WORLD ACCEPTANCE CORP [WRLD] Filings

10-Q 1 wrld-20230630.htm 10-Q wrld-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________________________

Form 10-Q

__________________________________

(Mark One)


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

For the quarterly period ended June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934

For the transition period from ______________ to ______________

Commission File Number: 000-19599

WORLD ACCEPTANCE CORPORATION

(Exact name of registrant as specified in its charter.)


South Carolina						57-0425114
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)


104 S Main Street
Greenville,	South Carolina	29601
(Address of principal executive offices)
(Zip Code)


(864)			298-9800
(registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, no par value	WRLD	The NASDAQ Stock Market LLC (NASDAQ Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period than the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

The number of outstanding shares of the issuer’s common stock, no par value, as of July 28, 2023 was 6,242,160.

WORLD ACCEPTANCE CORPORATION

FORM 10-Q

TABLE OF CONTENTS


Item No.	Contents	Page
	GLOSSARY OF DEFINED TERMS	4

	PART I - FINANCIAL INFORMATION
1.	Consolidated Financial Statements (unaudited):	1
	Consolidated Balance Sheets as of June 30, 2023 and March 31, 2023	1
	Consolidated Statements of Operations for the three months ended June 30, 2023 and June 30, 2022	2

	Consolidated Statements of Shareholders' Equity for the three months ended June 30, 2023 and June 30, 2022	3
	Consolidated Statements of Cash Flows for the three months ended June 30, 2023 and June 30, 2022	4
	Notes to Consolidated Financial Statements	6
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
3.	Quantitative and Qualitative Disclosures about Market Risk	36
4.	Controls and Procedures	36

	PART II - OTHER INFORMATION
1.	Legal Proceedings	37
1A.	Risk Factors	37
2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
3.	Defaults Upon Senior Securities	37
4.	Mine Safety Disclosures	37
5.	Other Information	37
6.	Exhibits	38

	EXHIBIT INDEX	39

	SIGNATURES	40

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

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GLOSSARY OF DEFINED TERMS

The following terms may be used throughout this Report, including consolidated financial statements and related notes.


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

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PART I. FINANCIAL INFORMATION

WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	June 30, 2023		March 31, 2023
ASSETS
Cash and cash equivalents	$	15,988,798	$	16,508,935
Gross loans receivable	1,397,965,921		1,390,015,568
Less:
Unearned interest, insurance and fees	(379,966,515)		(376,674,349)
Allowance for credit losses	(129,342,988)		(125,552,733)
Loans receivable, net	888,656,418		887,788,486

Operating lease right‐of‐use assets, net	79,462,179		81,289,240

Property and equipment, net	23,856,064		23,926,080
Deferred income taxes, net	43,271,950		41,722,361
Other assets, net	41,147,435		43,422,669
Goodwill	7,370,791		7,370,791
Intangible assets, net	14,220,264		15,289,579


Total assets	$	1,113,973,899	$	1,117,318,141

LIABILITIES & SHAREHOLDERS' EQUITY

Liabilities:
Senior notes payable	$	299,776,031	$	307,910,824
Senior unsecured notes payable, net	285,620,007		287,352,892
Income taxes payable	3,812,177		2,532,766
Operating lease liability	81,988,898		83,735,002

Accounts payable and accrued expenses	45,889,309		50,559,920

Total liabilities	717,086,422		732,091,404

Commitments and contingencies

Shareholders' equity:
Preferred stock, no par value Authorized 5,000,000, no shares issued or outstanding	—		—
Common stock, no par value Authorized 95,000,000 shares; issued and outstanding 6,240,497 and 6,231,082 shares at June 30, 2023 and March 31, 2023, respectively	—		—
Additional paid-in capital	290,193,831		288,071,839
Retained earnings	106,693,646		97,154,898

Total shareholders' equity	396,887,477		385,226,737

Total liabilities and shareholders' equity	$	1,113,973,899	$	1,117,318,141

See accompanying notes to consolidated financial statements.

