What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-05-27 compared with 2021-06-02 · 92 added, 117 removed, 151 unchanged (58% of the section changed)

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The Company's financial performance continues to be dependent in large part upon the growth in its outstanding loans receivable, the maintenance of loan quality and acceptable levels of operating expenses.

Since March 31, 2017, gross loans receivable have increased at a 4.03% annual compounded rate from $943.3 million to $1.10 billion at March 31, 2021.

Since March 31, 2018, gross loans receivable have increased at a 10.97% annual compounded rate from $1.00 billion to $1.52 billion at March 31, 2022.

We believe we were able to improve our gross loans receivable growth rates through acquisitions, improved marketing processes, and analytics.

During the four-year period beginning March 31, 2017, the Company has expanded in size from 1,169 branches to 1,205 branches as of March 31, 2021.

The Company plans to enter into new markets through opening new branches and acquisitions as opportunities arise.

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The Company prepared approximately 81,000, 77,000, and 84,000 returns in each of the fiscal years 2022, 2021, and 2020, respectively.

Revenues from the Company’s tax preparation business amounted to approximately $18.1 million, a 13.6% decrease over the $20.9 million earned during fiscal 2020.

Revenues from the Company’s tax preparation business in fiscal 2022 amounted to approximately $21.7 million, a 19.9% increase over the $18.1 million earned during fiscal 2021.

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

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Years Ended March 31,

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Loan volume (5)

3,267,860 2,371,981 2,929,265

Net charge-offs as percent of average net loans receivable 14.2 % 14.1 % 18.0 %

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(4) Operating income is computed as total revenue less provision for credit losses and general and administrative expenses.

COVID-19 Pandemic Response and Impact

The COVID-19 pandemic has caused significant economic disruption in the United States as many state and local governments, including all of the states in which the Company operates, have ordered non-essential businesses to close and residents to shelter in place at home at one point in time or another.

For the majority of states in which we operate, we have been considered an essential business and thus nearly all of our branches have remained open to date.

However, the impact of COVID-19 is rapidly evolving, its future effects are uncertain, and it may be difficult to assess or predict the extent of the impacts of the pandemic on us as many factors are beyond our control and knowledge.

In response to the spread of COVID-19, we have modified our business practices in order to reduce personal interactions and provide additional support to our associates and customers.

Some of these measures include reducing branch hours, limiting employee travel, implementing work-from-home initiatives for employees when possible, cancelling physical participation in meetings and training sessions, providing additional leave for those directly impacted, closing lobbies and offering curbside service, and encouraging customers to service accounts digitally rather than in person.

As a result, the Company has seen significant increases in online and phone activity related to account access, payments, and refinances.

The Company has expedited projects related to its digital presence and online lending and is currently piloting remote applications, signatures, and funding for select customers.

As non-essential businesses and schools began to close, we proactively halted marketing efforts and updated our underwriting criteria in light of the tremendous uncertainty, rapid increases in unemployment, and federal stimulus packages.

The Company is experiencing expected declines in customer demand due to a combination of reduced marketing and stay-at-home orders reducing customer mobility.

To assist customers impacted by COVID-19, the Company’s typical 30-day wait period for unemployment insurance claims has been waived and payment deferrals are being offered to impacted customers.

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We believe we have sufficient liquidity to support the fundamental operations of our business throughout the COVID-19 pandemic.

However, we are unable to estimate the long-term impact of COVID-19 on our business and will continue to assess our liquidity needs as the situation evolves.

If we experience sustained adverse effects, we may fail to satisfy our minimum capital ratios and other requirements under our revolving credit facility.

The extent to which the pandemic will ultimately impact our business and financial condition will depend on future events that are impossible to predict, including, but not limited to, the duration and severity of the pandemic, the success of actions taken to contain, treat, and prevent the spread of the virus, the effectiveness of our borrower assistance initiatives and government economic stimulus measures, and the speed at which normal economic and operating conditions return.

