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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-08 · 104 added, 64 removed, 190 unchanged (47% 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;

the unpredictable nature of regulatory examinations, proceedings and litigation;

employee misconduct or misconduct by third parties;

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changes in the Company’s markets and general changes in the economy (particularly in the markets served by the Company).

These and other risks are discussed in more detail in Part I, Item 1A “Risk Factors” in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2024 filed with the SEC, and in the Company’s other reports filed with, or furnished to, the SEC from time to time.

These and other risks are discussed in more detail in Part I, Item 1A “Risk Factors” in the Company's fiscal 2024 Annual Report, and in the Company’s other reports filed with, or furnished to, the SEC from time to time.

The Company does not undertake any obligation to update any forward-looking statements it may make, except to the extent required by law.

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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,

2024 2023 2024 2023

(Dollars in thousands)

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

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

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

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

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It does not include loans purchased through acquisitions.

Comparison of three months ended June 30, 2024 versus three months ended June 30, 2023

Gross loans outstanding decreased to $1.275 billion as of June 30, 2024, an 8.8% decrease from the $1.398 billion of gross loans outstanding as of June 30, 2023.

During the most recent quarter, gross loans outstanding decreased sequentially 0.2%, from $1.277 million as of March 31, 2024, compared to an increase of 0.6%, or $8.0 million, in the comparable quarter of the prior year.

Our customer base decreased by 2.6% during the twelve-month period ended June 30, 2024, compared to a decrease of 14.8% for the comparable period ended June 30, 2023.

During the three months ended June 30, 2024 our unique borrowers increased by 0.5% compared to an increase of 1.5% during the three months ended June 30, 2023.

Comparison of three months ended September 30, 2024 versus three months ended September 30, 2023

Gross loans outstanding decreased to $1.296 billion as of September 30, 2024, a 6.1% decrease from the $1.380 billion of gross loans outstanding as of September 30, 2023.

During the most recent quarter, gross loans outstanding increased 1.7%, from $1.275 million as of June 30, 2024, compared to a decrease of 1.3%, or $18.5 million, in the comparable quarter of the prior year.

During the most recent quarter, we saw improvement in borrowing from new, former and existing customers compared to the same quarter of fiscal year 2024.

Specifically, new, former and refinance loan customer volume during the quarter increased 20.8%, 11.5% and 2.9%, respectively, compared to the same quarter of fiscal year 2024.

Our customer base decreased by 0.1% during the twelve-month period ended September 30, 2024, compared to a decrease of 9.4% for the comparable period ended September 30, 2023.

During the three months ended September 30, 2024 our unique borrowers increased by 3.6% compared to an increase of 1.0% during the three months ended September 30, 2023.

We continued to improve the gross yield to expected loss ratio for all new, former and refinance customer originations and will continue to monitor performance indicators and intend to adjust underwriting accordingly.

Net income for the three months ended June 30, 2024 increased to $9.9 million, a 4.3% increase from net income of $9.5 million for the same period of the prior year.

Operating income, which is revenue less provision for credit losses and general and administrative expenses, decreased by $1.9 million, or 7.7%, compared to the same period of the prior year.

Revenues for the three months ended June 30, 2024 decreased by $9.8 million, or 7.0%, to $129.5 million from $139.3 million for the same period of the prior year.

Interest and fee income for the three months ended June 30, 2024 decreased by $5.5 million, or 4.7%, from the same period of the prior year due to a decrease in loans outstanding.

The large loan portfolio decreased from 57.4% of the overall portfolio as of June 30, 2023, to 54.5% as of June 30, 2024.

Insurance and other income for the three months ended June 30, 2024 decreased by $4.3 million, or 19.1%, from the same period of the prior year.

Insurance income decreased by approximately $3.1 million, or 19.4%, during the three months ended June 30, 2024 when compared to the three months ended June 30, 2023.

Net income for the three months ended September 30, 2024 increased to $22.1 million, a 37.6% increase from net income of $16.1 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 $4.9 million, or 14.7%, compared to the same period of the prior year.

