World Acceptance Corporation
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| Item 1. | Description of Business |
General. The Company, which has continuously operated since July 1962, is one of the nation's largest small-loan consumer finance companies, offering short-term small installment loans, medium-term larger installment loans, related credit insurance and ancillary products and services to individuals. The Company offers traditional installment loans generally between $400 and $5,300, with the average loan origination being $2,015 in fiscal 2026. The Company operates 1,009 branches in Alabama, Georgia, Idaho, Illinois, Indiana, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, South Carolina, Texas, Tennessee, Utah, and Wisconsin as of March 31, 2026. The Company generally serves individuals with limited access to other sources of consumer credit such as banks, credit unions, other consumer finance businesses and credit card lenders. The Company also offers income tax return preparation services to its loan customers and other individuals.
The traditional installment loan industry is a highly fragmented segment of the consumer lending industry. Installment loan finance companies generally make loans to individuals of less than $2,000 with maturities of less than 18 months. These companies approve loans on the basis of the personal creditworthiness of their customers and maintain close contact with borrowers to encourage the repayment or, when appropriate to meet the borrower’s needs, the refinancing of loans. By contrast, commercial banks, credit unions and some other consumer finance businesses typically make loans of more than $5,000 with maturities of greater than one year. Those financial institutions generally approve consumer loans on the security of qualifying personal property pledged as collateral or impose more stringent credit requirements than those of small-loan consumer finance companies. As a result of their higher credit standards and specific collateral requirements, commercial banks, credit unions and other consumer finance businesses typically charge lower interest rates and fees and experience lower delinquency and charge-off rates than small-loan consumer finance companies. Traditional installment loan companies generally charge higher interest rates and fees to compensate for the greater risk of delinquencies and charge-offs and increased loan administration and collection costs.
The majority of the participants in the industry are independent operators with generally less than 100 branches. We believe that competition between small-loan consumer finance companies occurs primarily on the basis of the strength of customer relationships, customer service and reputation in the local community. We believe that our relatively large size affords us a competitive advantage over smaller companies by increasing our access to, and reducing our cost of, capital.
Small-loan consumer finance companies are subject to extensive regulation, supervision, and licensing under various federal and state laws and regulations, as well as local ordinances. Consumer loan offices are licensed under state laws which, in many states, establish maximum loan amounts, interest rates, permissible fees and charges and other aspects of the operation of small-loan consumer finance companies. Furthermore, the industry is subject to numerous federal laws and regulations that affect lending operations. These federal laws require companies to provide complete disclosure of the terms of each loan to the borrower in accordance with specified standards prior to the consummation of the loan transaction. Federal laws also prohibit misleading advertising, protect against discriminatory lending practices and prohibit unfair, deceptive, and abusive credit practices.
Branch Expansion and Consolidation. As of March 31, 2026, the Company had 1,009 branches in 16 states, with over 100 branches located in each of Texas and Georgia. During fiscal 2026, the Company did not have any acquisitions and merged 15 branches into other existing branches due to their inability to generate sufficient returns or for efficiency reasons. In fiscal 2027, the Company may open or acquire new branches in its existing market areas or commence operations in new states where it believes demographic profiles and state regulations are attractive. The Company may merge other branches on a case-by-case basis based on profitability or other factors. The Company's ability to continue existing operations and expand its operations in
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existing or new states is dependent upon, among other things, laws and regulations that permit the Company to operate its business profitably and its ability to obtain necessary regulatory approvals and licenses. There can be no assurance that such laws and regulations will not change in ways that adversely affect the Company or that the Company will be able to obtain any such approvals or consents. See Part 1, Item 1A, “Risk Factors” for a further discussion of risks to our business and plans for expansion.
The Company's expansion is also dependent upon its ability to identify attractive locations for new branches and to hire suitable personnel to staff, manage, and supervise new branches. In evaluating a particular community, the Company examines several factors, including the demographic profile of the community, the existence of an established small-loan consumer finance market and the availability of suitable personnel.
Product Offerings
Installment Loans. We primarily offer pre-computed and interest bearing consumer installment loans with interest and fee income from such loans accounting for 82.9%, 82.4%, and 81.8% of our total revenues in fiscal years 2026, 2025, and 2024, respectively. Our loans are payable in fully-amortizing monthly installments with terms generally from 6 to 15 months and are prepayable at any time without penalty.
The following table sets forth information about our loan products for fiscal 2026:
Minimum Origination (1) | Maximum Origination (1) | Minimum Term (Months) | Maximum Term (Months) | |||||||||||||||||
| Small loans | $ | 150 | $ | 2,450 | 3 | 30 | ||||||||||||||
| Large loans | $ | 2,500 | $ | 25,200 | 6 | 60 | ||||||||||||||
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(1) Gross loan net of finance charges.
Specific, allowable interest, fees, and other charges vary by state. The finance charge is a combination of origination or acquisition fees, account maintenance fees, monthly account handling fees, interest and other charges permitted by the relevant state laws. As of March 31, 2026, annual percentage rates applicable to our gross loans receivable as defined by the Truth in Lending Act were as follows:
| Amount | Percentage of total gross loans receivable | |||||||||||
| 0 to 36% | $ | 489,284,284 | 38.3 | % | ||||||||
| Greater than 36% | 789,704,039 | 61.7 | % | |||||||||
| $ | 1,278,988,323 | 100.0 | % | |||||||||
The average annual percentage rate of our portfolio was 51.4% as of March 31, 2026.