See Part I, Item 1A, “Risk Factors” for additional information.

(5) Loan volume includes all loan balances originated by the Company.

It does not include loans purchased through acquisitions.

Comparison of Fiscal 2022 Versus Fiscal 2021

Net income for fiscal 2021 was $88.3 million, a 213.5% increase from the $28.2 million earned during fiscal 2020.

The increase in net income from continuing operations was primarily due to a $95.5 million decrease in the provision for credit losses partially offset by a $64.5 million decrease in revenue and a $21.7 million accrual in the prior year related to the investigation into our former Mexican business.

Operating income (revenues less provision for credit losses and general and administrative expenses) from continuing operations increased $76.3 million.

Total revenues from continuing operations decreased $64.5 million, or 10.9%, to $525.5 million in fiscal 2021, from $590.0 million in fiscal 2020.

Revenues from continuing operations from the 1,152 branches open throughout both fiscal years decreased by 13.1%.

At March 31, 2021, the Company had 1,205 branches in operation, an decrease of 38 branches from March 31, 2020.

Interest and fee income from continuing operations during fiscal 2021 decreased by $57.2 million, or 11.3%, from fiscal 2020.

The decrease was primarily due to a corresponding decrease in average earning loans.

Net loans receivable outstanding at March 31, 2021 decreased 8.4% compared to March 31, 2020, and average net loans receivable outstanding decreased 8.6% during fiscal 2021 compared to fiscal 2020.

Net income for fiscal 2022 was $53.9 million, a 38.9% decrease from the $88.3 million earned during fiscal 2021.

The decrease in net income from was primarily due to a $100.0 million increase in the provision for credit losses partially offset by a $56.9 million increase in revenue.

Operating income (revenues less provision for credit losses and general and administrative expenses) during fiscal 2022 decreased $38.1 million.

Total revenues increased $56.9 million, or 10.8%, to $582.4 million in fiscal 2022, from $525.5 million in fiscal 2021.

At March 31, 2022, the Company had 1,167 branches in operation, a decrease of 38 branches from March 31, 2021.

Interest and fee income during fiscal 2022 increased by $34.6 million, or 7.7%, from fiscal 2021.

The increase was primarily due to an increase in average net loans receivable.

Net loans receivable outstanding at March 31, 2022 increased 35.7% compared to March 31, 2021, and average net loans receivable outstanding increased 19.6% during fiscal 2022 compared to fiscal 2021.

Interest and fee income was also impacted by decreasing yields as the portfolio mix shifted to larger lower rate loans during the year.

We expect the portfolio to continue to shift towards larger lower rate loans in the near term which should continue to decrease interest and fee yields in the future.

Insurance commissions and other income from continuing operations decreased by $7.3 million, or 8.9%, from fiscal 2020 to fiscal 2021.

Insurance commissions from continuing operations decreased by $6.1 million, or 12.2%, from fiscal 2020 to fiscal 2021 due to a decrease in loan volume in states where we offer our insurance products.

Other income from continuing operations decreased by $1.1 million, or 3.6%, from fiscal 2020 to fiscal 2021 primarily due to a reduction in tax preparation income of $2.8 million, partially off-set by an increase in revenue from in the Company's motor club product of $1.6 million.

The provision for losses from continuing operations during fiscal 2021 decreased by $95.5 million, or 52.5%, from the previous year.

This increase can mostly be attributed to a decrease in charge-off and delinquency rates during the year.

Insurance commissions and other income increased by $22.3 million, or 30.0%, from fiscal 2021 to fiscal 2022.

Insurance commissions increased by $12.1 million, or 27.3%, from fiscal 2021 to fiscal 2022 due to an increase in loan volume in states where we offer our insurance products along with the shift towards larger loans.

The sale of insurance products is limited to large loans in several states in which we operate.

