8-K

UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) January 26, 2017

WORLD ACCEPTANCE CORPORATION

(Exact name of registrant as specified in its charter)

South Carolina	0-19599	57-0425114
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

108 Frederick Street, Greenville, South Carolina	29607
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (864) 298-9800

n/a

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition; and

Item 7.01 Regulation FD Disclosure.

On January 26, 2017, World Acceptance Corporation ("WRLD") issued a press release announcing financial information for its third quarter ended December 31, 2016.  The press release is attached as Exhibit 99.1 to this Form 8-K and is furnished to, but not filed with, the Commission.

On January 26, 2017, World Acceptance Corporation senior management held a conference call to discuss the results of its third quarter ended December 31, 2016.  Prepared remarks for the conference call by the Chief Executive Officer of WRLD is attached hereto as Exhibit 99.2 to this Form 8-K and is furnished to, but not filed with, the Commission.

Item 9.01 Financial Statements and Exhibits.

(d)	Exhibits.
	Exhibit Number	Description of Exhibit
	99.1	Press release issued January 26, 2017
	99.2	Prepared remarks by Chief Executive Officer for January 26, 2017 conference call

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		WORLD ACCEPTANCE CORPORATION
		(Registrant)
Date:	January 26, 2017	By:	/s/ John Calmes
			John Calmes
			Chief Financial Officer

EXHIBIT INDEX

Exhibit	Description
99.1	Press Release dated January 26, 2017
99.2	Prepared remarks by Chief Executive Officer for January 26, 2017 conference call

EX-99.1

Exhibit 99.1

World Acceptance Corporation Reports Third Quarter Results

GREENVILLE, S.C.--(BUSINESS WIRE)--January 26, 2017--World Acceptance Corporation (NASDAQ: WRLD) today reported financial results for its third fiscal quarter and nine months ended December 31, 2016.

Net income for the third quarter decreased 34.6% to $9.6 million compared to $14.8 million for the same quarter of the prior year. Net income per diluted share decreased 35.3% to $1.10 in the third quarter of fiscal 2017 compared to $1.70 in the prior year quarter.

Total revenues decreased to $130.8 million for the third quarter of fiscal 2017, a 6.4% decrease from the $139.7 million reported for the third quarter last year. Revenues from the 1,271 offices open throughout both quarterly periods decreased by 5.0%. Interest and fee income decreased 6.8%, from $126.9 million to $118.3 million in the third quarter of fiscal 2017 primarily due to a decrease in average earning loans and an unfavorable move in exchange rates. Insurance and other income decreased by 2.1% to $12.6 million in the third quarter of fiscal 2017 compared with $12.8 million in the third quarter of fiscal 2016. The decrease was related to a $190,000 decrease in insurance revenue and an $80,000 decrease in other income compared with the third quarter of fiscal 2016.

Accounts in the U.S. that were 61 days or more past due increased to 5.4% on a recency basis and to 7.0% on a contractual basis at December 31, 2016, compared to 5.1% and 6.8%, respectively, at December 31, 2015. On a consolidated basis, accounts that were 61 days or more past due increased to 5.6% on a recency basis and to 7.6% on a contractual basis at December 31, 2016, compared to 5.2% and 7.2%, respectively, at December 31, 2015. As a result of the higher delinquencies, our allowance to net loans increased from 9.6% at December 31, 2015, to 9.8% at December 31, 2016.

As previously disclosed, the Company ceased all in-person collection visits effective December 18, 2015. During the fourth quarter of fiscal 2016, the Company experienced higher-than-normal delinquencies in January and February, as well as higher than-normal charge-offs, especially in the month of March, as accounts became more than 90 days past due. We continue to see elevated net charge-offs and delinquencies compared to historical levels. The provision for the quarter increased $4.5 million when comparing the third quarter of fiscal to 2017 to the third quarter of fiscal 2016. This is primarily due to an increase in net charge-offs and a larger increase in loans outstanding quarter over quarter. Net charge-offs as a percentage of average net loans on an annualized basis increased from 14.6% to 16.9% when comparing the two quarters. The prior year net charge-off rate benefited from the monthly sale of accounts previously charged-off totaling approximately $0.5 million. Consolidated net charge-offs excluding the impact of the charge-off sale were up $2.3 million when comparing the two fiscal quarters. The portion of the provision related to an increase in loans outstanding increased $0.9 million quarter over quarter due to gross loans outstanding increasing $69.4 million in the third quarter of 2017 versus $56.4 million in the third quarter of 2016. Accounts 90 days past due in the U.S., which are fully reserved, increased by $5.1 million in the current quarter versus $5.3 the same quarter last year, which resulted in a $0.2 million decrease in the provision. The provision related to accounts becoming fully reserved in the quarter for Mexico increased $0.5 million.

