||||||||
Senior unsecured notes payable, net | |||||||||||
Income taxes payable | |||||||||||
Operating lease liability | |||||||||||
Accounts payable and accrued expenses | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Shareholders' equity: | |||||||||||
Preferred stock, | |||||||||||
Common stock, | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Total shareholders' equity | |||||||||||
Total liabilities and shareholders' equity | $ | $ |
Three months ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
Revenues: | |||||||||||
Interest and fee income | $ | $ | |||||||||
Insurance and other income, net | |||||||||||
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 (loss) before income taxes | ( | ||||||||||
Income tax expense (benefit) | ( | ||||||||||
Net income (loss) | $ | $ | ( | ||||||||
Net income (loss) per common share: | |||||||||||
Basic | $ | $ | ( | ||||||||
Diluted | $ | $ | ( | ||||||||
Weighted average common shares outstanding: | |||||||||||
Basic | |||||||||||
Diluted |
Three months ended June 30, 2023 | |||||||||||||||||||||||
Common Stock | |||||||||||||||||||||||
Shares | Additional Paid-in Capital | Retained Earnings | Total Shareholders' Equity | ||||||||||||||||||||
Balances at March 31, 2023 | $ | $ | $ | ||||||||||||||||||||
Proceeds from exercise of stock options | — | ||||||||||||||||||||||
Restricted common stock expense under stock option plan, net of cancellations ($ | — | ||||||||||||||||||||||
Stock option expense | — | — | |||||||||||||||||||||
Net income | — | — | |||||||||||||||||||||
Balances at June 30, 2023 | $ | $ | $ |
Three months ended June 30, 2022 | |||||||||||||||||||||||
Common Stock | |||||||||||||||||||||||
Shares | Additional Paid-in Capital | Retained Earnings | Total Shareholders' Equity | ||||||||||||||||||||
Balances at March 31, 2022 | $ | $ | $ | ||||||||||||||||||||
Proceeds from exercise of stock options | — | ||||||||||||||||||||||
Common stock repurchases | ( | — | ( | ( | |||||||||||||||||||
Restricted common stock expense under stock option plan, net of cancellations ($ | — | ||||||||||||||||||||||
Stock option expense | — | — | |||||||||||||||||||||
— | — | ( | ( | ||||||||||||||||||||
Net loss | — | — | ( | ( | |||||||||||||||||||
Balances at June 30, 2022 | $ | $ | $ |
Three months ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
Cash flow from operating activities: | |||||||||||
Net income (loss) | $ | $ | ( | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Amortization of intangible assets | |||||||||||
Accrued unearned interest | ( | ( | |||||||||
Amortization of deferred loan cost | |||||||||||
Gain on extinguishment of senior unsecured notes payable | ( | ||||||||||
Amortization of debt issuance costs | |||||||||||
Provision for credit losses | |||||||||||
Depreciation | |||||||||||
Amortization of finance leases | |||||||||||
Gain on asset acquisitions, net of income tax | ( | ||||||||||
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/ receivable | ( | ||||||||||
Accounts payable and accrued expenses | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Increase in loans receivable, net | ( | ( | |||||||||
Cash paid for acquisitions, primarily loans | ( | ||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Proceeds from the sale of property and equipment | |||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flow from financing activities: | |||||||||||
Borrowings from senior notes payable | |||||||||||
Payments on senior notes payable | ( | ( | |||||||||
Payments for extinguished senior unsecured notes payable | ( | ||||||||||
Payments for debt extinguishment costs | ( | ||||||||||
Debt issuance costs associated with senior notes payable | ( | ||||||||||
Proceeds from exercise of stock options | |||||||||||
Repayment of finance lease | ( | ||||||||||
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, 2023 | March 31, 2023 | ||||||||||||||||||||||||||||
Input Level | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||||||
Cash and cash equivalents | 1 | $ | $ | $ | $ | ||||||||||||||||||||||||
Loans receivable, net | 3 | ||||||||||||||||||||||||||||
LIABILITIES | |||||||||||||||||||||||||||||
Senior unsecured notes payable | 2 | ||||||||||||||||||||||||||||
Senior notes payable | 3 |
Customer Tenure | June 30, 2023 | March 31, 2023 | ||||||
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 | $ |
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 | $ |
Gross Charge-offs by Origination | |||||||||||
Origination by Calendar Year | Loans | Tax advance loans | Total | ||||||||
2018 and prior | $ | $ | $ | ||||||||
2019 | |||||||||||
2020 | |||||||||||
2021 | |||||||||||
2022 | |||||||||||
2023 | |||||||||||
Total | $ | $ | $ | ||||||||
Gross Charge-offs by Origination | |||||||||||
Origination by Calendar Year | Loans | Tax advance loans | Total | ||||||||
2017 and prior | $ | $ | $ | ||||||||
2018 | |||||||||||
2019 | |||||||||||
2020 | |||||||||||
2021 | |||||||||||
2022 | |||||||||||
Total | $ | $ | $ | ||||||||
Three months ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
Beginning balance | $ | $ | |||||||||
Provision for credit losses | |||||||||||
Charge-offs | ( | ( | |||||||||
Recoveries1 | |||||||||||
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 - 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 | % |
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 Loans Receivable | |||||||||||||||||
Customer Tenure | As of June 30, 2023 | As of March 31, 2023 | Interest Income Recognized for the three months ended June 30, 2023 | Interest Income Recognized for the three months ended June 30, 2022 | |||||||||||||
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 | $ | $ | $ | $ |
Three months ended June 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Lease Cost | ||||||||||||||
Finance lease cost | $ | $ | ||||||||||||
Amortization of right-of-use assets | ||||||||||||||
Interest on lease liabilities | ||||||||||||||
Operating lease cost | $ | $ | ||||||||||||
Variable lease cost | $ | $ | ||||||||||||
Total lease cost | $ | $ |
