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, 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).

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 current 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; 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

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

Current wording

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

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.

Current wording

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

Previous 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.

Current wording

Gross loans outstanding increased to $1.319 billion as of September 30, 2026, a 0.3% increase from the $1.315 billion of gross loans outstanding as of September 30, 2025. Refinanced customer loan volume increased 4.4% in the most recent quarter, compared to the same quarter of fiscal year 2026. New and former customer loan volume decreased 18.1% and 9.9% respectively, 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 5.4% during the twelve-month period ended September 30, 2026, compared to an increase of 6.2% for the comparable period ended September 30, 2025. We have since loosened underwriting and expect to carefully increase new customer lending in the coming quarters.

Previous 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.

Current wording

The $8.8 million net income for the three months ended September 30, 2026 is a $10.5 million increase from a net loss of $1.7 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 $10.3 million, or 78.8%, compared to the same period of the prior year.

Previous 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.

Current wording

Revenues for the three months ended September 30, 2026 increased by $4.4 million, or 3.2%, to $139.2 million from $134.8 million for the same period of the prior year. Interest and fee income for the three months ended September 30, 2026 increased by $4.3 million, or 3.6%, from the same period of the prior year due to a portfolio shift in mix to higher-yielding loans.

Previous 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.

Current wording

Insurance and other income for the three months ended September 30, 2026 increased by $0.04 million, or 0.3%, from the same period of the prior year. Insurance income decreased to $11.6 million in the second quarter of fiscal 2027, compared to $11.9 million in the second quarter of fiscal 2026. Other income increased $0.3 million, or 8.3%, to $4.3 million in the second quarter of fiscal 2027, compared to $4.0 million in the second quarter of fiscal 2026.

Previous 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.

Current wording

The provision for credit losses decreased $3.8 million, or 7.7%, to $46.0 million from $49.8 million when comparing the second quarter of fiscal 2027 to the second quarter of fiscal 2026. The table below itemizes the key components of the CECL allowance and provision impact during the quarter.

Previous 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.

Current wording

The Company's allowance for credit losses as a percentage of net loans was 12.0% at September 30, 2026 compared to 12.1% at September 30, 2025. Accounts that were 61 days or more past due on a recency basis decreased to 5.4% at September 30, 2026 compared to 5.8% at September 30, 2025. Recency delinquency on accounts 0 to 60 days past due decreased from 20.0% at

Previous 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.

Current wording

Personnel expense totaled $44.1 million for the three months ended September 30, 2026, a $3.8 million, or 8.0%, decrease over the three months ended September 30, 2025. Salary expense decreased approximately $0.3 million, or 1.0%, during the quarter ended September 30, 2026, compared to the quarter ended September 30, 2025. Our headcount as of September 30, 2026, decreased 3.4% compared to September 30, 2025. Benefit expense increased approximately $0.4 million, or 4.9%, when comparing the quarterly periods ended September 30, 2026 and 2025. Incentive expense decreased $4.2 million in the second quarter of fiscal 2027 compared to the second quarter of fiscal 2026. The decrease in incentive expense is primarily due to a decrease in share-based compensation expense.

Previous 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.

Current wording

Advertising expense increased $0.8 million, or 36.7%, in the second quarter of fiscal 2027 compared to the second quarter of fiscal 2026 due to increased spending on new customer acquisition programs.

Previous 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.

Current wording

Amortization of intangible assets totaled $0.8 million for the three months ended September 30, 2026, a $0.1 million, or 7.0%, decrease over the three months ended September 30, 2025.

Previous 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.

Current wording

Interest expense for the three months ended September 30, 2026 decreased by $2.7 million, or 18.8%, from the corresponding three months of the previous year. Interest expense decreased primarily because the prior year quarter included a $3.0 million early call penalty on our long-term notes and a $0.7 million write-off of the remaining unamortized debt issuance costs, neither of which recurred in the current quarter. The decrease was partially offset by a 13.3% increase in the average debt outstanding for the quarter, net of a 3.5% decrease in the effective interest rate from 8.2% to 8.0%. The average debt outstanding increased from $514.4 million to $582.8 million when comparing the quarters ended September 30, 2025 and 2026. The Company’s debt-to-equity ratio increased from 1.6:1 at September 30, 2025 to 1.7:1 at September 30, 2026.