General and administrative expenses amounted to $71.2 million in the third fiscal quarter, compared to $71.6 million in the same quarter of the prior fiscal year. As a percentage of revenues, G&A expenses increased from 51.2% during the third quarter of fiscal 2016 to 54.5% during the current quarter. G&A expenses per average open office increased by 1.4% when comparing the two fiscal quarters. Personnel expenses decreased $0.5 million when comparing the two quarters. The Company’s advertising expense increased $0.5 million from prior year quarter.

Interest expense for the quarter ended December 31, 2016, decreased by $1.9 million, or 26.2% from the corresponding quarter of the previous year. The decrease in interest expense is due to a 24.7% decrease in the average debt outstanding, from $489.6 million to $368.7 million for the quarters ended December 31, 2015 and 2016, respectively. The Company’s debt-to-equity ratio decreased from 1.4:1 at December 31, 2015, to 0.9:1 at December 31, 2016.

The Company’s third quarter effective income tax rate decreased to 32.7% compared with 42.2% in the prior year’s third quarter. The decrease was primarily due to the increase in reserves in the prior year quarter related to the reversal of a judge’s opinion on a tax position taken in one of the states in which we operate.

Gross loans decreased to $1.17 billion as of December 31, 2016, a 4.4% decrease from the $1.22 billion of loans outstanding as of December 31, 2015. Gross loans in the U.S. decreased 5.3%. Gross loans in Mexico increased 5.1% in U.S. dollars. However, gross loans in Mexico increased 25.6% in Mexican pesos. There has not been a significant shift in the mix of our loan portfolio. At December 31, 2016, our loan portfolio consisted of 61.9% small loans, 38.1% larger loans and 0.0% sales finance based on account balances. This compares to 61.9%, 37.9% and 0.2% at December 31, 2015. Additionally, the overall 4.4% decrease in loan balances resulted from a 2.2% decrease in the number of accounts outstanding and a 2.2% decrease in average balances outstanding. During the quarter we increased our unique borrowers in the U.S. by 45,570 or 6.1%. This is compared to 27,877 or 3.5% in fiscal 2016 and 32,364 or 4.0% in fiscal 2015. Year-to-date we have increased our unique customers in the U.S. by 69,987 or 9.6%, compared to 43,244 or 5.6% in fiscal 2016 and 60,764 or 7.7% in fiscal 2015.

Other key return ratios for the third quarter included an 8.4% return on average assets and a return on average equity of 17.6% (both on a trailing 12-month basis).

We remain optimistic about our Mexican operations. We have approximately 156,000 accounts and approximately $99.9 million in gross loans outstanding in Mexico. Net charge-offs as a percent of average net loans decreased from 12.7% in fiscal 2016 to 10.9% during the current fiscal year. Additionally, our 61+ day delinquencies were 8.5% and 13.6% on a recency and contractual basis, respectively, as of December 31, 2016, a change from 6.6% and 12.0%, respectively, as of December 31, 2015. Excluding intercompany charges, pretax earnings amounted to $6.7 million for the nine months ended December 31, 2016, a 4.6% decrease over the $7.0 million in pretax earnings during the first nine months of fiscal 2016.

Nine Month Results

For the first nine months of the fiscal year, net income decreased 27.5% to $41.7 million compared with $57.6 million for the nine months ended December 31, 2015. Fully diluted net income per share decreased 28.3% to $4.75 in the first nine months of fiscal 2017 compared with $6.63 for the first nine months of fiscal 2016.

