What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-03 compared with 2023-08-03 · 107 added, 65 removed, 178 unchanged (49% of the section changed)

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Consumer Financial Protection Bureau, and individual state regulators having jurisdiction over the Company;

the unpredictable nature of regulatory proceedings and litigation, employee misconduct or misconduct by third parties, uncertainties associated with management turnover and the effective succession of senior management;

media and public characterization of consumer installment loans, labor unrest the impact of changes in accounting rules and regulations, or their interpretation or application, which could materially and adversely affect the Company’s reported consolidated financial statements or necessitate material delays or changes in the issuance of the Company’s audited consolidated financial statements;

the unpredictable nature of regulatory proceedings and litigation;

employee misconduct or misconduct by third parties;

uncertainties associated with management turnover and the effective succession of senior management;

media and public characterization of consumer installment loans;

labor unrest;

the impact of changes in accounting rules and regulations, or their interpretation or application, which could materially and adversely affect the Company’s reported consolidated financial statements or necessitate material delays or changes in the issuance of the Company’s audited consolidated financial statements;

the Company's assessment of its internal control over financial reporting;

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The following table sets forth certain information derived from the Company's Consolidated Statements of Operations and Consolidated Balance Sheets (unaudited), as well as operating data and ratios, for the periods indicated:

Three months ended June 30,

Three months ended September 30, Six months ended September 30,

2023 2022 2023 2022

(Dollars in thousands)

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Operating income as a % of total revenue (4)

24.4 % 8.6 % 21.0 % 4.3 %

Loan volume (5)

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It does not include loans purchased through acquisitions.

Comparison of three months ended June 30, 2023 versus three months ended June 30, 2022

Gross loans outstanding decreased to $1.40 billion as of June 30, 2023, a 14.9% decrease from the $1.64 billion of gross loans outstanding as of June 30, 2022.

During the most recent quarter, we saw a decrease in borrowing from new, former, and refinance customers compared to the same quarter of the prior year due to the tighter underwriting standards implemented in prior quarters.

During the three months ended June 30, 2023 our unique borrowers increased by 1.5% compared to an increase of 0.2% during the three months ended June 30, 2022.

Net income for the three months ended June 30, 2023 increased to $9.5 million, a 211.3% increase from a net loss of $8.6 million for the same period of the prior year.

Comparison of three months ended September 30, 2023 versus three months ended September 30, 2022

Gross loans outstanding decreased to $1.38 billion as of September 30, 2023, a 13.7% decrease from the $1.60 billion of gross loans outstanding as of September 30, 2022.

During the most recent quarter, we saw a decrease in borrowing from new, former, and refinance customers compared to the same quarter of fiscal 2022 due to the tighter underwriting standards implemented in prior quarters.

During the three months ended September 30, 2023 our unique borrowers increased by 1.0% compared to a decrease of 5.1% during the three months ended September 30, 2022.

Net income for the three months ended September 30, 2023 increased to $16.1 million, a 2,622.4% increase from a net loss of $0.6 million for the same period of the prior year.

Operating income, which is revenue less provision for credit losses and general and administrative expenses, increased by $20.5 million, or 158.5%, compared to the same period of the prior fiscal year.

Revenues for the three months ended June 30, 2023 decreased by $18.6 million, or 11.8%, to $139.3 million from $157.9 million for the same period of the prior year.

Interest and fee income for the three months ended June 30, 2023 decreased by $13.6 million, or 10.4%, from the same period of the prior year due to a decrease in loans outstanding.

The decrease was primarily due to a 14.0% decrease in average gross earning loans (total gross loans less gross loans 60 days or more contractually past due and tax advances).

Insurance and other income for the three months ended June 30, 2023 decreased by $5.0 million, or 18.1%, from the same period of the prior year.

Insurance income decreased by approximately $1.0 million, or 5.9%, during the three months ended June 30, 2023 when compared to the three months ended June 30, 2022.

Revenues for the three months ended September 30, 2023 decreased by $14.4 million, or 9.5%, to $136.9 million from $151.3 million for the same period of the prior year.

Interest and fee income for the three months ended September 30, 2023 decreased by $13.5 million, or 10.4%, from the same period of the prior year due to a decrease in loans outstanding.

The decrease was primarily due to an 11.6% decrease in average gross earning loans (total gross loans less gross loans 60 days or more contractually past due and tax advances).

Insurance and other income for the three months ended September 30, 2023 decreased by $0.9 million, or 4.2%, from the same period of the prior year.