Revenues for the three months ended September 30, 2024 decreased by $5.5 million, or 4.0%, to $131.4 million from $136.9 million for the same period of the prior year.

Interest and fee income for the three months ended September 30, 2024 decreased by $3.0 million, or 2.6%, from the same period of the prior year due to a decrease in loans outstanding.

The large loan portfolio decreased from 56.7% of the overall portfolio as of September 30, 2023, to 52.1% as of September 30, 2024.

Insurance and other income for the three months ended September 30, 2024 decreased by $2.4 million, or 12.1%, from the same period of the prior year.

Insurance income decreased by approximately $3.2 million, or 20.5%, during the three months ended September 30, 2024 when compared to the three months ended September 30, 2023.

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

Other income decreased by $1.2 million, primarily due to a decrease in revenue from the Company's motor club product and tax preparations.

The provision for credit losses decreased $1.2 million, or 2.5%, to $45.4 million from $46.6 million when comparing the first quarter of fiscal 2025 to the first quarter of fiscal 2024.

Other income increased by $0.8 million.

The provision for credit losses increased $6.2 million, or 15.3%, to $46.7 million from $40.5 million when comparing the second quarter of fiscal 2025 to the second quarter of fiscal 2024.

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

CECL Allowance and Provision (Dollars in millions) Q2 FY 2025 Q2 FY 2024 Difference Reconciliation

Beginning Allowance - March 31 $103.0 $125.5 $(22.5)

Beginning Allowance - June 30 $109.7 $129.3 $(19.6)

Change due to Growth $1.8 $(1.6) $3.4 $3.4

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Change due to 90 day past due $2.2 $2.4 $(0.2) $(0.2)

Ending Allowance - June 30 $109.7 $129.3 $(19.6) $2.9

Ending Allowance - September 30 $114.5 $128.9 $(14.4) $5.2

Net Charge-offs $41.9 $40.9 $1.0 $1.0

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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 lower net charge-offs during the current quarter.

This was partially offset by a seasonally driven increase in expected loss rates.

Net charge-offs for the quarter decreased $4.1 million, from $42.8 million in the first quarter of fiscal 2024 to $38.7 million in the first quarter of fiscal 2025.

Net charge-offs as a percentage of average net loan receivables on an annualized basis decreased from 16.9% in the first quarter of fiscal 2024 to 16.4% in the first quarter of fiscal 2025.

Net charge-offs during the current quarter include $2.6 million in proceeds related to recurring sales of charge-offs.

The Company's allowance for credit losses as a percentage of net loans was 11.6% at June 30, 2024 compared to 12.7% at June 30, 2023.

Accounts that were 61 days or more past due on a recency basis remained flat at 5.6% at June 30, 2024 and June 30, 2023.

We experienced a slight improvement in recency delinquency on accounts at least 90 days past due, improving from 3.5% at June 30, 2023, to 3.4% at June 30, 2024.

G&A expenses for the three months ended June 30, 2024 decreased by $6.7 million, or 9.9%, from the corresponding period of the previous year.

As a percentage of revenues, G&A expenses decreased from 48.9% during the three months ended June 30, 2023 to 47.4% during the three months ended June 30, 2024.

The provision was negatively impacted by loan growth and an increase in expected loss rates during the quarter.

Specifically, expected loss rates were negatively impacted by an increase in our 0-5 month customers, our riskiest customers, during the current quarter.

Net charge-offs for the quarter increased $1.0 million, from $40.9 million in the second quarter of fiscal 2024 to $41.9 million in the second quarter of fiscal 2025.

Net charge-offs as a percentage of average net loan receivables on an annualized basis increased from 16.1% in the second quarter of fiscal 2024 to 17.6% in the second quarter of fiscal 2025.

The prior year quarter's net charge-offs benefited from a $4.9 million bulk sale of charge-offs from prior periods.

The Company's allowance for credit losses as a percentage of net loans was 12.0% at September 30, 2024 compared to 12.8% at September 30, 2023.

Accounts that were 61 days or more past due on a recency basis decreased to 5.6% at September 30, 2024 compared to 5.9% at September 30, 2023.