Three months ended June 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Other Lease Information | ||||||||||||||
Cash paid for amounts included in the measurement of lease liabilities | $ | $ | ||||||||||||
Operating cash flows from finance leases | ||||||||||||||
Operating cash flows from operating leases | ||||||||||||||
Financing cash flows from finance leases | ||||||||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | $ | ||||||||||||
Weighted-average remaining lease term — finance leases | — | |||||||||||||
Weighted average remaining lease term — operating leases | ||||||||||||||
Weighted-average discount rate — finance leases | % | % | ||||||||||||
Weighted-average discount rate — operating leases | % | % |
Operating Leases | |||||||||||
Remainder of 2024 | $ | ||||||||||
2025 | |||||||||||
2026 | |||||||||||
2027 | |||||||||||
2028 | |||||||||||
Thereafter | |||||||||||
Total undiscounted lease liability | $ | ||||||||||
Imputed interest | |||||||||||
Total discounted lease liability | $ |
Three months ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
Basic: | |||||||||||
Weighted average common shares outstanding (denominator) | |||||||||||
Diluted: | |||||||||||
Weighted average common shares outstanding | |||||||||||
Dilutive potential common shares2 | |||||||||||
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, | |||||||||||
2023 | 2022 | ||||||||||
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 | 3 | $ | $ | ||||||||||||||||||||
Options exercisable, end of period | $ | $ |
June 30, 2023 | June 30, 2022 | ||||||||||
Three months ended | $ | $ | |||||||||
Shares | Weighted Average Fair Value at Grant Date | ||||||||||
Outstanding at March 31, 2023 | $ | ||||||||||
Granted during the period | |||||||||||
Vested during the period | |||||||||||
Forfeited during the period | |||||||||||
Outstanding at June 30, 2023 | $ |
Three months ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
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, | ||||||||||||||
2023 | 2022 | |||||||||||||
Acquisitions: | ||||||||||||||
Number of loan portfolios acquired through asset purchases | ||||||||||||||
Total acquisitions | ||||||||||||||
Purchase price | $ | $ | ||||||||||||
Tangible assets: | ||||||||||||||
Loans receivable, net | ||||||||||||||
Purchase price amount below carrying value of net tangible assets4 | $ | $ | ( | |||||||||||
Non-compete agreements | $ | $ | ||||||||||||
Amount | |||||||||||
Remainder of 2024 | $ | ||||||||||
2025 | |||||||||||
2026 | |||||||||||
2027 | |||||||||||
2028 | |||||||||||
Total future debt payments | $ |
Three months ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
(Dollars in thousands) | |||||||||||
Gross loans receivable | $ | 1,397,966 | $ | 1,641,798 | |||||||
Average gross loans receivable (1) | 1,388,662 | 1,575,548 | |||||||||
Net loans receivable (2) | 1,017,999 | 1,194,508 | |||||||||
Average net loans receivable (3) | 1,013,007 | 1,152,981 | |||||||||
Expenses as a percentage of total revenue: | |||||||||||
Provision for credit losses | 33.4 | % | 54.3 | % | |||||||
General and administrative | 48.9 | % | 45.4 | % | |||||||
Interest expense | 8.8 | % | 7.1 | % | |||||||
Operating income as a % of total revenue (4) | 17.7 | % | 0.3 | % | |||||||
Loan volume (5) | 721,234 | 932,379 | |||||||||
Net charge-offs as percent of average net loans receivable on an annualized basis | 16.9 | % | 22.3 | % | |||||||
Return on average assets (trailing 12 months) | 3.3 | % | 2.5 | % | |||||||
Return on average equity (trailing 12 months) | 10.7 | % | 7.5 | % | |||||||
Branches opened or acquired (merged or closed), net | (18) | (21) | |||||||||
Branches open (at period end) | 1,055 | 1,146 |
CECL Allowance and Provision (Dollars in millions) | FY 2024 | FY 2023 | Difference | Reconciliation | ||||||||||||||||||||||
Beginning Allowance - March 31 | $125.5 | $134.2 | $(8.7) | |||||||||||||||||||||||
Change due to Growth | $0.7 | $10.5 | $(9.8) | $(9.8) | ||||||||||||||||||||||
Change due to Expected Loss Rate on Performing Loans | $3.5 | $16.8 | $(13.3) | $(13.3) | ||||||||||||||||||||||
Change due to 90 day past due | $(0.4) | $(5.9) | $5.5 | $5.5 | ||||||||||||||||||||||
Ending Allowance - June 30 | $129.3 | $155.6 | $(26.3) | $(17.6) | ||||||||||||||||||||||
Net Charge-offs | $42.8 | $64.4 | $(21.6) | $(21.6) | ||||||||||||||||||||||
Provision | $46.6 | $85.8 | $(39.2) | $(39.2) | ||||||||||||||||||||||
Note: The change in allowance for the quarter plus net charge-offs for the quarter equals the provision for the quarter (see above reconciliation). |
(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(1) | ||||||||||||||||||||
April 1 through April 30, 2023 | — | $ | — | — | $ | 1,123,544 | |||||||||||||||||
May 1 through May 31, 2023 | — | — | — | 1,123,544 | |||||||||||||||||||
June 1 through June 30, 2023 | — | — | — | 1,123,544 | |||||||||||||||||||
Total for the quarter | — | $ | — | — |
Exhibit Number | Exhibit Description | Filed Herewith | Incorporated by Reference | |||||||||||||||||
Form or Registration Number | Exhibit | Filing Date | ||||||||||||||||||
3.01 | S-8 | 3.1 | 07-29-03 | |||||||||||||||||
3.02 | 10-Q | 3.01 | 11-08-18 | |||||||||||||||||
10.01 | 8-K | 10.1 10.2 | 07-18-23 | |||||||||||||||||
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, 2023, formatted in Inline XBRL: | * | ||||||||||||||||||
(i) | Consolidated Balance Sheets as of June 30, 2023 and March 31, 2023; | |||||||||||||||||||
(ii) | Consolidated Statements of Operations for the three months ended June 30, 2023 and June 30, 2022; | |||||||||||||||||||
(iii) | Consolidated Statements of Shareholders' Equity for the three months ended June 30, 2023 and June 30, 2022; | |||||||||||||||||||
(iv) | Consolidated Statements of Cash Flows for the three months ended June 30, 2023 and June 30, 2022; and | |||||||||||||||||||
(v) | Notes to the Consolidated Financial Statements. | |||||||||||||||||||
104.01 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | * |
* | Filed 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/ Scott McIntyre | |||||||||||
Scott McIntyre | |||||||||||
Senior Vice President of Accounting | |||||||||||
Signing on behalf of the registrant and as principal accounting officer | |||||||||||
Date: | August 3, 2023 | ||||||||||
Dated: | August 3, 2023 | /s/ R. Chad Prashad | ||||||
R. Chad Prashad | ||||||||
President and Chief Executive Officer |
Dated: | August 3, 2023 | /s/ John L. Calmes, Jr. | ||||||
John L. Calmes, Jr. | ||||||||
Executive Vice President and Chief Financial and Strategy Officer |
Dated: | August 3, 2023 | /s/ R. Chad Prashad | ||||||
R. Chad Prashad | ||||||||
President and Chief Executive Officer |
Dated: | August 3, 2023 | /s/ John L. Calmes, Jr. | ||||||
John L. Calmes, Jr. | ||||||||
Executive Vice President and Chief Financial and Strategy Officer |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jun. 30, 2023 |
Mar. 31, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
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) | 6,240,497 | 6,231,082 |
Common stock, shares outstanding (in shares) | 6,240,497 | 6,231,082 |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - USD ($) |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Mar. 31, 2022 |
|
Statement of Stockholders' Equity [Abstract] | |||
Accounting Standards Update [Extensible List] | Accounting Standards Update 2023-02 [Member] | ||
Issuance of restricted common stock under stock option plan | $ 0 | $ 0 |
BASIS OF PRESENTATION |
3 Months Ended |
---|---|
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The consolidated financial statements of the Company at June 30, 2023 and 2022 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, 2023, and the results of operations and cash flows for the periods ended June 30, 2023 and 2022, have been included. The results for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates. The consolidated financial statements do not include all disclosures required by GAAP and should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the fiscal year ended March 31, 2023, included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2023, as filed with the SEC. The Company applies the accounting policies contained in Note 1 to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended March 31, 2023. The Company believes that the disclosures are adequate to make the information presented not misleading.
|
SUMMARY OF SIGNIFICANT POLICIES |
3 Months Ended |
---|---|
Jun. 30, 2023 | |
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. Loans receivable, net Loans receivable are carried at the gross amount outstanding, reduced by unearned interest and insurance income, net of deferred origination fees and direct costs, and an allowance for credit losses. Fees received and direct costs incurred for the origination of loans are deferred and amortized to interest income over the contractual lives of the loans using the interest method. Unamortized amounts are recognized in income at the time that loans are refinanced or paid in full except for those refinancings that do not constitute a more than minor modification. Net unamortized deferred origination costs were $5.2 million and $4.9 million as of June 30, 2023 and March 31, 2023, respectively. From time to time, the Company may sell charged off loans receivable, which are accounted for as a sale in accordance with ASC 860, Transfers and Servicing. Allowance for credit losses Refer to Note 4, “Loans Receivable and Allowance for Credit Losses,” for information regarding the Company's CECL allowance model and a description of the methodology it utilizes. Reclassification Certain prior period amounts have been reclassified to conform to the current presentation. Such reclassifications had no impact on previously reported net income (loss) or shareholders' equity, with the exception of the following. As a result of adopting ASU 2023-02, Investments- Equity Method and Joint Venture (Topic 323), in March 2023 with an effective date of April 1, 2022, previously reported net loss for the three months ended June 30, 2022 and shareholders' equity as of June 30, 2022 were immaterially impacted to conform to the modified retrospective application of this newly adopted ASU. Recently Adopted Accounting Standards Troubled Debt Restructurings and Vintage Disclosures In March 2022, the FASB issued ASU 2022-02, Troubled Debt Restructurings and Vintage Disclosures. The amendments in this update eliminate the accounting guidance for troubled debt restructurings by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Additionally, for public business entities, the amendments in this update require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. The adoption of ASU 2022-02 on April 1, 2023 expanded our write-off disclosures, but had no other impact on the Company’s Consolidated Financial Statements. Recently Issued Accounting Standards Not Yet Adopted We reviewed all newly issued accounting pronouncements and concluded that they are either not applicable to our business or are not expected to have a material effect on the Consolidated Financial Statements as a result of future adoption.
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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, senior notes payable, and senior unsecured notes payable. Loans receivable are originated at prevailing market rates and have an average life of approximately less than twelve months. Given the short-term nature of these loans, they are continually repriced at current market rates. The Company’s revolving credit facility has a variable rate based on a margin over SOFR and reprices with any changes in SOFR. The fair value of the senior unsecured notes payable is estimated based on quoted prices in markets that are not active. The Company also considers its creditworthiness in its estimation of fair value. 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.
There were no significant assets or liabilities measured at fair value on a non-recurring basis as of June 30, 2023 or March 31, 2023.