Other income increased by $10.2 million, or 33.9%, from fiscal 2021 to fiscal 2022 primarily due to an increase in tax preparation income of $3.6 million and increase in revenue from the Company's motor club product of $6.9 million.

The provision for losses during fiscal 2022 increased by $100.0 million, or 115.9%, from the previous year.

This increase can mostly be attributed to overall growth in the portfolio along with an increase in delinquency and charge-off rates during the year.

Accounts that were 91 days or more past due represented 4.5% and 3.1% of our loan portfolio on a recency basis at March 31, 2022 and March 31, 2021, respectively.

The Company's year-over-year charge-off ratio (net charge-offs as a percentage of average net loans receivable) decreased from 18.0% for the year ended March 31, 2020 to 14.1% for the year ended March 31, 2021.

Customers who are new borrowers to the Company (less than two years since their first origination at the time of their current loan) as a percentage of the year-end portfolio have decreased a relative 10.2% year over year.

These "new to World" customers now account for 31.0% of the portfolio, a decrease from 34.5% last year, however still an increase from an average of 29.2% in the prior four fiscal years (2016-2019).

This decreased weighting of new borrowers, our riskiest customer type, in the portfolio contributed to the decrease in delinquency and charge-off rates of the overall portfolio.

In addition to the decrease in portfolio weighting towards less tenured customers during the last 12 months, we have also seen a decrease in charge-off rates when comparing the less tenured customer segment to prior years, largely driven by stronger performance from COVID-19 stimulus and unemployment benefits, as well as improved underwriting practices on new borrowers.

Charge-off ratios for the past ten fiscal years averaged 14.9%, with a high of 18.0% (fiscal 2020) and a low of 12.8% (fiscal 2015).

In fiscal 2021 the charge-off ratio was 14.1%.

The Company's year-over-year charge-off ratio (net charge-offs as a percentage of average net loans receivable) increased from 14.1% for the year ended March 31, 2021 to 14.2% for the year ended March 31, 2022.

Customers who are new borrowers to the Company (less than two years since their first origination at the time of their current loan) as a percentage of the year-end portfolio have increased a relative 2.2% year over year.

These "new to World" customers now account for 31.7% of the portfolio, an increase from 31.0% last year.

Customers who were with the Company for less than five months have increased 56.0% from 8.4% to 13.1%.

This increased weighting of new borrowers, our riskiest customer type, in the portfolio contributed to the increase in delinquency and charge-off rates of the overall portfolio.

In addition to the increase in portfolio weighting towards less tenured customers during the last 12 months.

Charge-off rate for the past ten fiscal years averaged 15.0%, with a high of 18.0% (fiscal 2020) and a low of 12.8% (fiscal 2015).

In fiscal 2022 the charge-off rate was 14.2%.

The following table presents the Company's charge-off ratios since 2012.

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The net charge-off rate benefited from a change in branch level incentives during the year, which allows managers to continue collection efforts on accounts that are 91 days or more past due without having their monthly bonus negatively impacted.

As expected, the change resulted in an increase in accounts 91 days or more past due and fewer charge-offs during fiscal 2015.

As expected, the change resulted in an increase in accounts 91 days or

more past due and fewer charge-offs during fiscal 2015.

We estimate the net charge-off rate would have been approximately 14.0% for fiscal 2015 excluding the impact of the change.

General and administrative expenses from continuing operations during fiscal 2021 decreased by $45.3 million, or 13.0%, over the previous fiscal year.

General and administrative expenses from continuing operations, when divided by average open branches, decreased 13.4% from fiscal 2020 to fiscal 2021 and, overall, general and administrative expenses from continuing operations as a percent of total revenues from continuing operations decreased to 57.5% in fiscal 2021 from 58.9% in fiscal 2020.

The change in general and administrative expense from continuing operations is explained in greater detail below.

Personnel expense from continuing operations totaled $184.6 million for fiscal 2021, a $19.2 million, or (9.4)%, decrease over fiscal 2020.

