WORLD ACCEPTANCE CORP

Previous wording

Among the key factors that could cause our actual financial results, performance or condition to differ from the expectations expressed or implied in such forward-looking statements are the following: recently enacted, proposed or future legislation and the manner in which it is implemented, including pursuant to policies of the new U.S. administration; changes in the U.S. tax code; the nature and scope of regulatory authority, particularly discretionary authority, that is or may be exercised by regulators, including, but not limited to, the U.S. Consumer Financial Protection Bureau, and individual state regulators having jurisdiction over the Company; the unpredictable nature of regulatory examinations, 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; changes in interest rates; the impact of inflation; risks relating to the acquisition or sale of assets or businesses or other strategic initiatives, including increased loan delinquencies or net charge-offs, the loss of key personnel, integration or migration issues, the failure to achieve anticipated synergies, increased costs of servicing, incomplete records, and retention of customers; risks inherent in making loans, including repayment risks and value of collateral; cybersecurity threats or incidents, including the potential or actual misappropriation of assets or sensitive information, corruption of data or operational disruption and the costs of the associated response thereto; our dependence on debt and the potential impact of limitations in the Company’s credit facilities or other impacts on the Company's ability to borrow money on favorable terms, or at all; the timing and amount of revenues that may be recognized by the Company; changes in current revenue and expense trends (including trends affecting delinquency and charge-offs); the impact of extreme weather events and natural disasters; changes in the Company’s markets and general changes in the economy (particularly in the markets served by the Company).

Current wording

Among the key factors that could cause our actual financial results, performance or condition to differ from the expectations expressed or implied in such forward-looking statements are the following: recently enacted, proposed or future legislation and the manner in which it is implemented, including pursuant to policies of the new U.S. administration; changes in the U.S. tax code; the nature and scope of regulatory authority, particularly discretionary authority, that is or may be exercised by regulators, including, but not limited to, the U.S. Consumer Financial Protection Bureau, and individual state regulators having jurisdiction over the Company; the unpredictable nature of regulatory examinations, proceedings and litigation; employee misconduct or misconduct by third parties; uncertainties associated with management turnover and the effective succession of senior management, including the recent CEO transition and ongoing search for a permanent replacement; 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; changes in interest rates; the impact of inflation and macroeconomic uncertainty; risks relating to the acquisition or sale of assets or businesses or other strategic initiatives, including increased loan delinquencies or net charge-offs, the loss of key personnel, integration or migration issues, the failure to achieve anticipated synergies, increased costs of servicing, incomplete records, and retention of customers; risks inherent in making loans, including repayment risks and value of collateral; cybersecurity threats or incidents, including the potential or actual misappropriation of assets or sensitive information, corruption of data or operational disruption and the costs of the associated response thereto; our dependence on debt and the potential impact of limitations in the Company’s credit facilities or other impacts on the Company's ability to borrow money on favorable terms, or at all; the timing and amount of revenues that may be recognized by the Company; changes in current revenue and expense trends (including trends affecting delinquency and charge-offs); the impact of extreme weather events and natural disasters; changes in the Company’s markets and general changes in the economy (particularly in the markets served by the Company).

Previous wording

(1) Average gross loans receivable has been determined by averaging month-end gross loans receivable over the indicated period, excluding TALs.

Current wording

(1) Average gross loans receivable has been determined by averaging month-end gross loans receivable over the indicated period.

Previous wording

(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.

Current wording

(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.

Previous wording

Gross loans outstanding increased to $1.4 billion as of December 31, 2025, a 1.5% increase from the $1.38 billion of gross loans outstanding as of December 31, 2024, which is a substantial improvement from the 4.0% year over year decrease as of March 31, 2025. During the most recent quarter, gross loans outstanding increased sequentially 6.6%, or $86.8 million, from $1.32 billion as of September 30, 2025, compared to an increase of 6.6%, or $85.6 million, in the comparable quarter of the prior year. During the most recent quarter, our new and current customer borrowing increased when comparing the same quarter of fiscal 2025. Specifically, during the quarter, new and refinance customer loan volume increased 16.6% and 8.0% respectively, compared to the same quarter of fiscal 2025. Our customer base increased by 4.1% during the twelve-month period ended December 31, 2025, compared to an increase of 3.7% for the comparable period ended December 31, 2024. During the three months ended December 31, 2025 our unique borrowers increased by 4.2% compared to an increase of 6.2% during the three months ended December 31, 2024.