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LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES | LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES The following is a summary of gross loans receivable by Customer Tenure as of:
Current payment performance is used to assess the capability of the borrower to repay contractual obligations of the loan agreements as scheduled, which is monitored by management on a daily basis. On an as needed basis, qualitative information may be taken into consideration if new information arises related to the customer’s ability to repay the loan. The Company’s payment performance buckets are as follows: current, 30-60 days past due, 61-90 days past due, 91 days or more past due. The following table provides a breakdown of the Company’s gross loans receivable by current payment performance on a recency basis and year of origination at June 30, 2023:
The following table provides a breakdown of the Company’s gross loans receivable by current payment performance on a recency basis and year of origination at March 31, 2023:
The following table provides a breakdown of the Company’s gross loans receivable by current payment performance on a contractual basis and year of origination at June 30, 2023:
The following table provides a breakdown of the Company’s gross loans receivable by current payment performance on a contractual basis and year of origination at March 31, 2023:
The following table provides a breakdown of the Company’s gross charge-offs by year of origination at June 30, 2023:
The following table provides a breakdown of the Company’s gross charge-offs by year of origination at June 30, 2022:
The allowance for credit losses is applied to amortized cost, which is defined as the amount at which a financing receivable is originated, and net of deferred fees and costs, collection of cash, and charge-offs. Amortized cost also includes interest earned but not collected. Credit Risk is inherent in the business of extending loans to borrowers and is continuously monitored by management and reflected within the allowance for credit losses for loans. The allowance for credit losses is an estimate of expected losses inherent within the Company’s gross loans receivable portfolio. In estimating the allowance for credit losses, loans with similar risk characteristics are aggregated into pools and collectively assessed. The Company’s loan products have generally the same terms therefore the Company looked to borrower characteristics as a way to disaggregate loans into pools sharing similar risks. In determining the allowance for credit losses, the Company examined four borrower risk metrics as noted below. 1.Borrower type 2.Active months 3.Prior loan performance 4.Customer Tenure To determine how well each metric predicts default risk the Company uses loss rate data over an observation period of twelve months at the loan level. The information value was then calculated for each metric. From this analysis management determined the metric that had the strongest predictor of default risk was Customer Tenure. The Customer Tenure buckets used in the allowance for credit loss calculation are: 1.0 to 5 months 2.6 to 17 months 3.18 to 35 months 4.36 to 59 months 5.60+ months Management will continue to monitor this credit metric on a quarterly basis. Management estimates an allowance for each Customer Tenure bucket by performing a historical migration analysis of loans in that bucket for the twelve most recent historical twelve-month migration periods. All loans that are greater than 90 days past due on a recency basis and not written off as of the reporting date are reserved for at 100% of the outstanding balance, net of a calculated Rehab Rate. Management considers whether current credit conditions might suggest a change is needed to the allowance for credit losses by monitoring trends in first pay success for new borrowers, 60-89 day delinquencies on a recency basis, FICO scores, percent of loan balances that are paying and percentage of gross loans that are acquired loans. From time to time, the Company will make changes, as deemed appropriate, to our new borrower underwriting guidance. As a result, management also considers whether a change in our new borrower underwriting might suggest a change is needed to the allowance for credit losses. If a change is determined necessary, then the Company has elected to immediately revert back to historical experience past the forecast period. Due to the short term nature of the loan portfolio, forecasted changes in macroeconomic variables such as unemployment do not have a significant impact on loans outstanding at the end of a particular reporting period. Therefore, management develops a reasonable and supportable forecast of losses by comparing the most recent six-month loss curves as compared to historical loss curves to see if there are significant changes in borrower behavior that may indicate the historical migration rates should be adjusted. If management determines that historical migration rates should be adjusted to reflect expected credit losses, a qualitative adjustment is made to reflect management's judgment regarding observable changes in recent or expected economic trends and conditions, portfolio composition, or other significant events or conditions that affect the current estimate. The following table presents a roll forward of the allowance for credit losses for the three months ended June 30, 2023 and 2022:
The following table is an aging analysis on a recency basis at amortized cost of the Company’s gross loans receivable at June 30, 2023:
The following table is an aging analysis on a recency basis at amortized cost of the Company’s gross loans receivable at March 31, 2023:
The following table is an aging analysis on a contractual basis at amortized cost of the Company’s gross loans receivable at June 30, 2023:
The following table is an aging analysis on a contractual basis at amortized cost of the Company’s gross loans receivable at March 31, 2023:
The Company elected not to record an allowance for credit losses for accrued interest as outlined in ASC 326-20-30-5A. 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. 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, 2023 and June 30, 2022, the Company reversed a total of $6.3 million and $9.0 million, respectively, of unpaid accrued interest against interest income. 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, as well as interest income recognized on nonaccrual loans for the three months ended June 30, 2023 and 2022:
As of June 30, 2023 and March 31, 2023, there were no loans receivable 61 days or more past due, not on nonaccrual status, and no loans receivable on nonaccrual status with no related allowance for credit losses.
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LEASES |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASESAccounting Policies and Matters Requiring Management's Judgment The Company uses its effective annual interest rate, adjusted for certain assumptions, as the discount rate when evaluating leases under Topic 842. Management applies the adjusted effective annual interest rate to leases entered for the entirety of the subsequent year. 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 generally does not believe it is reasonably certain to exercise any options associated with its office equipment leases. Periodic Disclosures The Company's operating leases consist of real estate leases for office space as well as office equipment. Both the branch real estate and office equipment lease terms generally range from three years to five years, and generally contain options to extend which mirror the original terms of the lease. During the second quarter of fiscal 2023, the lease terms associated with the Company's finance leases expired and the Company exercised its purchase option to acquire the IT equipment. Because it was reasonably certain that the Company would obtain the assets at the end of their lease terms, the right-of-use assets have amortized over the useful life of the asset, rather than over the lease term. As of June 30, 2023, the Company had no finance leases. The following table reports information about the Company's lease cost for the three months ended June 30, 2023 and 2022:
The following table reports other information about the Company's leases for the three months ended June 30, 2023 and 2022:
The aggregate annual lease obligations as of June 30, 2023 are as follows:
The Company had no leases with related parties at June 30, 2023 or March 31, 2023.