The decrease was largely due to a $9.7 million decrease in share-based compensation driven by the long-term incentive plan and director equity awards granted during the FY2019.

Regular payroll expense decreased $7.5 million year over year primarily due to decreases in headcount and benefit expense decreased $4.1 million, mostly due to decrease in insurance claims.

The Company deferred $5.7 million less in payroll related origination costs under ASC 310, when comparing period over period, due to lower originations during the year, which partially offset the decrease in personnel expense.

Occupancy and equipment expense from continuing operations totaled $56.2 million for fiscal 2021, a $1.9 million, or 3.5%, increase over fiscal 2020.

General and administrative expenses during fiscal 2022 decreased by $5.0 million, or 1.7%, over the previous fiscal year.

General and administrative expenses, when divided by average open branches, decreased 1.0% from fiscal 2021 to fiscal 2022 and, overall, general and administrative expenses as a percent of total revenues decreased to 51.0% in fiscal 2022 from 57.5% in fiscal 2021.

The change in general and administrative expense is explained in greater detail below.

Personnel expense totaled $183.1 million for fiscal 2022, a $1.6 million, or 0.8%, decrease over fiscal 2021.

The decrease was largely due to a $2.5 million decrease related to the deferred origination payroll expense under ASC 310 as a result of higher originations during the year.

Regular payroll expense decreased $1.7 million year over year primarily due to decreases in headcount and benefit expense increased $0.2 million.

Occupancy and equipment expense totaled $52.1 million for fiscal 2022, a $4.1 million, or 7.3%, decrease over fiscal 2021.

Occupancy and equipment expense is generally a function of the number of branches the Company has open throughout the year.

In fiscal 2021 the expense per average open branch increased to $45.5 thousand, up from $44.2 thousand in fiscal 2020.

Occupancy and equipment expense was negatively impacted by a $2.9 million write down of signage as a result of rebranding our branch offices during fiscal 2021.

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Advertising expense from continuing operations totaled $17.2 million for fiscal 2021, a $7.1 million, or (29.3)%, decrease over fiscal 2020.

The decrease was primarily due to decreased spending in our direct mail and digital campaigns.

Amortization of intangible assets from continuing operations totaled $5.5 million for fiscal 2021, a $0.5 million, or 9.3%, increase over fiscal 2020, which primarily relates to a corresponding increase in total intangible assets during the comparative periods due to acquisition activity during the current and prior year.

Other expense from continuing operations totaled $38.7 million for fiscal 2021, a $21.4 million, or 35.6%, decrease over fiscal 2020.

The decrease was primarily due to a $21.7 million reduction in non deductible penalties related to the Company's Mexico investigation in the prior year.

Interest expense from continuing operations decreased by $0.2 million, or 0.8%, during fiscal 2021 when compared to the previous fiscal year as a result of an decrease in average debt outstanding of 1.0%.

For fiscal 2020 and 2021 the effective interest rate stayed the same at 5.8%.

Income tax expense from continuing operations increased $16.4 million, or 242.4% for fiscal 2021 compared to the prior fiscal year.

The effective tax rate increased to 20.8% for fiscal 2021 compared to 19.3% for fiscal 2020.

The increase was primarily due to the recognition of net Federal and state tax credits of $8.1 million in fiscal year 2020 compared to $1.2 million in the current fiscal year which was partially offset by the recognition of non-deductible penalties totaling $21.7 million in the prior fiscal year.

In fiscal 2022 the expense per average open branch decreased to $43.4 thousand, down from $45.5 thousand in fiscal 2021.

Occupancy and equipment expense decreased by $2.5 million due to the timing of write down of signage as a result of rebranding our branch offices beginning in fiscal 2021.

Advertising expense totaled $18.3 million for fiscal 2022, a $1.1 million, or 6.4%, increase over fiscal 2021.

The increase was primarily due to increased spending in our digital marketing.