Insurance Related Operations. The Company, as an agent for an unaffiliated insurance company, markets and sells credit life, credit accident and health, credit property and auto, unemployment, and accidental death and dismemberment insurance in connection with its loans in selected states where the sale of such insurance is permitted by law. Credit life insurance provides for the payment in full of the borrower's credit obligation to the lender in the event of death. The Company offers credit insurance for all loans originated in Georgia, Indiana, Kentucky, Louisiana, Mississippi and South Carolina, and on a more limited basis in Alabama, Idaho, Oklahoma, Tennessee, Texas and Utah. Customers in those states typically obtain such credit insurance through the Company. Charges for such credit insurance are made at filed, authorized rates and are stated separately in the Company's disclosure to customers, as required by the Truth in Lending Act and by various applicable state laws. In the sale of insurance policies, the Company, as an agent, writes policies only within limitations established by its agency contracts with the insurer. The Company does not sell credit insurance to non-borrowers. These insurance policies provide for the payment of the outstanding balance of the Company's loan upon the occurrence of an insured event. The Company earns a commission on the sale of such credit insurance, which, for most products, is directly impacted by the claims experience of the insurance company on policies sold on its behalf by the Company. In states where commissions on certain products are capped, the commission earned is not directly impacted by the claims experience.
The Company has a wholly-owned, captive insurance subsidiary that reinsures a portion of the credit insurance sold in connection with loans made by the Company. Certain coverages currently sold by the Company on behalf of the unaffiliated insurance carrier are ceded by the carrier to the captive insurance subsidiary, providing the Company with an additional source
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
General
The Company's financial performance continues to be dependent in large part upon the growth in its outstanding loans receivable, the maintenance of loan quality and acceptable levels of operating expenses. Since March 31, 2022, gross loans receivable have decreased at a 4.27% annual compounded rate from $1.52 billion to $1.28 billion at March 31, 2026. We believe we can continue to improve our gross loans receivable growth rates through acquisitions, improved marketing processes, and analytics. The Company plans to enter into new markets through opening new branches and acquisitions as opportunities arise.
The Company offers an income tax return preparation and electronic filing program in all but a few of its branches. The Company prepared approximately 91,000, 82,000, and 83,000 returns in each of the fiscal years 2026, 2025, and 2024, respectively. Revenues from the Company’s tax preparation business in fiscal 2026 amounted to approximately $40.4 million, a 10.6% increase over the $36.5 million earned during fiscal 2025.
The following table sets forth certain information derived from the Company's Consolidated Statements of Operations and Balance Sheets, as well as operating data and ratios, for the periods indicated:
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| Years Ended March 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Gross loans receivable | $ | 1,278,988 | $ | 1,225,636 | $ | 1,277,149 | |||||||||||
Average gross loans receivable (1) | $ | 1,305,870 | $ | 1,300,782 | $ | 1,378,329 | |||||||||||
Net loans receivable (2) | $ | 953,924 | $ | 916,316 | $ | 950,403 | |||||||||||
Average net loans receivable (3) | $ | 971,370 | $ | 965,331 | $ | 1,012,544 | |||||||||||
| Expenses as a percentage of total revenue: | |||||||||||||||||
| Provision for credit losses | 32.2 | % | 30.0 | % | 27.4 | % | |||||||||||
| General and administrative | 51.6 | % | 42.7 | % | 46.9 | % | |||||||||||
| Interest expense | 8.4 | % | 7.6 | % | 8.4 | % | |||||||||||
Operating income as a % of total revenue (4) | 16.2 | % | 27.3 | % | 25.7 | % | |||||||||||
Loan volume (5) | 2,989,614 | 2,714,988 | 2,758,260 | ||||||||||||||
| Net charge-offs as percent of average net loans receivable | 18.5 | % | 17.5 | % | 17.7 | % | |||||||||||
| Return on average assets (trailing 12 months) | 3.3 | % | 8.5 | % | 7.0 | % | |||||||||||
| Return on average equity (trailing 12 months) | 9.0 | % | 21.0 | % | 19.1 | % | |||||||||||
| Branches opened or acquired (merged or closed), net | (15) | (24) | (25) | ||||||||||||||
| Branches open (at period end) | 1,009 | 1,024 | 1,048 | ||||||||||||||
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(1) Average gross loans receivable have been determined by averaging month-end gross loans receivable over the indicated period.
(2) Net loans receivable is defined as gross loans receivable less unearned interest and deferred fees.
(3) Average net loans receivable have been determined by averaging month-end gross loans receivable less unearned interest and deferred fees over the indicated period.
(4) Operating income is computed as total revenue less provision for credit losses and general and administrative expenses.
(5) Loan volume includes all loan balances originated by the Company. It does not include loans purchased through acquisitions.
Comparison of Fiscal 2026 Versus Fiscal 2025
Net income for fiscal 2026 was $34.6 million, a 61.2% decrease from the $89.2 million earned during fiscal 2025. The decrease in net income was primarily due to a $59.0 million increase in personnel incentive expense, primarily due to the reversal of previously recognized stock-based compensation expense in fiscal 2025 as discussed below.
Operating income (revenues less provision for credit losses and general and administrative expenses) during fiscal 2026 decreased $59.3 million.
Total revenues increased $21.0 million, or 3.7%, to $585.2 million in fiscal 2026, from $564.2 million in fiscal 2025. At March 31, 2026, the Company had 1,009 branches in operation, a decrease of 15 branches from March 31, 2025.
Interest and fee income during fiscal 2026 increased by $19.7 million, or 4.2%, from fiscal 2025. The increase was due to an increase in average net loans receivable, which increased 0.6% during fiscal 2026 compared to fiscal 2025 as well as an increase in yields. Interest and fee income was impacted by a shift away from larger, lower interest rate loans. The large loan portfolio decreased from 48.5% of the overall portfolio as of March 31, 2025, to 44.7% as of March 31, 2026.
