WORLD ACCEPTANCE CORP - Quarter Report: 2021 December (Form 10-Q)

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 December 31, 2021


☐			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 January 28, 2022 was 6,546,203.

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):	5
	Consolidated Balance Sheets as of December 31, 2021 and March 31, 2021	5
	Consolidated Statements of Operations for the three and nine months ended December 31, 2021 and December 31, 2020	7

	Consolidated Statements of Shareholders' Equity for the three and nine months ended December 31, 2021 and December 31, 2020	8
	Consolidated Statements of Cash Flows for the nine months ended December 31, 2021 and December 31, 2020	10
	Notes to Consolidated Financial Statements	12
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	32
3.	Quantitative and Qualitative Disclosures about Market Risk	41
4.	Controls and Procedures	41

	PART II - OTHER INFORMATION
1.	Legal Proceedings	42
1A.	Risk Factors	42
2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
3.	Defaults Upon Senior Securities	42
4.	Mine Safety Disclosures	42
5.	Other Information	42
6.	Exhibits	43

	EXHIBIT INDEX	44

	SIGNATURES	45

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 2022" are to the Company’s fiscal year ending March 31, 2022; all references in this report to "fiscal 2021" are to the Company's fiscal year ended March 31, 2021; and all references to "fiscal 2020" are to the Company’s fiscal year ended March 31, 2020.

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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
EBITDA			Earnings before interest, taxes, depreciation, and amortization
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
IRS			U.S. Internal Revenue Service
LIBOR			London Interbank Offered Rate
Option Measurement Period			The 6.5 year performance period beginning on September 30, 2018 and ending on March 31, 2025 over which the Performance Options are eligible to vest, following certification by the Compensation Committee of achievement
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
TAL			Tax Advance Loan

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PART I. FINANCIAL INFORMATION

WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	December 31, 2021		March 31, 2021
ASSETS
Cash and cash equivalents	$	18,667,639	$	15,746,454
Gross loans receivable	1,606,111,453		1,104,746,261
Less:
Unearned interest, insurance and fees	(433,432,489)		(279,364,584)
Allowance for credit losses	(133,281,196)		(91,722,288)
Loans receivable, net	1,039,397,768		733,659,389
Operating lease right‐of‐use assets, net (Note 6)	86,097,524		90,055,572
Finance lease right‐of‐use assets, net (Note 6)	708,203		1,013,901
Property and equipment, net	24,530,719		25,326,136
Deferred income taxes, net	34,808,153		24,992,742
Other assets, net	37,596,701		31,423,134
Goodwill	7,370,791		7,370,791
Intangible assets, net	21,027,359		23,537,517
Assets held for sale (Note 2)	—		1,143,528

Total assets	$	1,270,204,857	$	954,269,164

LIABILITIES & SHAREHOLDERS' EQUITY

Liabilities:
Senior notes payable	$	425,174,040	$	405,007,500
Senior unsecured notes payable, net	295,142,754		—
Income taxes payable	1,591,376		11,575,861
Operating lease liability (Note 6)	87,677,147		91,132,722
Finance lease liability (Note 6)	146,305		585,353
Accounts payable and accrued expenses	51,066,970		41,040,287

Total liabilities	860,798,592		549,341,723

Commitments and contingencies (Notes 6 and 12)

Shareholders' equity:
Preferred stock, no par value Authorized 5,000,000, no shares issued or outstanding	—		—
Common stock, no par value Authorized 95,000,000 shares; issued and outstanding 6,637,093 and 6,805,294 shares at December 31, 2021 and March 31, 2021, respectively	—		—
Additional paid-in capital	274,991,975		255,590,674
Retained earnings	134,414,290		149,336,767

Total shareholders' equity	409,406,265		404,927,441

Total liabilities and shareholders' equity	$	1,270,204,857	$	954,269,164

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See accompanying notes to consolidated financial statements.

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WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended December 31,				Nine months ended December 31,
	2021		2020		2021		2020

Revenues:
Interest and fee income	$	128,147,374	$	114,885,857	$	355,435,289	$	333,632,164
Insurance and other income, net	20,424,437		16,059,793		60,622,784		45,621,340
Total revenues	148,571,811		130,945,650		416,058,073		379,253,504

Expenses:
Provision for credit losses	56,458,533		28,857,443		128,767,870		80,608,470
General and administrative expenses:
Personnel	44,383,906		46,699,999		136,361,580		138,154,915
Occupancy and equipment	12,613,622		15,058,226		39,155,558		41,755,200
Advertising	6,847,777		6,660,129		15,902,321		14,527,909
Amortization of intangible assets	1,275,784		1,377,250		3,736,113		4,045,496
Other	9,108,390		8,079,467		27,413,963		26,292,070
Total general and administrative expenses	74,229,479		77,875,071		222,569,535		224,775,590

Interest expense	10,166,125		7,304,531		22,380,850		18,759,198
Total expenses	140,854,137		114,037,045		373,718,255		324,143,258

Income before income taxes	7,717,674		16,908,605		42,339,818		55,110,246

Income taxes	390,942		2,417,999		6,802,166		11,711,371









Net income	$	7,326,732	$	14,490,606	$	35,537,652	$	43,398,875







Net income per common share:
Basic	$	1.20	$	2.32	$	5.81	$	6.58
Diluted	$	1.14	$	2.25	$	5.53	$	6.44
Weighted average common shares outstanding:
Basic	6,118,591		6,233,961		6,119,971		6,593,135
Diluted	6,403,788		6,452,385		6,424,067		6,743,649

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 December 31, 2021
	Common Stock
	Shares	Additional Paid-in Capital		Retained Earnings	Total Shareholders' Equity
Balances at September 30, 2021	6,724,140	$	272,572,177	146,435,164	419,007,341
Proceeds from exercise of stock options	31,981	3,033,142		—	3,033,142
Common stock repurchases	(93,722)			(19,347,606)	(19,347,606)
Restricted common stock expense under stock option plan, net of cancellations ($4,922,017)	(25,306)	(1,277,438)		—	(1,277,438)
Stock option expense	—	664,094		—	664,094

Net income	—	—		7,326,732	7,326,732
Balances at December 31, 2021	6,637,093	$	274,991,975	134,414,290	409,406,265


	Three months ended December 31, 2020
	Common Stock
	Shares	Additional Paid-in Capital		Retained Earnings	Total Shareholders' Equity
Balances at September 30, 2020	7,002,080	$	237,547,566	129,727,585	367,275,151
Proceeds from exercise of stock options	18,205	1,248,999		—	1,248,999
Common stock repurchases	(238,452)	—		(26,161,371)	(26,161,371)
Restricted common stock expense under stock option plan, net of cancellations ($2,889,656)	(16,055)	1,154,157		—	1,154,157
Stock option expense	—	854,647		—	854,647


Net income	—	—		14,490,606	14,490,606
Balances at December 31, 2020	6,765,778	$	240,805,369	118,056,820	358,862,189


	Nine months ended December 31, 2021
	Common Stock
	Shares	Additional Paid-in Capital		Retained Earnings	Total Shareholders' Equity
Balances at March 31, 2021	6,805,294	$	255,590,674	149,336,767	$	404,927,441
Proceeds from exercise of stock options	143,103	11,715,720		—	11,715,720
Common stock repurchases	(289,158)	—		(50,460,129)	(50,460,129)
Restricted common stock expense under stock option plan, net of cancellations ($5,072,230)	(22,146)	5,168,510		—	5,168,510
Stock option expense	—	2,517,071		—	2,517,071

Net income	—	—		35,537,652	35,537,652
Balances at December 31, 2021	6,637,093	$	274,991,975	134,414,290	$	409,406,265

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	Nine months ended December 31, 2020
	Common Stock
	Shares	Additional Paid-in Capital		Retained Earnings	Total Shareholders' Equity
Balances at March 31, 2020	7,807,834	$	227,214,577	184,748,490	$	411,963,067
Proceeds from exercise of stock options	33,776	2,255,824		—	2,255,824
Common stock repurchases	(1,024,870)	—		(88,848,296)	(88,848,296)
Restricted common stock expense under stock option plan, net of cancellations ($3,173,735)	(50,962)	8,347,347		—	8,347,347
Stock option expense	—	2,987,621		—	2,987,621
Cumulative effect of adoption of ASC 326	—	—		(21,242,249)	(21,242,249)


Net income	—	—		43,398,875	43,398,875
Balances at December 31, 2020	6,765,778	$	240,805,369	118,056,820	$	358,862,189

See accompanying notes to consolidated financial statements.

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WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

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(Unaudited)


	Nine months ended December 31,
	2021		2020
Cash flow from operating activities:
Net income	$	35,537,652	$	43,398,875
Adjustments to reconcile net income to net cash provided by operating activities:

Loss on assets held for sale	38,633		—
Amortization of intangible assets	3,736,113		4,045,496
Amortization of investment in historic tax credits	2,950,970		1,302,288
Amortization of debt issuance costs	698,667		489,582
Provision for credit losses	128,767,870		80,608,470
Depreciation	5,027,288		7,294,907

Loss (gain) on sale of property and equipment	368,589		(153,338)
Deferred income tax expense (benefit)	(9,815,411)		4,136,893
Compensation related to stock option and restricted stock plans, net of taxes and adjustments	12,757,811		14,508,703

Change in accounts:
Other assets, net	(9,058,328)		(1,154,320)
Income taxes payable	(9,984,485)		(4,112,382)
Accounts payable and accrued expenses	10,026,683		(18,969,426)
Net cash provided by operating activities	171,052,052		131,408,699
Cash flows from investing activities:
Increase in loans receivable, net	(424,875,137)		(106,901,743)

Net assets acquired from acquisitions, primarily loans	(9,631,112)		(14,364,043)
Increase in intangible assets from acquisitions	(1,225,955)		(4,483,180)
Purchases of property and equipment	(4,480,906)		(8,985,589)

Proceeds from sale of assets held for sale	1,104,895		2,810,391
Proceeds from sale of property and equipment	186,145		222,725

Net cash used in investing activities	(438,922,070)		(131,252,112)
Cash flow from financing activities:
Borrowings from senior notes payable	407,216,540		283,576,750
Payments on senior notes payable	(387,050,000)		(195,076,750)
Issuance of senior unsecured notes payable	300,000,000		—
Debt issuance costs associated with senior unsecured notes payable	(5,119,649)		—
Debt issuance costs associated with senior notes payable	—		(376,750)
Proceeds from exercise of stock options	11,715,720		2,255,824
Payments for taxes related to net share settlement of equity awards	(5,072,230)		(3,173,735)
Repayment of finance lease	(439,048)		(441,890)
Repurchase of common stock	(50,460,130)		(88,848,296)


Net cash provided by (used in) financing activities	270,791,203		(2,084,847)

Net change in cash and cash equivalents	2,921,185		(1,928,260)
Cash and cash equivalents at beginning of period	15,746,454		11,618,922

Cash and cash equivalents at end of period	$	18,667,639	$	9,690,662



Supplemental Disclosures:
Interest paid during the period	$	16,020,205	$	17,723,748
Income taxes paid during the period	$	26,884,025	$	12,101,860

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 December 31, 2021 and for the three and nine 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 December 31, 2021, and the results of operations and cash flows for the periods ended December 31, 2021 and 2020, 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, 2021, included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021, 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, 2021. The Company believes that the disclosures are adequate to make the information presented not misleading. Certain reclassifications have been made to the amounts previously reported to conform to the current period presentation.