Current wording

Gross loans outstanding increased to $1.29 billion as of June 30, 2026, a 2.3% increase from the $1.26 billion of gross loans outstanding as of June 30, 2025. During the most recent quarter, our existing customer borrowing increased, while our new customer borrowing decreased, compared to the same quarter of fiscal 2026. New customer loan volume decreased 40.1%, compared to the same quarter of fiscal year 2026. At the end of the prior fiscal year, we tightened our underwriting of new customers given the proportion of new customers already in the portfolio and increasing macroeconomic uncertainty. As a result, our customer base decreased by 1.9% during the twelve-month period ended June 30, 2026, compared to an increase of 4.0% for the comparable period ended June 30, 2025. We have since expanded underwriting and expect to carefully increase new customer lending in the coming quarters.

Previous wording

The $0.9 million net loss for the three months ended December 31, 2025 is a 106.8% decrease from net income of $13.4 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 $15.5 million, or 56.9%, compared to the same period of the prior year. Our results of operations were negatively impacted by an increase in provision for credit losses, largely related to our new loan growth;

Current wording

The $6.1 million net income for the three months ended June 30, 2026 is a 285.4% increase from net income of $1.6 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 $7.4 million, or 62.4%, compared to the same period of the prior year.

Previous wording

Revenues for the three months ended December 31, 2025 increased by $2.6 million, or 1.9%, to $141.3 million from $138.6 million for the same period of the prior year. Interest and fee income for the three months ended December 31, 2025 increased by $3.6 million, or 2.9%, from the same period of the prior year due to an increase in outstanding balances and interest yields.

Current wording

Revenues for the three months ended June 30, 2026 increased by $6.4 million, or 4.8%, to $139.2 million from $132.8 million for the same period of the prior year. Interest and fee income for the three months ended June 30, 2026 increased by $6.2 million, or 5.4%, from the same period of the prior year due to an increase in outstanding balances and interest yields.

Previous wording

Insurance and other income for the three months ended December 31, 2025 decreased by $1.0 million, or 5.9%, from the same period of the prior year. Insurance income remained relatively flat at $12.5 million during the three months ended December 31, 2025 when compared to the three months ended December 31, 2024. Other income decreased $1.0 million, or 25.5%, to $2.8 million in the third quarter of fiscal 2026, compared to $3.8 million in the third quarter of fiscal 2025.

Current wording

Insurance and other income for the three months ended June 30, 2026 increased by $0.2 million, or 1.3%, from the same period of the prior year. Insurance income remained essentially unchanged at $11.3 million in the first quarter of fiscal 2027 compared to $11.5 million in the first quarter of fiscal 2026. Other income increased $0.5 million, or 7.7%, to $6.4 million in the first quarter of fiscal 2027, compared to $5.9 million in the first quarter of fiscal 2026.

Previous wording

The provision for credit losses increased $7.3 million, or 16.6%, to $51.4 million from $44.1 million when comparing the third quarter of fiscal 2026 to the third quarter of fiscal 2025. The table below itemizes the key components of the CECL allowance and provision impact during the quarter.

Current wording

The provision for credit losses decreased $6.7 million, or 13.4%, to $43.8 million from $50.5 million when comparing the first quarter of fiscal 2027 to the first quarter of fiscal 2026. The table below itemizes the key components of the CECL allowance and provision impact during the quarter.

Previous wording

Net charge-offs for the quarter increased $4.2 million, from $42.4 million in the third quarter of fiscal 2025 to $46.6 million in the third quarter of fiscal 2026. Net charge-offs as a percentage of average net loan receivables on an annualized basis increased to 18.7% in the third quarter of fiscal 2026 from 17.2% in the third quarter of fiscal 2025. Net charge-offs increased due to the increase in new customers in the twelve months ending September 30, 2025.

Current wording

Net charge-offs for the quarter decreased $1.5 million, from $44.8 million in the first quarter of fiscal 2026 to $43.3 million in the first quarter of fiscal 2027. Net charge-offs as a percentage of average net loan receivables on an annualized basis decreased to 18.2% in the first quarter of fiscal 2027 from 19.4% in the first quarter of fiscal 2026. Net charge-offs decreased due to the decrease in new customers during the twelve-month period ending June 30, 2026. Additionally, net charge-offs during the quarter include recoveries of $1.6 million related to a bulk sale of prior charge-offs.