Insurance revenue and other income increased by $1.3 million, or 1.3%, from fiscal 2025 to fiscal 2026. See Note 9 to the Consolidated Financial Statements for the material components of Insurance and other income for the fiscal years ended March 31, 2026, 2025, and 2024.
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Insurance revenue decreased by $1.8 million, or 3.6%, from fiscal 2025 to fiscal 2026 due to a shift away from larger loans. The sale of insurance products is limited to large loans in several states in which we operate. Other income increased by $3.0 million, or 6.1%, from fiscal 2025 to fiscal 2026 primarily due to an increase in tax preparation revenue of $3.9 million.
The provision for credit losses during fiscal 2026 increased by $19.4 million, or 11.5%, from the previous year. Accounts that were 91 days or more past due represented 3.5% and 3.7% of our loan portfolio on a recency basis at March 31, 2026 and March 31, 2025, respectively. The table below itemizes the key components of the CECL allowance and provision impact during the year.
| CECL Allowance and Provision (Dollars in millions) | FY 2026 | FY 2025 | Difference | Reconciliation | ||||||||||||||||||||||
| Balance at beginning of period | $103.3 | $103.0 | $0.3 | |||||||||||||||||||||||
| Change due to Growth | $4.3 | $(4.1) | $8.4 | $8.4 | ||||||||||||||||||||||
| Change due to Expected Loss Rate on Performing Loans | $6.0 | $0.5 | $5.5 | $5.5 | ||||||||||||||||||||||
| Change due to 90 days past due | $(1.7) | $3.9 | $(5.6) | $(5.6) | ||||||||||||||||||||||
| Balance at end of period | $111.9 | $103.3 | $8.6 | $8.3 | ||||||||||||||||||||||
| Net Charge-offs | $179.9 | $168.8 | $11.1 | $11.1 | ||||||||||||||||||||||
| Provision | $188.6 | $169.2 | $19.4 | $19.4 | ||||||||||||||||||||||
| Note: The change in allowance for the year plus net charge-offs for the year equals the provision for the year (see above reconciliation). | ||||||||||||||||||||||||||
The Company's year-over-year net charge-off ratio (net charge-offs as a percentage of average net loans receivable) increased from 17.5% for the year ended March 31, 2025 to 18.5% for the year ended March 31, 2026. The net charge-off rate for the past ten fiscal years averaged 17.1%, with a high of 23.7% (fiscal 2023) and a low of 14.1% (fiscal 2021). The following table presents the Company's net charge-off ratios since 2016.
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General and administrative expenses during fiscal 2026 increased by $60.9 million, or 25.3%, over the previous fiscal year. General and administrative expenses, when divided by average open branches, increased 28.5% from fiscal 2025 to fiscal 2026 and, overall, general and administrative expenses as a percent of total revenues increased to 51.6% in fiscal 2026 from 42.7% in fiscal 2025. The change in general and administrative expense is explained in greater detail below.
Personnel expense totaled $200.0 million for fiscal 2026, a $59.0 million, or 41.8%, increase over fiscal 2025. The increase was largely due to a $39.0 million increase in share based compensation expense. Share based compensation expense increased due to share grants in December of 2024 and June of 2025, and because there was a $22.0 million reversal of previously recognized share based expense in fiscal 2025 as further discussed in Note 14 to the Consolidated Financial Statements. The remaining increase in personnel expense was due to an increase in salary expense as a result of the increase in headcount, and an increase in field level incentives. Our headcount as of March 31, 2026 increased 2.4% compared to March 31, 2025.
Occupancy and equipment expense totaled $48.4 million for fiscal 2026, a 0.8 million, or 1.6%, decrease over fiscal 2025. Occupancy and equipment expense is generally a function of the number of branches the Company has open throughout the year. In fiscal 2026, the expense per average open branch increased to $47.6 thousand, up from $47.2 thousand in fiscal 2025.
Advertising expense totaled $10.6 million for fiscal 2026, a $0.4 million, or 3.5%, increase over fiscal 2025. The increase was primarily due to increased spending in customer acquisition programs.
Amortization of intangible assets totaled $3.2 million for fiscal 2026, a $0.6 million, or 16.4%, decrease over fiscal 2025, which primarily relates to an increase in fully amortized intangible assets during the current fiscal year.
Other expense totaled $39.7 million for fiscal 2026, a $3.0 million, or 8.3%, increase over fiscal 2025.
Interest expense increased by $6.7 million, or 15.8%, during fiscal 2026 when compared to the previous fiscal year primarily as a result of a 9.2% increase in average debt outstanding. Additionally, in fiscal 2026, the Company recognized an additional $3.7 million in interest expense related to the redemption of all of the outstanding Notes as further discussed in Note 8 to the Consolidated Financial Statements.
Income tax expense decreased $11.4 million for fiscal 2026 compared to the prior fiscal year. The effective tax rate increased to 23.6% for fiscal 2026 compared to 19.8% for fiscal 2025. The effective tax rate increased primarily due to a settlement with various taxing authorities that resulted in an increase in the reserve under ASC 740-10 (unrecognized tax positions) in the current period, along with the tax benefit related to the forfeitures of the $20.45 Performance Shares and the $16.35 Performance Shares in the prior period. This was partially offset by the permanent tax benefit related to nonqualified stock option exercises and vesting of restricted stock in the current period.
Comparison of Fiscal 2025 Versus Fiscal 2024
For a comparison of our results of operations for the years ended March 31, 2025 and March 31, 2024, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 (which was filed with the SEC on May 22, 2025).