NOTE 2 – ASSETS HELD FOR SALE

In the fourth quarter of fiscal 2020 the Company moved its corporate headquarters from properties it owned outright in Greenville, South Carolina to leased office space in downtown Greenville, South Carolina. Under ASC 360-10, the properties met the criteria for classification as held for sale as of March 31, 2020. During the second quarter of fiscal 2021 the Company completed the sale of two of the three buildings held for sale. During the second quarter of fiscal 2022 the Company completed the sale of the last held for sale building, and recorded a $39.0 thousand loss on sale which is included as a component of Insurance and other income, net in the consolidated statements of operations.

The following table reconciles the major classes of assets held for sale to the amounts presented in the Consolidated Balance Sheets:


	December 31, 2021		March 31, 2021
Assets held for sale:
Property and equipment, net	$	—	$	1,143,528
Total assets held for sale	$	—	$	1,143,528

NOTE 3 – 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

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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.

Allowance for credit losses

Refer to Note 5, “Finance Receivables and Allowance for Credit Losses,” in this Quarterly Report on Form 10-Q for information regarding the Company's adoption of the CECL allowance model on April 1, 2020 and a description of the methodology it utilizes.

Reclassification

Certain prior period amounts have been reclassified to conform to the current presentation. Such reclassifications had no impact on previously reported net income or shareholders' equity.

Recently 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 4 – 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 eight months. Given the short-term nature of these loans, they are continually repriced at current market rates. The Company’s revolving credit facility has a variable rate based on a margin over LIBOR and reprices with any changes in LIBOR. The 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.


		December 31, 2021				March 31, 2021
	Input Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
ASSETS
Cash and cash equivalents	1	$	18,667,639	$	18,667,639	$	15,746,454	$	15,746,454
Loans receivable, net	3	1,039,397,768		1,039,397,768		733,659,389		733,659,389

LIABILITIES
Senior unsecured notes payable	2	300,000,000		301,500,000		—		—
Senior notes payable	3	425,174,040		425,174,040		405,007,500		405,007,500

The carrying amounts and estimated fair values of amounts the Company measures at fair value on a non-recurring basis, which are limited to the Company's assets held for sale, are summarized below.


		December 31, 2021				March 31, 2021
	Input Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
ASSETS
Assets held for sale	2	$	—	$	—	$	1,143,528	$	1,143,528

The Company re-valued its corporate headquarters in Greenville, South Carolina as of March 31, 2020 in conjunction with its reclassification of the related assets as held for sale. The observable inputs the Company used in its revaluation were the agreed-upon prices to sell the assets.

There were no other significant assets or liabilities measured at fair value on a non-recurring basis as of December 31, 2021 or March 31, 2021.

NOTE 5 – FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES

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


Customer Tenure	December 31, 2021		March 31, 2021
0 to 5 months	$	221,068,385	$	92,378,097
6 to 17 months	129,269,609		106,742,121
18 to 35 months	232,252,594		169,361,910
36 to 59 months	214,113,248		130,655,627
60+ months	809,305,528		597,292,495

Tax advance loans	102,089		8,316,011
Total gross loans	$	1,606,111,453	$	1,104,746,261

During the first quarter of fiscal 2021, we adopted ASU 2016-13, which replaces the incurred loss methodology for determining our provision for credit losses and allowance for credit losses with an expected loss methodology that is referred to as the CECL model, using the modified retrospective approach. Upon adoption, the total allowance for credit losses increased by $28.6 million, with no impact to the consolidated statement of operations.

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

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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 December 31, 2021:



	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	$	1,391,805,121	$	43,464,472	$	3,311,801	$	142,004	$	18,087	$	6,424	$	1,438,747,909
30 - 60 days past due	60,477,887		3,190,374		429,991		31,452		13,250		—		64,142,954
61 - 90 days past due	37,137,360		2,066,364		232,506		27,958		7,083		—		39,471,271
91 or more days past due	57,977,118		5,220,263		410,537		30,133		8,967		212		63,647,230
Total	$	1,547,397,486	$	53,941,473	$	4,384,835	$	231,547	$	47,387	$	6,636	$	1,606,009,364

	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	$	11,639	$	—	$	—	$	—	$	—	$	—	11,639
30 - 60 days past due	5,205		—		—		—		—		—		5,205
61 - 90 days past due	9,292		—		—		—		—		—		9,292
91 or more days past due	73,240		2,549		164		—		—		—		75,953
Total	$	99,376	$	2,549	$	164	$	—	$	—	$	—	$	102,089
Total gross loans													$	1,606,111,453

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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, 2021:


	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	$	970,526,682	$	45,769,052	$	2,102,732	$	154,890	$	14,444	$	831	$	1,018,568,631
30 - 60 days past due	21,862,634		2,011,261		153,417		21,426		3,500		2,069		24,054,307
61 - 90 days past due	18,039,010		1,208,936		88,119		11,800		571		—		19,348,436
91 or more days past due	31,126,328		3,120,210		183,434		14,028		14,708		168		34,458,876
Total	$	1,041,554,654	$	52,109,459	$	2,527,702	$	202,144	$	33,223	$	3,068	$	1,096,430,250

	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	$	7,583,075	$	9,360	$	—	$	—	$	—	$	—	7,592,435
30 - 60 days past due	686,667		1,423		—		—		—		—		688,090
61 - 90 days past due	—		—		321		—		—		—		321
91 or more days past due	—		34,509		656		—		—		—		35,165
Total	$	8,269,742	$	45,292	$	977	$	—	$	—	$	—	$	8,316,011
Total gross loans													$	1,104,746,261

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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 December 31, 2021:


	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	$	1,371,742,328	$	39,499,813	$	2,733,628	$	78,643	$	6,860	$	739	$	1,414,062,011
30 - 60 days past due	64,429,119		2,166,680		147,860		2,106		—		—		66,745,765
61 - 90 days past due	42,456,180		1,898,732		130,531		1,357		—		—		44,486,800
91 or more days past due	68,769,859		10,376,248		1,372,816		149,441		40,527		5,897		80,714,788
Total	$	1,547,397,486	$	53,941,473	$	4,384,835	$	231,547	$	47,387	$	6,636	$	1,606,009,364

	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	$	126	$	—	$	—	$	—	$	—	$	—	$	126
30 - 60 days past due	1,375		—		—		—		—		—		1,375
61 - 90 days past due	4,266		—		—		—		—		—		4,266
91 or more days past due	93,609		2,549		164		—		—		—		96,322
Total	$	99,376	$	2,549	$	164	$	—	$	—	$	—	$	102,089
Total gross loans													$	1,606,111,453

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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, 2021:


	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	$	948,353,853	$	39,661,944	$	1,522,148	$	83,073	$	1,790	$	831	$	989,623,639
30 - 60 days past due	29,300,148		1,872,816		72,187		1,322		—		—		31,246,473
61 - 90 days past due	23,075,264		1,363,196		75,343		567		—		—		24,514,370
91 or more days past due	40,825,388		9,211,503		858,024		117,183		31,433		2,237		51,045,768
Total	$	1,041,554,653	$	52,109,459	$	2,527,702	$	202,145	$	33,223	$	3,068	$	1,096,430,250

	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	$	7,583,075	$	—	$	—	$	—	$	—	$	—	$	7,583,075
30 - 60 days past due	686,667		—		—		—		—		—		686,667
61 - 90 days past due	—		—		—		—		—		—		—
91 or more days past due	—		45,292		977		—		—		—		46,269
Total	$	8,269,742	$	45,292	$	977	$	—	$	—	$	—	$	8,316,011
Total gross loans													$	1,104,746,261

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

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3.18 to 35 months

4.36 to 59 months

5.60+ months

Management will continue to monitor this credit metric on a quarterly basis.

Management estimates an allowance for each Customer Tenure bucket by performing a historical migration analysis of loans in that bucket for the twelve most recent historical twelve-month migration periods, adjusted for seasonality. All loans that are greater than 90 days past due on a recency basis and not written off as of the reporting date are reserved for at 100% of the outstanding balance, net of a calculated Rehab Rate. Management considers whether current credit conditions might suggest a change is needed to the allowance for credit losses by monitoring trends in 60-day delinquencies, FICO scores and average loan size as compared to metrics in the historical migration period. Due to the short term nature of the loan portfolio, forecasted changes in macroeconomic variables such as unemployment do not have a significant impact on loans outstanding at the end of a particular reporting period. Therefore, management develops a reasonable and supportable forecast of losses by comparing the most recent 6-month loss curves as compared to historical loss curves to see if there are significant changes in borrower behavior that may indicate the historical migration rates should be adjusted. If an adjustment is made as a result of the forecast, then the Company has elected to immediately revert back to historical experience past the forecast period.