Amortization of intangible assets totaled $5.0 million for fiscal 2022, a $0.5 million, or 8.5%, decrease over fiscal 2021, which primarily relates to a corresponding decrease in total intangible assets during the comparative periods due to acquisition activity during the current and prior year.

Other expense totaled $38.7 million for fiscal 2022, remaining relatively flat when compared to fiscal year 2021.

Interest expense increased by $7.7 million, or 30.1%, during fiscal 2022 when compared to the previous fiscal year as a result of an increase in average debt outstanding of 33.1% partially offset by a decrease in the effective interest rate from 5.8% to 5.7%.

Income tax expense decreased $11.5 million, or 49.6% for fiscal 2022 compared to the prior fiscal year.

The effective tax rate decreased to 17.8% for fiscal 2022 compared to 20.8% for fiscal 2021.

The decrease was primarily due to an increase in the permanent tax benefit related to non-qualified stock option exercises and vesting of restricted stock and state tax credits recognized in the current fiscal year.

This was partially offset by an increase in the disallowed executive compensation under Section 162(m) in the current year.

Comparison of Fiscal 2021 Versus Fiscal 2020

For a comparison of our results of operations for the years ended March 31, 2019 and March 31, 2020, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended March 31, 2020 (which was filed with the SEC on May 29, 2020), which comparison is incorporated herein by reference.

As previously disclosed, the Company sold all of the issued and outstanding capital stock and equity interest of its two Mexico subsidiaries, WAC de Mexico and SWAC, for a purchase price of MXN $826,795,050, effective as of July 1, 2018.

The Company subsequently converted the purchase price into approximately USD $44.36 million using applicable exchange rates.

The Company and its subsidiaries no longer operate in Mexico.

Thus, the Company expects its revenues and gross loans receivables to be negatively impacted in future years compared to historical levels.

For a comparison of our results of operations for the years ended March 31, 2021 and March 31, 2020, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended March 31, 2021 (which was filed with the SEC on June 2, 2021), which comparison is incorporated herein by reference.

Regulatory Matters

Mexico Investigation

As previously disclosed, the Company voluntarily contacted the SEC and DOJ in June 2017 to advise both agencies that an internal investigation of its operations in Mexico was underway.

As previously disclosed, the Company voluntarily contacted the SEC and DOJ in June 2017 to advise both agencies that an internal investigation of its historical operations in Mexico was underway.

The Company has fully cooperated with both agencies.

The Company sold its Mexican subsidiaries in 2018 and the Company and its subsidiaries no longer operate in Mexico.

On August 6, 2020, the Company announced that it reached resolution with both the SEC and the DOJ regarding allegations primarily involving the Company’s former subsidiary in Mexico.

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and discontinuing relationships with third parties in Mexico involved in the misconduct.

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The SEC approved the Offer of Settlement on August 6, 2020 and issued an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order (the “SEC Order”).

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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 originally required lenders originating short-term loans and longer-term balloon payment loans to evaluate whether each consumer has the ability to repay the loan along with current obligations and expenses (“ability to repay requirements”), however the ability to repay requirements was rescinded in July 2020.

The Rule also curtails repeated unsuccessful attempts to debit consumers’ accounts for short-term loans, balloon payment loans, and installment loans that involve a payment authorization and an annual percentage rate over 36% (“payment requirements”).

The Company does not believe that the Rule 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 the Rule’s payment requirements may require changes to the Company’s practices and procedures for such loans, which could materially and adversely affect the Company’s ability to make such loans, the cost of making such loans, the Company’s ability to, or frequency with which it could, refinance any such loans, and the profitability of such loans.

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.

The new compliance date for the ability to repay requirements is November 19, 2020.

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.

The comment period for this proposed rulemaking closed in May 2019.

According to the CFPB’s Fall 2019 rulemaking agenda, the CFPB is reviewing the approximately 190,000 comments it received and expected to take final action in April 2020 with respect to this proposal.