Press Release to 10-K Reconciliation
The Company issued its fourth quarter and fiscal 2026 earnings press release on April 30, 2026, prior to completion of the audit. The table below reconciles the differences in the press release figures to the Form 10-K.
| For the year ended March 31, 2026 | |||||||||||||||||
As Reported in the Press Release | Increase (Decrease) | As Reported in the Form 10-K | |||||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||||
| Insurance and other income, net | $ | 100,912 | $ | (576) | $ | 100,336 | |||||||||||
| Total revenues | 585,742 | (576) | 585,166 | ||||||||||||||
| Income before income taxes | 45,818 | (576) | 45,242 | ||||||||||||||
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Income tax expense | 10,804 | (147) | 10,657 | |||||||||
| Net income | 35,015 | (429) | 34,586 | |||||||||
| Net income per diluted share | 6.97 | (0.09) | 6.88 | |||||||||
Cash | 5,107 | 964 | 6,071 | |||||||||
Deferred income taxes, net | 40,233 | 1,008 | 41,241 | |||||||||
Total assets | 1,052,148 | 1,972 | 1,054,120 | |||||||||
| Accounts payable and accrued expenses | 37,032 | 964 | 37,996 | |||||||||
Deferred revenue (contract liability) | — | 3,926 | 3,926 | |||||||||
Total liabilities | 698,225 | 4,890 | 703,115 | |||||||||
Shareholders' equity | 353,923 | (2,918) | 351,005 | |||||||||
Total liabilities and shareholders' equity | 1,052,148 | 1,972 | 1,054,120 | |||||||||
Regulatory Matters
CFPB Rulemaking Initiative
On October 5, 2017, the CFPB issued a final rule (the "Rule") imposing limitations on (i) short-term consumer loans, (ii) longer-term consumer installment loans with balloon payments, and (iii) higher-rate consumer installment loans repayable by a payment authorization. The Rule originally required lenders originating short-term loans and longer-term balloon payment loans to evaluate whether each consumer has the ability to repay the loan along with current obligations and expenses (“ability to repay requirement”); however, the ability to repay requirement was rescinded in July 2020. The Rule also curtails repeated unsuccessful attempts to debit consumers’ accounts for short-term loans, balloon payment loans, and installment loans that involve a payment authorization and an annual percentage rate over 36% (“payment requirements”). Implementation of the Rule’s payment requirements may require changes to the Company’s practices and procedures for such loans, which could materially and adversely affect the Company’s ability to make such loans, the cost of making such loans, the Company’s ability to, or frequency with which it could, refinance any such loans, and the profitability of such loans.
In July 2020, the CFPB rescinded provisions of the Rule governing the ability to repay requirements. The payment requirements were scheduled to take effect in June 2022. However, on October 19, 2022, a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit ruled, in Community Financial Services Association of America v. Consumer Financial Protection Bureau, that the funding mechanism for the CFPB violates the appropriations clause of the U.S. Constitution, and as a result, vacated the Rule. On October 3, 2023, the U.S. Supreme Court held oral argument to decide the constitutionality of the CFPB's funding mechanism. On May 16, 2024, the Supreme Court held that the funding mechanism for the CFPB complies with the appropriations clause of the U.S. Constitution, reversing the judgment of the Court of Appeals, and remanding the cause for further proceedings. Subsequently, the U.S. Court of Appeals for the Fifth Circuit set March 30, 2025 as the effective date of the Rule. On March 28, 2025, the CFPB announced that it will not prioritize enforcement or supervision of the remaining provisions of the Rule, which took effect on March 30, 2025. Accordingly, the Company will have to comply with the Rule’s payment requirements if it continues to allow consumers to set up future recurring payments online for certain covered loans such that it meets the definition of having a “leveraged payment mechanism” under the Rule. If the payment provisions of the Rule apply, the Company will have to modify its loan payment procedures to comply with the required notices and mandated timeframes set forth in the final rule.
The CFPB also has stated that it expects to conduct separate rulemaking to identify larger participants in the installment lending market for purposes of its supervision program. This initiative was classified as “inactive” on the CFPB’s Spring 2018 rulemaking agenda and has remained inactive since, but the CFPB indicated that such action was not a decision on the merits. Though the likelihood and timing of any such rulemaking is uncertain, the Company believes that the implementation of such rules would likely bring the Company’s business under the CFPB’s supervisory authority which, among other things, would subject the Company to reporting obligations to, and on-site compliance examinations by, the CFPB. In addition, even in the absence of a “larger participant” rule, the CFPB has the power to order individual nonbank financial institutions to submit to supervision where the CFPB has reasonable cause to determine that the institution is engaged in “conduct that poses risks to consumers” under 12 USC 5514(a)(1)(C). In 2022, the CFPB announced that it had begun using this “dormant authority” to examine nonbank entities and the CFPB is attempting to expand the number of nonbank entities it currently supervises. Specifically, the CFPB previously notified the Company that it was seeking to establish such supervisory authority over the Company. Since then, the CFPB issued a public designation order setting forth its determination that the Company had met the legal requirements for supervision (the "Order"). Pursuant to the terms of the Order, the CFPB had supervisory authority over the Company pursuant to section 1024(a)(1)(C) of the Consumer Financial Protection Act of 2010 until such time as the Order is terminated consistent with 12 C.F.R. 1091.113. Importantly, on May 12, 2025, the CFPB withdrew the Order, indicating that
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the CFPB "is shifting its supervisory priorities to focus on pressing threats to consumers" and that supervision of the Company "is not consistent with these priorities." See Part I, Item 1, “Description of Business - Government Regulation - Federal legislation,” for a further discussion of these matters and the federal regulations to which the Company’s operations are subject and Part I, Item 1A, “Risk Factors,” for more information regarding these regulatory and related risks.