Previous 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.

Current wording

Other key return ratios for the three months ended September 30, 2026 included a 4.6% return on average assets and a return on average equity of 13.9% (both on a trailing 12-month basis), as compared to a 5.5% return on average assets and a return on average equity of 13.9% (both on a trailing 12-month basis) for the three months ended September 30, 2025.

Previous 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.

Current wording

The Company’s effective income tax rate was 25.0% for the three months ended September 30, 2026 compared to a negative 27.5% for the corresponding period of the previous year. The change was primarily 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 and a reduction to the final fiscal year 2026 tax credit that is being treated as a discrete adjustment in the current year quarter.

Previous 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.

Current wording

The provision for credit losses decreased $10.6 million, or 10.6%, to $89.8 million from $100.4 million when comparing the first two quarters of fiscal 2027 to the first two quarters of fiscal 2026. Net charge-offs as a percentage of average net loans receivable on an annualized basis decreased from 18.3% in the first two quarters of fiscal 2026 to 17.9% in the first two quarters of fiscal 2027. Net charge-offs during the current year period include recoveries of $1.6 million related to a bulk sale of prior charge-offs that did not occur in the prior year period.

Previous 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.

Current wording

G&A expenses for the six months ended September 30, 2026 increased by $3.7 million, or 2.6%, from the corresponding period of the previous year. As a percentage of revenues, G&A expenses decreased from 53.2% during the first six months of fiscal 2026 to 52.4% during the first six months of fiscal 2027. G&A expenses per average open branch increased by 3.4% when comparing the two six-month periods. The change in G&A expense is explained in greater detail below.

Previous wording

On October 5, 2017, the CFPB issued a final rule (the "Rule") imposing limitations on (i) short-term consumer loans, (ii) longer-term consumer installment loans with balloon payments, and (iii) higher-rate consumer installment loans repayable by a payment authorization. The Rule originally required lenders originating short-term loans and longer-term balloon payment loans to evaluate whether each consumer has the ability to repay the loan along with current obligations and expenses (“ability to repay requirements”); however, the ability to repay requirements was rescinded in July 2020. The Rule also curtails repeated unsuccessful attempts to debit consumers’ accounts for short-term loans, balloon payment loans, and installment loans that involve a payment authorization and an annual percentage rate over 36% (“payment requirements”). Implementation of the Rule’s payment requirements may 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.

Current wording

On October 5, 2017, the CFPB issued a final rule (the "Rule") imposing limitations on (i) short-term consumer loans, (ii) longer-term consumer installment loans with balloon payments, and (iii) higher-rate consumer installment loans repayable by a payment authorization. The Rule originally required lenders originating short-term loans and longer-term balloon payment loans to evaluate whether each consumer has the ability to repay the loan along with current obligations and expenses (“ability to repay requirements”); however, the ability to repay requirements were rescinded in July 2020. The Rule also curtails repeated unsuccessful attempts to debit consumers’ accounts for short-term loans, balloon payment loans, and installment loans that involve a payment authorization and an annual percentage rate over 36% (“payment requirements”). Implementation of the Rule’s payment requirements may 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.

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 three months ended June 30, 2026 was $64.4 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 six months ended September 30, 2026 was $130.4 million.

Previous 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.

Current wording

As of September 30, 2026, the Company's debt outstanding was $592.1 million and its shareholders' equity was $348.8 million resulting in a debt-to-equity ratio of 1.7:1.0. 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

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.

Current wording

For the six months ended September 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 September 30, 2026, the unused amount available under the Revolving Credit Facility was $99.8 million. Borrowings under the Revolving Credit Facility have a maturity date of July 22, 2028.

Previous 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.