We experienced an improvement in recency delinquency on accounts at least 90 days past due, improving from 3.7% at September 30, 2023, to 3.4% at September 30, 2024.

G&A expenses for the three months ended September 30, 2024 decreased by $16.6 million, or 26.4%, from the corresponding period of the previous year.

As a percentage of revenues, G&A expenses decreased from 46.0% during the three months ended September 30, 2023 to 35.3% during the three months ended September 30, 2024.

G&A expenses per average open branch increased by 25.9% when comparing the two three-month periods.

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

Personnel expense totaled $37.0 million for the three months ended June 30, 2024, a $4.8 million, or 11.5%, decrease over the three months ended June 30, 2023.

Salary expense decreased approximately $0.3 million, or 0.9%, during the quarter ended June 30, 2024, compared to the quarter ended June 30, 2023.

Our headcount as of June 30, 2024, decreased 5.4% compared to June 30, 2023.

Benefit expense decreased approximately $0.9 million, or 11.1%, when comparing the quarterly periods ended June 30, 2024 and 2023.

Incentive expense decreased $3.5 million, or 54.8%.

The decrease in incentive expense is mostly due to a decrease in share-based compensation.

Occupancy and equipment expense totaled $12.2 million for the three months ended June 30, 2024, a $0.5 million, or 3.6%, decrease over the three months ended June 30, 2023.

Personnel expense totaled $21.8 million for the three months ended September 30, 2024, a $16.7 million, or 43.4%, decrease over the three months ended September 30, 2023.

Salary expense decreased approximately $0.5 million, or 1.7%, during the quarter ended September 30, 2024, compared to the quarter ended September 30, 2023.

Our headcount as of September 30, 2024, decreased 6.7% compared to September 30, 2023.

Benefit expense decreased approximately $1.1 million, or 12.2%, when comparing the quarterly periods ended September 30, 2024 and 2023.

Incentive expense decreased $14.6 million in the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024.

The decrease in incentive expense is mostly due to a decrease in share-based compensation as a result of an

$18.5 million reversal of the expense associated with the $20.45 Performance Shares since the Company is no longer expected to achieve the target required to vest.

Occupancy and equipment expense totaled $12.3 million for the three months ended September 30, 2024, a $0.1 million, or 0.7%, decrease over the three months ended September 30, 2023.

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

The prior year's first quarter includes $0.3 million in expense related to the merger of branches during the quarter.

For the three months ended June 30, 2024, the average open branches decreased 1.4% compared to the three months ended June 30, 2023.

Advertising expense decreased $1.1 million, or 39.8%, in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024 due to decreased spending on customer acquisition programs.

Amortization of intangible assets totaled $1.0 million for the three months ended June 30, 2024, a $63.6 thousand, or 5.9%, decrease over the three months ended June 30, 2023.

Other expense totaled $9.6 million for the three months ended June 30, 2024, a $0.3 million, or 2.9%, decrease over the three months ended June 30, 2023.

Interest expense for the three months ended June 30, 2024 decreased by $2.5 million, or 20.2%, from the corresponding three months of the previous year.

The decrease in interest expense was due to a 17.5% decrease in the average debt outstanding from $593.2 million to $489.2 million partially offset by a 1.4% increase in the effective interest rate from 8.5% to 8.6%.

The Company’s debt-to-equity ratio decreased from 1.5:1 at June 30, 2023 to 1.2:1 at June 30, 2024.

The Company repurchased and extinguished $21.8 million of its Notes, net of $0.2 million unamortized debt issuance costs related to the extinguished debt, on the open market for a reacquisition price of $21.0 million during the first quarter of fiscal 2025.

Other key return ratios for the three months ended June 30, 2024 included a 7.1% return on average assets and a return on average equity of 18.9% (both on a trailing 12-month basis), as compared to a 3.3% return on average assets and a return on average equity of 10.7% (both on a trailing 12-month basis) for the three months ended June 30, 2023.

The Company’s effective income tax rate increased to 23.1% for the three months ended June 30, 2024 compared to 22.8% for the corresponding period of the previous year.