Quarterly Information and Seasonality
The Company's loan volume and corresponding loans receivable follow seasonal trends. The Company's highest loan demand typically occurs from October through December, its third fiscal quarter. Loan demand has generally been the lowest and loan repayment highest from January to March, its fourth fiscal quarter. Loan volume and average balances typically remain relatively level during the remainder of the year. This seasonal trend affects quarterly operating performance through corresponding fluctuations in interest and fee income and insurance commissions earned and the provision for credit losses recorded, as well as fluctuations in the Company's cash needs. Consequently, operating results for the Company's third fiscal quarter generally are significantly lower than in other quarters and operating results for its fourth fiscal quarter are significantly higher than in other quarters.
The following table sets forth, on a quarterly basis, certain items included in the Company's unaudited Consolidated Financial Statements and shows the number of branches open during fiscal years 2026 and 2025.
| At or for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| Fiscal 2026 | Fiscal 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| June 30, | September 30, | December 31, | March 31, | June 30, | September 30, | December 31, | March 31, | ||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | 132,775 | $ | 134,848 | $ | 141,637 | $ | 175,907 | $ | 129,801 | $ | 131,729 | $ | 138,955 | $ | 163,688 | |||||||||||||||||||||||||||||||
| Provision for credit losses | $ | 50,516 | $ | 49,841 | $ | 51,423 | $ | 36,822 | $ | 45,419 | $ | 46,669 | $ | 44,103 | $ | 33,024 | |||||||||||||||||||||||||||||||
| General and administrative expenses | $ | 70,360 | $ | 71,968 | $ | 78,057 | $ | 81,493 | $ | 61,412 | $ | 46,355 | $ | 67,223 | $ | 65,940 | |||||||||||||||||||||||||||||||
Net income (loss) | $ | 1,585 | $ | (1,662) | $ | (625) | $ | 35,290 | $ | 10,151 | $ | 22,366 | $ | 13,629 | $ | 43,100 | |||||||||||||||||||||||||||||||
| Gross loans receivable | $ | 1,264,341 | $ | 1,315,491 | $ | 1,402,317 | $ | 1,278,988 | $ | 1,274,819 | $ | 1,295,870 | $ | 1,381,462 | $ | 1,225,636 | |||||||||||||||||||||||||||||||
| Number of branches open | 1,014 | 1,013 | 1,013 | 1,009 | 1,047 | 1,045 | 1,035 | 1,024 | |||||||||||||||||||||||||||||||||||||||
Critical Accounting Estimates
The Company’s accounting and reporting policies are in accordance with GAAP and conform to general practices within the finance company industry. The significant accounting policies used in the preparation of the Consolidated Financial Statements are discussed in Note 1 to the Consolidated Financial Statements. Certain critical accounting policies involve significant judgment by the Company’s management, including the use of estimates and assumptions which affect the reported amounts of assets, liabilities, revenues, and expenses. As a result, changes in these estimates and assumptions could significantly affect the Company’s financial position and results of operations. The Company considers its policies regarding the allowance for credit losses and income taxes to be its most critical accounting policies due to the significant degree of management judgment involved.
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Allowance for Credit Losses
Accounting policies related to the allowance for credit losses are considered to be critical as these policies involve considerable subjective judgment and estimation by management. In the case of loans, the allowance for credit losses is a contra-asset valuation account, calculated in accordance with ASC 326 that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. The amount of the allowance represents management’s best estimate of current expected credit losses on these financial instruments considering available information, from internal and external sources, relevant to assessing exposure to credit loss over the contractual term of the instrument. Relevant available information includes historical credit loss experience, current conditions, and reasonable and supportable forecasts. The historical credit loss experience is adjusted for quantitative and qualitative factors that are not fully reflected in the historical data. In determining our estimate of expected credit losses, we evaluate information related to credit metrics, changes in our lending strategies and underwriting practices, and the current and forecasted direction of the economic and business environment. These metrics include, but are not limited to, trends in first pay success for NBs, 61-90 day delinquencies on a recency basis, percent of loan balances that are paying, percentage of gross loans that are acquired loan, portfolio composition, and observable changes in recent or expected economic trends and conditions.
To enhance the precision of the allowance for credit loss estimate, we evaluate our loans receivable portfolio on a pool basis and segment each pool of loans receivable with similar credit risk characteristics, specifically Customer Tenure, which was determined to be the best predictor of default risk.
Due to the short term nature of the loan portfolio, forecasted changes in macro-economic variables, such as unemployment levels, general inflation and commodity prices, typically do not have a significant impact on loans outstanding at the end of a particular reporting period, unless those changes are particularly severe and sudden in nature.
Due to the judgment and uncertainty in estimating the allowance for credit losses, we may experience differences to the assumptions, which could lead to further changes in our allowance for credit losses, allowance as a percentage of loans receivable, net, and provision for credit losses.
Income Taxes
Management uses certain assumptions and estimates in determining income taxes payable or refundable, deferred income tax liabilities and assets for events recognized differently in its financial statements and income tax returns, and income tax expense. Determining these amounts requires analysis of certain transactions and interpretation of tax laws and regulations. Management exercises considerable judgment in evaluating the amount and timing of recognition of the resulting income tax liabilities and assets. These judgments and estimates are re-evaluated on a periodic basis as regulatory and business factors change.