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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 |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock Incentive Plans The Company maintains 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 3,350,000 shares of authorized common stock have been reserved for issuance pursuant to grants approved by the Compensation Committee. Stock options granted under these plans have a maximum term of 10 years, may be subject to certain vesting requirements, which are generally to six 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, 2023, there were a total of 149,174 shares of common stock remaining 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 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, in fiscal 2019, 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 will 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, subject to each respective employee’s continued employment at the Company through the last day of the 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 typically 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 typically vest in three 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 There were no options issued during the three months ended June 30, 2023. The weighted-average fair value at the grant date for options issued during the three months ended June 30, 2022 was $80.87. 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, 2023 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, 2023 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, 2023. 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, 2023 and 2022 was as follows:
As of June 30, 2023, total unrecognized stock-based compensation expense related to non-vested stock options amounted to approximately $2.4 million, which is expected to be recognized over a weighted-average period of approximately 1.6 years. Restricted Stock During the first three months of fiscal 2024, the Company granted 1,875 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 $103.78 per share. During fiscal 2023, the Company granted 3,250 shares of restricted stock (which are equity classified) to certain vice presidents with a grant date weighted average fair value of $129.85 per share. 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 $1.1 million and $3.0 million for the three months ended June 30, 2023 and 2022, respectively, which is included as a component of general and administrative expenses in the Company’s Consolidated Statements of Operations. As of June 30, 2023, there was approximately $3.5 million of unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over the next 1.3 years based on current estimates. A summary of the status of the Company’s restricted stock as of June 30, 2023, and changes during the three months ended June 30, 2023, are presented below:
Total Stock-Based Compensation Total stock-based compensation included as a component of net income (loss) during the three month periods ended June 30, 2023 and 2022 was as follows:
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ACQUISITIONS |
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Business Combination and Asset Acquisition [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, 2023 and 2022.
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 less than twelve 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 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 PCDs during the three months ended June 30, 2023 and 2022. 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 values. 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 estimated 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 |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT Senior Notes Payable; Revolving Credit Facility At June 30, 2023, the Company's senior 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 $785.0 million provided that certain conditions are met. At June 30, 2023, $299.8 million was outstanding under the Company's credit facility, not including a $524.0 thousand outstanding standby letter of credit related to workers compensation under a $1.5 million sub-facility. 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, 2023. The letter of credit expires on December 31, 2023; 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 one month SOFR plus .10% and an applicable margin of 3.5% with a minimum rate of 4.5%. 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 $0.5 million and $0.3 million for the three months ended June 30, 2023 and 2022, respectively. For the three months ended June 30, 2023 and fiscal year ended March 31, 2023, the Company’s effective interest rate, including the commitment fee and amortization of debt issuance costs, was 9.6% annualized and 7.0%, respectively. At June 30, 2023, the unused amount available under the revolving credit facility was $366.3 million and borrowings under the revolving credit facility mature on June 7, 2024. Substantially all of the Company’s assets are pledged as collateral for borrowings under the revolving credit agreement. Senior Unsecured Notes Payable On September 27, 2021, we issued $300 million in aggregate principal amount of 7.0% senior notes due 2026. The Notes were sold in a private placement in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by all of the Company’s existing and certain of its future subsidiaries that guarantee the revolving credit facility. Interest on the Notes is payable semi-annually in arrears on May 1 and November 1 of each year, commencing May 1, 2022. At any time prior to November 1, 2023, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus a make-whole premium, as described in the indenture, plus accrued and unpaid interest, if any, to, but not including, the date of redemption. At any time on or after November 1, 2023, the Company may redeem the Notes at redemption prices set forth in the indenture, plus accrued and unpaid interest, if any, to, but not including, the date of redemption. In addition, at any time prior to November 1, 2023, the Company may use the proceeds of certain equity offerings to redeem up to 40.0% of the aggregate principal amount of the Notes issued under the indenture at a redemption price equal to 107.0% of the principal amount of Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the date of redemption. We used the net proceeds from this offering to repay a portion of the outstanding indebtedness under our revolving credit facility and for general corporate purposes. During fiscal 2023, the Company repurchased and extinguished $9.1 million of its Notes, net of $0.1 million unamortized debt issuance costs related to the extinguished debt, on the open market for a reacquisition price of $7.2 million. During the first three months of fiscal 2024. the Company repurchased and extinguished $2.0 million of its Notes, net of $24.1 thousand unamortized debt issuance costs related to the extinguished debt, on the open market for a reacquisition price of $1.54 million. In accordance with ASC 470, the Company recognized the $0.4 million gain on extinguishment as a component of interest expense in the Company's Consolidated Statements of Operations. 