Total revenues for the first nine-months of fiscal 2017 declined 6.3% to $387.2 million compared with a revised $413.3 million during the corresponding period of the previous year. Annualized net charge-offs as a percent of average net loans increased from 13.4% during the first nine-months of fiscal 2016 to 15.8% for the first nine-months of fiscal 2017.

Other Matters

As previously disclosed, on August 7, 2015, the Company received a letter from the CFPB’s Enforcement Office notifying the Company that, in accordance with the CFPB’s discretionary Notice and Opportunity to Respond and Advise (“NORA”) process, the staff of CFPB’s Enforcement Office is considering recommending that the CFPB take legal action against the Company (the “NORA Letter”). The NORA Letter states that the staff of the CFPB’s Enforcement Office expects to allege that the Company violated the Consumer Financial Protection Act of 2010, 12 U.S.C. §5536. The NORA Letter confirms that the Company has the opportunity to make a NORA submission, which is a written statement setting forth any reasons of law or policy why the Company believes the CFPB should not take legal action against it. Following the CFPB’s NORA Letter, the Company made NORA submissions to the CFPB’s Enforcement Office. The Company understands that a NORA Letter is intended to ensure that potential subjects of enforcement actions have the opportunity to present their positions to the CFPB before an enforcement action is recommended or commenced. The Company continues to believe its historical and current business practices are lawful.

About World Acceptance Corporation

World Acceptance Corporation is one of the largest small-loan consumer finance companies, operating 1,323 offices in 15 states and Mexico.

Third Quarter Conference Call

The senior management of World Acceptance Corporation will be discussing these results in its quarterly conference call to be held at 10:00 a.m. Eastern time today. A simulcast of the conference call will be available on the Internet at https://www.webcaster4.com/Webcast/Page/1118/19255. The call will be available for replay on the Internet for approximately 30 days.

This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, that represent the Company’s expectations or beliefs concerning future events. Statements other than those of historical fact, as well as those identified by the words “anticipate,” “estimate,” ”intend,” “plan,” “expect,” ”project,” “believe,” “may,” “will,” “should,” “would,” “could” and any variation of the foregoing and similar expressions are forward-looking statements. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties. Factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include the following: recently enacted, proposed or future legislation and the manner in which it is implemented; the nature and scope of regulatory authority, particularly discretionary authority, that may be exercised by regulators, including, but not limited to, the Consumer Financial Protection Bureau (the “CFPB”), having jurisdiction over the Company’s business or consumer financial transactions generically; the unpredictable nature of regulatory proceedings and litigation; any determinations, findings, claims or actions made or taken by the CFPB, other regulators or third parties in connection with or resulting from the previously disclosed civil investigative demand (CID) or the notice and opportunity to respond and advise (NORA) letter from the CFPB that assert or establish that the Company’s lending practices or other aspects of its business violate applicable laws or regulations; the impact of changes in accounting rules and regulations, or their interpretation or application, which could materially and adversely affect the Company’s reported financial statements or necessitate material delays or changes in the issuance of the Company’s audited financial statements; the Company's assessment of its internal control over financial reporting, and the timing and effectiveness of the Company's efforts to remediate any reported material weakness in its internal control over financial reporting; changes in interest rates; risks related to expansion and foreign operations; risks inherent in making loans, including repayment risks and value of collateral; the timing and amount of revenues that may be recognized by the Company; changes in current revenue and expense trends (including trends affecting delinquencies and charge-offs); the potential impact of limitations in the Company’s amended revolving credit facility; and changes in the Company’s markets and general changes in the economy (particularly in the markets served by the Company). These and other factors are discussed in greater detail in Part I, Item 1A, “Risk Factors” in the Company’s most recent annual report on Form 10-K for the fiscal year ended March 31, 2016 filed with the Securities and Exchange Commission (“SEC”) and the Company’s other reports filed with, or furnished to, the SEC from time to time. World Acceptance Corporation does not undertake any obligation to update any forward-looking statements it makes. The Company is also not responsible for updating the information contained in this press release beyond the publication date, or for changes made to this document by wire services or Internet services.