Insurance income decreased by approximately $1.3 million, or 7.8%, during the three months ended September 30, 2023 when compared to the three months ended September 30, 2022.

Insurance commissions decreased primarily due to a decrease in loans where our insurance products are available to our customer.

Other income decreased by $4.0 million.

Other income in the prior year's first quarter includes a $3.1 million bargain purchase gain related to an acquisition.

The provision for credit losses decreased $39.2 million, or 45.7%, to $46.6 million from $85.8 million when comparing the first quarter of fiscal 2024 to the first quarter of fiscal 2023.

Other income increased by $0.4 million.

The provision for credit losses decreased $28.1 million, or 41.0%, to $40.5 million from $68.6 million when comparing the second quarter of fiscal 2024 to the second quarter of fiscal 2023.

The table below itemizes the key components of the CECL allowance and provision impact during the quarter.

CECL Allowance and Provision (Dollars in millions) FY 2024 FY 2023 Difference Reconciliation

Beginning Allowance - March 31 $125.5 $134.2 $(8.7)

Beginning Allowance - June 30

$129.3 $155.7 $(26.4)

Change due to Growth $(1.6) $(4.1) $2.5 $2.5

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Change due to 90 day past due $2.4 $7.9 $(5.5) $(5.5)

Ending Allowance - June 30 $129.3 $155.6 $(26.3) $(17.6)

Ending Allowance - September 30

$128.9 $155.9 $(27.0) $(0.6)

Net Charge-offs $40.9 $68.4 $(27.5) $(27.5)

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The change in allowance for the quarter plus net charge-offs for the quarter equals the provision for the quarter (see above reconciliation).

The provision benefited from substantially lower charge-offs, smaller increases in expected loss rates, and slower growth in the

The three most important factors impacting the expected loss rates on performing loans are recent actual loss

performance, changes in mix of the portfolio tenure, and a seasonality factor.

Net charge-offs for the quarter decreased $21.6 million, from $64.4 million in the first quarter of fiscal 2023 to $42.8 million in the first quarter of fiscal 2024.

Net charge-offs as a percentage of average net loan receivables on an annualized basis decreased from 22.3% in the first quarter of fiscal 2023 to 16.9% in the first quarter of fiscal 2024.

Net charge-offs during the period include $4.4 million in proceeds related to recurring sales of charge-offs.

The Company's allowance for credit losses as a percentage of net loans was 12.7% at June 30, 2023 compared to 13.0% at June 30, 2022.

Accounts that were 61 days or more past due on a recency basis were 5.6% of the portfolio at June 30, 2023 and 6.9% of the portfolio at June 30, 2022.

We experienced significant improvement in recency delinquency on accounts at least 90 days past due, improving from 4.1% at June 30, 2022, to 3.5% at June 30, 2023.

Recency delinquency for accounts 0-89 days past due also improved from 23.0% at June 30, 2022, to 20.2% at June 30, 2023.

G&A expenses for the three months ended June 30, 2023 decreased by $3.5 million, or 4.9%, from the corresponding period of the previous year.

As a percentage of revenues, G&A expenses increased from 45.4% during the three months ended June 30, 2022 to 48.9% during the three months ended June 30, 2023.

The provision benefited from substantially lower charge-offs and smaller increases in loans 90 days past due.

Net charge-offs for the quarter decreased $27.5 million, from $68.4 million in the second quarter of fiscal 2023 to $40.9 million in the second quarter of fiscal 2024.

Net charge-offs as a percentage of average net loan receivables on an annualized basis decreased from 23.0% in the second quarter of fiscal 2023 to 16.1% in the second quarter of fiscal 2024.

Net charge-offs during the period include $8.1 million in proceeds related to the sale of charge-offs, for which $4.9 million relates to bulk sales of charge-offs from prior periods and $3.2 million relates to recurring sales of charge-offs.

The Company's allowance for credit losses as a percentage of net loans was 12.8% at September 30, 2023 compared to 13.5% at September 30, 2022.

Accounts that were 61 days or more past due on a recency basis were 5.9% of the portfolio at September 30, 2023 and 8.0% of the portfolio at September 30, 2022.

We experienced significant improvement in recency delinquency on accounts at least 90 days past due, improving from 5.0% at September 30, 2022, to 3.7% at September 30, 2023.

Recency delinquency for accounts 0-89 days past due also improved from 23.5% at September 30, 2022, to 22.1% at September 30, 2023.