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 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 agreement's financial covenants include (i) a minimum consolidated net worth of $325.0 million on and after December 31, 2020; (ii) a maximum ratio of total debt to consolidated adjusted net worth of 2.5 to 1.0 (decreasing to 2.25 to 1.0 for the fiscal quarters ending March 31, 2023 and June 30, 2023, 2.0 to 1.0 for the fiscal quarter ending September 30, 2023, and 2.25 to 1.0 for the fiscal quarter ending December 31, 2023); (iii) a maximum collateral performance indicator of 26.0% as of the end of each calendar month (increasing to 28% for the calendar months ending October 31, 2022 through June 30, 2023); and (iv) a minimum fixed charges coverage ratio of 1.25 to 1.0 for the fiscal quarter ended December 31, 2022, 1.15 to 1.0 for the fiscal quarters ending March 31, 2023 and June 30, 2023, 1.50 to 1.0 for the fiscal quarter ending September 30, 2023, 2.0 to 1.0 for the fiscal quarter ending December 31, 2023, and 2.75 to 1.0 for each fiscal quarter thereafter, where the ratio for the most recent four consecutive fiscal quarters must be at least 2.0 to 1.0 in order for the Company to declare dividends or purchase any class or series of its capital stock or other equity. The collateral performance indicator is equal to the sum of (a) a three-month rolling average rate of receivables at least sixty days past due and (b) an eight-month rolling average net charge-off rate. The Company was in compliance with these covenants at June 30, 2023 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 loans receivable 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. The indenture governing the Notes contains certain covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to (i) incur additional indebtedness or issue certain disqualified stock and preferred stock; (ii) pay dividends or distributions or redeem or purchase capital stock; (iii) prepay subordinated debt or make certain investments; (iv) transfer and sell assets; (v) create or permit to exist liens; (vi) enter into agreements that restrict dividends, loans and other distributions from their subsidiaries; (vii) engage in a merger, consolidation or sell, transfer or otherwise dispose of all or substantially all of their assets; and (viii) engage in transactions with affiliates. However, these covenants are subject to a number of important detailed qualifications and exceptions. Debt Maturities The aggregate annual maturities of the Company's debt arrangements as of June 30, 2023 are as follows:
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INCOME TAXES |
3 Months Ended |
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Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXESAs of June 30, 2023 and March 31, 2023, the Company had $1.2 million and $1.1 million, respectively, of total gross unrecognized tax benefits including interest. Approximately $0.9 million and $0.9 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, 2023, approximately $0.5 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. The Company had approximately $313.1 thousand accrued for gross interest as of June 30, 2023, and accrued $20.2 thousand during the three months ended June 30, 2023. Investment in HTC was $21.7 million and $23.0 million as of June 30, 2023 and March 31, 2023, respectively, which is included as a component of Other assets, net in the Consolidated Balance Sheets. For the three months ended June 30, 2023 and 2022, the Company recognized net amortization from these investments of $1.3 million and $0.9 million, respectively, in income tax expense. For the three months ended June 30, 2023 and 2022, the Company recognized tax benefits from these investments of $1.5 million and $0.5 million, respectively, in income tax expense and in Income taxes payable in the Consolidated Statements of Cash Flows. The Company did not recognize any non-tax related activity or have any significant modifications in the investments during the current period. The Company is subject to U.S. income taxes, as well as taxes in 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 2018, although carryforward attributes that were generated prior to 2018 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 totaled 22.8% for the quarter ended June 30, 2023 compared to 20.2% for the prior year quarter. The increase is primarily due to the tax benefit related to the bargain purchase recorded as a discrete item in the prior year quarter. This was partially offset by the effects of pretax book earnings relative to the effects of various permanent items including a decrease in the disallowed executive compensation under Section 162(m) and the recognition of additional HTCs when compared to the prior year quarter.
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COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
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Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Derivative Litigation On September 25, 2020, a shareholder filed a derivative complaint in South Carolina state court, Paul Parshall v. World Acceptance et al., against the Company as the nominal defendant and certain current and former directors and officers as defendants. Pointing to the Company’s resolution with the SEC and DOJ of the Mexico investigation previously disclosed, the complaint alleged violations of South Carolina law, including breaches of fiduciary duties and corporate waste, and that the Company has suffered damages as a result of those alleged breaches. The complaint sought unspecified monetary damages from the individual defendants, equitable and/or injunctive relief, disgorgement of compensation from the individual defendants, and attorneys’ fees and costs. Because the complaint was derivative in nature, it did not seek monetary damages from the Company. On July 6, 2023, the Court issued a Final Order and Judgment approving the April 19, 2023 Stipulation and Agreement of Settlement dated March 31, 2023, by and among: the plaintiff, derivatively on behalf of the Company; (ii) the individual defendants; and (iii) the Company. The Final Order and Judgment resulted in a non-material payment by the Company. 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.
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SUBSEQUENT EVENTS |
3 Months Ended |
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Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS On July 18, 2023, the Company amended its revolving credit agreement ("Tenth Amendment") to, among other things, (i) reduce the total commitments under the facility from $685 million to $580 million; (ii) increase the amount available under the accordion feature from $100 million to $150 million (for a total commitment, if the full accordion is borrowed, of $730 million); (iii) extend the maturity from June 7, 2024 to June 7, 2026; (iv) change the ratio of Net Income Available for Fixed Charges to Fixed Charges from not less than 2.75 to 1.0 to not less than 2.25 to 1.0 starting with the fiscal quarter ending March 31, 2024; and (v) replace certain lenders and amend the commitment levels of certain lenders. Management is not aware of any other significant events occurring subsequent to the balance sheet date that would have a material effect on the financial statements thereby requiring adjustment or disclosure.
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Pay vs Performance Disclosure - USD ($) |
3 Months Ended | |
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Jun. 30, 2023 |
Jun. 30, 2022 |
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Pay vs Performance Disclosure | ||
Net income (loss) | $ 9,538,748 | $ (8,566,472) |
Insider Trading Arrangements |
3 Months Ended |
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Jun. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
SUMMARY OF SIGNIFICANT POLICIES (Policies) |
3 Months Ended |
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Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Nature of Operations | 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.
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Seasonality | 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.
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Loans receivable, net | Loans receivable, net Loans receivable are carried at the gross amount outstanding, reduced by unearned interest and insurance income, net of deferred origination fees and direct costs, and an allowance for credit losses. Fees received and direct costs incurred for the origination of loans are deferred and amortized to interest income over the contractual lives of the loans using the interest method. Unamortized amounts are recognized in income at the time that loans are refinanced or paid in full except for those refinancings that do not constitute a more than minor modification. Net unamortized deferred origination costs were $5.2 million and $4.9 million as of June 30, 2023 and March 31, 2023, respectively. From time to time, the Company may sell charged off loans receivable, which are accounted for as a sale in accordance with ASC 860, Transfers and Servicing.
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Allowance for credit losses | Allowance for credit losses Refer to Note 4, “Loans Receivable and Allowance for Credit Losses,” for information regarding the Company's CECL allowance model and a description of the methodology it utilizes.