World Acceptance Corporation
Consolidated Statements of Operations
(unaudited and in thousands, except per share amounts)
	Three Months Ended					Nine Months Ended
	December 31,					December 31,
	2016		2015			2016		2015
Interest & fees	$	118,257		126,870		349,282		373,673
Insurance & other		12,558		12,826		37,882		39,660
Total revenues		130,815		139,696		387,164		413,333
Expenses:
Provision for loan losses		39,985		35,440		107,870		99,226
General and administrative expenses
Personnel		42,395		42,920		124,792		125,584
Occupancy & equipment		10,517		10,546		31,650		32,969
Advertising		8,491		7,961		14,934		14,541
Intangible amortization		108		131		383		407
Other		9,725		10,022		25,882		29,083
		71,236		71,580		197,641		202,584
Interest expense		5,274		7,149		16,380		19,891
Total expenses		116,495		114,169		321,891		321,701
Income before taxes		14,320		25,527		65,273		91,632
Income taxes		4,679		10,775		23,524		34,062
Net income	$	9,641		14,752		41,749		57,570
Diluted earnings per share	$	1.10		1.70		4.75		6.63
Diluted weighted average shares outstanding		8,783		8,694		8,786		8,687
Consolidated Balance Sheets
(unaudited and in thousands)
			December 31,			March 31,		December 31,
			2016			2016		2015
ASSETS
Cash			$	15,986		12,377		20,942
Gross loans receivable				1,165,009		1,066,964		1,219,209
Less: Unearned interest & fees				(327,308	)	(290,659	)	(337,504	)
Allowance for loan losses				(81,803	)	(69,566	)	(84,489	)
Loans receivable, net				755,898		706,739		797,216
Property and equipment, net				23,762		25,297		23,314
Deferred income taxes, net				43,612		38,131		41,037
Goodwill				6,067		6,121		6,121
Intangibles, net				2,588		2,917		3,038
Other assets, net				13,024		14,637		15,308
			$	860,937		806,219		906,976
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Notes payable				397,936		374,685		511,935
Income tax payable				10,984		8,259		4,412
Accounts payable and accrued expenses				30,027		31,374		27,759
Total liabilities				438,947		414,318		544,106
Shareholders' equity				421,990		391,901		362,870
			$	860,937		806,219		906,976

Selected Consolidated Statistics
(dollars in thousands)
	Three Months Ended						Nine Months Ended
	December 31,						December 31,
	2016			2015			2016			2015
Expenses as a percent of total revenues:
Provision for loan losses		30.6	%		25.4	%		27.9	%		24.0	%
General and administrative expenses		54.5	%		51.2	%		51.0	%		49.0	%
Interest expense		4.0	%		5.1	%		4.2	%		4.8	%
Average gross loans receivable	$	1,119,658			1,179,437		$	1,098,837			1,156,062
Average net loans receivable	$	807,310			855,093		$	793,807			840,004
Loan volume	$	724,320		$	752,229		$	1,990,196		$	2,117,004
Net charge-offs as percent of average loans		16.9	%		14.6	%		15.8	%		13.4	%
Return on average assets (trailing 12 months)		8.4	%		11.9	%		8.4	%		11.9	%
Return on average equity (trailing 12 months)		17.6	%		31.7	%		17.6	%		31.7	%
Offices opened (closed) during the period, net		1			4			(16	)		30
Offices open at end of period		1,323			1,350			1,323			1,350

CONTACT:
World Acceptance Corporation
John L. Calmes Jr., 864-298-9800
Chief Financial Officer

EX-99.2

Exhibit 99.2

Q3 FY2017EARNINGS CALL SCRIPT

Please find following a summary of our operational results for this past quarter, Q3 FY2017. The purpose of these notes is to add more detail to the standard press release that we issue each quarter. We intend to dedicate the Earnings Call time to answering any specific questions that folks have on our results or performance year-to-date.

OVERALL

Revenue fell by 6.4% for this quarter and 6.3% fiscal year-to-date. This is not surprising as our loans outstanding are lower than in the past due to the shrinkage in accounts the company has experienced over the last couple of years (thus affecting revenue).