Previous wording

The Company's allowance for credit losses as a percentage of net loans was 11.8% at December 31, 2025 compared to 11.4% at December 31, 2024. Accounts that were 61 days or more past due on a recency basis decreased to 5.6% at December 31, 2025 compared to 5.7% at December 31, 2024. Recency delinquency on accounts at least 90 days past due remained relatively flat at 3.4% at December 31, 2025, compared to December 31, 2024. Recency delinquency on accounts 0 to 60 days past due decreased from 20.0% at December 31, 2024, to 18.1% at December 31, 2025.

Current wording

The Company's allowance for credit losses as a percentage of net loans was 11.8% at June 30, 2026 compared to 11.6% at June 30, 2025. Accounts that were 61 days or more past due on a recency basis decreased to 5.2% at June 30, 2026 compared to 5.4% at June 30, 2025. Recency delinquency on accounts 0 to 60 days past due decreased from 19.2% at June 30, 2025, to 18.1% at June 30, 2026.

Previous wording

G&A expenses for the three months ended December 31, 2025 increased by $10.8 million, or 16.1%, from the corresponding period of the previous year. As a percentage of revenues, G&A expenses increased from 48.5% during the three months ended December 31, 2024 to 55.3% during the three months ended December 31, 2025. G&A expenses per average open branch increased by 19.1% when comparing the two three-month periods. The change in G&A expense is explained in greater detail below.

Current wording

G&A expenses for the three months ended June 30, 2026 increased by $5.8 million, or 8.2%, from the corresponding period of the previous year. As a percentage of revenues, G&A expenses increased from 53.0% during the three months ended June 30, 2025 to 54.7% during the three months ended June 30, 2026. G&A expenses per average open branch increased by 9.4% when comparing the two three-month periods. G&A expenses were negatively impacted during the current quarter by $4.6 million in CEO transition related expense. The change in G&A expense is explained in greater detail below.

Previous wording

Personnel expense totaled $51.3 million for the three months ended December 31, 2025, a $10.2 million, or 24.9%, increase over the three months ended December 31, 2024. Salary expense increased approximately $2.8 million, or 8.7%, during the quarter ended December 31, 2025, compared to the quarter ended December 31, 2024. Our headcount as of December 31, 2025 increased 10.2% compared to December 31, 2024. Benefit expense increased approximately $0.8 million, or 10.1%, when comparing the quarterly periods ended December 31, 2025 and 2024. Incentive expense increased $6.9 million in the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025. The increase in incentive expense is primarily due to a $5.0 million increase in share based compensation expense. Share based compensation expense increased due to share grants in December of 2024 and June of 2025. There was also a significant increase in field level incentives. Over the last several months we have increased headcount in the field to further improve branch level performance.

Current wording

Personnel expense totaled $50.8 million for the three months ended June 30, 2026, a $5.1 million, or 11.1%, increase over the three months ended June 30, 2025. Salary expense increased approximately $2.5 million, or 7.8%, during the quarter ended June 30, 2026, compared to the quarter ended June 30, 2025. Severance related costs increased salary expense by $2.1 million in the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026. Our headcount as of June 30, 2026 remained relatively flat compared to June 30, 2025. Benefit expense increased approximately $1.0 million, or 10.6%, when comparing the quarterly periods ended June 30, 2026 and 2025. Incentive expense increased $3.3 million in the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026. The increase in incentive expense is primarily due to $2.0 million in CEO transition expense.

Previous wording

Occupancy and equipment expense totaled $12.4 million for the three months ended December 31, 2025, a $0.1 million, or 1.2%, increase over the three months ended December 31, 2024.

Current wording

Occupancy and equipment expense totaled $12.0 million for the three months ended June 30, 2026, a $0.2 million, or 2.1%, increase over the three months ended June 30, 2025.

Previous wording

Advertising expense decreased $0.7 million, or 15.5%, in the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025 due to increased efficiency in our customer acquisition programs.

Current wording

Advertising expense decreased $0.2 million, or 7.6%, in the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026 due to decreased spending on new customer acquisition programs.

Previous wording

Amortization of intangible assets totaled $0.8 million for the three months ended December 31, 2025, a $0.2 million, or 17.2%, decrease over the three months ended December 31, 2024.

Current wording

Amortization of intangible assets totaled $0.8 million for the three months ended June 30, 2026, a $0.1 million, or 6.9%, decrease over the three months ended June 30, 2025.