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Reclassification | Reclassification Certain prior period amounts have been reclassified to conform to the current presentation. Such reclassifications had no impact on previously reported net income (loss) or shareholders' equity, with the exception of the following. As a result of adopting ASU 2023-02, Investments- Equity Method and Joint Venture (Topic 323), in March 2023 with an effective date of April 1, 2022, previously reported net loss for the three months ended June 30, 2022 and shareholders' equity as of June 30, 2022 were immaterially impacted to conform to the modified retrospective application of this newly adopted ASU
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Recently Adopted Accounting Standards and Recently Issued Accounting Standards Not Yet Adopted | Recently Adopted Accounting Standards Troubled Debt Restructurings and Vintage Disclosures In March 2022, the FASB issued ASU 2022-02, Troubled Debt Restructurings and Vintage Disclosures. The amendments in this update eliminate the accounting guidance for troubled debt restructurings by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Additionally, for public business entities, the amendments in this update require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. The adoption of ASU 2022-02 on April 1, 2023 expanded our write-off disclosures, but had no other impact on the Company’s Consolidated Financial Statements. Recently Issued Accounting Standards Not Yet Adopted We reviewed all newly issued accounting pronouncements and concluded that they are either not applicable to our business or are not expected to have a material effect on the Consolidated Financial Statements as a result of future adoption.
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FAIR VALUE (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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.
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LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable | The following is a summary of gross loans receivable by Customer Tenure as of:
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Assessment of the Credit Quality | The following table provides a breakdown of the Company’s gross loans receivable by current payment performance on a recency basis and year of origination at June 30, 2023:
The following table provides a breakdown of the Company’s gross loans receivable by current payment performance on a recency basis and year of origination at March 31, 2023:
The following table provides a breakdown of the Company’s gross loans receivable by current payment performance on a contractual basis and year of origination at June 30, 2023:
The following table provides a breakdown of the Company’s gross loans receivable by current payment performance on a contractual basis and year of origination at March 31, 2023:
The following table provides a breakdown of the Company’s gross charge-offs by year of origination at June 30, 2023:
The following table provides a breakdown of the Company’s gross charge-offs by year of origination at June 30, 2022:
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Summary of Changes in the Allowance For Loan Losses | The following table presents a roll forward of the allowance for credit losses for the three months ended June 30, 2023 and 2022:
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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, 2023:
The following table is an aging analysis on a recency basis at amortized cost of the Company’s gross loans receivable at March 31, 2023:
The following table is an aging analysis on a contractual basis at amortized cost of the Company’s gross loans receivable at June 30, 2023:
The following table is an aging analysis on a contractual basis at amortized cost of the Company’s gross loans receivable at March 31, 2023:
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Financing Receivable, Nonaccrual | 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, as well as interest income recognized on nonaccrual loans for the three months ended June 30, 2023 and 2022:
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LEASES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost | The following table reports information about the Company's lease cost for the three months ended June 30, 2023 and 2022:
The following table reports other information about the Company's leases for the three months ended June 30, 2023 and 2022:
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Operating Lease Maturity | The aggregate annual lease obligations as of June 30, 2023 are as follows:
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Finance Lease Maturity | The aggregate annual lease obligations as of June 30, 2023 are as follows:
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AVERAGE SHARE INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares Vesting Based on EPS Targets | The Performance Share performance targets are set forth below.
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Fair Value was Estimated at Grant Date Using the Weighted-Average | Fair value was estimated at grant date using the weighted-average assumptions listed below:
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Summary Schedule of Stock Option Activity | Option activity for the three months ended June 30, 2023 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, 2023 and 2022 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, 2023, and changes during the three months ended June 30, 2023, are presented below:
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Share-Based Compensation Included as a Component of Net Income (Loss) | Total stock-based compensation included as a component of net income (loss) during the three month periods ended June 30, 2023 and 2022 was as follows:
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ACQUISITIONS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The following table sets forth the Company's acquisition activity for the three months ended June 30, 2023 and 2022.
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DEBT (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate Annual Maturities Of the Notes Payable | The aggregate annual maturities of the Company's debt arrangements as of June 30, 2023 are as follows:
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SUMMARY OF SIGNIFICANT POLICIES (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Mar. 31, 2023 |
---|---|---|
Accounting Policies [Abstract] | ||
Unamortized deferred origination fees and costs | $ 5,200 | $ 4,900 |
LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES (Company’s Gross Charge-Offs By Year of Origination) (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Financing Receivable, Recorded Investment [Line Items] | ||
2018 and prior | $ 5,007 | $ 5,663 |
2019 | 12,727 | 13,855 |