Pursuant to ASC 740, a deferred tax asset or liability is generally recognized for the estimated future tax effects attributable to temporary differences, net operating losses, and tax credit carryforwards. Deferred tax assets are to be reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Significant judgment is required in assessing the realizability of the Company’s deferred tax assets. The Company considers all available evidence, both positive and negative, in assessing the extent to which a valuation allowance should be applied against its deferred tax asset. If, based on its assessment, the Company determines that it is more likely than not (intended to mean a likelihood that is more than 50%) that some portion or all of the deferred tax asset will not be realized, a valuation allowance is established. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income of the appropriate character during the periods in which the temporary differences become deductible. Management considers the timing of the reversal of deferred liabilities, projected future taxable income, tax planning strategies, and the ability to carryback tax attributes in making this assessment.
No assurance can be given that either the tax returns submitted by management or the income tax reported on the Consolidated Financial Statements will not be adjusted by either adverse rulings, changes in the tax code, or assessments made by the IRS or by state or foreign taxing authorities. The Company is subject to potential adverse adjustments including, but not limited to, an increase in the statutory federal or state income tax rates, the permanent non-deductibility of amounts currently considered deductible either now or in future periods, and the dependency on the generation of future taxable income in order to ultimately realize deferred income tax assets.
Under FASB ASC 740, the Company includes the current and deferred tax impact of its tax positions in the financial statements when it is more likely than not (likelihood of greater than 50%) that such positions will be sustained by taxing authorities, with full knowledge of relevant information, based on the technical merits of the tax position. While the Company supports its tax
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positions by unambiguous tax law, prior experience with the taxing authority, and analysis that considers all relevant facts, circumstances and regulations, management must still rely on assumptions and estimates to determine the overall likelihood of success and proper quantification of a given tax position.
Liquidity and Capital Resources
The Company has historically financed and continues to finance its operations, acquisitions and branch expansion through a combination of cash flows from operations and borrowings from its institutional lenders. As discussed below, the Company has also issued debt securities to finance its operations and repay a portion of its outstanding indebtedness. The Company has generally applied its cash flows from operations to fund its loan volume, fund acquisitions, repay long-term indebtedness and repurchase its common stock. Net cash provided by operating activities for fiscal year 2026 was $259.4 million.
As of March 31, 2026, the Company's debt outstanding was $587.2 million and its shareholders' equity was $351.0 million resulting in a debt-to-equity ratio of 1.7:1.0. Management will continue to monitor the Company's debt-to-equity ratio and is committed to maintaining a debt level that will allow the Company to continue to execute its business objectives, while not putting undue stress on its Consolidated Balance Sheets.
The Company believes that attractive opportunities to acquire new branches or receivables from its competitors or to acquire branches in communities not currently served by the Company will continue to become available as conditions in local economies and the financial circumstances of owners change.
As of March 31, 2026, the Company had two credit facilities: the Revolving Credit Facility and the Warehouse Facility. The Revolving Credit Facility provides, among other things, aggregate commitments of the Lenders of $640.0 million, with an accordion feature that can increase the aggregate commitments by $150.0 million (for a total commitment, if the full accordion is borrowed, of $790.0 million). The Revolving Credit Agreement has a commitment fee of 0.50% per annum on the unused portion of the commitment.
Subject to a borrowing base formula, the Company could borrow at the rate of one month SOFR plus 0.10% and an applicable margin of 3.5% with a minimum rate of 4.5% under the Revolving Credit Agreement. At March 31, 2026, the aggregate commitments under the Revolving Credit Agreement were $640.0 million. The borrowing base limitation was equal to the product of (a) the Company’s eligible finance receivables, less unearned finance charges, insurance premiums and insurance commissions applicable to such eligible finance receivables, and (b) an advance rate percentage that ranges from 70% to 80% based on a collateral performance indicator equal to the sum of, for the Company and certain of its subsidiaries (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 had $816.1 thousand in outstanding standby letters of credit which include (i) $200.0 thousand related to worker's compensation expiring on October 16, 2026 and (ii) $616.1 thousand related to the Company's investment in captive insurance expiring on March 1, 2027. Both letters of credit automatically extend for one year on their expiration dates. Further, under the Revolving Credit Agreement, the administrative agent has the right to set aside reasonable reserves against the available borrowing base in such amounts as it may deem appropriate, including, without limitation, reserves with respect to certain regulatory events or any increased operational, legal, or regulatory risk of the Company and its subsidiaries.
For the year ended March 31, 2026, the effective interest rate, including the commitment fee and amortization of debt issuance costs, as it relates to the Revolving Credit Agreement and Prior Credit Agreement was 8.3%. At March 31, 2026, the unused amount available under the Revolving Credit Facility was $90.1 million. Borrowings under the Revolving Credit Facility have a maturity date of July 22, 2028.
The Company’s obligations under the Revolving Credit Agreement, together with treasury management and hedging obligations owing to any lender under the revolving credit facility or any affiliate of any such lender, are required to be guaranteed by each of the Company’s wholly-owned subsidiaries. The obligations of the Company and the subsidiary guarantors under the revolving credit facility, together with such treasury management and hedging obligations, are secured by a first-priority security interest in substantially all assets of the Company and the subsidiary guarantors.
The Warehouse Facility provides for a revolving $175.0 million warehouse facility and is secured by certain consumer loan receivables that were directly originated by certain of the Company’s subsidiaries. As of March 31, 2026, the Company may borrow at the rate of one-month SOFR plus 0.11448% and an applicable margin of 3.0%, with a minimum rate of 4.0%. The Credit Agreement has a commitment fee of 0.50% per annum on the unused portion of the commitment.