The following table presents a roll forward of the allowance for credit losses on our gross loans receivable for the three and nine months ended December 31, 2021 and 2020:


	Three months ended December 31,				Nine months ended December 31,
	2021		2020		2021		2020
Beginning balance	114,660,240		$	109,601,359	$	91,722,288	$	96,487,856
Impact of ASC 326 adoption	—		—		—		28,628,368
Provision for credit losses	56,458,533		28,857,443		128,767,870		80,608,470
Charge-offs	(42,359,511)		(29,239,780)		(102,226,061)		(106,865,225)
Recoveries	4,521,934		4,248,339		15,017,099		14,607,892
Net charge-offs	(37,837,577)		(24,991,441)		(87,208,962)		(92,257,333)
Ending Balance	$	133,281,196	$	113,467,361	$	133,281,196	$	113,467,361

The following table is an aging analysis on a recency basis at amortized cost of the Company’s gross loans receivable at December 31, 2021:


			Days Past Due - Recency Basis
Customer Tenure	Current		30 - 60		61 - 90		Over 90		Total Past Due		Total Loans
0 to 5 months	$	172,004,649	$	16,169,844	$	12,618,184	$	20,275,708	$	49,063,736	$	221,068,385
6 to 17 months	109,037,255		6,981,112		4,478,060		8,773,182		20,232,354		129,269,609
18 to 35 months	205,079,885		10,179,964		6,236,507		10,756,238		27,172,709		232,252,594
36 to 59 months	197,597,921		7,067,994		3,793,106		5,654,227		16,515,327		214,113,248
60+ months	755,028,199		23,744,042		12,345,414		18,187,873		54,277,329		809,305,528

Tax advance loans	11,638		5,205		9,292		75,954		90,451		102,089
Total gross loans	1,438,759,547		64,148,161		39,480,563		63,723,182		167,351,906		1,606,111,453
Unearned interest, insurance and fees	(388,270,148)		(17,311,312)		(10,654,403)		(17,196,626)		(45,162,341)		(433,432,489)
Total net loans	$	1,050,489,399	$	46,836,849	$	28,826,160	$	46,526,556	$	122,189,565	$	1,172,678,964

Percentage of period-end gross loans receivable			4.0%		2.5%		4.0%		10.4%

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The following table is an aging analysis on a recency basis at amortized cost of the Company’s gross loans receivable at March 31, 2021:


			Days Past Due - Recency Basis
Customer Tenure	Current		30 - 60		61 - 90		Over 90		Total Past Due		Total Loans
0 to 5 months	$	72,702,970	$	4,799,102	$	5,680,380	$	9,195,642	$	19,675,124	$	92,378,094
6 to 17 months	94,466,209		3,187,347		2,798,411		6,290,155		12,275,913		106,742,122
18 to 35 months	158,217,605		3,570,696		2,592,402		4,981,208		11,144,306		169,361,911
36 to 59 months	123,542,346		2,432,489		1,753,291		2,927,501		7,113,281		130,655,627
60+ months	569,639,500		10,064,674		6,523,952		11,064,370		27,652,996		597,292,496

Tax advance loans	7,592,435		688,090		321		35,165		723,576		8,316,011
Total gross loans	1,026,161,065		24,742,398		19,348,757		34,494,041		78,585,196		1,104,746,261
Unearned interest, insurance and fees	(259,492,219)		(6,256,776)		(4,892,850)		(8,722,739)		(19,872,365)		(279,364,584)
Total net loans	$	766,668,846	$	18,485,622	$	14,455,907	$	25,771,302	$	58,712,831	$	825,381,677

Percentage of period-end gross loans receivable			2.2%		1.8%		3.1%		7.1%

The following table is an aging analysis on a contractual basis at amortized cost of the Company’s gross loans receivable at December 31, 2021:


			Days Past Due - Contractual Basis
Customer Tenure	Current		30 - 60		61 - 90		Over 90		Total Past Due			Total Loans
0 to 5 months	$	169,809,788	$	16,270,280	$	12,982,498	$	22,005,819	$	51,258,597		$	221,068,385
6 to 17 months	106,743,212		6,875,450		4,810,849		10,840,098		22,526,397			129,269,609
18 to 35 months	200,583,467		10,575,890		7,169,828		13,923,409		31,669,127			232,252,594
36 to 59 months	194,361,605		7,316,480		4,590,054		7,845,109		19,751,643			214,113,248
60+ months	742,563,943		25,707,664		14,933,572		26,100,349		66,741,585			809,305,528

Tax advance loans	125		1,375		4,266		96,323		101,964			102,089
Total gross loans	1,414,062,140		66,747,139		44,491,067		80,811,107		192,049,313			1,606,111,453
Unearned interest, insurance and fees	(381,605,195)		(18,012,684)		(12,006,560)		(21,808,050)		(51,827,294)			(433,432,489)
Total net loans	$	1,032,456,945	$	48,734,455	$	32,484,507	$	59,003,057	$	140,222,019		$	1,172,678,964

Percentage of period-end gross loans receivable			4.2%		2.8%		5.0%		12.0		%

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The following table is an aging analysis on a contractual basis at amortized cost of the Company’s gross loans receivable at March 31, 2021:


			Days Past Due - Contractual Basis
Customer Tenure	Current		30 - 60		61 - 90		Over 90		Total Past Due			Total Loans
0 to 5 months	$	70,532,439	$	5,245,878	$	6,019,264	$	10,580,514	$	21,845,656		$	92,378,095
6 to 17 months	90,679,304		3,936,937		3,267,446		8,858,434		16,062,817			106,742,121
18 to 35 months	153,922,334		4,471,202		3,488,629		7,479,745		15,439,576			169,361,910
36 to 59 months	120,168,698		3,229,253		2,337,625		4,920,052		10,486,930			130,655,628
60+ months	554,320,865		14,363,203		9,401,406		19,207,022		42,971,631			597,292,496

Tax advance loans	7,583,075		686,667		—		46,269		732,936			8,316,011
Total gross loans	997,206,715		31,933,140		24,514,370		51,092,036		107,539,546			1,104,746,261
Unearned interest, insurance and fees	(252,170,339)		(8,075,147)		(6,199,113)		(12,919,985)		(27,194,245)			(279,364,584)
Total net loans	$	745,036,376	$	23,857,993	$	18,315,257	$	38,172,051	$	80,345,301		$	825,381,677

Percentage of period-end gross loans receivable			2.9%		2.2%		4.6%		9.7		%

The Company elected not to record an allowance for credit losses for accrued interest as outlined in ASC 326-20-30-5A. Loans are placed on nonaccrual status when management determines that the full payment of principal and collection of interest according to contractual terms is no longer likely. The accrual of interest is discontinued when a loan is 61 days or more past the contractual due date. When the interest accrual is discontinued, all unpaid accrued interest is reversed against interest income. While a loan is on nonaccrual status, interest revenue is recognized only when a payment is received. Once a loan moves to nonaccrual status, it remains in nonaccrual status until it is paid out, charged off or refinanced. During the three months ended December 31, 2021, the Company reversed a total of $9.7 million of unpaid accrued interest against interest income. During the nine months ended December 31, 2021, the Company reversed a total of $20.3 million of unpaid accrued interest against interest income.

The following table presents the amortized cost basis of loans on nonaccrual status as of the beginning of the reporting period and the end of the reporting period and the amortized cost basis of nonaccrual loans without related expected credit loss. It also shows year-to-date interest income recognized on nonaccrual loans:


	Nonaccrual Financial Assets
Customer Tenure	As of December 31, 2021		As of March 31, 2021		Financial Assets 61 Days or More Past Due, Not on Nonaccrual Status		Nonaccrual Financial Assets With No Allowance as of December 31, 2021		Interest Income Recognized
0 to 5 months	$	35,412,925	$	17,256,243	$	—	$	—	$	858,871
6 to 17 months	15,914,402		13,153,363		—		—		1,151,316
18 to 35 months	21,651,091		12,048,132		—		—		1,414,201
36 to 59 months	12,890,209		8,156,159		—		—		978,378
60+ months	42,629,042		31,947,750		—		—		3,782,122

Tax advance loans	126,905		46,269		—		—		—
Unearned interest, insurance and fees	(34,711,208)		(20,889,617)		—		—
Total	$	93,913,366	$	61,718,299	$	—	$	—	$	8,184,888

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NOTE 6 – LEASES

Accounting Policies and Matters Requiring Management's Judgment

When determining the economic life of a lease the Company adopts a convention of applying an economic life equal to the useful life as specified in its accounting policy. Refer to Note 1, “Property and Equipment,” to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021 for a description of the Company's accounting policy regarding useful lives.

The Company uses its effective annual interest rate, adjusted for certain assumptions, as the discount rate when evaluating leases under Topic 842. Management applies the adjusted effective annual interest rate to leases entered for the entirety of the subsequent year.

Based on its historical practice, the Company believes it is reasonably certain to exercise a given option associated with a given office space lease. Therefore, the Company classifies all lease options for office space as “reasonably certain” unless it has specific knowledge to the contrary for a given lease. The Company does not believe it is reasonably certain to exercise any options associated with its office equipment leases.

Periodic Disclosures

The Company's leases consist of real estate leases for office space as well as office equipment leases, most of which were classified as operating at December 31, 2021. Both the real estate and office equipment leases primarily range from three years to five years, and generally contain options to extend which mirror the original terms of the lease.

The following table reports information about the Company's lease cost for the three and nine months ended December 31, 2021 and 2020:


	Three months ended December 31,				Nine months ended December 31,
	2021		2020		2021		2020
Lease Cost
Finance lease cost	$	105,639	$	115,359	$	323,880	$	353,254
Amortization of right-of-use assets	101,906		101,906		305,718		305,718
Interest on lease liabilities	3,733		13,453		18,162		47,536
Operating lease cost	$	6,723,789	$	6,939,330	$	20,421,780	$	21,027,265
Short-term lease cost	—		—		—		1,800
Variable lease cost	904,015		882,559		2,690,848		2,659,932

Total lease cost	$	7,733,443	$	7,937,248	$	23,436,508	$	24,042,251

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The following table reports other information about the Company's leases for the three and nine months ended December 31, 2021 and 2020:


	Three months ended December 31,						Nine months ended December 31,
	2021			2020			2021			2020
Other Lease Information
Cash paid for amounts included in the measurement of lease liabilities	$	6,825,474		$	7,008,686		$	20,796,373		$	21,184,138
Operating cash flows from finance leases	3,733			13,453			18,162			47,536
Operating cash flows from operating leases	6,684,414			6,845,544			20,339,163			20,694,712
Financing cash flows from finance leases	137,327			149,689			439,048			441,890
Right-of-use assets obtained in exchange for new finance lease liabilities	—			—			—			—
Right-of-use assets obtained in exchange for new operating lease liabilities	$	2,763,875		$	2,116,215		$	11,840,569		$	9,748,709
Weighted-average remaining lease term — finance leases	0.5 years			1.0 years			0.5 years			1.0 years
Weighted average remaining lease term — operating leases	7.1 years			7.3 years			7.1 years			7.3 years
Weighted-average discount rate (monthly) — finance leases	6.1		%	6.4		%	6.1		%	6.4		%
Weighted-average discount rate — operating leases	6.1		%	6.3		%	6.1		%	6.3		%

The following table reports information about the maturity of the Company's operating and finance leases as of December 31, 2021:


	Operating Lease		Finance Lease
Fiscal 2022	$	6,514,101	$	66,239
Fiscal 2023	23,364,391		80,066
Fiscal 2024	19,340,503		—
Fiscal 2025	14,814,558		—
Fiscal 2026	10,936,674		—
Fiscal 2027	6,811,037		—
Thereafter	27,573,596		—
Total undiscounted lease liability	109,354,860		146,305
Imputed interest	21,677,713		—
Total discounted lease liability	$	87,677,147	$	146,305

The Company had no leases with related parties at December 31, 2021 or March 31, 2021.