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WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended June 30,
	2023		2022

Revenues:
Interest and fee income	$	116,618,914	$	130,205,390
Insurance and other income, net	22,704,877		27,712,898
Total revenues	139,323,791		157,918,288

Expenses:
Provision for credit losses	46,602,012		85,822,267
General and administrative expenses:
Personnel	41,792,087		45,178,345
Occupancy and equipment	12,619,740		13,234,697
Advertising	2,749,544		2,208,395
Amortization of intangible assets	1,069,316		1,132,104
Other	9,894,517		9,896,854
Total general and administrative expenses	68,125,204		71,650,395

Interest expense	12,242,249		11,174,347
Total expenses	126,969,465		168,647,009

Income (loss) before income taxes	12,354,326		(10,728,721)

Income tax expense (benefit)	2,815,578		(2,162,249)

Net income (loss)	$	9,538,748	$	(8,566,472)

Net income (loss) per common share:
Basic	$	1.65	$	(1.49)
Diluted	$	1.62	$	(1.49)
Weighted average common shares outstanding:
Basic	5,772,733		5,740,835
Diluted	5,891,299		5,740,835

See accompanying notes to consolidated financial statements.

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WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)


	Three months ended June 30, 2023
	Common Stock
	Shares	Additional Paid-in Capital		Retained Earnings		Total Shareholders' Equity
Balances at March 31, 2023	6,231,082	$	288,071,839	$	97,154,898	$	385,226,737
Proceeds from exercise of stock options	7,540	709,294		—		709,294

Restricted common stock expense under stock option plan, net of cancellations ($0)	1,875	1,099,351		—		1,099,351
Stock option expense	—	313,347		—		313,347

Net income	—	—		9,538,748		9,538,748
Balances at June 30, 2023	6,240,497	$	290,193,831	$	106,693,646	$	396,887,477


	Three months ended June 30, 2022
	Common Stock
	Shares	Additional Paid-in Capital		Retained Earnings		Total Shareholders' Equity
Balances at March 31, 2022	6,348,314	$	280,907,085	$	92,117,343	$	373,024,428
Proceeds from exercise of stock options	4,300	403,547		—		403,547
Common stock repurchases	(73,643)	—		(14,314,088)		(14,314,088)
Restricted common stock expense under stock option plan, net of cancellations ($0)	1,750	3,048,003		—		3,048,003
Stock option expense	—	768,055		—		768,055
Cumulative effect of adoption of ASU 2023-02	—	—		(1,880,346)		(1,880,346)
Net loss	—	—		(8,566,472)		(8,566,472)
Balances at June 30, 2022	6,280,721	$	285,126,690	$	67,356,437	$	352,483,127

See accompanying notes to consolidated financial statements.

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WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Table of Contents

(Unaudited)


	Three months ended June 30,
	2023		2022
Cash flow from operating activities:
Net income (loss)	$	9,538,748	$	(8,566,472)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:


Amortization of intangible assets	1,069,316		1,132,104

Accrued unearned interest	(879,946)		(6,442,480)
Amortization of deferred loan cost	3,198,092		4,404,042
Gain on extinguishment of senior unsecured notes payable	(435,885)		—
Amortization of debt issuance costs	484,571		382,230
Provision for credit losses	46,602,012		85,822,267
Depreciation	1,574,515		1,510,599
Amortization of finance leases	—		102,278
Gain on asset acquisitions, net of income tax	—		(3,144,722)

Gain on sale of property and equipment	(11,753)		(129,476)
Deferred income tax benefit	(1,549,589)		(6,695,391)
Compensation related to stock option and restricted stock plans, net of taxes and adjustments	1,412,698		3,816,058


Change in accounts:
Other assets, net	2,114,620		(8,573,847)
Income taxes payable/ receivable	1,279,411		(323,270)
Accounts payable and accrued expenses	(4,670,611)		(5,116,425)
Net cash provided by operating activities	59,726,199		58,177,495
Cash flows from investing activities:
Increase in loans receivable, net	(49,788,091)		(113,577,559)

Cash paid for acquisitions, primarily loans	—		(19,700,844)

Purchases of property and equipment	(1,658,199)		(1,353,135)


Proceeds from the sale of property and equipment	165,453		283,927
Net cash used in investing activities	(51,280,837)		(134,347,611)
Cash flow from financing activities:
Borrowings from senior notes payable	65,529,224		127,920,704
Payments on senior notes payable	(73,664,017)		(43,500,000)
Payments for extinguished senior unsecured notes payable	(1,535,000)		—


Payments for debt extinguishment costs	(5,000)		—
Debt issuance costs associated with senior notes payable	—		(239,636)
Proceeds from exercise of stock options	709,294		403,547

Repayment of finance lease	—		(34,143)
Repurchase of common stock	—		(14,314,088)

Net cash provided by (used in) financing activities	(8,965,499)		70,236,384

Net change in cash and cash equivalents	(520,137)		(5,933,732)
Cash and cash equivalents at beginning of period	16,508,935		19,236,322

Cash and cash equivalents at end of period	$	15,988,798	$	13,302,590



Supplemental Disclosures:
Interest paid during the period	$	17,301,329	$	17,698,537
Income taxes paid during the period	$	2,466,889	$	4,007,869

See accompanying notes to consolidated financial statements.