The effective tax rate remained substantially unchanged from the prior year quarter with the slight increase related to return to provision adjustments recorded as discrete items in the prior year quarter.

Advertising expense increased $0.6 million, or 25.9%, in the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024 due to increased spending on customer acquisition programs.

Amortization of intangible assets totaled $1.0 million for the three months ended September 30, 2024, a $103.5 thousand, or 9.7%, decrease over the three months ended September 30, 2023.

Other expense totaled $8.5 million for the three months ended September 30, 2024, a $0.3 million, or 3.3%, decrease over the three months ended September 30, 2023.

Interest expense for the three months ended September 30, 2024 decreased by $2.1 million, or 16.6%, from the corresponding three months of the previous year.

The decrease in interest expense was due to a 14.5% decrease in the average debt outstanding from $580.4 million to $496.0 million and a 0.6% decrease in the effective interest rate from 8.71% to 8.66%.

The Company’s debt-to-equity ratio decreased from 1.4:1 at September 30, 2023 to 1.2:1 at September 30, 2024.

The Company repurchased and extinguished $11.9 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 $11.5 million during the second quarter of fiscal 2025.

Other key return ratios for the three months ended September 30, 2024 included a 7.8% return on average assets and a return on average equity of 20.1% (both on a trailing 12-month basis), as compared to a 5.0% return on average assets and a return on average equity of 15.2% (both on a trailing 12-month basis) for the three months ended September 30, 2023.

The Company’s effective income tax rate decreased to 20.8% for the three months ended September 30, 2024 compared to 23.1% for the corresponding period of the previous year.

The decrease 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.

Comparison of six months ended September 30, 2024 versus six months ended September 30, 2023

Gross loans outstanding decreased to $1.296 billion as of September 30, 2024, a 6.1% decrease from the $1.380 billion of gross loans outstanding as of September 30, 2023.

Net income for the six months ended September 30, 2024 increased to $32.1 million from the $25.6 million net income reported 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 $3.0 million, or 5.2%.

Revenues decreased by $15.3 million, or 5.5%, to $260.9 million during the six months ended September 30, 2024 from $276.2 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, 2024 decreased by $8.5 million, or 3.6%, from the same period of the prior year.

Net loans outstanding at September 30, 2024 decreased by 5.2% over the balance at September 30, 2023.

Average net loans outstanding decreased by 6.8% for the six months ended September 30, 2024 compared to the six-month period ended September 30, 2023.

Insurance commissions and other income for the six months ended September 30, 2024 decreased by $6.8 million, or 15.9%, from the same period of the prior year.

Insurance commissions decreased by approximately $6.3 million, or 19.9%, during the six months ended September 30, 2024 when compared to the six months ended September 30, 2023.

Other income decreased by $0.5 million.

Sales of our motor club product decreased by $1.2 million as sales opportunities decreased with lower originations.

This decrease was offset by a $0.8 million increase in revenue from the Company's tax preparation.

The provision for credit losses increased $5.0 million, or 5.8%, to $92.1 million from $87.1 million when comparing the first two quarters of fiscal 2025 to the first two quarters of fiscal 2024.

Net charge-offs as a percentage of average net loans receivable on an annualized basis increased from 16.5% in the first two quarters of fiscal 2024 to 17.0% in the first two quarters of fiscal 2025.

G&A expenses for the six months ended September 30, 2024 decreased by $23.3 million, or 17.8%, from the corresponding period of the previous year.

As a percentage of revenues, G&A expenses decreased from 47.5% during the first six months of fiscal 2024 to 41.3% during the first six months of fiscal 2025.

G&A expenses per average open branch decreased by 16.9% when comparing the two six-month periods.

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

Personnel expense totaled $58.7 million for the six months ended September 30, 2024, a $21.5 million, or 26.8%, decrease over the six months ended September 30, 2023.

Salary expense decreased approximately $0.8 million, or 1.3%, when comparing the six month periods ended September 30, 2024 and 2023.

Our headcount as of September 30, 2024, decreased 6.7% compared to September 30, 2023.