2020 | 104,287 | 138,663 |
2021 | 2,943,366 | 1,509,992 |
2022 | 47,401,443 | 65,881,363 |
2022 | 256,212 | 1,716,846 |
Total | 50,723,042 | 69,266,382 |
Loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
2018 and prior | 5,007 | 5,663 |
2019 | 12,727 | 13,855 |
2020 | 104,287 | 138,663 |
2021 | 2,943,366 | 1,509,992 |
2022 | 47,396,816 | 65,867,200 |
2022 | 253,212 | 1,649,742 |
Total | 50,715,415 | 69,185,115 |
Tax advance loans | ||
Financing Receivable, Recorded Investment [Line Items] | ||
2018 and prior | 0 | 0 |
2019 | 0 | 0 |
2020 | 0 | 0 |
2021 | 0 | 0 |
2022 | 4,627 | 14,163 |
2022 | 3,000 | 67,104 |
Total | $ 7,627 | $ 81,267 |
LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES (Roll Forward of the Allowance for Credit Losses on Our Gross Loans Receivable) (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 125,552,733 | $ 134,242,862 |
Provision for credit losses | 46,602,012 | 85,822,267 |
Charge-offs | (50,723,042) | (69,266,382) |
Recoveries | 7,911,285 | 4,851,932 |
Net charge-offs | (42,811,757) | (64,414,450) |
Ending Balance | $ 129,342,988 | $ 155,650,679 |
LEASES (Additional Information) (Details) |
Jun. 30, 2023 |
---|---|
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating lease, term of contract | 3 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating lease, term of contract | 5 years |
LEASES (Lease Cost) (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Leases [Abstract] | ||
Finance lease cost | $ 0 | $ 103,302 |
Amortization of right-of-use assets | 0 | 102,278 |
Interest on lease liabilities | 0 | 1,024 |
Operating lease cost | 6,141,171 | 6,662,311 |
Variable lease cost | 1,030,675 | 931,084 |
Total lease cost | 7,171,846 | 7,696,697 |
Cash paid for amounts included in the measurement of lease liabilities | 6,324,218 | 6,724,592 |
Operating cash flows from finance leases | 0 | 1,024 |
Operating cash flows from operating leases | 6,324,218 | 6,689,425 |
Financing cash flows from finance leases | 0 | 34,143 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 3,046,251 | $ 5,352,690 |
Weighted-average remaining lease term — finance leases | 4 months 24 days | |
Weighted average remaining lease term — operating leases | 7 years 1 month 6 days | 7 years 2 months 12 days |
Weighted-average discount rate — finance leases | 0.00% | 6.00% |
Weighted-average discount rate — operating leases | 6.10% | 6.10% |
LEASES (Aggregate Annual Lease Obligations) (Details) - USD ($) |
Jun. 30, 2023 |
Mar. 31, 2023 |
---|---|---|
Operating Leases | ||
Remainder of 2024 | $ 17,407,197 | |
2025 | 19,180,075 | |
2026 | 15,695,818 | |
2027 | 11,797,164 | |
2028 | 9,231,916 | |
Thereafter | 28,762,038 | |
Total undiscounted lease liability | 102,074,208 | |
Imputed interest | 20,085,310 | |
Total discounted lease liability | $ 81,988,898 | $ 83,735,002 |
AVERAGE SHARE INFORMATION (Details) - shares |
3 Months Ended | |
---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Basic: | ||
Weighted average common shares outstanding (in shares) | 5,772,733 | 5,740,835 |
Diluted: | ||
Weighted average common shares outstanding (in shares) | 5,772,733 | 5,740,835 |
Dilutive potential common shares (in shares) | 118,566 | 0 |
Weighted average diluted shares outstanding (in shares) | 5,891,299 | 5,740,835 |
Anti-dilutive shares (in shares) | 309,371 | 341,880 |
STOCK-BASED COMPENSATION (Share and Options Performance Targets) (Details) |
3 Months Ended |
---|---|
Jun. 30, 2023
$ / shares
| |
Target 1 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
EPS target (in dollars per share) | $ 16.35 |
Vesting percentage | 40.00% |
Target 2 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
EPS target (in dollars per share) | $ 20.45 |
Vesting percentage | 60.00% |
Target 3 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
EPS target (in dollars per share) | $ 25.30 |
Vesting percentage | 100.00% |
STOCK-BASED COMPENSATION (Grants Date Using The Weighted-Average Assumptions) (Details) |
3 Months Ended | |
---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Share-Based Payment Arrangement [Abstract] | ||
Dividend yield | 0.00% | 0.00% |
Expected volatility | 0.00% | 55.96% |
Average risk-free rate | 0.00% | 2.94% |
Expected life | 0 days | 5 years 10 months 24 days |
ACQUISITIONS (Details) |
3 Months Ended | |
---|---|---|
Jun. 30, 2023
USD ($)
acquisition
|
Jun. 30, 2022
USD ($)
acquisition
|
|
Business Acquisition [Line Items] | ||
Number of loan portfolios acquired through asset purchases | acquisition | 0 | 35 |
Total acquisitions | acquisition | 0 | 35 |
Loans receivable, net | $ 0 | $ 23,547,972 |
Purchase price amount below carrying value of net tangible assets | 0 | (3,847,128) |
Non-compete agreements | 0 | 215,000 |
Gain on acquisition, net of income tax | 0 | 3,144,722 |
Income tax related to asset acquisition | 917,400 | |
Insurance And Other Income, Net | ||
Business Acquisition [Line Items] | ||
Gain on acquisition, net of income tax | 3,100,000 | |
Series of Individually Immaterial Business Acquisitions | ||
Business Acquisition [Line Items] | ||
Purchase price | $ 0 | $ 19,700,844 |
DEBT (Debt Maturities) (Details) |
Jun. 30, 2023
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
Remainder of 2024 | $ 0 |
2025 | 299,776,031 |
2026 | 0 |
2027 | 288,860,000 |
2028 | 0 |
Total future debt payments | $ 588,636,031 |
INCOME TAXES (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Mar. 31, 2023 |
|
Income Tax Contingency [Line Items] | |||
Total gross unrecognized tax benefits including interest | $ 1,200,000 | $ 1,100,000 | |
Unrecognized tax benefits | 900,000 | 900,000 | |
Gross unrecognized tax benefits, limitations and settlement with taxing authorities | 500,000 | ||
Accrued gross interest | 313,100 | ||
Gross interest expense | $ 20,200 | ||
Effective income tax rate reconciliation, percent | 22.80% | 20.20% | |
Historic Tax Credit Investment | |||
Income Tax Contingency [Line Items] | |||
Equity method investment | $ 21,700,000 | $ 23,000,000 | |
Historic tax credit investments amortization | 1,300,000 | $ 900,000 | |
Tax benefits from these investments | $ 1,500,000 | $ 500,000 |
SUBSEQUENT EVENTS (Details) |
3 Months Ended | |
---|---|---|
Jul. 18, 2023
USD ($)
|
Jun. 30, 2023
USD ($)
|
|
Subsequent Event [Line Items] | ||
Accordion feature | $ 100,000,000 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Accordion feature | $ 150,000,000 | |
Revolving Credit Facility | ||
Subsequent Event [Line Items] | ||
Maximum borrowing capacity | 685,000,000 | |
Accordion feature | $ 785,000,000 | |
Fixed conversion ratio | 2.0 | |
Revolving Credit Facility | Scenario 5 | ||
Subsequent Event [Line Items] | ||
Fixed conversion ratio | 2.75 | |
Revolving Credit Facility | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Maximum borrowing capacity | 580,000,000 | |
Accordion feature | $ 730,000,000 | |
Fixed conversion ratio | 2.25 |
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