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WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – 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.

NOTE 2 – SUMMARY OF SIGNIFICANT POLICIES

Nature of Operations

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

Seasonality

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

Loans receivable, net

Loans receivable are carried at the gross amount outstanding, reduced by unearned interest and insurance income, net of deferred origination fees and direct costs, and an allowance for credit losses. Fees received and direct costs incurred for the origination of loans are deferred and amortized to interest income over the contractual lives of the loans using the interest method. Unamortized amounts are recognized in income at the time that loans are refinanced or paid in full except for those refinancings that do not constitute a more than minor modification. Net unamortized deferred origination costs were $5.2 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.

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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.

NOTE 3 – FAIR VALUE

Fair Value Disclosures

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

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

•Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 2 – Inputs other than quoted prices that are observable for assets and liabilities, either directly or indirectly. These inputs include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are less active.

•Level 3 – Unobservable inputs for assets or liabilities reflecting the reporting entity’s own assumptions.

The Company’s financial instruments consist of cash and cash equivalents, loans receivable, net, senior notes payable, and senior unsecured notes payable. Loans receivable are originated at prevailing market rates and have an average life of approximately less than twelve months. Given the short-term nature of these loans, they are continually repriced at current market rates. The Company’s 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.

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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.


		June 30, 2023				March 31, 2023
	Input Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
ASSETS
Cash and cash equivalents	1	$	15,988,798	$	15,988,798	$	16,508,935	$	16,508,935
Loans receivable, net	3	888,656,418		888,656,418		887,788,486		887,788,486

LIABILITIES
Senior unsecured notes payable	2	288,860,000		252,752,500		290,860,000		218,127,548
Senior notes payable	3	299,776,031		299,776,031		307,910,824		307,910,824

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.

NOTE 4 – LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES

The following is a summary of gross loans receivable by Customer Tenure as of:


Customer Tenure	June 30, 2023		March 31, 2023
0 to 5 months	$	77,832,233	$	81,803,668
6 to 17 months	115,061,651		133,650,188
18 to 35 months	149,142,504		135,396,187
36 to 59 months	240,921,979		244,414,255
60+ months	813,633,836		792,189,216

Tax advance loans	1,373,718		2,562,054
Total gross loans	$	1,397,965,921	$	1,390,015,568

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

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

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	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	$	1,192,066,728	$	77,308,971	$	3,044,992	$	120,623	$	33,744	$	8,848	$	1,272,583,906
30 - 60 days past due	40,945,038		6,398,969		305,901		21,491		9,068		857		47,681,324
61 - 90 days past due	24,455,047		4,170,062		166,843		34,662		6,921		—		28,833,535
91 or more days past due	38,396,407		8,793,831		285,866		9,021		8,313		—		47,493,438
Total	$	1,295,863,220	$	96,671,833	$	3,803,602	$	185,797	$	58,046	$	9,705	$	1,396,592,203

	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	$	8,436	$	2,475	$	—	$	—	$	—	$	—	$	10,911
30 - 60 days past due	92,644		406		—		—		—		—		93,050
61 - 90 days past due	150,173		376		—		—		—		—		150,549
91 or more days past due	1,118,587		621		—		—		—		—		1,119,208
Total	$	1,369,840	$	3,878	$	—	$	—	$	—	$	—	$	1,373,718
Total gross loans													$	1,397,965,921

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:

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	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	$	1,200,504,088	$	62,076,656	$	1,998,218	$	148,662	$	23,046	$	6,863	$	1,264,757,533
30 - 60 days past due	40,791,746		4,689,867		160,956		42,700		8,504		2,988		45,696,761
61 - 90 days past due	26,319,250		2,572,733		92,088		40,281		884		—		29,025,236
91 or more days past due	41,832,821		5,944,645		160,361		29,494		4,430		2,233		47,973,984
Total	$	1,309,447,905	$	75,283,901	$	2,411,623	$	261,137	$	36,864	$	12,084	$	1,387,453,514