Although revenue was down $8.9MM in Q3 FY2017 compared to Q3 FY2016, net income only decreased by $5.1MM over the same period. For net income, this equates to 34.6% for the quarter (a high percentage as this is traditionally our lowest income quarter) and 27.5% for the fiscal nine months. Our net income was impacted by both the decrease in revenue, and a significant increase in the provision due to increased chargeoffs. The increase in chargeoffs (excluding the impact of the sale last year) of $2.3MM was largely offset by the savings in G&A as discussed in more detail below.

Our operating statistics in terms of growth and quality of accounts for Q3 FY2017 showed a solid improvement over the same quarter a year ago. For Q3 FY2017, we were able to increase the number of new and returning customers that we added to our base compared to the same quarter a year ago. We consider this a very positive sign towards the future growth potential of the company. Furthermore, we have improved new borrower and former borrower solicitation and credit quality consistently and have a solid plan for continued improvement in FY2018.

While our delinquencies and chargeoffs have risen, we believe that the rising average credit scores of our customer base should bring these closer to historic levels going forward.

We continue to be pleased with our decision to end field calls. The rise in the dollar value of chargeoffs is also only marginally above the cost savings we have experienced through the elimination of field calls. We believe the resulting reduction in personnel and mileage expenses, combined with a more cohesive office and the ability for great salespeople to be promoted to branch manager without a required stage in collecting first will increase the strength of our employee base and improve branch performance.

LOAN PORTFOLIO PERFORMANCE

Account performance

We believe that the number of unique customers that we have is a critical measure of future growth (as long as underwriting criteria has not deteriorated) as this number directly leads to:

• Growth in ledger, as these customers improve their credit quality and so are able to take out larger loans
• Increase in referrals, through the suggested contacts of this customer base of friends and family who can benefit from our products, as referrals is an important source of new customers for our business
• Growth in products and services as we can offer additional products (such as our tax prep services) to a larger customer base

While our total number of unique customers at 799,000 as of December 31^st is 47,000 below our peak of around 846,000 at that same date two years earlier, the number of unique customers we added this quarter was more than 60% higher than in Q3 FY2016. We are very pleased to see that our growth in new and former borrowers in the latest quarter has been higher not just than the same quarter in FY2016, but higher than FY2014 and FY2015 as well. Year-to-date this fiscal year, we have brought in more unique customers than in any other year in the last four years, beating even 2014 levels.

Ledger performance

In Q2 FY2017, our ledger growth was only about half of what it was a year earlier and a quarter of what it was two years ago. However, in Q3, we added more in ledger than we did a year earlier, both in percent and total ledger dollars added, even though we were starting from a lower base than a year earlier. We are pleased with this result. We are continuing with our cautious lending strategy. In Q2, we hedged risk with smaller loan amounts for new customers in every credit score bucket, but especially in the riskiest buckets (the lowest credit quality). We also made substantially fewer loans to lower credit score customers. Q3 has seen a continuation of this strategy. As our new customers prove their creditworthiness over time, we can more confidently increase their qualified loan amount if they so desire it.

Of course, since our ledger began Q3 FY2017 at lower levels than a year earlier (5.8% smaller), it is not surprising that in spite of growing our ledger more this quarter than Q3 FY2016, we are still not at previous levels, and so our revenue and net income is not as high as a year ago.

Credit quality of customer base

We have continued to reduce our lending to lower credit score customers, so the average credit score of our customer base continues to rise as our current customers improve their scores and new customers that we bring in have higher scores than in the past. The average credit score for Q3 originations are up in all categories (new borrowers, former borrowers and refinancings) by up to eleven score points compared to a year ago, and are now at the highest average credit score levels that we’ve seen in the last four years.

Refinancing

Refinancing has been a particular area of focus for us. We saw a significant improvement in performance in refinancing volumes in Q3 compared to Q2. We are also retaining customers at better rates than we did a year ago – meaning the percent of our customer base that is choosing to pay off their loans before the end of their term have both declined in Q3.

