GREENVILLE, S.C.--(BUSINESS WIRE)--World Acceptance Corporation (NASDAQ: WRLD) today reported financial results for its third quarter of fiscal 2025.
Third fiscal quarter highlights
During its third fiscal quarter, World Acceptance Corporation achieved improved loan growth while continuing to focus on credit quality. Management believes that continuing to carefully invest in our best customers and closely monitoring performance has strengthened the Company's financial position and positioned us well for the remainder of the fiscal year.
Highlights from the third quarter include:
- Increase in total revenues to $138.6 million, including a 208 basis point yield increase compared to the same quarter in the prior year
- Net income of $13.4 million
- Diluted net income per share of $2.45
- Recency delinquency on accounts 90+ days past due improved to 3.4% at December 31, 2024, from 3.7% at December 31, 2023
Portfolio results
Gross loans outstanding were $1.38 billion as of December 31, 2024, a 1.4% decrease from the $1.40 billion of gross loans outstanding as of December 31, 2023. During the most recent quarter, gross loans outstanding increased sequentially 6.6%, or $85.6 million, from $1.30 billion as of September 30, 2024, compared to an increase of 1.5%, or $21.1 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 22.6%, 13.9%, and 1.5%, respectively, compared to the same quarter of fiscal year 2024. Our customer base increased by 3.7% during the twelve-month period ended December 31, 2024, compared to a decrease of 2.4% for the comparable period ended December 31, 2023. During the quarter ended December 31, 2024, the number of unique borrowers in the portfolio increased by 6.2% compared to an increase of 2.4% during the quarter ended December 31, 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 adjust underwriting accordingly.
The following table includes the volume of gross loan origination balances by customer type for the following comparative quarterly periods:
| Customer Type | Q3 FY 2025 | Q3 FY 2024 | Q3 FY 2023 |
|---|---|---|---|
| New Customers | $57,332,913 | $46,768,269 | $28,909,629 |
| Former Customers | $109,982,248 | $96,582,426 | $94,505,522 |
| Refinance Customers | $609,851,426 | $600,866,594 | $664,382,650 |
As of December 31, 2024, the Company had 1,035 open branches. For branches open at least twelve months, same store gross loans decreased 0.2% in the twelve-month period ended December 31, 2024, compared to a decrease of 8.2% for the twelve-month period ended December 31, 2023. For branches open throughout both periods, the customer base over the twelve-month period ended December 31, 2024, increased 4.9% compared to a decrease of 0.8% for the twelve-month period ended December 31, 2023.
Three-month financial results
Net income for the third quarter of fiscal 2025 decreased to $13.4 million compared to $16.7 million for the same quarter of the prior year. Net income per diluted share decreased to $2.45 per share in the third quarter of fiscal 2025 compared to $2.84 per share for the same quarter of the prior year. Although net income was negatively impacted by an increase in provision for credit losses, primarily related to our new growth, we expect solid returns on our third quarter originations given early payment performance and yield.
Total revenues for the third quarter of fiscal 2025 increased to $138.6 million, a 0.6% increase from $137.7 million for the same quarter of the prior year. Interest and fee income increased 3.1%, from $118.7 million in the third quarter of fiscal 2024 to $122.4 million in the third quarter of fiscal 2025. Insurance income decreased by 14.1% to $12.5 million in the third quarter of fiscal 2025 compared to $14.5 million in the third quarter of fiscal 2024. The large loan portfolio decreased from 55.2% of the overall portfolio as of December 31, 2023, to 48.2% as of December 31, 2024. Interest and insurance yields for the quarter ended December 31, 2024, increased 332 and 208 basis points compared to the quarters ended March 31, 2024 and December 31, 2023, respectively. Other income decreased $0.8 million, or 17.3%, to $3.8 million in the third quarter of fiscal 2025 compared to $4.6 million in the third quarter of fiscal 2024. The decrease in other income is the result of lower motor club sales driven by fewer large loan customers.
The Company accrues for expected losses with a current expected credit loss ("CECL") methodology, which requires us to create a provision for credit losses on the day we originate the loan. The provision for credit losses increased $3.5 million to $44.1 million from $40.6 million when comparing the third quarter of fiscal 2025 to the third 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) | Q3 FY 2025 | Q3 FY 2024 | Difference | Reconciliation | ||||
|---|---|---|---|---|---|---|---|---|
| Beginning Allowance - September 30 | $114.5 | $128.9 | $(14.4) | |||||
| Change due to Growth | $7.6 | $2.0 | $5.6 | $5.6 | ||||
| Change due to Expected Loss Rate on Performing Loans | $(5.6) | $(10.0) | $4.4 | $4.4 | ||||
| Change due to 90 day past due | $(0.3) | $0.2 | $(0.5) | $(0.5) | ||||
| Ending Allowance - December 31 | $116.2 | $121.1 | $(4.9) | $9.5 | ||||
| Net Charge-offs | $42.4 | $48.4 | $(6.0) | $(6.0) | ||||
| Provision | $44.1 | $40.6 | $3.5 | $3.5 |
The provision was negatively impacted by higher growth and a smaller decrease in expected loss rates compared to the same quarter of the prior year. Specifically, expected loss rates were negatively impacted by an increase in our 0-5 month customers, our riskiest customers, as a percentage of the portfolio during the current quarter.
Net charge-offs for the quarter decreased $6.0 million, from $48.4 million in the third quarter of fiscal 2024 to $42.4 million in the third quarter of fiscal 2025. Net charge-offs as a percentage of average net loan receivables on an annualized basis decreased to 17.2% in the third quarter of fiscal 2025 from 19.1% in the third quarter of fiscal 2024.
Accounts 61 days or more past due decreased to 5.7% on a recency basis at December 31, 2024, compared to 5.8% at December 31, 2023. Our allowance for credit losses as a percent of net loans receivable was 11.4% at December 31, 2024, compared to 11.8% at December 31, 2023. We also experienced improvement in recency delinquency on accounts at least 90 days past due, improving from 3.7% at December 31, 2023, to 3.4% at December 31, 2024.
The table below is updated to use the customer tenure-based methodology that aligns with our CECL methodology. After experiencing rapid portfolio growth during fiscal years 2019 and 2020, primarily in new customers, our gross loan balance experienced pandemic related declines in fiscal 2021 before rebounding during fiscal 2022. Over the last two and a half years, we have tightened our lending to new customers substantially. The tables below illustrate the changes in the portfolio weighting.
| Gross Loan Balance By Customer Tenure at Origination | As of | Less Than 2 Years | More Than 2 Years | Total |
|---|---|---|---|---|
| 12/31/2019 | $489,940,306 | $882,877,242 | $1,372,817,548 | |
| 12/31/2020 | $413,509,916 | $851,073,804 | $1,264,583,720 | |
| 12/31/2021 | $527,433,398 | $1,078,703,853 | $1,606,137,251 | |
| 12/31/2022 | $421,291,725 | $1,132,819,599 | $1,554,111,324 | |
| 12/31/2023 | $315,059,832 | $1,085,605,652 | $1,400,665,484 | |
| 12/31/2024 | $310,926,501 | $1,070,584,174 | $1,381,510,675 |
| Year-Over-Year Growth (Decline) in Gross Loan Balance by Customer Tenure at Origination | 12 Month Period Ended | Less Than 2 Years | More Than 2 Years | Total |
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