	Term Loans By Origination
Tax advance 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	$	1,932,607	$	3,524	$	—	$	—	$	—	$	—	$	1,936,131
30 - 60 days past due	609,844		736		—		—		—		—		610,580
61 - 90 days past due	—		4,845		—		—		—		—		4,845
91 or more days past due	409		10,089		—		—		—		—		10,498
Total	$	2,542,860	$	19,194	$	—	$	—	$	—	$	—	$	2,562,054
Total gross loans													$	1,390,015,568

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

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	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	$	1,171,894,227	$	67,248,005	$	2,360,641	$	41,757	$	14,047	$	3,465	$	1,241,562,142
30 - 60 days past due	45,623,659		5,538,291		133,436		6,006		—		—		51,301,392
61 - 90 days past due	29,268,423		4,820,038		126,494		5,572		—		—		34,220,527
91 or more days past due	49,076,912		19,065,498		1,183,032		132,462		43,999		6,239		69,508,142
Total	$	1,295,863,221	$	96,671,832	$	3,803,603	$	185,797	$	58,046	$	9,704	$	1,396,592,203

	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	87,950		—		—		—		—		—		87,950
61 - 90 days past due	164,821		—		—		—		—		—		164,821
91 or more days past due	1,117,069		3,878		—		—		—		—		1,120,947
Total	$	1,369,840	$	3,878	$	—	$	—	$	—	$	—	$	1,373,718
Total gross loans													$	1,397,965,921

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:

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	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	$	1,174,237,761	$	53,652,011	$	1,554,144	$	64,233	$	5,142	$	1,491	$	1,229,514,782
30 - 60 days past due	47,346,331		3,661,493		77,857		6,714		—		—		51,092,395
61 - 90 days past due	33,012,804		3,030,052		44,129		7,643		—		—		36,094,628
91 or more days past due	54,851,010		14,940,345		735,493		182,547		31,721		10,593		70,751,709
Total	$	1,309,447,906	$	75,283,901	$	2,411,623	$	261,137	$	36,863	$	12,084	$	1,387,453,514

	Term Loans By Origination
Tax advance 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	$	1,932,607	$	—	$	—	$	—	$	—	$	—	$	1,932,607
30 - 60 days past due	609,844		—		—		—		—		—		609,844
61 - 90 days past due	—		—		—		—		—		—		—
91 or more days past due	409		19,194		—		—		—		—		19,603
Total	$	2,542,860	$	19,194	$	—	$	—	$	—	$	—	$	2,562,054
Total gross loans													$	1,390,015,568

The following table provides a breakdown of the Company’s gross charge-offs by year of origination at June 30, 2023:


	Gross Charge-offs by Origination
Origination by Calendar Year	Loans		Tax advance loans		Total
2018 and prior	$	5,007	$	—	$	5,007
2019	12,727		—		12,727
2020	104,287		—		104,287
2021	2,943,366		—		2,943,366
2022	47,396,816		4,627		47,401,443
2023	253,212		3,000		256,212
Total	$	50,715,415	$	7,627	$	50,723,042

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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	Gross Charge-offs by Origination
Origination by Calendar Year	Loans		Tax advance loans		Total
2017 and prior	$	5,663	$	—	$	5,663
2018	13,855		—		13,855
2019	138,663		—		138,663
2020	1,509,992		—		1,509,992
2021	65,867,200		14,163		65,881,363
2022	1,649,742		67,104		1,716,846
Total	$	69,185,115	$	81,267	$	69,266,382

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.

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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:


	Three months ended June 30,
	2023		2022
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)
Recoveries1	7,911,285		4,851,932
Net charge-offs	(42,811,757)		(64,414,450)
Ending Balance	$	129,342,988	$	155,650,679

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:


			Days Past Due - Recency Basis
Customer Tenure	Current		30 - 60		61 - 90		Over 90		Total Past Due		Total Loans
0 to 5 months	$	61,192,949	$	5,159,304	$	3,946,507	$	7,533,473	$	16,639,284	$	77,832,233
6 to 17 months	97,270,965		6,044,736		4,167,086		7,578,864		17,790,686		115,061,651
18 to 35 months	133,608,163		6,116,113		3,508,885		5,909,343		15,534,341		149,142,504
36 to 59 months	219,635,566		8,468,545		4,959,167		7,858,701		21,286,413		240,921,979
60+ months	760,876,263		21,892,627		12,251,890		18,613,056		52,757,573		813,633,836

Tax advance loans	10,912		93,049		150,549		1,119,208		1,362,806		1,373,718
Total gross loans	1,272,594,818		47,774,374		28,984,084		48,612,645		125,371,103		1,397,965,921
Unearned interest, insurance and fees	(345,890,705)		(12,985,054)		(7,877,861)		(13,212,895)		(34,075,810)		(379,966,515)
Total net loans	$	926,704,113	$	34,789,320	$	21,106,223	$	35,399,750	$	91,295,293	$	1,017,999,406

Percentage of period-end gross loans receivable			3.4%		2.1%		3.5%		9.0%

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

1 Recoveries during the three months ended June 30, 2023 include $4.4 million in proceeds related to the recurring sales of charge-offs. This gain on sale is included as a component of Provision for credit losses in the Consolidated Statements of Operations.

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			Days Past Due - Recency Basis
Customer Tenure	Current		30 - 60			61 - 90			Over 90			Total Past Due			Total Loans
0 to 5 months	$	64,615,314	$	5,451,276		$	4,407,751		$	7,329,327		$	17,188,354		$	81,803,668
6 to 17 months	113,946,833		6,527,355			4,655,441			8,520,559			19,703,355			133,650,188
18 to 35 months	120,125,821		5,336,994			3,727,331			6,206,041			15,270,366			135,396,187
36 to 59 months	223,734,062		8,070,011			4,839,000			7,771,182			20,680,193			244,414,255
60+ months	742,335,503		20,311,125			11,395,713			18,146,875			49,853,713			792,189,216

Tax advance loans	1,936,131		610,580			4,845			10,498			625,923			2,562,054
Total gross loans	1,266,693,664		46,307,341			29,030,081			47,984,482			123,321,904			1,390,015,568
Unearned interest, insurance and fees	(343,255,876)		(12,548,627)			(7,866,737)			(13,003,109)			(33,418,473)			(376,674,349)
Total net loans	$	923,437,788	$	33,758,714		$	21,163,344		$	34,981,373		$	89,903,431		$	1,013,341,219

Percentage of period-end gross loans receivable			3.3		%	2.1		%	3.5		%	8.9		%

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:


			Days Past Due - Contractual Basis
Customer Tenure	Current		30 - 60		61 - 90		Over 90		Total Past Due			Total Loans
0 to 5 months	$	59,258,540	$	5,113,469	$	4,075,349	$	9,384,875	$	18,573,693		$	77,832,233
6 to 17 months	93,865,123		6,127,267		4,571,045		10,498,216		21,196,528			115,061,651
18 to 35 months	129,848,141		6,471,807		4,158,292		8,664,264		19,294,363			149,142,504
36 to 59 months	214,011,449		9,223,244		5,966,254		11,721,032		26,910,530			240,921,979
60+ months	744,578,889		24,365,605		15,449,587		29,239,755		69,054,947			813,633,836

Tax advance loans	—		87,950		164,821		1,120,947		1,373,718			1,373,718
Total gross loans	1,241,562,142		51,389,342		34,385,348		70,629,089		156,403,779			1,397,965,921
Unearned interest, insurance and fees	(337,456,038)		(13,967,600)		(9,345,922)		(19,196,955)		(42,510,477)			(379,966,515)
Total net loans	$	904,106,104	$	37,421,742	$	25,039,426	$	51,432,134	$	113,893,302		$	1,017,999,406

Percentage of period-end gross loans receivable			3.7%		2.5%		5.1%		11.3		%

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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			Days Past Due - Contractual Basis
Customer Tenure	Current		30 - 60		61 - 90		Over 90		Total Past Due		Total Loans
0 to 5 months	$	61,850,142	$	5,320,659	$	4,864,498	$	9,768,369	$	19,953,526	$	81,803,668
6 to 17 months	109,694,389		6,892,610		5,613,468		11,449,721		23,955,799		133,650,188
18 to 35 months	115,711,782		5,721,694		4,499,010		9,463,701		19,684,405		135,396,187
36 to 59 months	217,821,239		8,991,995		6,078,488		11,522,533		26,593,016		244,414,255
60+ months	724,437,230		24,165,437		15,039,164		28,547,385		67,751,986		792,189,216

Tax advance loans	1,932,607		609,844		—		19,603		629,447		2,562,054
Total gross loans	1,231,447,389		51,702,239		36,094,628		70,771,312		158,568,179		1,390,015,568
Unearned interest, insurance and fees	(333,704,639)		(14,010,568)		(9,781,128)		(19,178,014)		(42,969,710)		(376,674,349)
Total net loans	$	897,742,750	$