What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-06-01 compared with 2022-05-27 · 128 added, 132 removed, 1011 unchanged (20% of the section changed)

13 unchanged sentences

Intangible assets, net 15,289,579 19,756,114

Assets held for sale (Note 17) — 1,143,528

Total assets $ 1,117,318,141 $ 1,218,296,589

47 unchanged sentences

Balances at March 31, 2022 6,348,314 $ 280,907,085 92,117,343 373,024,428

Proceeds from exercise of stock options 154,699 12,805,646 — 12,805,646

Proceeds from exercise of stock options, net of cancellations 7,569 654,920 — 654,920

Common stock repurchases ( 73,643 ) — ( 14,314,089 ) ( 14,314,089 )

2 unchanged sentences

Stock option expense — 2,442,309 — 2,442,309

Cumulative effect of adoption of ASU 2023-02 — — ( 1,880,346 ) ( 1,880,346 )

Net income — — 21,231,990 21,231,990

8 unchanged sentences

Stock option expense — 3,473,913 — 3,473,913

Cumulative effect of adoption of ASC 326 — — ( 21,242,249 ) ( 21,242,249 )

Net income — — 53,919,837 53,919,837

3 unchanged sentences

Balances at March 31, 2020 7,807,834 $ 227,214,577 184,748,490 411,963,067

Proceeds from exercise of stock options 69,481 4,612,926 — 4,612,926

Proceeds from exercise of stock options, net 165,237 12,268,554 — 12,268,554

Common stock repurchases ( 1,129,875 ) — ( 102,452,302 ) ( 102,452,302 )

2 unchanged sentences

Stock option expense — 3,804,674 — 3,804,674

Cumulative effect of adoption of ASC 326 — — ( 21,242,249 ) ( 21,242,249 )

Net income — — 88,282,828 88,282,828

10 unchanged sentences

Amortization of historic tax credits — 3,930,753 1,736,384

Accrued unearned interest 3,213,737 ( 9,032,020 ) 9,698,671

Gain on extinguishment of senior unsecured notes payable ( 1,831,277 ) — —

Amortization of deferred loan costs 15,526,336 16,911,599 17,101,722

3 unchanged sentences

Amortization of finance leases 204,552 407,624 407,624

Gain on asset acquisition, net of income tax ( 3,993,168 ) — —

Loss on sale of property and equipment 11,837 419,975 2,812,404

10 unchanged sentences

Increase in loans receivable, net ( 152,154,050 ) ( 436,311,573 ) ( 56,143,765 )

Net assets acquired from business combinations and asset acquisitions, primarily loans ( 9,631,112 ) ( 15,210,973 ) ( 47,100,694 )

Increase in intangible assets from acquisitions ( 1,228,872 ) ( 4,563,279 ) ( 14,455,279 )

Cash paid for acquisitions, primarily loans ( 23,131,758 ) ( 10,859,984 ) ( 19,774,252 )

Purchases of property and equipment ( 5,827,773 ) ( 6,070,414 ) ( 11,683,858 )

7 unchanged sentences

Payments on senior notes payable ( 402,924,870 ) ( 523,350,000 ) ( 357,076,750 )

Payments for extinguished senior unsecured notes payable ( 7,171,700 ) — —

Issuance of senior unsecured notes payable — 300,000,000 —

Loan costs associated with senior unsecured notes payable ( 5,119,647 ) — —

Debt issuance costs associated with senior unsecured notes payable ( 19,656 ) ( 5,119,647 ) —

Payments for debt extinguishment costs ( 22,850 ) — —

Debt issuance costs associated with senior notes payable ( 1,139,008 ) — ( 784,250 )

10 unchanged sentences

Income taxes paid during the year $ 10,783,143 $ 30,941,852 $ 14,857,555

Finance lease right-of-use assets, net transferred to property and equipment, net $ 402,960 $ — $ —

See accompanying notes to Consolidated Financial Statements.

12 unchanged sentences

Subsidiaries consist of operating entities in various states and WAC Insurance Company, Ltd.

(a captive reinsurance company established in fiscal 1994).

(a captive reinsurance company).

All significant inter-company balances and transactions have been eliminated in consolidation.

35 unchanged sentences

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.

Unamortized amounts are recognized in interest 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.

Loans 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.

Net unamortized deferred origination fees and costs were $ 6.9 million and $ 5.1 million as of March 31, 2022 and 2021, respectively.

Net unamortized deferred origination costs were $ 4.9 million and $ 6.9 million as of March 31, 2023 and 2022, respectively.

The Company recognizes interest and fee income using the interest method.

Charges for late payments are credited to income when collected.

Charges for late payments are recognized in interest and fee income when collected.

With the exception of tax advance loans, which are interest free, the Company offers its loans at the prevailing statutory rates for terms not to exceed 60 months.

3 unchanged sentences

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.

While a loan is on nonaccrual status, interest income 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.

19 unchanged sentences

For any new or modified lease, the Company, at the inception of the contract, determines whether a contract is or contains a lease.

The Company records right-of-use ("ROU") assets and lease obligations for its finance and operating leases, which are initially recognized based on the discounted future lease payments over the term of the lease.

The Company uses its effective annual interest rate as the discount rate when evaluating leases.

The Company records ROU assets and lease liabilities for its leases, which are initially recognized based on the discounted future lease payments over the term of the lease.

The Company uses its effective annual or fourth quarter interest rate as the discount rate when evaluating leases.

Refer to Note 9, "Leases", for further discussion of the discount rate.

Lease term is defined as the non-cancelable period of the lease plus any options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option.

The Company has elected not to recognize ROU asset and lease obligations for its short-term equipment leases, which are defined as leases with an initial term of 12 months or less.

The Company has elected not to recognize ROU assets and lease obligations for its short-term equipment leases, which are defined as leases with an initial term of 12 months or less.

Further, the Company has elected to not separate lease from non-lease components.

Variable lease costs include expenses such as common area maintenance, utilities, and repairs and maintenance.

Other assets include cash surrender value of life insurance policies, prepaid expenses, debt issuance costs related to the senior notes payable, and other deposits.

Other assets include cash surrender value of life insurance policies, HTC investments, prepaid expenses, debt issuance costs related to the senior notes payable, and other deposits and receivables.

Debt Issuance Costs

In accordance with ASC 835, debt issuance costs related to the senior unsecured notes payable are presented as a direct deduction from its carrying value in the Consolidated Balance Sheets.

Unamortized debt issuance costs related to the senior unsecured notes payable as of March 31, 2022 were $ 4.6 million.

There were no debt issuance costs related to the senior unsecured notes payable as of March 31, 2021.

Unamortized debt issuance costs related to the senior unsecured notes payable as of March 31, 2023 and 2022 were $ 3.5 million and 4.6 million, respectively.

As the Company intends to pay down the senior notes payable throughout the contractual arrangement, debt issuance costs related to this arrangement are presented as an asset within Other assets in the Consolidated Balance Sheets as discussed above.

16 unchanged sentences

The Company has one reporting unit, and the Company has multiple components, the lowest level of which is individual branches.

The Company’s components are aggregated for impairment testing because they have similar economic characteristics.

The Company’s components are aggregated for impairment testing as they have similar economic characteristics.

Impairment of Long-Lived Assets

8 unchanged sentences

cash and cash equivalents, loans receivable, senior notes payable, and senior unsecured notes payable.

Loans receivable are originated at prevailing market rates and have an average life of approximately 8 months.

Loans receivable are originated at prevailing market rates and have an average life of less than twelve months.

Given the short-term nature of these loans, they are continually repriced at current market rates.

The Company’s senior notes payable has a variable rate based on a margin over LIBOR and reprices with any changes in LIBOR.

The Company’s senior notes payable has a variable rate based on a margin over SOFR and reprices with any changes in SOFR.

The fair value of the senior unsecured notes payable is estimated based on quoted prices in markets that are not active.

1 unchanged sentence

Insurance premiums for credit life, accident and health, property and unemployment insurance written in connection with certain loans, net of refunds and applicable advance insurance commissions retained by the Company, are remitted monthly to an insurance company.

All commissions are credited to unearned insurance commissions and recognized as income over the life of the related insurance contracts.

All commissions are recorded to unearned insurance commissions and recognized as insurance income over the life of the related insurance contracts.

The Company recognizes insurance income using the Rule of 78s method for credit life (decreasing term), credit accident and health, unemployment insurance and the Pro Rata method for credit life (level term) and credit property.

2 unchanged sentences

The premiums and recoveries are remitted to a third party insurance company and are not reflected in the accompanying Consolidated Financial Statements (see Note 8).

Claims paid by the third party insurance company result in a reduction to loan losses.