Benefit expense decreased approximately $2.0 million, or 11.7%, when comparing the six month periods ended September 30, 2024 and 2023.

Incentive expense decreased $18.1 million, mostly due to the $18.5 million reversal of the expense associated with the $20.45 Performance Shares since the Company is no longer expected to achieve the target required to vest.

Occupancy and equipment expense totaled $24.5 million for the six months ended September 30, 2024, a $0.5 million, or 2.2%, decrease over the six months ended September 30, 2023.

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, 2024, the average occupancy and equipment expense per branch totaled $23.4 thousand, a 0.3 thousand, or 1.3% decrease when compared to the six months ended September 30, 2023.

Advertising expense totaled $4.5 million for the six months ended September 30, 2024, a $0.5 million, or 10.3%, decrease over the six months ended September 30, 2023 due to decreased spending on customer acquisition programs.

Amortization of intangible assets totaled $2.0 million for the six months ended September 30, 2024, a $0.2 million, or 7.8%, decrease over the six months ended September 30, 2023.

Other expense totaled $18.1 million for the six months ended September 30, 2024, a $0.6 million, or 3.1% decrease over the six months ended September 30, 2023.

Interest expense for the six months ended September 30, 2024 decreased by $4.6 million, or 18.4%, from the corresponding six months of the previous year.

The decrease in interest expense was due to a 16.1% decrease in the average debt outstanding, from $586.5 million to $492.3 million, and a $0.6 million increase in gain recognized on Notes repurchased and extinguished during the six months ended September 30, 2024.

The Company repurchased and extinguished $33.7 million of its Notes, net of $0.3 unamortized debt issuance costs related to the extinguished debt, on the open market for a reacquisition price of $32.5 million, during the six months ended September 30, 2024.

Other key return ratios for the first six months of fiscal 2025 included a 7.8% return on average assets and a return on average equity of 20.1% (both on a trailing 12-month basis), as compared to a 5.0% return on average assets and a return on average equity of 15.2% (both on a trailing 12-month basis) for the first six months of fiscal 2024.

The Company’s effective income tax rate decreased to 21.5% for the six months ended September 30, 2024 compared to 23.0% for the corresponding period of the previous year.

Regulatory Matters

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This initiative was classified as “inactive” on the CFPB’s Spring 2018 rulemaking agenda and has remained inactive since, but the CFPB indicated that such action was not a decision on the merits.

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.

In addition, even in the absence of a “larger participant” rule, the CFPB has the power to order individual nonbank financial institutions to submit to supervision where the CFPB has reasonable cause to determine that the institution is engaged in “conduct that poses risks to consumers” under 12 USC 5514(a)(1)(C).

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The supervision could also result in additional examinations, investigations, litigation, consent orders or administrative proceedings, which could require considerable resources, time, effort and attention from our management, and may result in operational changes, monetary penalties or declines in our stock price.

See Part I, Item 1, “Business Government Regulation Federal legislation,” for a further discussion of these matters and the federal regulations to which the Company’s operations are subject and Part I, Item 1A, “Risk Factors,” in each case, in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024 for more information regarding these regulatory and related risks.

See Part I, Item 1, “Business Government Regulation Federal legislation,” for a further discussion of these matters and the federal regulations to which the Company’s operations are subject and Part I, Item 1A, “Risk Factors,” in each case, in the Company’s fiscal 2024 Annual Report for more information regarding these regulatory and related risks.

Liquidity and Capital Resources

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The Company has generally applied its cash flows from operations to fund its loan volume, fund acquisitions, repay long-term indebtedness, and repurchase its common stock.

Net cash provided by operating activities for the three months ended June 30, 2024 was $48.4 million.

Net cash provided by operating activities for the six months ended September 30, 2024 was $102.1 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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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 the first quarter of fiscal 2025, the Company repurchased and extinguished $21.8 million of its Notes, net of $0.2 million unamortized debt issuance costs related to the extinguished debt, on the open market for a reacquisition price of $21.0 million.