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NOTE 7 – AVERAGE SHARE INFORMATION

The following is a summary of the basic and diluted average common shares outstanding:


	Three months ended December 31,		Nine months ended December 31,
	2021	2020	2021	2020
Basic:
Weighted average common shares outstanding (denominator)	6,118,591	6,233,961	6,119,971	6,593,135

Diluted:
Weighted average common shares outstanding	6,118,591	6,233,961	6,119,971	6,593,135
Dilutive potential common shares	285,197	218,424	304,096	150,514
Weighted average diluted shares outstanding (denominator)	6,403,788	6,452,385	6,424,067	6,743,649

Options to purchase 376,307 and 629,086 shares of common stock at various prices were outstanding during the three months ended December 31, 2021 and 2020 respectively, but were not included in diluted shares outstanding because the option exercise price exceeded the market value of the shares.

Options to purchase 431,858 and 636,118 shares of common stock at various prices were outstanding during the nine months ended December 31, 2021 and 2020 respectively, but were not included in diluted shares outstanding because the option exercise price exceeded the market value of the shares.

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NOTE 8 – STOCK-BASED COMPENSATION

Stock Incentive Plans

The Company has a 2008 Stock Option Plan, a 2011 Stock Option Plan and a 2017 Stock Incentive Plan for the benefit of certain non-employee directors, officers, and key employees. Under these plans, a total of 3,350,000 shares of common stock have been authorized and reserved for issuance pursuant to grants approved by the Compensation Committee of the Board of Directors. Stock options granted under these plans have a maximum duration of 10 years, may be subject to certain vesting requirements, which are generally three to six years for officers, non-employee directors, and key employees, and are priced at the market value of the Company's common stock on the option's grant date. At December 31, 2021, there were a total of 108,063 shares of common stock available for grant under the plans.

Stock-based compensation is recognized as provided under FASB ASC Topic 718-10 and FASB ASC Topic 505-50. FASB ASC Topic 718-10 requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense over the requisite service period (generally the vesting period) in the consolidated financial statements based on their grant date fair values. The Company has applied the Black-Scholes valuation model in determining the grant date fair value of the stock option awards. Compensation expense is recognized only for those options expected to vest.

Long-term Incentive Program and Non-Employee Director Awards

On October 15, 2018, the Compensation Committee and Board approved and adopted a new long-term incentive program that sought to motivate and reward certain employees and to align management’s interest with shareholders' interest by focusing executives on the achievement of long-term results. The program is comprised of four components: Service Options, Performance Options, Restricted Stock, and Performance Shares.

Pursuant to this program, the Compensation Committee approved certain grants of Service Options, Performance Options, Restricted Stock and Performance Shares under the World Acceptance Corporation 2011 Stock Option Plan and the World Acceptance Corporation 2017 Stock Incentive Plan to certain employee directors, vice presidents of operations, vice presidents, senior vice presidents, and executive officers. Separately, the Compensation Committee approved certain grants of Service Options and Restricted Stock to certain of the Company's non-employee directors.

Under the long-term incentive program, up to 100% of the shares of restricted stock subject to the Performance Shares shall vest, if at all, based on the achievement of two trailing earnings per share performance targets established by the Compensation Committee that are based on earnings per share (measured at the end of each calendar quarter, commencing with the calendar quarter ending September 30, 2019) for the previous four calendar quarters. The Performance Shares are eligible to vest over the Performance Share Measurement Period and subject to each respective employee’s continued employment at the Company through the last day of the applicable Performance Share Measurement Period (or as otherwise provided under the terms of the applicable award agreement or applicable employment agreement).

The Performance Share performance targets are set forth below.


Trailing 4-Quarter EPS Targets for September 30, 2018 through March 31, 2025			Restricted Stock Eligible for Vesting (Percentage of Award)
$16.35			40%
$20.45			60%

The Restricted Stock awards vest in six equal annual installments, beginning on the first anniversary of the grant date, subject to each respective employee’s continued employment at the Company through each applicable vesting date or otherwise provided under the terms of the applicable award agreement or applicable employment agreement.

The Service Options vest in six equal annual installments, beginning on the first anniversary of the grant date, subject to each respective employee’s continued employment at the Company through each applicable vesting date or otherwise provided under the terms of the applicable award agreement or applicable employment agreement. The option price is equal to the fair market value of the common stock on the grant date and the Service Options have a 10-year term.

The Performance Options will fully vest if the Company attains the trailing earnings per share target over four consecutive calendar quarters occurring between September 30, 2018 and March 31, 2025 described below. Such performance target was established by the Compensation Committee and will be measured at the end of each calendar quarter commencing on

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September 30, 2019. The Performance Options are eligible to vest over the Option Measurement Period, subject to each respective employee’s continued employment at the Company through the last day of the Option Measurement Period or as otherwise provided under the terms of the applicable award agreement or applicable employment agreement. The option price is equal to the fair market value of the common stock on the grant date and the Performance Options have a 10-year term. The Performance Option performance target is set forth below.


Trailing 4-Quarter EPS Targets for September 30, 2018 through March 31, 2025			Options Eligible for Vesting (Percentage of Award)
$25.30			100%

Stock Options

The weighted-average fair value at the grant date for options issued during the three months ended December 31, 2021 and 2020 was $101.73 and $56.55, respectively. The weighted-average fair value at the grant date for options issued during the nine months ended December 31, 2021 and 2020 was $97.65 and $50.42, respectively.

Fair value was estimated at grant date using the weighted-average assumptions listed below:


	Three months ended December 31,		Nine months ended December 31,
	2021	2020	2021	2020

Dividend Yield	—%	—%	—%	—%
Expected Volatility	55.71%	57.09%	58.11%	56.48%
Average risk-free rate	1.22%	0.43%	0.92%	0.38%
Expected Life	6.0 years	6.0 years	6.1 years	6.2 years

The expected stock price volatility is based on the historical volatility of the Company's common stock for a period approximating the expected life. The expected life represents the period of time that options are expected to be outstanding after the grant date. The risk-free rate reflects the interest rate at grant date on zero coupon U.S. governmental bonds having a remaining life similar to the expected option term.

Option activity for the nine months ended December 31, 2021 was as follows:


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value

Options outstanding, beginning of period	500,168	$	93.89
Granted during period	19,642	181.58
Exercised during period	(143,103)	81.87
Forfeited during period	(18,948)	99.00
Expired during period	—	—
Options outstanding, end of period	357,759	$	103.24	6.6 years	$	50,868,725
Options exercisable, end of period	110,675	$	89.86	4.8 years	$	17,218,134

The aggregate intrinsic value reflected in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price on December 31, 2021 and the exercise price, multiplied by the number of in-the-money options) that would have been received by option holders had all option holders exercised their options as of December 31, 2021. This amount will change as the market price of the common stock changes. The total intrinsic value of options exercised during the periods ended December 31, 2021 and 2020 was as follows:

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	December 31, 2021		December 31, 2020

Three months ended	$	4,529,120	$	718,343
Nine months ended	$	16,070,389	$	1,215,063

As of December 31, 2021, total unrecognized stock-based compensation expense related to non-vested stock options amounted to approximately $6.8 million, which is expected to be recognized over a weighted-average period of approximately 2.5 years.

Restricted Stock

During the first nine months of fiscal 2022, the Company granted 4,062 shares of restricted stock (which are equity classified) to certain vice presidents, senior vice presidents, executive officers, and non-employee directors with a grant date weighted average fair value of $188.38 per share.

During fiscal 2021, the Company granted 52,735 shares of restricted stock (which are equity classified) to certain vice presidents with a grant date weighted average fair value of $106.28 per share.

Compensation expense related to restricted stock is based on the number of shares expected to vest and the fair market value of the common stock on the grant date. The Company recognized compensation expense of $3.6 million and $4.0 million for the three months ended December 31, 2021 and 2020, respectively, which is included as a component of general and administrative expenses in the Company’s consolidated statements of operations. The Company recognized compensation expense of $10.2 million and $11.5 million for the nine months ended December 31, 2021 and 2020, respectively, which is included as a component of general and administrative expenses in the Company’s consolidated statements of operations.

As of December 31, 2021, there was approximately $17.8 million of unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over the next 1.8 years based on current estimates.

A summary of the status of the Company’s restricted stock as of December 31, 2021, and changes during the nine months ended December 31, 2021, are presented below:


	Shares	Weighted Average Fair Value at Grant Date

Outstanding at March 31, 2021	614,739	$	101.99
Granted during the period	4,062	188.38
Vested during the period	(66,299)	102.93
Forfeited during the period	—	—
Outstanding at December 31, 2021	552,502	$	102.51

Total Stock-Based Compensation

Total stock-based compensation included as a component of net income during the three and nine month periods ended December 31, 2021 and 2020 was as follows:


	Three months ended December 31,				Nine months ended December 31,
	2021		2020		2021		2020
Stock-based compensation related to equity classified awards:
Stock-based compensation related to stock options	$	664,094	$	854,647	$	2,517,071	$	2,987,621
Stock-based compensation related to restricted stock, net of adjustments and exclusive of cancellations	3,644,579		4,043,813		10,240,740		11,521,082
Total stock-based compensation related to equity classified awards	$	4,308,673	$	4,898,460	$	12,757,811	$	14,508,703

NOTE 9 – ACQUISITIONS

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The Company evaluates each set of assets and activities it acquires to determine if the set meets the definition of a business according to FASB ASC Topic 805-10-55. Acquisitions meeting the definition of a business are accounted for as a business combination while all other acquisitions are accounted for as asset purchases.

The following table sets forth the Company's acquisition activity for the nine months ended December 31, 2021 and 2020.


	Nine months ended December 31,
	2021		2020
Acquisitions:
Number of branches acquired through business combinations	—		—
Number of loan portfolios acquired through asset purchases	50		48
Total acquisitions	50		48

Purchase price	$	10,859,984	$	18,847,223

Tangible assets:
Loans receivable, net	9,631,112		14,364,042
Property and equipment	—		—
Total tangible assets	9,631,112		14,364,042

Excess of purchase prices over carrying value of net tangible assets	$	1,228,872	$	4,483,181

Customer lists	$	952,872	4,300,681
Non-compete agreements	$	276,000	182,500
Goodwill	$	—	—

Acquisitions that are accounted for as business combinations typically result in one or more new branches. In such cases, the Company typically retains the existing employees and the branch location from the acquisition. The purchase price is allocated to the tangible assets and intangible assets acquired based upon their estimated fair market values at the acquisition date. The remainder is allocated to goodwill.