Previous wording

Interest expense for the three months ended December 31, 2025 increased by $1.5 million, or 13.2%, from the corresponding three months of the previous year. Interest expense primarily increased due to a 17.1% increase in the average debt outstanding for the quarter, partially offset by a 2.8% decrease in the effective interest rate from 8.4% to 8.1%. The average debt outstanding increased from $534.0 million to $625.4 million when comparing the quarters ended December 31, 2024 and 2025. The Company’s debt-to-equity ratio increased from 1.3:1 at December 31, 2024 to 1.9:1 at December 31, 2025.

Current wording

Interest expense for the three months ended June 30, 2026 increased by $1.8 million, or 18.6%, from the corresponding three months of the previous year. Interest expense primarily increased due to a 27.6% increase in the average debt outstanding for the quarter, partially offset by a 6.4% decrease in the effective interest rate from 8.3% to 7.8%. The average debt outstanding increased from $456.2 million to $582.3 million when comparing the quarters ended June 30, 2025 and 2026. The Company’s debt-to-equity ratio increased from 1.1:1 at June 30, 2025 to 1.6:1 at June 30, 2026.

Previous wording

Other key return ratios for the three months ended December 31, 2025 included a 4.0% return on average assets and a return on average equity of 10.6% (both on a trailing 12-month basis), as compared to a 7.5% return on average assets and a return on average equity of 19.2% (both on a trailing 12-month basis) for the three months ended December 31, 2024.

Current wording

Other key return ratios for the three months ended June 30, 2026 included a 3.6% return on average assets and a return on average equity of 10.6% (both on a trailing 12-month basis), as compared to a 7.8% return on average assets and a return on average equity of 19.1% (both on a trailing 12-month basis) for the three months ended June 30, 2025.

Previous wording

The Company’s effective income tax rate was a negative 100.8% for the nine months ended December 31, 2025 compared to 20.1% for the corresponding period of the previous year. The Company finalized a settlement with various taxing authorities that resulted in an increase in the reserve under ASC 740-10 (unrecognized tax positions) which is treated as a discrete item in the current period, along with a decrease in pretax book income relative to the effects of various permanent items including an increase in disallowed executive compensation under Section 162(m) in the current period. This was partially offset by the permanent tax benefit related to nonqualified stock option exercises and vesting of restricted stock treated as discrete items in the current period.

Current wording

The Company’s effective income tax rate was 22.7% for the three months ended June 30, 2026 compared to 30.2% for the corresponding period of the previous year. The decrease was the result of a settlement with various taxing authorities that resulted in an increase in the reserve under ASC 740 (unrecognized tax positions) which was treated as a discrete item in the prior year quarter. This was partially offset by an increase in disallowed executive compensation under Section 162(m) in the current quarter.

Previous wording

The Company has historically financed and continues to finance its operations, acquisitions and branch expansion primarily through a combination of cash flows from operations and borrowings from its institutional lenders. As discussed below, the Company has also issued debt securities to finance its operations and repay a portion of its outstanding indebtedness. 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 nine months ended December 31, 2025 was $164.8 million.

Current wording

The Company has historically financed and continues to finance its operations, acquisitions and branch expansion primarily through a combination of cash flows from operations and borrowings from its institutional lenders. As discussed below, the Company has also issued debt securities to finance its operations and repay a portion of its outstanding indebtedness. 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, 2026 was $64.4 million.

Previous wording

As of December 31, 2025, the Company's debt outstanding was $677.2 million and its shareholders' equity was $351.6 million resulting in a debt-to-equity ratio of 1.9:1.0. 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.

Current wording

As of June 30, 2026, the Company's debt outstanding was $572.8 million and its shareholders' equity was $362.2 million resulting in a debt-to-equity ratio of 1.6:1.0. 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.

Previous wording

As of December 31, 2025, the Company had two credit facilities: the Revolving Credit Facility and the Warehouse Facility. The Revolving Credit Facility provides, among other things, aggregate commitments of the Lenders of $640.0 million, with an accordion feature that can increase the aggregate commitments by $150.0 million (for a total commitment, if the full accordion is borrowed, of $790.0 million).

Current wording

As of June 30, 2026, the Company had two credit facilities: the Revolving Credit Facility and the Warehouse Facility. The Revolving Credit Facility provides, among other things, aggregate commitments of the Lenders of $655.0 million, with an accordion feature that can increase the aggregate commitments by $135.0 million (for a total commitment, if the full accordion is borrowed, of $790.0 million).

Previous wording

Subject to a borrowing base formula, the Company could 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% under the Revolving Credit Agreement. At December 31, 2025, the aggregate commitments under the Revolving Credit Agreement were $640.0 million. The borrowing base limitation was equal to the product of (a) the Company’s eligible finance receivables, less unearned finance charges, insurance premiums and insurance commissions applicable to such eligible finance receivables, and (b) an advance rate percentage that ranges from 70% to 80% based on a collateral performance indicator equal to the sum of, for the Company and certain of its subsidiaries (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 had $789.7 thousand in outstanding standby letters of credit which include (i) $200.0 thousand related to worker's compensation expiring on October 16, 2026 and (ii) $589.7 thousand related to the Company's investment in captive insurance expiring on April 12, 2026. Both letters of credit automatically extend for one year on their expiration dates. Further, under the 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.

Current wording

Subject to a borrowing base formula, the Company could 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% under the Revolving Credit Agreement. At June 30, 2026, the aggregate commitments under the Revolving Credit Agreement were $655.0 million. The borrowing base limitation was equal to the product of (a) the Company’s eligible finance receivables, less unearned finance charges, insurance premiums and insurance commissions applicable to such eligible finance receivables, and (b) an advance rate percentage that ranges from 70% to 80% based on a collateral performance indicator equal to the sum of, for the Company and certain of its subsidiaries (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 had $816.1 thousand in outstanding standby letters of credit which include (i) $200.0 thousand related to worker's compensation expiring on October 16, 2026 and (ii) $616.1 thousand related to the Company's investment in captive insurance expiring on March 01, 2027. Both letters of credit automatically extend for one year on their expiration dates. Further, under the 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.

Previous wording

For the nine months ended December 31, 2025 and fiscal year ended March 31, 2025, the Company’s effective interest rate, including the commitment fee and amortization of debt issuance costs, as it relates to the Revolving Credit Agreement was 8.3% annualized and 9.5%, respectively. At December 31, 2025, the unused amount available under the Revolving Credit Facility was $63.5 million. Borrowings under the Revolving Credit Facility have a maturity date of July 22, 2028.

Current wording

For the three months ended June 30, 2026 and fiscal year ended March 31, 2026, the Company’s effective interest rate, including the commitment fee and amortization of debt issuance costs, as it relates to the Revolving Credit Agreement was 7.8% annualized and 8.3%, respectively. At June 30, 2026, the unused amount available under the Revolving Credit Facility was $103.6 million. Borrowings under the Revolving Credit Facility have a maturity date of July 22, 2028.

Previous wording

For the nine months ended December 31, 2025, the Company’s effective interest rate, including the commitment fee and amortization of debt issuance costs, as it relates to the Credit Agreement was 6.3%. At December 31, 2025, the unused amount available under the Warehouse Facility was $73.5 million. Borrowings under the Warehouse Facility have an expected maturity date of September 29, 2027.

Current wording

For the three months ended June 30, 2026, the Company’s effective interest rate, including the commitment fee and amortization of debt issuance costs, as it relates to the Credit Agreement was 7.9%. At June 30, 2026, the unused amount available under the Warehouse Facility was $69.8 million. Borrowings under the Warehouse Facility have an expected maturity date of September 29, 2027.

Previous wording

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. Additional share repurchases can be made subject to compliance with, among other things, applicable restricted payment covenants under the Revolving Credit Agreement. Our first priority is to ensure we have enough capital to fund loan growth. As of December 31, 2025, subject to further approval from our Board of Directors, we could repurchase approximately $61.1 million of shares under the terms of our Revolving Credit Agreement. To the extent we have excess capital, we may repurchase stock, if appropriate and as authorized by our Board of Directors.

Current wording

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. Additional share repurchases can be made subject to compliance with, among other things, applicable restricted payment covenants under the Revolving Credit Agreement. Our first priority is to ensure we have enough capital to fund loan growth. As of June 30, 2026, subject to further approval from our Board of Directors, we could repurchase approximately $63.8 million of shares under the terms of our Revolving Credit Agreement. To the extent we have excess capital, we may repurchase stock, if appropriate and as authorized by our Board of Directors.

Previous wording

The Revolving Credit Agreement contains a number of affirmative and negative covenants that, among other things, restrict our ability to incur liens, incur indebtedness, pay dividends and repurchase or redeem capital stock, make certain restricted payments, merge or consolidate, dispose of assets, 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 of the Revolving Credit Agreement and that contains specified subordinated terms, subject to limitations on amount imposed by the financial covenants under the Revolving Credit Agreement. In addition, the Revolving Credit Agreement requires the Company to (i) keep and maintain a Consolidated Net Worth of $325.0 million, (ii) have a ratio of Net Income Available for Fixed Charges to Fixed Charges of not less than 2.25 to 1.00, (iii) not permit the aggregate unpaid principal amount of Total Debt to exceed 225.0% of Consolidated Adjusted Net Worth, and (iv) maintain an Asset Quality Indicator (Consolidated) of less than or equal to 26.0%. Each of the capitalized terms used and not defined herein have the meanings set forth in the Revolving Credit Agreement.

Current wording

The Revolving Credit Agreement contains a number of affirmative and negative covenants that, among other things, restrict our ability to incur liens, incur indebtedness, pay dividends and repurchase or redeem capital stock, make certain restricted payments, merge or consolidate, dispose of assets, 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 of the Revolving Credit Agreement and that contains specified subordinated terms, subject to limitations on amount imposed by the financial covenants under the Revolving Credit Agreement.

Previous wording

The Company was in compliance with these covenants at December 31, 2025, after giving effect to an agreement related to the treatment of the payment of early call premiums in connection with Redemption, and does not believe that these covenants will materially limit its business and expansion strategy.

Current wording

The Company was in compliance with these covenants at June 30, 2026, after giving effect to the Consent and Limited Modification to the Net Income Available for Fixed Charges to Fixed Charges ratio. The Company does not believe that these covenants will materially limit its business and expansion strategy.

Previous wording

The Credit Agreement contains affirmative and negative covenants, including covenants that generally 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, engage in mergers and consolidations, make acquisitions or other investments, or fund benefit plans. The Company’s financial covenants under the Credit Agreement include (i) a minimum net worth of $305.0 million; (ii) a maximum ratio of debt to net worth of 2.25 to 1.0 as of the end of each fiscal quarter; (iii) a minimum liquidity amount of $35.0 million; and (iv) a minimum of unrestricted cash and cash equivalents of $5.0 million. The Credit Agreement also contains covenants that require the Company, as Servicer, with respect to any collection period to maintain certain delinquency ratios, payment ratios and annualized net charge-off ratios. A failure to maintain such ratios may result in a Level I Trigger Event, Level II Trigger Event, or Level III Trigger Event. Each of the capitalized terms used and not defined herein have the meanings set forth in the Credit Agreement.

Current wording

The Credit Agreement contains affirmative and negative covenants, including covenants that generally restrict the ability of the Company and the Borrower to, among other things, incur or guarantee indebtedness, incur liens, pay dividends and repurchase or redeem capital stock, engage in mergers and consolidations, make acquisitions or other investments, or fund benefit plans. The Company’s financial covenants under the Credit Agreement include: (i) a minimum tangible net worth of $305.0 million; (ii) a maximum ratio of debt to tangible net worth of 2.25 to 1.0 as of the end of each fiscal quarter; (iii) a minimum liquidity amount of $35.0 million; and (iv) a minimum of unrestricted cash and cash equivalents of $5.0 million. The Credit Agreement also contains covenants that require the Company, as Servicer, with respect to any collection period to maintain certain delinquency ratios, payment ratios and annualized net charge-off ratios. A failure to maintain such ratios may result in a Level I Trigger Event, Level II Trigger Event, or Level III Trigger Event. Each of the capitalized terms used and not defined herein have the meanings set forth in the Credit Agreement.

Previous wording

Company, the Borrower, or the Originators, (g) a change in control of the Company or the Borrower, (h) an event of default under a material financing agreement of the Company, the Borrower, or the Originators, (i) failure of the Company, as Servicer, to maintain certain financial covenants, and (j) the Company, the Borrower, or the Originators have one or more final non-appealable judgments entered against it by a court of competent jurisdiction in excess of the specified monetary thresholds. The remedies for such events of default are also customary for this type of transaction and include acceleration of the Borrower’s outstanding obligations under the Credit Agreement.