During the six months ended September 30, 2024, the Company repurchased and extinguished $33.7 million of its Notes, net of

$0.3 million unamortized debt issuance costs related to the extinguished debt, on the open market for a reacquisition price of $32.5 million.

During fiscal 2024, the Company repurchased and extinguished $15.7 million of its Notes, net of $0.2 million unamortized debt issuance costs related to the extinguished debt, on the open market for a reacquisition price of $14.1 million.

For the three months ended June 30, 2024 and 2023, the Company recognized a $0.8 million and $0.4 million gain on extinguishment, respectively.

For the three months ended September 30, 2024 and 2023, the Company recognized a $0.4 million and $0.2 million gain on extinguishment, respectively.

For the six months ended September 30, 2024 and 2023, the Company recognized a $1.2 million and $0.6 million gain on extinguishment, respectively.

In accordance with ASC 470, the Company recognized the 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, 2024, subject to further approval from our Board of Directors, we could repurchase approximately $23.6 million of shares under the terms of our debt facilities.

As of September 30, 2024, subject to further approval from our Board of Directors, we could repurchase approximately $24.7 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, 2024, the aggregate commitments under the revolving credit facility were $580.0 million.

At September 30, 2024, the aggregate commitments under the revolving credit facility were $580.0 million.

The Company had $725.8 thousand in outstanding standby letters of credit which include (i) $300.0 thousand related to worker's compensation expiring on December 31, 2024 and (ii) $425.8 thousand related to the Company's investment in captive insurance expiring on April 12, 2025.

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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, 2024 and fiscal year ended March 31, 2024, 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 10.1% annualized and 9.9%, respectively.

At June 30, 2024, the unused amount available under the revolving credit facility was $337.5 million.

For the six months ended September 30, 2024 and fiscal year ended March 31, 2024, 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 10.1% annualized and 9.9%, respectively.

At September 30, 2024, the unused amount available under the revolving credit facility was $313.6 million.

Borrowings under the revolving credit facility mature on June 7, 2026.

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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, 2024 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, 2024 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 June 30, 2024, the Company's debt outstanding was $492.7 million, net of $2.0 million unamortized debt issuance costs related to the unsecured senior notes payable, and its shareholders' equity was $422.6 million resulting in a debt-to-equity ratio of 1.2:1.0.

As of September 30, 2024, the Company's debt outstanding was $504.9 million, net of $1.7 million unamortized debt issuance costs related to the unsecured senior notes payable, and its shareholders' equity was $417.5 million resulting in a debt-to-equity ratio of 1.2:1.0.

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).

Except as otherwise discussed in this report including, but not limited to, any discussions in Part II, Item 1A, "Risk Factors" in this Quarterly Report on Form 10-Q and Part I, Item 1A, "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2024 (as supplemented by any subsequent disclosures in information the Company files with or furnishes to the SEC from time to time), management is not currently aware of any trends, demands, commitments, events or uncertainties that it believes will or could result in, or are or could be reasonably likely to result in, any material adverse effect on the Company’s liquidity.

Except as otherwise discussed in (i) this report including, but not limited to, any discussions in Part II, Item 1A, "Risk Factors" in this Quarterly Report on Form 10-Q and (ii) Part I, Item 1A, "Risk Factors" in the Company's fiscal 2024 Annual Report (as supplemented by any subsequent disclosures in information the Company files with or furnishes to the SEC from time to time), management is not currently aware of any trends, demands, commitments, events or uncertainties that it believes will or could result in, or are or could be reasonably likely to result in, any material adverse effect on the Company’s liquidity.

Share Repurchase Program

On May 15, 2024, the Board of Directors authorized the Company to repurchase up to $20.0 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, 2024, the Company had $20.0 million in aggregate remaining repurchase capacity under its current share repurchase program.

As of September 30, 2024, the Company had $10.0 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.

3 unchanged sentences

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

As of June 30, 2024, subject to further approval from our Board of Directors, we could repurchase approximately $23.6 million of shares under the terms of our debt facilities.

As of September 30, 2024, subject to further approval from our Board of Directors, we could repurchase approximately $24.7 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.

33 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