Current wording

For the six months ended September 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 8.1%. At September 30, 2026, the unused amount available under the Warehouse Facility was $85.4 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 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.

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 September 30, 2026, subject to further approval from our Board of Directors, we could repurchase approximately $47.5 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.

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 maturity 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

Pursuant to Section 8.7(b) of the Revolving Credit Agreement, the Company and its Restricted Subsidiaries are required to maintain a ratio of Net Income Available for Fixed Charges to Fixed Charges (the "Financial Covenant") of not less than 2.25 to 1.0 for each fiscal quarter. The Modification provides for a limited, temporary modification of the Financial Covenant as follows:

Current wording

Pursuant to Section 8.7(b) of the Revolving Credit Agreement, the Company and its Restricted Subsidiaries are required to maintain a ratio of Net Income Available for Fixed Charges to Fixed Charges (the "Financial Covenant") of not less than 2.25 to 1.0 as of the end of each fiscal quarter, calculated for the period of four consecutive fiscal quarters then ending. The Modification provides for a limited, temporary modification of the Financial Covenant as follows:

Previous wording

.In addition, the Revolving Credit Agreement requires the Company to (i) keep and maintain a Consolidated Net Worth of $325.0 million, (ii) not permit the aggregate unpaid principal amount of Total Debt to exceed 225.0% of Consolidated Adjusted Net Worth, and (iii) 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

In addition, the Revolving Credit Agreement requires the Company to (i) keep and maintain a Consolidated Net Worth of $325.0 million, (ii) not permit the aggregate unpaid principal amount of Total Debt to exceed 225.0% of Consolidated Adjusted Net Worth, and (iii) as of the end of each calendar month, 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.

Previous 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.

Current wording

The Company was in compliance with these covenants at September 30, 2026, after giving effect to the Modification. The Company does not believe that these covenants will materially limit its business and expansion strategy.

Previous 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.

Current wording

During the six months ended September 30, 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.

Previous 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.

Current wording

For each of the three and six months ended September 30, 2025, the Company recognized a $3.7 million 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 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.

Current wording

On August 13, 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 September 30, 2026, the Company had $25.0 million in aggregate remaining repurchase capacity under its current share repurchase program. The Company expects to repurchase shares in fiscal 2027; however, 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 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.

Current wording

On August 14, 2026, in accordance with its share repurchase program, the Company, after approval by the Audit and Compliance Committee, repurchased 133,199 shares of its common stock for $25.0 million from Prescott Associates L.P., Idoya Partners L.P., Prescott International Partners L.P., and Prescott Investors, Inc. Profit Sharing (the "Prescott Sellers") in a privately negotiated transaction. The Prescott Sellers are affiliates of Prescott General Partners, LLC, who, along with its affiliates, beneficially own approximately 43.3% of the Company's common stock as of September 30, 2026. The $187.69 price per share was the closing market price at August 14, 2026.

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 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.

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 September 30, 2026, subject to further approval from our Board of Directors, we could repurchase approximately $47.5 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 Company’s accounting and reporting policies are in accordance with GAAP and conform to general practices within the finance company industry. Certain accounting policies involve significant judgment by the Company’s management, including the use of estimates and assumptions which affect the reported amounts of assets, liabilities, revenue, and expenses. As a result, changes in these estimates and assumptions could significantly affect the Company’s financial position and results of operations. The Company considers its policies regarding the allowance for credit losses, share-based compensation and income taxes to be its most critical accounting policies due to the significant degree of management judgment involved.

Current wording

The Company’s accounting and reporting policies are in accordance with GAAP and conform to general practices within the finance company industry. Certain accounting policies involve significant judgment by the Company’s management, including the use of estimates and assumptions which affect the reported amounts of assets, liabilities, revenue, and expenses. As a result, changes in these estimates and assumptions could significantly affect the Company’s financial position and results of operations. The Company considers its policies regarding the allowance for credit losses and income taxes to be its most critical accounting policies due to the significant degree of management judgment involved.