G&A expenses for the three months ended September 30, 2023 decreased by $6.7 million, or 9.7%, from the corresponding period of the previous year.

As a percentage of revenues, G&A expenses decreased from 46.1% during the three months ended September 30, 2022 to 46.0% during the three months ended September 30, 2023.

G&A expenses per average open branch decreased by 3.3% when comparing the two three-month periods.

The change in G&A expense is explained in greater detail below.

Personnel expense totaled $41.8 million for the three months ended June 30, 2023, a $3.4 million, or 7.5%, decrease over the three months ended June 30, 2022.

Benefit expense decreased approximately $1.7 million, or 18.4%, when comparing the quarterly periods ended June 30, 2023 and 2022.

Personnel expense totaled $38.4 million for the three months ended September 30, 2023, a $6.9 million, or 15.1%, decrease over the three months ended September 30, 2022.

Benefit expense increased approximately $1.2 million, or 15.0%, when comparing the quarterly periods ended September 30, 2023 and 2022.

Incentive expense decreased $7.3 million, or 93.9%.

This was offset by a $1.1 million, or 3.6%, increase in salary expense when comparing the two quarterly periods ended June 30, 2023 and 2022.

The decrease in incentive expense is mostly due to a $1.9 million decrease in share based compensation and bonus expense.

On July 1, 2022, we increased base wages for our Financial Service Representatives to a minimum of approximately $15 an hour and eliminated the monthly bonus for the same position.

The increase in salary expense is mostly due to the increased base wages for our Financial Service Representatives as mentioned above, partially offset by our headcount as of June 30, 2023, decreasing by 5.3% compared to June 30, 2022.

Occupancy and equipment expense totaled $12.6 million for the three months ended June 30, 2023, a $0.6 million, or 4.6%, decrease over the three months ended June 30, 2022.

Salary expense decreased $0.6 million, or 1.9%, when comparing the two quarterly periods ended September 30, 2023 and 2022.

The decrease in incentive expense is mostly due to a decrease in share-based compensation of $4.9 million related to the reversal of the expense associated with the third tranche of our performance-based share plan, since the Company determined it is no longer probable to achieve the target required for the third tranche to vest, which was set at earnings per share of $25.30 over four consecutive quarters.

Occupancy and equipment expense totaled $12.4 million for the three months ended September 30, 2023, a $1.1 million, or 7.9%, decrease over the three months ended September 30, 2022.

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

The current year includes $0.3 million in expense related to the merger of branches during the quarter.

For the three months ended June 30, 2023, the average open branches decreased 8.4% compared to the three months ended June 30, 2022.

Advertising expense increased $0.5 million, or 24.5%, in the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023 due to increased spending on customer acquisition programs.

Amortization of intangible assets totaled $1.1 million for the three months ended June 30, 2023, a $62.8 thousand, or 5.5%, decrease over the three months ended June 30, 2022.

Other expense totaled $9.9 million for the three months ended June 30, 2023, remaining relatively flat compared to the three month ended June 30, 2022.

Interest expense for the three months ended June 30, 2023 increased by $1.1 million, or 9.6%, from the corresponding three months of the previous year.

The increase in interest expense was due to a 42% increase in the effective interest rate from 6.0% to 8.5%, partially offset by a 20.0% decrease in the average debt outstanding, from $741.7 million to $593.2 million.

The Company’s senior debt-to-equity ratio decreased from 2.2:1 at June 30, 2022 to 1.5:1 at June 30, 2023.

The prior year's second quarter includes $0.7 million in expense related to the merger of branches during the quarter.

For the three months ended September 30, 2023, the average open branches decreased 6.6% compared to the three months ended September 30, 2022.

Advertising expense increased $1.2 million, or 122.0%, in the second quarter of fiscal 2024 compared to the second quarter of fiscal 2023 due to increased spending on customer acquisition programs.

Amortization of intangible assets totaled $1.1 million for the three months ended September 30, 2023, a $43.5 thousand, or 3.9%, decrease over the three months ended September 30, 2022.

Other expense totaled $8.8 million for the three months ended September 30, 2023, remaining relatively flat compared to the three months ended September 30, 2022.

Interest expense for the three months ended September 30, 2023 decreased by $0.5 million, or 3.8%, from the corresponding three months of the previous year.