Current wording

The Credit Agreement also contains customary events of default (subject to certain materiality thresholds and cure periods), including among others, (a) non-payment, (b) non-compliance with covenants, (c) failure of the Administrative Agent to maintain a first-priority perfected security interest in any material portion of the collateral (subject to permitted liens), (d) the occurrence of a servicer termination event, (e) a breach of a representation or warranty, (f) an insolvency event involving the Company, the Borrower, or the Originators, (g) a change in control of the Company or the Borrower, (h) an event of default under a material financing agreement of the Company, the Borrower, or the Originators, (i) failure of the Company, as Servicer, to maintain certain financial covenants, and (j) the Company, the Borrower, or the Originators have one or more final non-appealable judgments entered against it by a court of competent jurisdiction in excess of the specified monetary thresholds. The remedies for such events of default are also customary for this type of transaction and include acceleration of the Borrower’s outstanding obligations under the Credit Agreement.

Previous wording

During the nine months ended December 31, 2025 and prior to the Redemption, the Company repurchased and extinguished $17.0 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 $17.0 million. During fiscal 2025, the Company repurchased and extinguished $89.0 million of its Notes, net of $0.6 million unamortized debt issuance costs related to the extinguished debt, on the open market for a reacquisition price of $88.0 million.

Current wording

During fiscal 2026 and prior to the Redemption, the Company repurchased and extinguished $17.0 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 $17.0 million.

Previous wording

No loss on extinguishment was recognized for the three months ended December 31, 2025. For the nine months ended December 31, 2025, the Company recognized a $3.7 million loss on extinguishment. For the three and nine months ended December 31, 2024, the Company recognized a $50.0 thousand loss on extinguishment and a $1.2 million gain on extinguishment, respectively. In accordance with ASC 470, the Company recognized the gain and loss on extinguishments as a component of interest expense in the Company's Consolidated Statements of Operations.

Current wording

For the three months ended June 30, 2025, the Company recognized a $43.0 thousand loss on extinguishment. In accordance with ASC 470, the Company recognized the loss on extinguishments as a component of interest expense in the Company's Consolidated Statements of Operations.

Previous wording

On July 22, 2025, the Board of Directors authorized the Company to repurchase up to $100.0 million of the Company’s outstanding common stock, inclusive of the amount that remained available for repurchase under prior repurchase authorizations. As of December 31, 2025, the Company had $18.4 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. The Company’s stock repurchase program may be suspended or discontinued at any time.

Current wording

On February 11, 2026, the Board of Directors authorized the Company to repurchase up to $50.0 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, 2026, 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. The Company’s stock repurchase program may be suspended or discontinued at any time.

Previous wording

On September 3, 2025, in accordance with its share repurchase program, the Company, after approval by the Audit and Compliance Committee, repurchased 347,064 shares of its common stock for $60.0 million from Prescott Associates L.P., Idoya Partners L.P., Prescott International Partners L.P., and Prescott Investors, Inc. Profit Sharing (the "Sellers") in a privately negotiated transaction. The Sellers are affiliates of Prescott General Partners, LLC, who, along with its affiliates, beneficially own approximately 43.6% of the Company's common stock as of December 31, 2025. The $172.88 price per share, was the closing market price at September 3, 2025.

Current wording

On September 3, 2025, in accordance with its share repurchase program, the Company, after approval by the Audit and Compliance Committee, repurchased 347,064 shares of its common stock for $60.0 million from Prescott Associates L.P., Idoya Partners L.P., Prescott International Partners L.P., and Prescott Investors, Inc. Profit Sharing (the "Sellers") in a privately negotiated transaction. The Sellers are affiliates of Prescott General Partners, LLC, who, along with its affiliates, beneficially own approximately 46.3% of the Company's common stock as of June 30, 2026. The $172.88 price per share was the closing market price at September 3, 2025.

Previous wording

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. Additional share repurchases can be made subject to compliance with, among other things, applicable restricted payment covenants under the Revolving Credit Agreement. Our first priority is to ensure we have enough capital to fund loan growth. As of December 31, 2025, subject to further approval from our Board of Directors, we could repurchase approximately $61.1 million of shares under the terms of our Revolving Credit Agreement. To the extent we have excess capital, we may repurchase stock, if appropriate and as authorized by our Board of Directors.

Current wording

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. Additional share repurchases can be made subject to compliance with, among other things, applicable restricted payment covenants under the Revolving Credit Agreement. Our first priority is to ensure we have enough capital to fund loan growth. As of June 30, 2026, subject to further approval from our Board of Directors, we could repurchase approximately $63.8 million of shares under the terms of our Revolving Credit Agreement. To the extent we have excess capital, we may repurchase stock, if appropriate and as authorized by our Board of Directors.