Acquisitions that are accounted for as asset purchases are typically limited to acquisitions of loan portfolios. The purchase price is allocated to the tangible assets and intangible assets acquired based upon their estimated fair market values at the acquisition date. In an asset purchase, no goodwill is recorded.

The Company’s acquisitions include tangible assets (generally loans and furniture and equipment) and intangible assets (generally non-compete agreements, customer lists, and goodwill), both of which are recorded at their fair values, which are estimated pursuant to the processes described below.

Acquired loans are valued at the net loan balance. Given the short-term nature of these loans, generally eight months, and that these loans are priced at current rates, management believes the net loan balances approximate their fair value. Under CECL, acquired loans are included in the reserve calculations for all other loan types (excluding TALs). Management includes recent acquisition activity compared to historical activity when considering reasonable and supportable forecasts as it relates to assessing the adequacy of the allowance for expected credit losses. The Company did not acquire any loans that would qualify as PCD's during the period.

Furniture and equipment are valued at the specific purchase price as agreed to by both parties at the time of acquisition, which management believes approximates their fair values.

Non-compete agreements are valued at the stated amount paid to the other party for these agreements, which the Company believes approximates their fair value.

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Customer lists are valued with a valuation model that utilizes the Company’s historical data to estimate the value of any acquired customer lists. Customer lists are allocated at a branch level and are evaluated for impairment at a branch level when a triggering event occurs in accordance with FASB ASC Topic 360-10-05. If a triggering event occurs, the impairment loss to the customer list is generally the remaining unamortized customer list balance. In most acquisitions, the original fair value of the customer list allocated to a branch is less than $100,000, and management believes that in the event a triggering event were to occur, the impairment loss to an unamortized customer list would be immaterial.

The results of all acquisitions have been included in the Company’s Consolidated Financial Statements since the respective acquisition date. The pro forma impact of these branches as though they had been acquired at the beginning of the periods presented would not have a material effect on the results of operations as reported.

NOTE 10 – DEBT

Senior Notes Payable; Revolving Credit Facility

At December 31, 2021, the Company had a $685.0 million senior revolving credit facility. The revolving credit facility was amended in connection with the Company’s Notes offering (described below) on September 27, 2021 to permit the issuance of the Notes described below and increase the amount of permitted borrowings under the accordion feature from $685.0 million to $785.0 million. At December 31, 2021, $425.2 million was outstanding under the Company's revolving credit facility, not including a $300.0 thousand outstanding standby letter of credit related to workers compensation under a $1.5 million sub-facility. To the extent that the letter of credit is drawn upon, the disbursement will be funded by the credit facility. There are no amounts due related to the letter of credit as of December 31, 2021. The letter of credit expired on December 31, 2021; however, it automatically extends for one year on the expiration date. Subject to a borrowing base formula, the Company may borrow at the rate of LIBOR plus an applicable margin of 3.5% with a minimum rate of 4.5%. The revolving credit facility has a commitment fee of 0.50% per annum on the unused portion of the commitment. Commitment fees on the unused portion of the borrowing totaled $1.0 million and $1.1 million for the nine months ended December 31, 2021 and 2020, respectively. The amended and restated revolving credit agreement provides for a process to transition to a new benchmark interest rate from LIBOR.

For the nine months ended December 31, 2021 and fiscal year ended March 31, 2021, the Company’s effective interest rate, including the commitment fee and amortization of debt issuance costs, was 5.5% annualized and 5.8%, respectively, and the unused amount available under the revolving credit facility at December 31, 2021 was $259.5 million. Borrowings under the revolving credit facility mature on June 7, 2024.

Substantially all of the Company’s assets are pledged as collateral for borrowings under the revolving credit agreement.

Senior Unsecured Notes Payable

On September 27, 2021, we issued $300 million in aggregate principal amount of 7.0% senior notes due 2026 (the “Notes”). The Notes were sold in a private placement in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by all of the Company’s existing and certain of its future subsidiaries that guarantee the revolving credit facility. Interest on the notes is payable semi-annually in arrears on May 1 and November 1 of each year, commencing May 1, 2022. At any time prior to November 1, 2023, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus a make-whole premium, as described in the indenture, plus accrued and unpaid interest, if any, to, but not including, the date of redemption. At any time on or after November 1, 2023, the Company may redeem the Notes at redemption prices set forth in the indenture, plus accrued and unpaid interest, if any, to, but not including, the date of redemption. In addition, at any time prior to November 1, 2023, the Company may use the proceeds of certain equity offerings to redeem up to 40.0% of the aggregate principal amount of the Notes issued under the indenture at a redemption price equal to 107.0% of the principal amount of Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

We used the net proceeds from this offering to repay a portion of the outstanding indebtedness under our revolving credit facility and for general corporate purposes.

Debt Covenants

The agreement governing the Company’s revolving credit facility contains affirmative and negative covenants, including covenants that generally restrict the ability of the Company and its subsidiaries to, among other things, incur or guarantee indebtedness, incur liens, pay dividends and repurchase or redeem capital stock, dispose of assets, engage in mergers and consolidations, make acquisitions or other investments, redeem or prepay subordinated debt, amend subordinated debt

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documents, make changes in the nature of its business, and engage in transactions with affiliates. The agreement also contains financial covenants, including: (i) a minimum consolidated net worth of $325,000,000; (ii) a minimum fixed charge coverage ratio of 2.75 to 1.0 (iii) a maximum ratio of total debt to consolidated adjusted net worth of 2.5 to 1.0; and (iv) a maximum collateral performance indicator of 24.0%, as of the end of each calendar month. The collateral performance indicator is equal to the sum of (a) a three-month rolling average rate of receivables at least sixty days past due and (b) an eight-month rolling average net charge-off rate. The agreement allows the Company to incur subordinated debt that matures after the termination date for the revolving credit facility and that contains specified subordination terms, subject to limitations on amount imposed by the financial covenants under the agreement.

The Company was in compliance with these covenants at December 31, 2021 and March 31, 2021 and does not believe that these covenants will materially limit its business and expansion strategy.

The revolving credit agreement contains events of default including, without limitation, nonpayment of principal, interest or other obligations, violation of covenants, misrepresentation, cross-default and cross-acceleration to other debt, bankruptcy and other insolvency events, judgments, certain ERISA events, actual or asserted invalidity of loan documentation, invalidity of subordination provisions of subordinated debt, certain changes of control of the Company, and the occurrence of certain regulatory events (including the entry of any stay, order, judgment, ruling or similar event related to the Company’s or any of its subsidiaries’ originating, holding, pledging, collecting or enforcing its eligible finance receivables that is material to the Company or any subsidiary) which remains unvacated, undischarged, unbonded or unstayed by appeal or otherwise for a period of 60 days from the date of its entry and is reasonably likely to cause a material adverse change. If it is determined that a violation of any applicable law has occurred, such violation may give rise to an event of default under our credit agreement if such violation were to result in a material adverse change on our business, operations, results of operations, assets, liabilities, or condition (financial or otherwise), or a material impairment of the Company’s and the subsidiaries’ ability to perform their obligations under the agreement or related documents, or if the amount of any settlement, penalties, fines, or other payments resulted in the Company failing to satisfy any financial covenants.

The indenture governing the Notes contains certain covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to (i) incur additional indebtedness or issue certain disqualified stock and preferred stock; (ii) pay dividends or distributions or redeem or purchase capital stock; (iii) prepay subordinated debt or make certain investments; (iv) transfer and sell assets; (v) create or permit to exist liens; (vi) enter into agreements that restrict dividends, loans and other distributions from their subsidiaries; (vii) engage in a merger, consolidation or sell, transfer or otherwise dispose of all or substantially all of their assets; and (viii) engage in transactions with affiliates. However, these covenants are subject to a number of important detailed qualifications and exceptions.

NOTE 11 – INCOME TAXES

As of December 31, 2021 and March 31, 2021, the Company had $2.1 million and $3.1 million, respectively, of total gross unrecognized tax benefits including interest. Approximately $2.0 million and $2.6 million, respectively, represent the amount of net unrecognized tax benefits that are permanent in nature and, if recognized, would affect the annual effective tax rate. At December 31, 2021, approximately $1.3 million of gross unrecognized tax benefits are expected to be resolved during the next twelve months through the expiration of the statute of limitations and settlement with taxing authorities. The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2021, the Company had approximately $496.2 thousand accrued for gross interest and reversed $747.9 thousand during the nine months ended December 31, 2021.

The Company is subject to U.S. income taxes, as well as various other state and local jurisdictions. With the exception of a few states, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2017, although carryforward attributes that were generated prior to 2017 may still be adjusted upon examination by the taxing authorities if they either have been or will be used in a future period.

The Company’s effective income tax rate totaled 5.1% for the quarter ended December 31, 2021 compared to 14.3% for the prior year quarter. The decrease is primarily due to the permanent tax benefit related to non-qualified stock option exercises and vesting of restricted stock as discrete items in the current quarter, the recognition of Federal Historic Tax Credits in the current quarter and lower than estimated Federal Historic Tax Credits for fiscal 2020 with the provision to return adjustment being treated as a discrete item in the prior year quarter. This was partially offset by an increase in the disallowed executive compensation under Section 162(m) in the current quarter.

NOTE 12 – COMMITMENTS AND CONTINGENCIES

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Derivative Litigation

On September 25, 2020, a shareholder filed a derivative complaint in South Carolina state court, Paul Parshall v. World Acceptance et al., against the Company as the nominal defendant and certain current and former directors and officers as defendants. Pointing to the Company’s resolution with the SEC and DOJ of the Mexico investigation previously disclosed, the complaint alleges violations of South Carolina law, including breaches of fiduciary duties and corporate waste, and that the Company has suffered damages as a result of those alleged breaches. The complaint seeks unspecified monetary damages from the individual defendants, equitable and/or injunctive relief, disgorgement of compensation from the individual defendants, and attorneys’ fees and costs. Because the complaint is derivative in nature, it does not seek monetary damages from the Company. However, the Company may be required to advance, and ultimately be responsible for, the legal fees and costs incurred by the individual defendants.

General

In addition, from time to time the Company is involved in litigation matters relating to claims arising out of its operations in the normal course of business.