The decrease in interest expense was due to a 25.2% decrease in the average debt outstanding from $775.6 million to $580.4 million partially offset by a 30% increase in the effective interest rate from 6.7% to 8.7%.

The Company’s senior debt-to-equity ratio decreased from 2.1:1 at September 30, 2022 to 1.4:1 at September 30, 2023.

The Company repurchased and extinguished $1.5 million of its Notes, net of $16.0 thousand unamortized debt issuance costs related to the extinguished debt, on the open market for a reacquisition price of $1.3 million.

Other key return ratios for the three months ended June 30, 2023 included a 3.3% return on average assets and a return on average equity of 10.7% (both on a trailing 12-month basis), as compared to a 2.5% return on average assets and a return on average equity of 7.5% (both on a trailing 12-month basis) for the three months ended June 30, 2022.

The Company’s effective income tax rate increased to 22.8% for the three months ended June 30, 2023 compared to 20.2% for the corresponding period of the previous year.

The increase is primarily due to the tax benefit related to the bargain purchase recorded as a discrete item in the prior year quarter.

This was partially offset by the effects of pretax book earnings relative to the effects of various permanent items including a decrease in the disallowed executive compensation under Section 162(m) and the recognition of additional HTCs when compared to the prior year quarter.

Other key return ratios for the three months ended September 30, 2023 included a 5.0% return on average assets and a return on average equity of 15.2% (both on a trailing 12-month basis), as compared to a 1.3% return on average assets and a return on average equity of 4.1% (both on a trailing 12-month basis) for the three months ended September 30, 2022.

The Company’s effective income tax rate increased to 23.1% for the three months ended September 30, 2023 compared to (618.9)% for the corresponding period of the previous year.

The difference is primarily due to the effects of pretax book earnings relative to the effects of various permanent items including a decrease in the disallowed executive compensation under Section 162(m) and the recognition of additional HTCs when compared to the prior year quarter.

Comparison of six months ended September 30, 2023 versus six months ended September 30, 2022

Gross loans outstanding decreased to $1.38 billion as of September 30, 2023, a 13.7% decrease from the $1.60 billion of gross loans outstanding as of September 30, 2022.

During the six months ended September 30, 2023 our number of unique borrowers in the portfolio decreased by 9.4% compared to a decrease of 2.3% during the six months ended September 30, 2022.

Net income for the six months ended September 30, 2023 increased to $25.6 million, a 378.4% increase from the $9.2 million loss reported for the same period of the prior year.

Operating income (revenue less provision for credit losses and general and administrative expenses) increased by $44.7 million, or 333.6%.

Revenues decreased by $33.0 million, or 10.7%, to $276.2 million during the six months ended September 30, 2023 from $309.2 million for the same period of the prior year.

The decrease was primarily due to a decrease in average net loans outstanding.

Interest and fee income for the six months ended September 30, 2023 decreased by $27.1 million, or 10.4%, from the same period of the prior year.

Net loans outstanding at September 30, 2023 decreased by 12.9% over the balance at September 30, 2022.

Average net loans outstanding decreased by 13.0% for the six months ended September 30, 2023 compared to the six-month period ended September 30, 2022.

Insurance commissions and other income for the six months ended September 30, 2023 decreased by $5.9 million, or 12.1%, from the same period of the prior year.

Insurance commissions decreased by approximately $2.3 million, or 6.8%, during the six months ended September 30, 2023 when compared to the six months ended September 30, 2022.

Other income decreased by $3.6 million.

Sales of our motor club product decreased by $1.5 million as sales opportunities decreased with lower originations.

The provision for credit losses decreased $67.3 million, or 43.6%, to $87.1 million from $154.4 million when comparing the first two quarters of fiscal 2024 to the first two quarters of fiscal 2023.

This decrease was primarily driven by a $49.1 million decrease in net charge-offs.

Net charge-offs as a percentage of average net loans receivable on an annualized basis decreased from 22.8% in the first two quarters of fiscal 2023 to 16.5% in the first two quarters of fiscal 2024.

Net charge-offs during the period include $12.5 million in proceeds related to the sales of charge-offs, for which $4.9 million relates to bulk sales of charge-offs from prior periods and $7.6 million relates to recurring sales of charge-offs.

G&A expenses for the six months ended September 30, 2023 decreased by $10.3 million, or 7.3%, from the corresponding period of the previous year.

As a percentage of revenues, G&A expenses increased from 45.7% during the first six months of fiscal 2023 to 47.5% during the first six months of fiscal 2024.