For the year ended March 31, 2026, the Company’s effective interest rate, including the commitment fee and amortization of debt issuance costs, was 6.7%. At March 31, 2026, the unused amount available under the Warehouse Facility was $31.7 million. Borrowings under the Warehouse Facility have an expected maturity date of September 29, 2027.
The Company continues to believe stock repurchases are a viable component of the Company’s long-term financial strategy and an excellent use of excess cash when the opportunity arises. Additional share repurchases can be made subject to compliance
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with, among other things, applicable restricted payment covenants under the Revolving Credit Agreement. Our first priority is to ensure we have enough capital to fund loan growth. As of March 31, 2026, subject to further approval from our Board of Directors, we could repurchase approximately $59.9 million of shares under the terms of our debt facilities. To the extent we have excess capital, we may repurchase stock, if appropriate, and as authorized by our Board of Directors.
The Company believes that cash flow from operations and borrowings under its credit facilities or other sources will be adequate to fund the expected cash requirements from contractual and other obligations and cost of opening or acquiring new branches, including funding initial operating losses of new branches and funding loans receivable originated by those branches and the Company's other branches (for the next 12 months and for the foreseeable future beyond that). Except as otherwise discussed in this report including, but not limited to, any discussions in Part 1, Item 1A, "Risk Factors" (as supplemented by any subsequent disclosures in information the Company files with or furnishes to the SEC from time to time), management is not currently aware of any trends, demands, commitments, events or uncertainties that it believes will or could result in, or are or could be reasonably likely to result in, any material adverse effect on the Company’s liquidity.
Revolving Credit Facility
The Revolving Credit Agreement contains a number of affirmative and negative covenants that, among other things, restrict our ability to incur liens, incur indebtedness, pay dividends and repurchase or redeem capital stock, make certain restricted payments, merge or consolidate, dispose of assets, 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 of the Revolving Credit Agreement and that contains specified subordinated terms, subject to limitations on amount imposed by the financial covenants under the Revolving Credit Agreement. In addition, the Revolving Credit Agreement requires the Company to (i) keep and maintain a Consolidated Net Worth of $325.0 million, (ii) have a ratio of Net Income Available for Fixed Charges to Fixed Charges of not less than 2.25 to 1.00, (iii) not permit the aggregate unpaid principal amount of Total Debt to exceed 225.0% of Consolidated Adjusted Net Worth, and (iv) maintain an Asset Quality Indicator (Consolidated) of less than or equal to 26.0%. Each of the capitalized terms used and not defined herein have the meanings set forth in the Revolving Credit Agreement.
The Company was in compliance with these covenants at March 31, 2026, after giving effect to a Consent and Limited Modification to the Net Income Available for Fixed Charges to Fixed Charges ratio entered into on May 22, 2026 as further discussed in Note 19 to the Consolidated Financial Statements. The Company does not believe that these covenants will materially limit its business and expansion strategy.
The Revolving Credit Agreement also contains customary events of default (subject to certain materiality thresholds and cure periods), including among others, (a) non-payment, (b) non-compliance with covenants, (c) a breach of a representation or warranty, (d) an insolvency event involving the Company, (e) a change in control of the Company, (f) failure of the Company to maintain certain financial covenants, (g) cross-default to other debt, (h) invalidity of subordination provisions of subordinated debt, (i) the occurrence of certain regulatory events (including an order or judgment entered against the Company with respect to the financial receivables generally or any category of receivables that is material to the business) 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, and (j) payment defaults resulting in acceleration of securitizations or warehouse facilities that remain continuing for more than 30 days.
Warehouse Facility
The Credit Agreement contains affirmative and negative covenants, including covenants that generally restrict the ability of the Company and the Borrower to, among other things, incur or guarantee indebtedness, incur liens, pay dividends and repurchase or redeem capital stock, engage in mergers and consolidations, make acquisitions or other investments, or fund benefit plans. The Company’s financial covenants under the Credit Agreement include (i) a minimum tangible net worth of $305.0 million; (ii) a maximum ratio of debt to tangible net worth of 2.25 to 1.0 as of the end of each fiscal quarter; (iii) a minimum liquidity amount of $35.0 million; and (iv) a minimum of unrestricted cash and cash equivalents of $5.0 million. The Credit Agreement also contains covenants that require the Company, as Servicer, with respect to any collection period to maintain certain delinquency ratios, payment ratios and annualized net charge-off ratios. A failure to maintain such ratios may result in a Level I Trigger Event, Level II Trigger Event, or Level III Trigger Event. Each of the capitalized terms used and not defined herein have the meanings set forth in the Credit Agreement.
The Company was in compliance with these covenants at March 31, 2026, and does not believe that these covenants will materially limit its business and expansion strategy.
The Credit Agreement also contains customary events of default (subject to certain materiality thresholds and cure periods), including among others, (a) non-payment, (b) non-compliance with covenants, (c) failure of the Administrative Agent to
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maintain a first-priority perfected security interest in any material portion of the collateral (subject to permitted liens), (d) the occurrence of a servicer termination event, (e) a breach of a representation or warranty, (f) an insolvency event involving the Company, the Borrower, or the Originators (as defined therein), (g) a change in control of the Company or the Borrower, (h) an event of default under a material financing agreement of the Company, the Borrower, or the Originators, (i) failure of the Company, as Servicer, to maintain certain financial covenants, and (j) the Company, the Borrower, or the Originators have one or more final non-appealable judgments entered against it by a court of competent jurisdiction in excess of the specified monetary thresholds. The remedies for such events of default are also customary for this type of transaction and include acceleration of the Borrower’s outstanding obligations under the Credit Agreement.
Notes Redemption
On September 27, 2021, we issued $300 million in aggregate principal amount of $300 million senior notes due November 2026 (the "Notes"). The Notes were sold in a private placement in reliance on Rule 144A and Regulation S under the Securities Act.
On July 22, 2025, an irrevocable notice of full redemption (the “Notice”) of the Notes was delivered to the holders of the Notes. The Notice called for the redemption of all of the outstanding Notes (the “Redemption”) on August 29, 2025 (the “Redemption Date”) at a redemption price equal to 101.75% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to, but not including, the Redemption Date. The aggregate principal amount of the Notes redeemed was $168.3 million. The Redemption was made in accordance with the terms and conditions of the Notes and the indenture governing the Notes. As a result of the Redemption, the Company recognized an additional $3.7 million in interest expense, for which $3.0 million represents an early redemption premium and $0.7 million represents the write-off of the remaining unamortized debt issuance costs associated with the Notes.
During the year ended March 31, 2026 and prior to the Redemption, the Company repurchased and extinguished $17.0 million of its Notes, net of $0.1 million unamortized debt issuance costs related to the extinguished debt, on the open market for a reacquisition price of $17.0 million. During fiscal 2025, the Company repurchased and extinguished $89.0 million of its Notes, net of $0.6 million unamortized debt issuance costs related to the extinguished debt, on the open market for a reacquisition price of $88.0 million.
For the year ended March 31, 2026, the Company recognized a $3.7 million loss on extinguishment. For the fiscal years ended 2025 and 2024, the Company recognized a $1.0 million and $1.6 million gain on extinguishment, respectively. In accordance with ASC 470, the Company recognized the gain and loss on extinguishments as a component of interest expense in the Company's Consolidated Statements of Operations.
Share Repurchase Program
On February 11, 2026, the Board of Directors authorized the Company to repurchase up to $50.0 million of the Company’s outstanding common stock, inclusive of the amount that remained available for repurchase under prior repurchase authorizations. As of March 31, 2026, the Company had $12.2 million in aggregate remaining repurchase capacity under its current share repurchase program. The timing and actual number of shares of common stock repurchased will depend on a variety of factors, including the stock price, corporate and regulatory requirements, restrictions under the revolving credit facility and other market and economic conditions. The Company’s stock repurchase program may be suspended or discontinued at any time.
On September 3, 2025, in accordance with its share repurchase program, the Company, after approval by the Audit and Compliance Committee, repurchased 347,064 shares of its common stock for $60.0 million in a privately negotiated transaction from certain affiliates of Prescott General Partners, LLC, who, along with its affiliates, beneficially own approximately 46.3% of the Company's common stock as of March 31, 2026. The price per share was $172.88, which was the closing market price at September 3, 2025.
The Company continues to believe stock repurchases are a viable component of the Company’s long-term financial strategy and an excellent use of excess cash when the opportunity arises. Additional share repurchases can be made subject to compliance with, among other things, applicable restricted payment covenants under the revolving credit facility. As of March 31, 2026, subject to further approval from our Board of Directors, we could repurchase approximately $59.9 million of shares under the terms of our debt facilities. To the extent we have excess capital, we may repurchase stock, if appropriate, and as authorized by our Board of Directors.
Inflation
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The Company does not believe that inflation will have a materially adverse effect on its financial condition, unless changes in inflation are particularly severe and sudden in nature. Although inflation would increase the Company’s operating costs in absolute terms and may impact the ability or willingness of borrowers to repay their loans, the Company expects that the same decrease in the value of money would result in an increase in the size of loans demanded by its customer base. It is reasonable to anticipate that such a change in customer preference would result in an increase in total loan receivables and an increase in absolute revenues to be generated from that larger amount of loans receivable. The Company believes that this increase in absolute revenues should offset any increase in operating costs. In addition, because the Company’s loans have a relatively short contractual term and average life, it is unlikely that loans made at any given point in time will be repaid with significantly inflated dollars.
Legal Matters
From time to time, the Company is involved in litigation relating to claims arising out of its operations in the normal course of business. See Part I, Item 3, “Legal Proceedings” and Note 18 to our audited Consolidated Financial Statements for further discussion of legal matters.
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-06-15 | Caulder Alice Lindsay | SVP, Human Resources | Sell | -609 | $181.00 | -$110,229 |
| 2026-06-12 | Umstetter Luke J. | See remarks | Sell | -1,000 | $181.66 | -$181,660 |
| 2026-05-22 | Robinson Benjamin E III | Director | Sell | -90 | $160.00 | -$14,400 |
| 2026-04-30 | Robinson Benjamin E III | Director | Sell | -180 | $160.00 | -$28,800 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-08-06 10-Q expected by 2026-08-09 (in 43 days)
- ~2026-11-06 10-Q expected by 2026-11-09 (in 135 days)
- ~2027-02-09 10-Q expected by 2027-02-12 (in 230 days)
- ~2027-06-04 10-K expected by 2027-06-17 (in 345 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-06-05 10-K/A Annual Report (Amended)
- 2026-06-04 8-K Officer/Director Change
- 2026-06-04 10-K Annual Report
- 2026-05-26 8-K Material Agreement Entered
- 2026-04-30 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-04-15 8-K Officer/Director Change; Other Events; Financial Statements and Exhibits
- 2026-02-17 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-02-11 8-K Other Events
- 2026-02-09 10-Q Quarterly Report
- 2026-01-27 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-12-04 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-11-06 10-Q Quarterly Report
- 2025-10-23 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-10-03 8-K Material Agreement Entered
- 2025-08-22 8-K Officer/Director Change; Shareholder Vote Results; Financial Statements and Exhibits