Estimating an amount or range of possible losses resulting from litigation, government actions and other legal proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the matters involve indeterminate claims for monetary damages, may involve fines, penalties or damages that are discretionary in amount, involve a large number of claimants or significant discretion by regulatory authorities, represent a change in regulatory policy or interpretation, present novel legal theories, are in the early stages of the proceedings, are subject to appeal or could result in a change in business practices. In addition, because most legal proceedings are resolved over extended periods of time, potential losses are subject to change due to, among other things, new developments, changes in legal strategy, the outcome of intermediate procedural and substantive rulings and other parties’ settlement posture and their evaluation of the strength or weakness of their case against us. However, in light of the inherent uncertainties involved, an adverse outcome in one or more of these matters could materially and adversely affect the Company’s financial condition, results of operations or cash flows in any particular reporting period.

NOTE 13 – SUBSEQUENT EVENTS

Management is not aware of any significant events occurring subsequent to the balance sheet date that would have a material effect on the financial statements thereby requiring adjustment or disclosure.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Information

This report on Form 10-Q, including "Management’s Discussion and Analysis of Financial Condition and Results of Operations," contains various "forward-looking statements," within the meaning of The Private Securities Litigation Reform Act of 1995, that are based on management’s beliefs and assumptions, as well as information currently available to management. Statements other than those of historical fact, as well as those identified by the words “anticipate,” “estimate,” “intend,” “plan,” “expect,” “believe,” “may,” “will,” “should,” "would," "could," "continue," "forecast," and any variation of the foregoing and similar expressions are forward-looking statements. Although the Company believes that the expectations reflected in any such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Any such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company’s actual financial results, performance or financial condition may vary materially from those anticipated, estimated or expected. Therefore, you should not rely on any of these forward-looking statements.

Among the key factors that could cause our actual financial results, performance or condition to differ from the expectations expressed or implied in such forward-looking statements are the following: the ongoing impact of the COVID-19 pandemic and the mitigation efforts by governments and related effects on our financial condition, business operations and liquidity, our customers, our employees, and the overall economy; recently enacted, proposed or future legislation and the manner in which it is implemented; changes in the U.S. tax code; the nature and scope of regulatory authority, particularly discretionary authority, that may be exercised by regulators, including, but not limited to, the Securities and Exchange Commission (SEC), Department of Justice, U.S. Consumer Financial Protection Bureau, and individual state regulators having jurisdiction over the Company; the unpredictable nature of regulatory proceedings and litigation, employee misconduct or misconduct by third parties, uncertainties associated with management turnover and the effective succession of senior management; media and public characterization of consumer installment loans, labor unrest the impact of changes in accounting rules and regulations, or their interpretation or application, which could materially and adversely affect the Company’s reported consolidated financial statements or necessitate material delays or changes in the issuance of the Company’s audited consolidated financial statements; the Company's assessment of its internal control over financial reporting; changes in interest rates; risks relating to the acquisition or sale of assets or businesses or other strategic initiatives, including increased loan delinquencies or net charge-offs, the loss of key personnel, integration or migration issues, the failure to achieve anticipated synergies, increased costs of servicing, incomplete records, and retention of customers; risks inherent in making loans, including repayment risks and value of collateral; cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption; our dependence on debt and the potential impact of limitations in the Company’s amended revolving credit facility or other impacts on the Company's ability to borrow money on favorable terms, or at all; the timing and amount of revenues that may be recognized by the Company; changes in current revenue and expense trends (including trends affecting delinquency and charge-offs); the impact of extreme weather events and natural disasters; changes in the Company’s markets and general changes in the economy (particularly in the markets served by the Company). These and other risks are discussed in more detail in Part I, Item 1A “Risk Factors” in the Company's most recent annual report on Form 10-K for the fiscal year ended March 31, 2021 filed with the SEC, and in the Company’s other reports filed with, or furnished to, the SEC from time to time. The Company does not undertake any obligation to update any forward-looking statements it may make.

Results of Operations

The following table sets forth certain information derived from the Company's consolidated statements of operations and balance sheets (unaudited), as well as operating data and ratios, for the periods indicated:

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	Three months ended December 31,						Nine months ended December 31,
	2021			2020			2021			2020
	(Dollars in thousands)
Gross loans receivable	$	1,606,111		$	1,264,530		$	1,606,111		$	1,264,530
Average gross loans receivable (1)	1,493,234			1,175,251			1,319,026			1,133,065
Net loans receivable (2)	1,172,679			929,474			1,172,679			929,474
Average net loans receivable (3)	1,094,014			865,480			970,992			839,491

Expenses as a percentage of total revenue:
Provision for credit losses	38.0		%	22.0		%	30.9		%	21.3		%
General and administrative	50.0		%	59.5		%	53.5		%	59.3		%
Interest expense	6.8		%	5.6		%	5.4		%	4.9		%
Operating income as a % of total revenue (4)	12.0		%	18.5		%	15.6		%	19.5		%

Loan volume (5)	976,118			782,995			2,531,815			1,893,502

Net charge-offs as percent of average net loans receivable on an annualized basis	13.8		%	11.6		%	12.0		%	14.7		%

Return on average assets (trailing 12 months)	7.4		%	6.6		%	7.4		%	6.6		%

Return on average equity (trailing 12 months)	20.1		%	17.4		%	20.1		%	17.4		%

Branches opened or acquired (merged or closed), net	—			(2)			(3)			(13)

Branches open (at period end)	1,202			1,230			1,202			1,230

_______________________________________________________

(1) Average gross loans receivable has been determined by averaging month-end gross loans receivable over the indicated period, excluding tax advances.

(2) Net loans receivable is defined as gross loans receivable less unearned interest and deferred fees.

(3) Average net loans receivable has been determined by averaging month-end gross loans receivable less unearned interest and deferred fees over the indicated period, excluding tax advances.

(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 three months ended December 31, 2021 versus three months ended December 31, 2020

Gross loans outstanding increased to $1.61 billion as of December 31, 2021, a 27.0% increase from the $1.26 billion of gross loans outstanding as of December 31, 2020. During the three months ended December 31, 2021 our unique borrowers increased by 7.7% compared to a decrease of 8.4% during the three months ended December 31, 2020.

Net income for the three months ended December 31, 2021 decreased to $7.3 million, a 49.4% decrease from $14.5 million for the same period of the prior year. Operating income (revenue less provision for credit losses and general and administrative expenses) decreased by $6.3 million, or 26.1%.

Revenues for the three months ended December 31, 2021 increased by $17.6 million, or 13.5%, to $148.6 million from $130.9 million for the same period of the prior year. The increase was primarily due to an increase in average net loans outstanding.

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Interest and fee income for the three months ended December 31, 2021 increased by $13.3 million, or 11.5%, from the same period of the prior year. Interest and fee income was impacted by a shift to larger lower interest rate loans. Net loans outstanding at December 31, 2021 increased by 26.2% over the balance at December 31, 2020. Average net loans outstanding increased by 26.4% for the three months ended December 31, 2021 compared to the three-month period ended December 31, 2020.

Insurance commissions and other income for the three months ended December 31, 2021 increased by $4.4 million, or 27.2%, from the same period of the prior year. Insurance commissions increased by approximately $2.9 million, or 24.9%, during the three months ended December 31, 2021 when compared to the three months ended December 31, 2020. Insurance revenue increased due to a shift to larger loans during the quarter. The sale of insurance products are limited to large loans in several of our states. The large loan portfolio increased from 39.5% of the overall portfolio as of December 31, 2020 to 49.5% as of December 31, 2021. Other income increased by $1.5 million. Sales of our motor club product increased by $1.5 million as sales opportunities increased, similar to our insurance products, with the increase in large loan originations.

On April 1, 2020, the Company replaced its incurred loss methodology with a current expected credit loss ("CECL") methodology to accrue for expected losses. The provision for credit losses increased $27.6 million, or 95.6%, to $56.5 million from $28.9 million when comparing the third quarter of fiscal 2022 to the third quarter of fiscal 2021. The provision for credit losses increased during the most recent quarter primarily due to significant loan growth and the increase in loans 90 days past due. The same quarter in the prior year also included a $6.5 million release of a pandemic related reserve. Net charge-offs as a percentage of average net loans receivable on an annualized basis increased from 11.6% in the third quarter of fiscal 2021 to 13.8% in the third quarter of fiscal 2022. The increases in delinquency and charge-offs were expected due to the increase in new and shorter tenured customers in the most recent fiscal second and third quarters.

The Company's allowance for credit losses as a percentage of net loans was 11.4% at December 31, 2021 compared to 12.2% at December 31, 2020. Accounts that were 61 days or more past due on a recency basis were 6.4% of the portfolio at December 31, 2021 and 5.2% of the portfolio at December 31, 2020. Accounts that were 61 days or more past due on a contractual basis were 7.8% of the portfolio at December 31, 2021 compared to 6.6% of the portfolio at December 31, 2020.

G&A expenses for the three months ended December 31, 2021 decreased by $3.6 million, or 4.7%, from the corresponding period of the previous year. As a percentage of revenues, G&A expenses decreased from 59.5% during the three months ended December 31, 2020 to 50.0% during the three months ended December 31, 2021. G&A expenses per average open branch decreased by 2.4% when comparing the two three-month periods. The change in G&A expense is explained in greater detail below.

Personnel expense totaled $44.4 million for the three months ended December 31, 2021, a $2.3 million, or 5.0%, decrease over the three months ended December 31, 2020. Salary expense decreased approximately $0.1 million, or 0.2%, when comparing the two quarterly periods ended December 31, 2021and 2020. Our headcount as of December 30, 2021, decreased 5.9% compared to December 30, 2020. Benefit expense decreased approximately $2.1 million, or 20.5%, when comparing the quarterly periods ended December 31, 2021 and 2020. Incentive expense decreased $0.2 million, or 1.8%.

Occupancy and equipment expense totaled $12.6 million for the three months ended December 31, 2021, a $2.4 million, or 16.2%, decrease over the three months ended December 31, 2020. Occupancy and equipment expense is generally a function of the number of branches the Company has open throughout the period. For the three months ended December 31, 2021, the average occupancy and equipment expense per branch decreased to $10.5 thousand, down from $12.2 thousand for the three months ended December 31, 2020. The prior year includes a $2.1 million write down of signage as a result of rebranding our offices in the prior year quarter and we did not have any similar expense this year.

Advertising expense remained flat in the third quarter of fiscal 2022 compared to the second quarter of fiscal 2021. The Company anticipated an increase in demand during the quarter and increased marketing accordingly. Marketing spend remained neutral as the Company shifted to lower cost channels.

Amortization of intangible assets totaled $1.3 million for the three months ended December 31, 2021, a $101.5 thousand, or 7.4%, decrease over the three months ended December 31, 2020.

Other expense totaled $9.1 million for the three months ended December 31, 2021, a $1.0 million, or 12.7%, increase over the three months ended December 31, 2020. Other expense increased $0.4 million due to an increase in software subscriptions and $0.3 million due to an increase in office supplies.

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Interest expense for the three months ended December 31, 2021 increased by $2.9 million, or 39.2%, from the corresponding three months of the previous year. The increase in interest expense was due to a 34.7% increase in the average debt outstanding, from $475.7 million to $640.8 million, and a 3.7% increase in the effective interest rate from 6.1% to 6.3%. The Company’s senior debt-to-equity ratio increased from at 1.5:1 at December 31, 2020 to 1.8:1 at December 31, 2021.

Other key return ratios for the three months ended December 31, 2021 included a 7.4% return on average assets and a return on average equity of 20.1% (both on a trailing 12-month basis), as compared to a 6.6% return on average assets and a return on average equity of 17.4% (both on a trailing 12-month basis) for the three months ended December 31, 2020.

The Company’s effective income tax rate decreased to 5.1% for the three months ended December 31, 2021 compared to 14.3% for the corresponding period of the previous year. The decrease is primarily due to the permanent tax benefit related to non-qualified stock option exercises and vesting of restricted stock as discrete items in the current quarter, the recognition of Federal Historic Tax Credits in the current quarter and lower than estimated Federal Historic Tax Credits for fiscal 2020 with the provision to return adjustment being treated as a discrete item in the prior year quarter. This was partially offset by an increase in the disallowed executive compensation under Section 162(m) in the current quarter.

Comparison of nine months ended December 31, 2021 versus nine months ended December 31, 2020

Gross loans outstanding increased to $1.61 billion as of December 31, 2021, a 27.0% increase from the $1.26 billion of gross loans outstanding as of December 31, 2020. During the nine months ended December 31, 2021 our number of unique borrowers in the portfolio increased by 15.4% compared to a decrease of 10.2% during the nine months ended December 31, 2020.

Net income for the nine months ended December 31, 2021 decreased to $35.5 million, a 18.1% decrease from the $43.4 million reported for the same period of the prior year. Operating income (revenue less provision for credit losses and general and administrative expenses) decreased by $9.1 million, or 12.4%.

Revenues increased by $36.8 million, or 9.7%, to $416.1 million during the nine months ended December 31, 2021 from $379.3 million for the same period of the prior year. The increase was primarily due to an increase in average net loans outstanding.

Interest and fee income for the nine months ended December 31, 2021 increased by $21.8 million, or 6.5%, from the same period of the prior year. Interest and fee income was impacted by a shift to larger, lower interest rate loans. Net loans outstanding at December 31, 2021 increased by 26.2% over the balance at December 31, 2020. Average net loans outstanding increased by 15.7% for the nine months ended December 31, 2021 compared to the nine-month period ended December 31, 2020.

Insurance commissions and other income for the nine months ended December 31, 2021 increased by $15.0 million, or 32.9%, from the same period of the prior year. Insurance commissions increased by approximately $8.0 million, or 24.6%, during the nine months ended December 31, 2021 when compared to the nine months ended December 31, 2020. Insurance commissions benefited from the shift to larger loans mentioned above. Other income increased by $7.0 million. Sales of our motor club product increased by $6.1 million as sales opportunities increased, similar to our insurance products, with the increase in large loan originations. Revenue from our tax preparation business increased by $1.3 million during the first three quarters of fiscal 2022 from $3.0 million during the first three quarters of fiscal 2021, or 43.5%. This was largely driven by a delay in the individual income tax filing season which resulted in a higher number of tax preparations being completed in the first quarter of fiscal 2022.

On April 1, 2020, the Company replaced its incurred loss methodology with a current expected credit loss ("CECL") methodology to accrue for expected losses. The provision for credit losses increased $48.2 million, or 59.7%, to $128.8 million from $80.6 million when comparing the first three quarters of fiscal 2022 to the first three quarters of fiscal 2021. The provision increased during the first three quarters of the year primarily due to significant loan growth during the period. CECL requires expected losses to be accrued at the time of origination. This increase was offset by a $5.0 million decrease in net charge-offs. Net charge-offs as a percentage of average net loans receivable on an annualized basis decreased from 14.7% in the first three quarters of fiscal 2021 to 12.0% in the first three quarters of fiscal 2022. The charge-off rate during the period benefited from the increased average tenure and reduced credit risk of customers in the portfolio as of March 31, 2021. We are experiencing lower losses on loans that were in the portfolio as of January 1, 2021 than initially predicted under our CECL methodology through December 31, 2021.

G&A expenses for the nine months ended December 31, 2021 decreased by $2.2 million, or 1.0%, from the corresponding period of the previous year. As a percentage of revenues, G&A expenses decreased from 59.3% during the first nine months of

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fiscal 2021 to 53.5% during the first nine months of fiscal 2022. G&A expenses per average open branch increased by 1.7% when comparing the two nine-month periods. The change in G&A expense is explained in greater detail below.

Personnel expense totaled $136.4 million for the nine months ended December 31, 2021, a $1.8 million, or 1.3%, decrease over the nine months ended December 31, 2020. Salary expense decreased approximately $2.1 million, or 2.3%, when comparing the two nine month periods ended December 31, 2021 and 2020. Our headcount as of December 31, 2021, decreased 5.9% compared to December 31, 2020. Benefit expense increased approximately $0.1 million, or 0.3%, when comparing the nine month periods ended December 31, 2021 and 2020. Incentive expense increased $1.3 million, or 3.9% due to an increase in branch level bonuses offset by a decrease in share-based compensation.

Occupancy and equipment expense totaled $39.2 million for the nine months ended December 31, 2021, a $2.6 million, or 6.2%, decrease over the nine months ended December 31, 2020. Occupancy and equipment expense is generally a function of the number of branches the Company has open throughout the period. For the nine months ended December 31, 2021, the average occupancy and equipment expense per branch decreased to $32.5 thousand, down from $33.8 thousand for the nine months ended December 31, 2020. The prior year includes $1.6 million more in write down of signage as a result of rebranding our offices when comparing the two nine-month periods.

Advertising expense totaled $15.9 million for the nine months ended December 31, 2021, a $1.4 million, or 9.5%, increase over the nine months ended December 31, 2020. The Company anticipated an increase in demand during the period and increased marketing spend accordingly.

Amortization of intangible assets totaled $3.7 million for the nine months ended December 31, 2021, a $309.4 thousand, or 7.6%, decrease over the nine months ended December 31, 2020.

Other expense totaled $27.4 million for the nine months ended December 31, 2021, a $1.1 million, or 4.3%, increase over the nine months ended December 31, 2020.

Interest expense for the nine months ended December 31, 2021 increased by $3.6 million, or 19.3%, from the corresponding nine months of the previous year. The increase in interest expense was due to a 25.8% increase in the average debt outstanding, from $421.2 million to $530.0 million offset by a 5.7% decrease in the effective interest rate from 5.8% to 5.5%.

Other key return ratios for the first nine months of fiscal 2022 included a 7.4% return on average assets and a return on average equity of 20.1% (both on a trailing 12-month basis), as compared to a 6.6% return on average assets and a return on average equity of 17.4% (both on a trailing 12-month basis) for the first nine months of fiscal 2021.

The Company’s effective income tax rate decreased to 16.1% for the nine months ended December 31, 2021 compared to 21.3% for the corresponding period of the previous year. The decrease is primarily due to the permanent tax benefit related to non-qualified stock option exercises and vesting of restricted stock in the current period, the recognition of Federal Historic Tax Credits in the current period and lower than estimated Federal Historic Tax Credits for fiscal 2020 with the provision to return adjustment recorded in the prior year. This was partially offset by an increase in the disallowed executive compensation under Section 162(m) in the current period and the recognition of the permanent tax benefit related to the exclusion of life insurance proceeds in the prior year.

Regulatory Matters

CFPB Rulemaking Initiatives

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 requires 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 requirements”). 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”). The the Company does not believe that it will have a material impact on the Company’s existing lending procedures, because the Company currently does not make short-term consumer loans or longer-term consumer installment loans with balloon payments that would subject the Company to the Rule’s ability to repay requirements. The Company also currently underwrites all its loans (including those secured by a vehicle title that would fall within the scope of these proposals) by reviewing the customer’s ability to repay based on the Company’s standards. However, implementation of

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the Rule’s payment requirements may require changes to the Company’s practices and procedures for such loans, which could 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.

Further, on June 6, 2019, the CFPB amended the Rule to delay the August 19, 2019 compliance date for part of the Rule’s provisions, including the ability to repay requirements. In addition, on February 6, 2019, the CFPB issued a notice of proposed rulemaking proposing to rescind provisions of the Rule governing the ability to repay requirements. There were also lawsuits filed challenging various provisions of these Rules, as well as the constitutionality of the CFPB’s structure, and the court stayed the compliance date of the Rule while the litigation was pending. The Supreme Court handed down its decision on the constitutional challenge in June 2020, and in July 2020, the CFPB issued a final Rule, which revoked the underwriting provisions of the prior Rule. However, additional lawsuits were filed challenging the payment provisions of the Rule issued in 2020. In August 2021, the court found for the CFPB and dismissed the remaining challenges. As a result, the compliance date for the payments provisions of the Rule is now June 13, 2022 Unless rescinded or otherwise amended, 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.

See Part I, Item 1, “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,” in the Company’s Form 10-K for the year ended March 31, 2021 for more information regarding these regulatory and related risks.

Liquidity and Capital Resources

The Company has historically financed and continues to finance its operations, acquisitions and branch expansion primarily 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 the nine months ended December 31, 2021 was $171.1 million.

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.

On September 27, 2021, we issued $300 million in aggregate principal amount of 7.0% senior notes due 2026 (the “Notes”). The Notes were sold in a private placement in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by all of the Company’s existing and certain of its future subsidiaries that guarantee the revolving credit facility. Interest on the notes is payable semi-annually in arrears on May 1 and November 1 of each year, commencing May 1, 2022. At any time prior to November 1, 2023, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus a make-whole premium, as described in the indenture, plus accrued and unpaid interest, if any, to, but not including, the date of redemption. At any time on or after November 1, 2023, the Company may redeem the Notes at redemption prices set forth in the indenture, plus accrued and unpaid interest, if any, to, but not including, the date of redemption. In addition, at any time prior to November 1, 2023, the Company may use the proceeds of certain equity offerings to redeem up to 40% of the aggregate principal amount of the Notes issued under the indenture at a redemption price equal to 107.0% of the principal amount of Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

We used the net proceeds from this offering to repay a portion of the outstanding indebtedness under our revolving credit facility and for general corporate purposes.

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The Company has a revolving credit facility with a syndicate of banks. The revolving credit facility provides for revolving borrowings of up to the lesser of (a) the aggregate commitments under the facility and (b) a borrowing base, and it includes a $300,000 letter of credit under a $1.5 million subfacility.

Subject to a borrowing base formula, the Company may borrow at the rate of LIBOR plus 3.5% with a minimum rate of 4.5%. The Company’s amended and restated revolving credit agreement provides procedures for determining a replacement or alternative rate in the event LIBOR is unavailable or discontinued or if the administrative agent elects to replace LIBOR prior to its discontinuation. There can be no assurances as to whether such replacement or alternative rate will be more or less favorable than LIBOR. We intend to monitor the developments with respect to the phasing out of LIBOR and will work to limit any negative impacts that could result during the transition away from LIBOR. At December 31, 2021, the aggregate commitments under the revolving credit facility were $685.0 million. The $300,000 letter of credit outstanding under the subfacility expired on December 31, 2021; however, it automatically extends for one year on the expiration date. The borrowing base limitation is 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 74% to 80% based on a collateral performance indicator, as more completely described below. Further, under the amended and restated 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.

The Company’s obligations under the revolving credit facility, 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 domestic 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 agreement governing the Company’s revolving credit facility contains affirmative and negative covenants, including covenants that restrict the ability of the Company and its subsidiaries to, among other things, incur or guarantee indebtedness, incur liens, pay dividends and repurchase or redeem capital stock, dispose of assets, engage in mergers and consolidations, make acquisitions or other investments, redeem or prepay subordinated debt, amend subordinated debt documents, make changes in the nature of its business, and engage in transactions with affiliates. The agreement also contains financial covenants, including (i) a minimum consolidated net worth of $325.0 million; (ii) a minimum fixed charge coverage ratio of 2.75 to 1.0; (iii) a maximum ratio of total debt to consolidated adjusted net worth of 2.5 to 1.0; and (iv) a maximum collateral performance indicator of 24% as of the end of each calendar month. The agreement allows the Company to incur subordinated debt that matures after the termination date for the revolving credit facility and that contains specified subordination terms, subject to limitations on the amount incurred that are imposed by the financial covenants under the agreement.

The collateral performance indicator is equal to the sum of (a) a three-month rolling average rate of receivables at least sixty days past due and (b) an eight-month rolling average net charge-off rate. The Company was in compliance with these covenants at December 31, 2021 and does not believe that these covenants will materially limit its business and expansion strategy.

The agreement contains events of default including, without limitation, nonpayment of principal, interest or other obligations, violation of covenants, misrepresentation, cross-default and cross-acceleration to other debt, bankruptcy and other insolvency events, judgments, certain ERISA events, actual or asserted invalidity of loan documentation, invalidity of subordination provisions of subordinated debt, certain changes of control of the Company, and the occurrence of certain regulatory events (including the entry of any stay, order, judgment, ruling or similar event related to the Company’s or any of its subsidiaries’ originating, holding, pledging, collecting or enforcing its eligible finance receivables that is material to the Company or any subsidiary) which remains unvacated, undischarged, unbonded or unstayed by appeal or otherwise for a period of 60 days from the date of its entry and is reasonably likely to cause a material adverse change.

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The Company believes that cash flow from operations and borrowings under its revolving credit facility or other sources will be adequate to fund the expected 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" in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K (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.

Share Repurchase Program

On June 16, 2021, the Board of Directors authorized the Company to repurchase up to $30.0 million of the Company’s outstanding common stock, inclusive of the amount that remains available for repurchase under prior repurchase authorizations. On December 7, 2021, the Board of Directors authorized the Company to repurchase up to $50.0 million of the Company's outstanding common stock inclusive of any amount that remains available for repurchase under prior repurchase authorizations. As of December 31, 2021, the Company had $46.1 million in aggregate remaining repurchase capacity. 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 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. Under the terms of our revolving credit facility and the Notes, we have, subject to certain restrictions, the ability to make total share repurchases of at least $90.0 million through June 30, 2022. As of December 31, 2021, subject to further approval from our Board of Directors, we could repurchase approximately $84.4 million of shares under the terms of our debt facilities. Additional share repurchases can be made subject to compliance with, among other things, applicable restricted payment covenants under the revolving credit facility and the Notes. Our first priority is to ensure we have enough capital to fund loan growth. To the extent we have excess capital, we may repurchase stock, if appropriate and as authorized by our Board of Directors. As of December 31, 2021, the Company's debt outstanding was $720.3 million and its shareholders' equity was $409.4 million resulting in a debt-to-equity ratio of 1.8:1.0. 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 sheet.

Inflation

The Company does not believe that inflation, within reasonably anticipated rates, will have a material, adverse effect on its financial condition. Although inflation would increase the Company’s operating costs in absolute terms, 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. We anticipate that such a change in customer preference would result in an increase in total loans receivable and an increase in absolute revenue to be generated from that larger amount of loans receivable. That increase in absolute revenue should offset any increase in operating costs. In addition, because the Company’s loans have a relatively short contractual term, it is unlikely that loans made at any given point in time will be repaid with significantly inflated dollars.

Quarterly Information and Seasonality

See Note 3 to the unaudited Consolidated Financial Statements.

Recently Adopted Accounting Pronouncements

See Note 3 to the unaudited Consolidated Financial Statements.

Critical Accounting Policies

The Company’s accounting and reporting policies are in accordance with GAAP and conform to general practices within the finance company industry. Certain 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, revenue, 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, share-based compensation 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 judgement and estimation by management. As discussed in Note 3 – Summary of Significant Policies, to our unaudited Consolidated Financial Statements included in this report, our policies related to the allowances for credit losses changed on April 1, 2020 in connection with the adoption of a new accounting standard update as codified in ASC 326. 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 account 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.

Share-Based Compensation

The Company measures compensation cost for share-based awards at fair value and recognizes compensation over the service period for awards expected to vest. The fair value of restricted stock is based on the number of shares granted and the quoted price of the Company’s common stock at the time of grant, and the fair value of stock options is determined using the Black-Scholes valuation model. The Black-Scholes model requires the input of highly subjective assumptions, including expected volatility, risk-free interest rate and expected life, changes to which can materially affect the fair value estimate. Actual results and future changes in estimates may differ substantially from the Company’s current estimates.

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.

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, 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 Topic 740, the Company will include 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 positions by unambiguous tax law, prior experience with the taxing authority, and analysis of what it considers to be 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.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

The Company’s outstanding debt under its revolving credit facility was $425.2 million at December 31, 2021. Interest on borrowing under this facility is based on the greater of 4.5% or one month LIBOR plus an applicable margin of 3.5%. Based on the outstanding balance at December 31, 2021, a change of 1.0% in the interest rate would cause a change in interest expense of approximately $4.3 million on an annual basis.

Item 4. Controls and Procedures

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures

Based on management’s evaluation, with the participation of our CEO and CFO, as of the end of the period covered by this report, our CEO and CFO have concluded that our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See Note 12 to the unaudited Consolidated Financial Statements included in this report for information regarding legal proceedings.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Part I, Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company's credit agreements contain certain limits on share repurchases. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources."

The following table details purchases of the Company's common stock made by the Company during the three months ended December 31, 2021:


	(a) Total number of shares purchased	(b) Average price paid per share		(c) Total number of shares purchased as part of publicly announced plans or programs	(d) Approximate dollar value of shares that may yet be purchased under the plans or programs(1)
October 1 through October 31, 2021	6,000	$	160.66	6,000	$	14,498,580
November 1 through November 30, 2021	43,605	200.52		43,605	5,755,015
December 1 through December 31, 2021	44,117	218.45		44,117	46,112,727
Total for the quarter	93,722	$	206.41	93,722

On June 16, 2021, the Board of Directors authorized the Company to repurchase up to $30.0 million of the Company's outstanding common stock in addition to the amount that remained available for repurchase under prior repurchase authorizations. On December 7, 2021, the Board of Directors authorized the Company to repurchase up to $50.0 million of the Company's outstanding common stock inclusive of any amount that remains available for repurchase under prior repurchase authorizations.As of December 31, 2021, the Company had $46.1 million remaining in aggregate repurchase capacity under its authorizations. 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, available funds, alternative uses of capital, restrictions under the revolving credit agreement, and other market and economic conditions. The share repurchase program does not have an expiration date and may be suspended, modified or discontinued at any time at the Company’s discretion without prior notice.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

The exhibits listed in the accompanying exhibit index are filed as part of the Quarterly Report on Form 10-Q.

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EXHIBIT INDEX

Exhibit
Number

Exhibit Description

Filed
Herewith

Incorporated by Reference

Form or
Registration
Number

Exhibit

Filing
Date

3.01

Second Amended and Restated Articles of Incorporation of World Acceptance Corporation, as amended

S-8

3.1

07-29-03

3.02

Eighth Amended and Restated Bylaws of World Acceptance Corporation

10-Q

3.01

11-08-18

31.01

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

31.02

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial and Strategy Officer

32.01

Section 1350 Certification of Chief Executive Officer

32.02

Section 1350 Certification of Chief Financial and Strategy Officer

101.01

The following materials from the Company's Quarterly Report for the fiscal quarter ended December 31, 2021, formatted in Inline XBRL:

(i)

Consolidated Balance Sheets as of December 31, 2021 and March 31, 2021;

(ii)

Consolidated Statements of Operations for the three and nine months ended December 31, 2021 and December 31, 2020;

(iii)

Consolidated Statements of Shareholders' Equity for the three and nine months ended December 31, 2021 and December 31, 2020;

(iv)

Consolidated Statements of Cash Flows for the nine months ended December 31, 2021 and December 31, 2020; and

(v)

Notes to the Consolidated Financial Statements.

104.01

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


*			Filed herewith.
+			Management Contract or other compensatory plan required to be filed under Item 6 of this report and Item 601 of Regulation S-K of the Securities and Exchange Commission.

Table of Contents

SIGNATURES

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


WORLD ACCEPTANCE CORPORATION

	By: /s/ Scott McIntyre
	Scott McIntyre
	Senior Vice President of Accounting
	Signing on behalf of the registrant and as principal accounting officer
	Date:	February 4, 2022