G&A expenses per average open branch increased by 0.1% when comparing the two six-month periods.

The change in G&A expense is explained in greater detail below.

Personnel expense totaled $80.2 million for the six months ended September 30, 2023, a $10.2 million, or 11.3%, decrease over the six months ended September 30, 2022.

Salary expense decreased approximately $0.4 million, or 0.7%, when comparing the two six month periods ended September 30, 2023 and 2022.

Our headcount as of September 30, 2023, decreased 6.2% compared to September 30, 2022.

Benefit expense decreased approximately $0.5 million, or 3.0%, when comparing the six month periods ended September 30, 2023 and 2022.

Incentive expense decreased $10.7 million, or 60.8%, mostly due to the reversal of the expense associated with the third tranche of our performance-based share plan as discussed above.

Occupancy and equipment expense totaled $25.0 million for the six months ended September 30, 2023, a $1.7 million, or 6.3%, decrease over the six months ended September 30, 2022.

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

For the six months ended September 30, 2023, the average occupancy and equipment expense per branch increased to $23.7 thousand, up from $23.4 thousand for the six months ended September 30, 2022.

The prior year includes $1.1 million in expense related to the merger of branches during the period.

Advertising expense totaled $5.0 million for the six months ended September 30, 2023, a $1.8 million, or 55.1%, increase over the six months ended September 30, 2022 due to increased spending on customer acquisition programs.

Amortization of intangible assets totaled $2.1 million for the six months ended September 30, 2023, a $106.3 thousand, or 4.7%, decrease over the six months ended September 30, 2022.

Other expense totaled $18.7 million for the six months ended September 30, 2023, remaining relatively flat compared to the six months ended September 30, 2022.

Interest expense for the six months ended September 30, 2023 increased by $0.6 million, or 2.4%, from the corresponding six months of the previous year.

The increase in interest expense was due to a 35.2% increase in the effective interest rate from 6.4% to 8.6%, offset by a 22.4% decrease in the average debt outstanding, from $755.4 million to $586.5 million.

Other key return ratios for the first six months of fiscal 2024 included a 5.0% return on average assets and a return on average equity of 15.2% (both on a trailing 12-month basis), as compared to a 1.3% return on average assets and a return on average equity of 4.1% (both on a trailing 12-month basis) for the first six months of fiscal 2023.

The Company’s effective income tax rate increased to 23.0% for the six months ended September 30, 2023 compared to 14.9% for the corresponding period of the previous year.

The increase is primarily due to the tax benefit related to the bargain purchase recorded as a discrete item in the prior year.

Regulatory Matters

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Supreme Court to review the Fifth Circuit’s panel decision.

The Supreme Court has scheduled oral arguments on October 3, 2023 and it is possible that a decision may not be issued until the end of the Court’s term in June 2024.

The Supreme Court heard oral arguments on October 3, 2023 and it is possible that a decision may not be issued until the end of the Court’s term in June 2024.

Implementation of the Rule’s payment requirements is uncertain, but if it were to take effect it could 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.

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In its Fall 2015 rulemaking agenda, the CFPB stated that it expected to conduct a rulemaking to identify larger participants in the installment lending market for purposes of its supervision program.

However, this initiative was classified as “inactive” on the CFPB’s Spring 2018 rulemaking, and its Fall 2022 rulemaking agenda showed no planned activity in this area.

However, this initiative was classified as “inactive” on the CFPB’s Spring 2018 rulemaking, and its Spring 2023 rulemaking agenda showed no planned activity in this area.

Though the likelihood and timing of any such rulemaking is uncertain, the Company believes that the implementation of such rules would likely bring the Company’s business under the CFPB’s supervisory authority which, among other things, would subject the Company to reporting obligations to, and on-site compliance examinations by, the CFPB.

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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.

Net cash provided by operating activities for the three months ended June 30, 2023 was $59.7 million.

Net cash provided by operating activities for the six months ended September 30, 2023 was $123.1 million.

The Company believes that attractive opportunities to acquire new branches or receivables from its competitors or to acquire branches in communities not currently served by the Company will continue to become available as conditions in local economies and the financial circumstances of owners change.

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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 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.

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During fiscal 2023, the Company repurchased and extinguished $9.1 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.

During the first three months of fiscal 2024.

the Company repurchased and extinguished $2.0 million of its Notes, net of $24.1 thousand unamortized debt issuance costs related to the extinguished debt, on the open market for a reacquisition price of $1.54 million.