However, no final action has been taken as of yet.

Implementation of the Rule’s payment requirements may require changes to the Company’s practices and procedures for such loans, which could materially and adversely affect the Company’s ability to make such loans, the cost of making such loans, the Company’s ability to, or frequency with which it could, refinance any such loans, and the profitability of such loans.

In July 2020, the CFPB rescinded provisions of the Rule governing the ability to repay requirements.

Currently, the payment requirements are scheduled to take effect in June 2022.

Any regulatory changes could have effects beyond those currently contemplated that could further materially and adversely impact our business and operations.

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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 5 – Summary of Significant Policies, to our 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.

As discussed in Note 1 to the 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.

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Consequently, operating results for the Company's third fiscal quarter generally are significantly lower than in other quarters and operating results for its fourth fiscal quarter are significantly higher than in other quarters.

However, the effects of COVID-19 and related economic stimulus has reduced demand and impacted our typical seasonal trends.

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The following table sets forth, on a quarterly basis, certain items included in the Company's unaudited Consolidated Financial Statements and shows the number of branches open during fiscal years 2022 and 2021.

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Total revenues $ 129,659 $ 137,827 $ 148,572 $ 166,329 $ 123,867 $ 124,441 $ 130,946 $ 146,280

Provision for loan losses $ 25,661 $ 26,090 $ 28,857 $ 5,636 $ 41,291 $ 52,968 $ 55,219 $ 32,252

Provision for credit losses $ 30,266 $ 42,044 $ 56,459 $ 57,439 $ 25,661 $ 26,090 $ 28,857 $ 5,636

General and administrative expenses $ 73,351 $ 74,989 $ 74,229 $ 74,607 $ 71,608 $ 75,293 $ 77,875 $ 77,411

Net income (loss) $ 15,509 $ 13,398 $ 14,491 $ 44,884 $ 8,608 $ 2,513 $ (6,267) $ 23,303

Net income $ 15,771 $ 12,439 $ 7,327 $ 18,382 $ 15,509 $ 13,398 $ 14,491 $ 44,884

Gross loans receivable $ 1,223,139 $ 1,394,827 $ 1,606,111 $ 1,522,789 $ 1,067,877 $ 1,109,366 $ 1,264,530 $ 1,104,746

Number of branches open 1,205 1,202 1,202 1,167 1,240 1,232 1,230 1,205

Recently Issued Accounting Pronouncements

See Part II, Item 8, Financial Statements and Supplementary Data and Note 1—Summary of Significant Accounting Policies in the Consolidated Financial Statements for the impact of new accounting pronouncements.

Liquidity and Capital Resources

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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.

As the Company's gross loans receivable increased from $1,004.2 million at March 31, 2018 to $1,104.7 million at March 31, 2021, net cash provided by operating activities for fiscal years 2021, 2020, and 2019 was $199.6 million, $257.4 million, and $244.7 million, respectively.

As the Company's gross loans receivable increased from $1.13 billion at March 31, 2019 to $1.52 billion at March 31, 2022, net cash provided by operating activities for fiscal years 2022, 2021, and 2020 was $281.5 million, $217.3 million, and $281.0 million, respectively.

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.

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.

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.

However, our revolving credit facility limits share repurchases to 50% of consolidated adjusted net income in any fiscal year commencing with the fiscal year ending March 31, 2017.

The Company can repurchase additional amounts of shares with prior written consent from lenders.

However, our revolving credit facility and the Notes limit share repurchases to $90.0 million from March 26, 2021 through June 30, 2022 plus up to 50% of consolidated adjusted net income for the period commencing January 1, 2019.

As of March 31, 2022, subject to further approval from our Board of Directors, we could repurchase approximately $32.9 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.

The Company did not acquire any branches during fiscal 2022.

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and (iii) extend the maturity date of the amended and restated revolving credit agreement to June 7, 2024.