Claims paid by the third party insurance company result in a reduction to credit losses.

Certain losses related to such loans, which are not recoverable through life, accident and health, property, or unemployment insurance claims, are reimbursed through non-filing insurance claims subject to policy limitations.

28 unchanged sentences

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 agreement and the Notes limit share repurchases to $ 90 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 our debt outstanding was $ 697.0 million and our shareholders' equity was $ 373.0 million resulting in a debt-to-equity ratio of 1.9 :1.0.

As of March 31, 2023 our debt outstanding was $ 595.3 million, net of $ 3.5 million unamortized debt issuance costs related to the unsecured senior notes payable, and our shareholders' equity was $ 385.2 million resulting in a debt-to-equity ratio of 1.6 :1.0.

Concentration of Risk

8 unchanged sentences

Advertising costs were approximately $ 6.1 million, $ 18.3 million, and $ 17.2 million for fiscal years 2023, 2022, and 2021, respectively.

Recently Adopted Accounting Standards

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

In March 2023, the FASB issued ASU No.

2023-02, Investments- Equity Method and Joint Venture (Topic 323) .

The amendments in this ASU permit reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met.

For public business entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted in any interim period.

If an entity adopts the amendments in an interim period, it shall adopt them as of the beginning of the fiscal year that includes that interim period.

The amendments in this pronouncement must be applied on either a modified retrospective or retrospective basis.

The Company adopted this ASU as of April 1, 2022 using the modified retrospective approach.

The adoption of this ASU resulted in a $ 1.9 million cumulative adjustment to the opening balance of retained earnings.

Refer to Note 10 for further details.

Recently Issued Accounting Standards Not Yet Adopted

3 unchanged sentences

Additionally, for public business entities, the amendments in this update require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost .

For entities that have adopted the amendments in Update 2016-13, the amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years and should be applied prospectively, with the exception of the transition method related to the recognition and measurement of troubled debt restructurings in which an entity has the option to apply a modified retrospective transition method.

For entities that have adopted the amendments in Update 2016-13, the amendments in this update are effective for fiscal years

beginning after December 15, 2022, including interim periods within those fiscal years and should be applied prospectively, with the exception of the transition method related to the recognition and measurement of troubled debt restructurings in which an entity has the option to apply a modified retrospective transition method.

Early adoption is permitted.

149 unchanged sentences

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.

Management considers whether current credit conditions might suggest a change is needed to the allowance for credit losses by monitoring trends in first pay success for new borrowers, 60-89 day delinquencies on a recency basis, FICO scores, percent of loan balances that are paying and percentage of gross loans that are acquired loans.

From time to time, the Company will make changes, as deemed appropriate, to our new borrower (NB) underwriting guidance.

As a result, management also considers whether a change in our NB underwriting might suggest a change is needed to the allowance for credit losses.

As of March 31, 2023, there were no current credit conditions or other factors considered significant enough to warrant a change to the allowance for credit losses.

Due to the short term nature of the loan portfolio, forecasted changes in macro-economic 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.

56 unchanged sentences

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.

While a loan is on nonaccrual status, interest income 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 March 31, 2022, the Company reversed a total of $ 10.3 million of unpaid accrued interest against interest income.

During the twelve months ended March 31, 2023 and March 31, 2022, the Company reversed a total of $ 36.5 million and $ 30.6 million, respectively of unpaid accrued interest against interest income.

The following tables present the amortized cost basis of loans on nonaccrual status and the amortized cost basis of nonaccrual loans without related expected credit loss as of March 31, 2022 and 2021.

It also shows year-to-date interest income recognized on nonaccrual loans for fiscal years ended March 31, 2022 and 2021:

Nonaccrual Financial Assets

Customer Tenure As of March 31, 2022 Financial Assets 61 Days or More Past Due, Not on Nonaccrual Status Nonaccrual Financial Assets With No Allowance as of March 31, 2022 Interest Income

0 to 5 months $ 45,227,510 $ — $ — $ 1,485,356

6 to 17 months 15,879,250 — — 1,662,082

18 to 35 months 20,745,106 — — 2,292,776

36 to 59 months 14,232,388 — — 1,602,011

60+ months 47,565,819 — — 5,615,521

Tax advance loans 25,249 — — —

Unearned interest, insurance and fees ( 38,026,011 )

Total $ 105,649,311 $ — $ — $ 12,657,746

Nonaccrual Financial Assets

Customer Tenure 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 March 31, 2021 Interest Income

The following table presents the amortized cost basis of loans on nonaccrual status as of March 31, 2023 and March 31, 2022, as well as interest income recognized on nonaccrual loans for the years ended March 31, 2023, 2022, and 2021:

Nonaccrual Loans Receivable

Customer Tenure As of March 31, 2023 As of March 31, 2022 Interest Income

Fiscal 2023 Interest Income

Fiscal 2022 Interest Income

0 to 5 months $ 15,781,494 $ 45,227,510 $ 2,032,098 $ 1,485,356 $ 1,705,371

6 unchanged sentences

Total $ 86,514,188 $ 105,649,311 $ 15,606,987 $ 12,657,746 $ 14,690,456

As of March 31, 2023 and March 31, 2022, there were no loans receivable 61 days or more past due, not on nonaccrual status, and no loans receivable with no related allowance for credit losses.

The following is a summary of the changes in the allowance for credit losses for the years ended March 31, 2023, 2022, and 2021:

5 unchanged sentences

Recoveries 2 34,226,817 21,060,785 21,631,475

Net charge-off ( 268,153,328 ) ( 143,686,767 ) ( 119,638,650 )

Balance at end of period $ 125,552,733 $ 134,242,862 $ 91,722,288

27 unchanged sentences

and an aggregate of $ 0.5 million for the years thereafter.

The following summarizes the changes in the carrying amount of goodwill for the years ended March 31, 2022 and 2021:

Balance at beginning of year:

Goodwill $ 7,450,422 7,450,422

Accumulated goodwill impairment losses ( 79,631 ) ( 79,631 )

Goodwill, net $ 7,370,791 7,370,791

Goodwill acquired during the year $ — —

Impairment losses — —

Balance at end of year:

Goodwill $ 7,450,422 7,450,422

Accumulated goodwill impairment losses ( 79,631 ) ( 79,631 )

Goodwill, net $ 7,370,791 7,370,791

1 The Company saw a significant increase in charge-offs in fiscal 2023 primarily due to the higher proportion of new borrowers at the beginning of the current fiscal year.

Additionally, new borrowers originated in the prior fiscal year performed worse than expected due to macro-economic factors.

2 Recoveries for the year ended March 31, 2023 include $ 15.8 million in proceeds related to the sale of charge-offs, for which $ 8.4 million relates to bulk sales of charge-offs from prior periods and $ 7.4 million relates to recurring sales of charge-offs.

This gain on sale is included as a component of Provision for credit losses in the Consolidated Statements of Operations.

As of March 31, 2023 and 2022, goodwill was $ 7.4 million.

There were no goodwill additions during fiscal 2023 and 2022.

The Company performed an annual impairment test during the fourth quarters of fiscal 2023 and 2022 and determined none of its recorded goodwill was impaired.

Senior Notes Payable;

Revolving Credit Facility

5 unchanged sentences

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 %.

Subject to a borrowing base formula, the Company may borrow at the rate of one month SOFR plus 0.10 % and an applicable margin of 3.5 %, with a minimum rate of 4.5 %.

The revolving credit facility has a commitment fee of 0.50 % per annum on the unused portion of the commitment.

12 unchanged sentences

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.

During fiscal 2023, the Company repurchased and extinguished $ 9.0 million of its Notes, net of $ 0.1 million unamortized debt issuance costs related to the extinguished debt, on the open market for a reacquisition price of $ 7.2 million.

In accordance with ASC 470, the Company recognized the $ 1.8 million gain on extinguishment as a component of interest expense in the Company's Consolidated Statements of Operations.

Debt Covenants

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 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 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, 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.

(ii) a maximum ratio of total debt to consolidated adjusted net worth of 2.5 to 1.0 (decreasing to 2.25 to 1.0 for the fiscal quarters ending March 31, 2023 and June 30, 2023, 2.0 to 1.0 for the fiscal quarter ending September 30, 2023, 2.25 to 1.0 for the fiscal quarter ending December 31, 2023);

(iii) a maximum collateral performance indicator of 26.0 % as of the end of each calendar month (increasing to 28 % for the calendar months ending October 31, 2022 through June 30, 2023);

and (iv) a minimum fixed charges coverage ratio of 1.25 to 1.0 for the fiscal quarter ended December 31, 2022, 1.15 to 1.0 for the fiscal quarters ending March 31, 2023 and June 30, 2023, 1.50 to 1.0 for the fiscal quarter ending September 30, 2023, 2.0 to 1.0 for the fiscal quarter ending December 31, 2023, and 2.75 to 1.0 for each fiscal quarter thereafter, where the ratio for the most recent four consecutive fiscal quarters must be at least 2.0 to 1.0 in order for the Company to declare dividends or purchase any class or series of its capital stock or other equity.

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 March 31, 2023 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 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.

The agreement contains events of default including, without limitation, nonpayment of principal, interest or other obligations, violation of covenants, misrepresentation, cross-default 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 loans 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.

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;

33 unchanged sentences

Accounting Policies and Matters Requiring Management's Judgment

The Company uses its effective annual interest rate as the discount rate when evaluating leases under Topic 842.

Management applies its effective annual interest rate to leases entered for the entirety of the subsequent year.

For example, fiscal 2021’s annual effective interest rate of 5.8 % will be used in the determination of lease type as well as the discount rate when calculating the present value of lease payments for all leases entered into in fiscal 2022 or until a new annual effective interest rate is available for application.

The Company uses its effective annual or fourth quarter interest rate to determine the discount rate when evaluating leases under Topic 842.

Management applies its effective interest rate to leases entered for the entirety of the subsequent year.

For example, fiscal 2022’s fourth quarter effective interest rate of 6.0 % was used in the determination of lease type as well as the discount rate when calculating the present value of lease payments for all leases entered into in fiscal 2023.

Note that in fiscal 2023, it was determined most reasonable to use fiscal 2022's fourth quarter effective interest rate as the Notes was not effective until September 27, 2021.

Based on its historical practice, the Company believes it is reasonably certain to exercise a given option associated with a given office space lease.

4 unchanged sentences

Both the branch real estate and office equipment lease terms generally range from three years to five years , and generally contain options to extend which mirror the original terms of the lease.

The Company's finance leases consist of IT equipment which have a three year lease term and do not contain an option to extend the lease term.

During the second quarter of fiscal 2023, the lease terms associated with the Company's finance leases expired and the Company exercised its purchase option to acquire the IT equipment.

Because it was reasonably certain that the Company

would obtain the assets at the end of their lease terms, the right-of-use assets are amortized over the useful life of the assets, rather than over the lease terms.

The following table reports information about the Company's lease costs for the years ended March 31, 2023, 2022, and 2021:

16 unchanged sentences

Right-of-use assets obtained in exchange for new operating lease liabilities $ 16,924,511 $ 15,381,953 $ 12,482,167

Weighted-average remaining lease term — finance leases 0.4 years 0.8 years 1.5 years

Weighted-average remaining lease term — finance leases — 0.4 years 0.8 years

Weighted average remaining lease term — operating leases 7.1 years 7.3 years 7.3 years

2 unchanged sentences

The aggregate annual lease obligations as of fiscal year March 31, 2023, are as follows:

Operating Finance

2024 $ 23,157,355

9 unchanged sentences

(10) Income Taxes

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic.

The CARES Act, among other things, expands current benefits of net operating losses and increases the allowable business interest deduction under Section 163(j).

The CARES Act did not have a material impact on the Company's income tax position.

As discussed in Note 1, the Company adopted ASU 2023-02, Investments- Equity Method and Joint Ventures , on a modified retrospective basis effective April 1, 2022.

Prior to the adoption of this pronouncement, the Company recognized its HTC investment under the flow through method over the five-year investment period on a straight-line basis as a component of other expense.

With the adoption of this ASU, the Company now recognizes the investment of the HTC under the proportional amortization method which allows the investment to be recognized in proportion to the tax credit as a component of income tax expense.

During the current fiscal year, the Company recorded a cumulative adjustment of $ 1.9 million to the opening balance of retained earnings, which represents the net difference between the investment amortization under the two methods through the April 1, 2022 adoption date.

As of March 31, 2023, Investment in HTC was $ 23.0 million, which is included as a component of Other assets, net in the Consolidated Balance Sheets.

For the fiscal year ended March 31, 2023, the Company recognized net amortization of $ 2.1 million and $ 1.9 million of tax benefits from these investments in income tax expense and also recognized the $ 1.9 million of tax benefits from these investments in Income taxes payable in the Consolidated Statements of Cash Flows.

The Company did not recognize any non-tax related activity or have any significant modifications to its investments during the current fiscal year.

Income tax expense (benefit) consists of:

21 unchanged sentences

Uncertain tax positions ( 1,151,234 ) ( 555,252 ) ( 2,107,263 )

Nondeductible penalties 2,866 8,274 4,562,830

Executive compensation limitation under Section 162(m) 732,504 1,918,618 1,203,203

Excess tax benefits related to equity compensation ( 73,644 ) ( 3,237,682 ) ( 996,769 )

Prior year adjustments ( 51,728 ) ( 30,953 ) ( 672,358 )

Other, net 740,340 ( 63,722 ) 746,619

17 unchanged sentences

Property and equipment ( 4,611,006 ) ( 4,875,859 )

Intangible assets — ( 243,574 )

Deferred net loan origination costs ( 1,708,369 ) ( 1,268,653 )

Deferred loan origination costs ( 1,212,809 ) ( 1,708,369 )

Prepaid expenses ( 1,766,564 ) ( 1,785,906 )

4 unchanged sentences

At March 31, 2023, the Company had state net operating loss carryforwards of approximately $ 84.7 million.

A deferred tax asset of approximately $ 3.8 million has been recorded to reflect the benefit of these losses.

A deferred tax asset of approximately $ 4.9 million was recorded to reflect the benefit of these losses.

Of this $ 4.9 million, $ 0.9 million is expected to be recognized.

8 unchanged sentences

As of March 31, 2023, 2022, and 2021, the Company had $ 1.1 million, $ 2.2 million, and $ 3.1 million of total gross unrecognized tax benefits including interest, respectively.

Of these totals, approximately $ 2.0 million, $ 2.6 million, and

$ 5.2 million, respectively, represents the amount of net unrecognized tax benefits that are permanent in nature and, if recognized, would affect the annual effective tax rate.

Of these totals, approximately $ 0.9 million, $ 2.0 million, and $ 2.6 million, respectively, represents the amount of net unrecognized tax benefits that are permanent in nature and, if recognized, would affect the annual effective tax rate.

A reconciliation of the beginning and ending amount of unrecognized tax benefits at March 31, 2023, 2022, and 2021 are presented below:

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Gross increases for tax positions of current year 129,146 153,754 36,541

Gross increases (decreases) for tax positions of prior years — — 786,674

Settlements with tax authorities — — ( 1,968,702 )

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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.

Separately, the Compensation Committee approved certain grants of Service Options and Restricted Stock to certain non-employee directors of the Company.

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.

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The option price is equal to the fair market value of the common stock on the grant date and the Service Options shall have a 10 -year term.

The Performance Options shall 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 September 30, 2019.

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Forfeited ( 21,523 ) 119.93

Expired ( 20,445 ) 88.88

Options outstanding, end of period 314,742 3 $ 104.41 5.82 $ 589,526

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2023 2022 2021

Number of branches acquired through business combinations — — 38

Acquisitions:

Number of asset purchases 50 50 50

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Loans receivable, net 28,322,554 9,631,112 15,210,973

Property and equipment — — 74,000

9,631,112 15,210,973 47,100,694

Excess of purchase prices over fair value of net tangible assets $ 1,228,872 $ 4,563,279 $ 14,455,279

Purchase price amount over (below) carrying value of net tangible assets 4 $ ( 5,190,796 ) $ 1,228,872 $ 4,563,279

Customer lists $ — $ 952,872 $ 4,365,779

Non-compete agreements — 276,000 197,500

Goodwill — — 336,328

Acquisitions that are accounted for as business combinations typically result in one or more new branches.

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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.

Given the short-term nature of these loans, generally twelve 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.

The Company did not acquire any loans that would qualify as PCDs 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 the fair value.

4 As a result of the asset purchases during fiscal 2023, the Company recorded a $ 5.2 million gain, net of $ 1.2 million income tax, which is included as a component of Insurance and other income, net in the Consolidated Statements of Operations.

The transactions resulted in a gain as the acquired loan portfolios were purchased at a discount.

As an immediate gain would be recognized on the net loans acquired if the cost below fair value was allocated, it was not determined appropriate to reduce the basis of the net loans acquired.

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.

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.

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Fair Value Disclosures

The Company may carry certain financial instruments and derivative assets and liabilities at fair value on a recurring or nonrecurring basis.

The Company may carry certain financial instruments and derivative assets and liabilities at fair value.

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.

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

The Company’s financial instruments for the periods reported consist of the following:

cash and cash equivalents, loans receivable, the senior notes payable, and the senior unsecured notes payable.

Loans receivable are originated at prevailing market rates and have an average life of approximately 8 months.

The Company’s financial instruments consist of cash and cash equivalents, loans receivable, the senior notes payable, and the senior unsecured notes payable.

Loans receivable are originated at prevailing market rates and have an average life of less than twelve months.

Given the short-term nature of these loans, they are continually repriced at current market rates.

The Company’s senior notes payable has a variable rate based on a margin over LIBOR and reprices with any changes in LIBOR.

The Company’s senior notes payable has a variable rate based on a margin over SOFR and reprices with any changes in SOFR.

The fair value of the senior unsecured notes payable is estimated based on quoted prices in markets that are not active.

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Senior notes payable 3 307,910,824 307,910,824 396,972,746 396,972,746

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:

March 31, 2022 March 31, 2021

Input Level Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

Assets held for sale 2 $ — $ — $ 1,143,528 $ 1,143,528

The Company re-valued its corporate headquarters in Greenville, SC as of March 31, 2020 in conjunction with its reclassification of the related assets as held for sale.

The revaluation resulted in an impairment loss of approximately $ 251,000 , which is included as a component of Other Expense in the Company's Consolidated Statements of Operations.

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 March 31, 2022 and 2021.

There were no other significant assets or liabilities measured at fair value as of March 31, 2023 and 2022.

(15) Quarterly Information (Unaudited)

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Interest expense 11,174 13,032 14,070 12,185 5,501 6,714 10,166 11,044

Income tax expense 4,770 1,641 391 4,857 5,527 3,767 2,418 11,409

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

Net income per common share:

Income tax expense (benefit) ( 3,449 ) ( 246 ) 619 8,990 4,770 1,641 391 4,857

Net income (loss) $ ( 8,803 ) $ ( 1,366 ) $ 5,759 $ 25,643 $ 15,771 $ 12,439 $ 7,327 $ 18,382

Net income (loss) per common share:

Basic $ ( 1.53 ) $ ( 0.24 ) $ 1.00 $ 4.44 $ 2.56 $ 2.04 $ 1.20 3.10

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However, the Company may be required to advance, and ultimately be responsible for, the legal fees and costs incurred by the individual defendants.

On April 19, 2023, the Court preliminarily approved a Stipulation and Agreement of Settlement dated March 31, 2023 (the “Stipulation”), by and among:

the plaintiff, derivatively on behalf of the Company; (ii) the individual defendants;

and (iii) the Company.

If approved, the Stipulation will result in a non-material payment by the Company.

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.

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For these reasons, we are currently unable to predict the ultimate timing or outcome of, or reasonably estimate the possible losses or a range of possible losses resulting from, any currently pending claims.

Based on information currently available, the Company does not believe that any reasonably probable losses arising from currently pending legal matters will be material to the Company’s results of operations or financial conditions.

Based on information currently available, the Company does not believe that any reasonably possible losses arising from currently pending legal matters will be material to the Company’s results of operations or financial conditions.

However, in light of the inherent uncertainties involved in such matters, 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.

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During the second quarter of fiscal 2022 the Company completed the sale of the last held for sale building, and recorded $ 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:

March 31, 2022 March 31, 2021

Assets held for sale:

Property and equipment, net $ — $ 1,143,528

Total assets held for sale $ — $ 1,143,528

As of March 31, 2023 and 2022, there were no assets held for sale.

(18) Subsequent Events

Seventh Amendment to Amended and Restated Revolving Credit Facility

On May 3rd, 2022, the Company entered into the Seventh Amendment among the Company, the lenders named therein, and Wells Fargo Bank, National Association, as Administrative Agent and Collateral Agent.

The Seventh Amendment amends its Amended and Restated Revolving Credit Agreement to, among other things:

• Reduce the required ratio for Net Income Available for Fixed Charges to Fixed Charges to 2.10 to 1.0 for the fiscal quarters ending March 31, 2022, June 30, 2022, September 30, 2022, December 31, 2022, March 31, 2023 and June 30, 2023, with the ratio increasing to 2.75 to 1.0 for each fiscal quarter thereafter.

• Allow the Company to form up to two SPV Subsidiaries for purposes of an anticipated warehouse facility or securitization.

• Transition from a benchmark rate of 1-month LIBOR to a term rate based on SOFR.

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.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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President and Chief Executive Officer Executive Vice President and Chief Financial and Strategy Officer

May 26, 2022 Date:

June 1, 2023 Date:

Report of Independent Registered Public Accounting Firm

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of World Acceptance Corporation and its subsidiaries (the Company) as of March 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended March 31, 2022, and the related notes to the consolidated financial statements (collectively, the financial statements).

We have audited the accompanying consolidated balance sheets of World Acceptance Corporation and its subsidiaries (the Company) as of March 31, 2023 and 2022, the related consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period ended March 31, 2023, and the related notes to the consolidated financial statements and schedules (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 31, 2022, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated May 26, 2022 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 31, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated June 1, 2023 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

Basis for Opinion

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Allowance for Credit Losses

As described in Notes 1 and 2 to the Consolidated Financial Statements, the Company established an allowance for credit losses of $134.2 million as of March 31, 2022, which was estimated using the Company’s current expected credit loss (CECL) model.

As described in Notes 1 and 2 to the financial statements, the Company established an allowance for credit losses of $125.6 million as of March 31, 2023, which was estimated using the Company’s current expected credit loss (CECL) model.

The Company’s CECL model estimates the allowance for credit losses for each Customer Tenure bucket using a historical migration analysis for the twelve most recent historical twelve-month migration periods, adjusted for seasonality.

The Company’s CECL model also includes a reserve at 100% of the outstanding balance of all loans greater than 90 days past due on a recency basis and not written off as of the reporting date, net of a calculated Rehab Rate.

Management considers whether current credit and economic 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 (qualitative factors).

Management also considers whether a change in new borrower underwriting might suggest a change is needed to the allowance for credit losses.

Management also utilizes a reasonable and supportable forecast 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.

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We identified the Company’s allowance for credit losses as a critical audit matter as auditing management’s judgments in evaluating reasonable and supportable forecasts and qualitative factors regarding the allowance for credit losses required a high degree of auditor judgment and increased extent of audit effort.

Our audit procedures related to the Company’s allowance for credit losses included the following, among others:

We obtained an understanding of the relevant controls related to the allowance for credit losses, and tested such controls for design and operating effectiveness, including those controls over (a) validation of data within the CECL

model and (b) the management review and approval of the computed allowance for credit losses including the assessment of reasonable and supportable forecasts and qualitative factors.

We tested the completeness and accuracy of data inputs into the CECL model by comparing to internal data sources.

We evaluated reasonable and supportable forecasts and qualitative factors, including customer tenure loss rate trends and delinquency, for reasonableness by comparing to internal source data.

We tested management’s historical loss rates by customer tenure and loan type by recalculating customer tenure for a sample of charge-offs to ensure they had the correct customer tenure classification within the CECL model, which impacted both the CECL model calculation and the reasonable and supportable forecasts used.

Our audit procedures related to the Company’s allowance for credit losses, specifically the reasonable and supportable forecasts and qualitative factors, included the following, among others:

• We obtained an understanding of the relevant controls related to the allowance for credit losses, and tested such controls for design and operating effectiveness, including those controls over (a) review and approval of the appropriateness of the assumptions of the CECL model and (b) the management review and approval of the computed allowance for credit losses including the assessment of reasonable and supportable forecasts and qualitative factors.

• We tested the completeness and accuracy of data inputs for qualitative factors into the CECL model by comparing to internal data sources.

• We evaluated reasonable and supportable forecasts and qualitative factors for reasonableness by comparing to internal source data.

• We evaluated the accuracy of the delinquency amounts used within the CECL model by testing the recency aging calculation on a sample of loans.

/s/ RSM US LLP

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Opinion on the Internal Control Over Financial Reporting

We have audited World Acceptance Corporation and subsidiaries’ (the Company) internal control over financial reporting as of March 31, 2022, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have audited World Acceptance Corporation and subsidiaries' (the Company’s) internal control over financial reporting as of March 31, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of March 31, 2022 and 2021 and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended March 31, 2022, and our report dated May 26, 2022 expressed an unqualified opinion.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of March 31, 2023 and 2022 and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the three years in the period ended March 31, 2023, and our report dated June 1, 2023 expressed an unqualified opinion.

Basis for Opinion

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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 8. Financial Statements and Supplementary Data