During the first six months of fiscal 2024, the Company repurchased and extinguished $3.5 million of its Notes, net of $40.1 thousand unamortized debt issuance costs related to the extinguished debt, on the open market for a reacquisition price of $2.9 million.

In accordance with ASC 470, the Company recognized the $0.6 million gain on extinguishment as a component of interest expense in the Company's Consolidated Statements of Operations.

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However, our revolving credit facility and the Notes limit share repurchases to up to 50% of consolidated adjusted net income for the period commencing January 1, 2019.

As of June 30, 2023, subject to further approval from our Board of Directors, we could repurchase approximately $34.0 million of shares under the terms of our debt facilities.

As of September 30, 2023, subject to further approval from our Board of Directors, we could repurchase approximately $42.0 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.

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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%.

At June 30, 2023, the aggregate commitments under the revolving credit facility were $685.0 million.

At September 30, 2023, the aggregate commitments under the revolving credit facility were $580.0 million.

The $524.0 thousand letter of credit outstanding under the subfacility expires on December 31, 2023;

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Further, under the amended and restated revolving credit agreement, the administrative agent has the right to set aside reasonable reserves against the available borrowing base in such amounts as it may deem appropriate, including, without limitation, reserves with respect to certain regulatory events or any increased operational, legal, or regulatory risk of the Company and its subsidiaries.

For the three months ended June 30, 2023 and fiscal year ended March 31, 2023, the Company’s effective interest rate, including the commitment fee and amortization of debt issuance costs, was 9.6% annualized and 7.0%, respectively.

At June 30, 2023, the unused amount available under the revolving credit facility was $366.3 million and borrowings under the revolving credit facility mature on June 7, 2024.

For the six months ended September 30, 2023 and fiscal year ended March 31, 2023, the Company’s effective interest rate, including the commitment fee and amortization of debt issuance costs, as it relates to the revolving credit facility was 9.8% annualized and 7.0%, respectively.

At September 30, 2023, the unused amount available under the revolving credit facility was $302.9 million and borrowings under the revolving credit facility mature on June 7, 2026.

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.

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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 June 30, 2023 and does not believe that these covenants will materially limit its business and expansion strategy.

The Company was in compliance with these covenants at September 30, 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 loans receivable 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.

As of September 30, 2023, the Company's debt outstanding was $560.9 million, net of $3.0 million unamortized debt issuance costs related to the unsecured senior notes payable, and its shareholders' equity was $410.0 million resulting in a debt-to-equity ratio of 1.4:1.0.

Management will continue to monitor the Company's debt-to-equity ratio and is committed to maintaining a debt level that will allow the Company to continue to execute its business objectives, while not putting undue stress on its consolidated balance sheet.

The Company believes that cash flow from operations and borrowings under its revolving credit facility or other sources will be adequate to fund the expected cost of opening or acquiring new branches, including funding initial operating losses of new branches and funding loans receivable originated by those branches and the Company's other branches (for the next 12 months and for the foreseeable future beyond that).

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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 remained available for repurchase under prior repurchase authorizations.

As of June 30, 2023 the Company had $1.1 million in aggregate remaining repurchase capacity under its current share repurchase program.

As of September 30, 2023, the Company had $1.1 million in aggregate remaining repurchase capacity under its current share repurchase program.

The timing and actual number of shares repurchased will depend on a variety of factors, including the stock price, corporate and regulatory requirements, available funds, alternative uses of capital, restrictions under the revolving credit agreement, and other market and economic conditions.

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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.

As of June 30, 2023, subject to further approval from our Board of Directors, we could repurchase approximately $34.0 million of shares under the terms of our debt facilities.

priority is to ensure we have enough capital to fund loan growth.

As of September 30, 2023, subject to further approval from our Board of Directors, we could repurchase approximately $42.0 million of shares under the terms of our debt facilities.

To the extent we have excess capital, we may repurchase stock, if appropriate and as authorized by our Board of Directors.

As of June 30, 2023, the Company's debt outstanding was $585.4 million, net of $3.2 million unamortized debt issuance costs related to the unsecured senior notes payable, and its shareholders' equity was $396.9 million resulting in a debt-to-equity ratio of 1.5:1.0.

The Company does not believe that inflation, within reasonably anticipated rates, will have a material, adverse effect on its financial condition.

31 unchanged sentences

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-Q

Item 2. Management’s Discussion and Analysis