While our small-loan refinancings are still not up to last year’s levels in absolute dollars, the improved strategies we put in place this quarter for our larger loan customers that take more into account their needs and behaviors, have seen our refinancing in larger loans increase to 4.5% higher (in number of accounts) than a year earlier.

Delinquencies and chargeoffs

Even as we add new and former customers at higher levels than in recent years, clearly, if our chargeoffs are higher, we are losing a higher percent of the customer base than before. It is a very high priority for us to reduce our chargeoffs. Our delinquencies and chargeoffs are still higher than historically. However, we see that our 30-day and 60-day delinquent accounts in the US have reduced from 5.6% at December 31, 2015 to 5.5% at December 31, 2016. This leads us to believe that we can expect an improvement in chargeoffs over the next few months as we have fewer delinquencies in the pipeline that could potentially become charged off if not rehabilitated. Furthermore, the higher credit scores of our current customer base than in the past, as mentioned earlier, should also have a positive effect on reducing future chargeoffs.

In order to reduce both delinquencies and net chargeoffs, we have made several strategic changes, including the installation of an Internal Recovery Unit, improved analytic tools, and a more detailed action plan for charged-off accounts to increase recoveries. Furthermore, many of the early indicators of likely creditworthy performance for our new customers in the prior two quarters look similar to or better than historic levels at 1-6 months since origination in terms of payer rates, percent of balance paid, loss rates and many other credit quality metrics that we examine.

GROWTH STRATEGIES

Live checks program

World’s live checks program launched in April and has already brought over 13,000 former borrowers back to World, some of whom had not been a customer for more than 5-10 years. We continue to test and learn in this area. In October, we launched a live check program in Texas to former borrowers. We purposefully sent these products to customers whose credit quality was higher than those to whom we offered this product compared to our past campaigns, but nevertheless the response rate that we experienced was still higher than our average for pre-approvals. Our next program launches in Q4 in all four of the states where we have completed our initial tests.

Website performance:

We had a record number of visitors to our website in Q3, with more than 75% being customers new to World. That percentage has also been increasing over the fiscal year as we improve our digital sourcing strategies. Our mobile site friendliness scores a 99/100 rating from Google’s rating system, but our speed score is low so we are working on improving this as more than three-quarters of our traffic come in through a mobile device. Our bounce rate is at lower levels than last quarter, and at the lowest levels of this fiscal year. We still believe there is plenty of room to improve our website and online application process, including optimizing channels for sourcing new customers. During Q4, we intend to continue to push our loan traffic through our digital marketing campaigns, as well as ramp up our tax preparation campaigns.

Web applications

We had a record number of web applications in Q3 of this fiscal year that being more than twice the application volume we had for the same quarter a year ago. In the month of December (our busiest month), volume was more than 88% up from December of a year ago. 90% of the loans sourced from our web applicants come from new borrowers so this is proving to be a strong channel for us in bringing brand new customers to World. We launched our new website on November 2^nd and we saw an immediate uptick in traffic and conversions.

As we improve our organic search capabilities, and also by sheer virtue of having so many unique customers visiting our website, our position in search engine results listings will naturally improve and this in turn is likely to lead more customers to our website – this is the virtuous circle of the internet. In Q4, we also plan to begin promoting our tax program in the digital space for the first time in the company’s history.

Customer access channels:

64% of our customers are signed up to receive text messages. This is at the highest level in our company’s history. Texting is a timely, effective and efficient means of communicating outwards to our customers with friendly payment reminders and offers of tax prep services whether as a single marketing campaign, or in combination with printed mail.

In Q3, we have been testing Out-of-Home marketing strategies and we will use the results to improve our channel strategy.

New Branches:

As we focus this year on improving efficiency in our current branches, we are opening fewer branches than in years past. We opened only 4 new branches in Q3 FY2017. We closed 8 branches and merged those accounts into existing branches. Our branch openings this fiscal year have focused on states where our presence is newer – Indiana, Mississippi and Idaho. In Q4, as we plan out new branch locations for FY2018, we will rely on data analytics to optimize expansion into our other existing states as well.

Our total branches at 1,323 is 27 fewer than the same quarter a year earlier, but we believe that most of the truly long-term poorly-performing branches have now been closed and the accounts consolidated into other branches, so we expect fewer closures going forward.

United Motor Club:

While this is a small percent of our total business, contributing $2.5 million in revenue in FY2016, it is a valuable additional product to offer our customer base. We changed our operating system to make it easier for our branch personnel to offer UMC appropriately to our customers and, as a result, have seen revenues in Q3 increase 14.3% versus the same quarter a year ago.

OTHER PERFORMANCE DETAILS

Personnel Expense:

Overall personnel expenses decreased $0.5MM or 1.2% in Q3 compared to the same quarter of last year. However, if we compare personnel expenses excluding costs due to stock compensation and retirement plan changes, and focus only on those we consider related to the elimination of field calls, the saving is much more significant. Eliminating field calls reduces our payroll costs, overtime, health insurance (as lower headcount), workers’ compensation and mileage reimbursement costs. Our payroll costs are down $0.86MM for Q3 and $3.99MM year-to-date. Our overtime costs are down $0.25MM for Q3 and $1.15MM year-to-date. Our personnel related insurance is down $0.36MM for Q3 and $0.33MM year-to-date. Our mileage costs are down $0.36MM for Q3 and $1.54MM year-to-date. The total of these savings year-to-date is only $0.4MM greater than the total increase in our chargeoffs.

We also believe that while it may take time to materialize, we can continue to reduce our personnel costs over time.  The elimination of field calls allows more time to be spent at the branch level focusing on beneficial performance issues, such as better ability to hire, providing more branch personnel time to focus on selling and training, as well as building cohesive office teams who spend more time together as a unit.

Mexico:

Our Mexico business has had another very good quarter. Gross loans in Mexico increased 5.1% in US dollars. However, gross loans in Mexico increased 25.6% in Mexican pesos. VIVA, our payroll-deductible business, continues to grow strongly, and our penetration in this business is fairly low. Therefore, we believe there continues to be a long runway for growth of this business.  We continue to closely monitor late payments from a few specific unions and to diversify our union base in order to limit exposure in any one specific union or state. Overall in Mexico, we increased our volume (number of originations) by 13.8% in Q3 compared to the same quarter a year ago, improving new & former customer additions as well as refinancings.

Line of credit from bank group:

Our line of credit is currently $460MM and, during our growth season, we did not have any restriction in our ability to grow due to this credit limit. The line of credit will reduce to $370MM on June15, 2017. Given that in the fourth quarter, we experience a seasonal net reduction in credit as our customers traditionally pay back loans post-Christmas and in tax season, we do not foresee any constraints on our growth due to this reduction in our line of credit and, in fact, expect to reduce our borrowing to well below the maximum by the end of Q4. Our current debt to equity ratio is 0.9:1. We consider 2:1 to already be a conservative level. Our debt to equity ratio is expected to decrease further as we continue to pay down our debt in Q4. Based on historical payment rates, we expect our debt will be well below $300MM by March 31, 2017.

REGULATORY ENVIRONMENT

New Department of Labor Law on overtime pay:

Although this law has not become effective, we decided to continue with the change in employment practices that we had already put in place in order to conform to it. The new law that would require any employee earning under $47,476 base salary to receive overtime pay would affect the majority of our branch managers. We do not expect that the changes we have made (including additional part-time hires in order to limit overtime costs) will lead to a long-term increase in personnel costs.

CFPB:

Regarding proposed regulations from the CFPB on small dollar lending, as the proposal stands at present, we believe that the effect on our business practices will be fairly limited, though we will not be able to determine that conclusively until / if the final new regulations come into existence. With the change in government leadership, it is unclear on the expected timetable for these regulations to be issued. Regarding the CID issued to World in March of 2014, we have no further information to add.

IN SUMMARY

We are pleased with our operational improvements, bringing in more new and former borrowers than a year earlier, increasing the credit quality of those new customers, making cautious loans to new customers, improving the growth in our ledger, and significantly increasing our strength in digital channels. We have a strong focus on reducing delinquencies and chargeoffs, as well as continuing to improve our marketing and underwriting strategies. We look forward to continuing to improve our operating metrics in the next quarter and beyond.