In September of 2021, the credit facility was amended in connection with the Company’s Notes offering to permit the issuance of the Notes.

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

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alternative rate in the event LIBOR is unavailable or discontinued or if the administrative agent elects to replace LIBOR prior to its discontinuation.

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 potential phasing out of LIBOR and will work to limit any negative impacts that could result during any transition away from 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 any transition away from LIBOR.

At March 31, 2022, the aggregate commitments under the revolving credit facility were $685.0 million.

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On March 31, 2022 $397.0 million was outstanding under this facility, and there was $287.7 million of unused borrowing availability under the borrowing base limitations.

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 on and after December 31, 2020;

(ii) a minimum fixed charge coverage ratio of (a) 2.25 to 1.0 for the fiscal quarters ending March 31, 2020, June 30, 2020 and September 30, 2020 and (b) 2.75 to 1.0 for each fiscal quarter thereafter;

(iii) a maximum ratio of total debt to consolidated adjusted net worth of 2.0 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 amount imposed by the financial covenants under the agreement.

The agreement's financial covenants include (i) a minimum consolidated net worth of $325.0 million on and after December 31, 2020;

(ii) a maximum ratio of total debt to consolidated adjusted net worth of 2.5 to 1.0;

(iii) a maximum collateral performance indicator of 24% as of the end of each calendar month;

and (iv) a minimum fixed charges coverage ratio as further discussed below.

As further discussed in Note 18 to the Consolidated Financial Statements, on May 3rd, 2022, the Company entered into the Seventh Amendment to its Amended and Restated Revolving Credit Agreement (the “Seventh Amendment”) to, among other things, reduce the required ratio for Net Income Available for Fixed Charges to Fixed Charges from 2.75 to 1.0 to 2.10 to 1.0 for each fiscal quarter from March 31, 2022 to June 30, 2023, with the ratio increasing to 2.75 to 1.0 for each fiscal quarter thereafter.

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.

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Except as otherwise discussed in this report including, but not limited to, any discussions in Part 1, Item 1A, "Risk Factors" (as supplemented by any subsequent disclosures in information the Company files with or furnishes to the SEC from time to time), management is not currently aware of any trends, demands, commitments, events or uncertainties that it believes will or could result in, or are or could be reasonably likely to result in, any material adverse effect on the Company’s liquidity.

Table o f C o ntent s

The following table summarizes the Company’s contractual obligations by period:

Contractual Obligations Payments Due by Period

Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years

Long-term debt obligations $ 463,100,765 $ 18,225,338 $ 36,450,676 $ 408,424,751 $ —

Capital lease obligations — — — — —

Operating lease obligations 117,121,294 25,697,140 38,629,359 21,482,911 31,311,884

Purchase obligations — — — — —

Other long-term liabilities reflected on the balance sheet under GAAP — — — — —

Total $ 580,222,059 $ 43,922,478 $ 75,080,035 $ 429,907,662 $ 31,311,884

Share Repurchase Program

On January 26, 2021, the Board of Directors authorized the Company to repurchase up to $25.0 million of the Company’s outstanding common stock, inclusive of the amount that remains available for repurchase under prior repurchase authorizations.

As of March 31, 2021, the Company had $21.4 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.

On February 24, 2022, 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.

As of March 31, 2022, the Company had $15.4 million in aggregate remaining repurchase capacity under its current share repurchase program.

The timing and actual number of shares of common stock repurchased will depend on a variety of factors, including the stock price, corporate and regulatory requirements, restrictions under the Company's debt agreements 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.

However, our revolving credit facility limits share repurchases to $90 million through June 30, 2022 plus up to 50% of consolidated adjusted net income for the period commencing on January 1, 2019, subject to certain restrictions.

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 from March 26, 2021 through June 30, 2022.

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.

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See Part I, Item 3, “Legal Proceedings” and Note 16 to our audited Consolidated Financial Statements for further discussion of legal matters.

Table o f C o ntent s

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis