World Acceptance (US:WRLD)2021-01-22 19:03Financial Data and Key Metrics Changes - The third quarter of 2020 was the busiest in the company's history, indicating a significant operational achievement despite challenges faced during the year [5] - The company built up a quantitative reserve tied to higher unemployment rates but adjusted this reserve due to additional federal unemployment and stimulus, indicating a cautious approach to future losses [8] Business Line Data and Key Metrics Changes - Demand for loans saw a significant rebound in the third quarter, with the highest demand for former customers recorded in the company's history, although new customer demand was still down approximately 20% to 25% year-over-year [9][11] - The company pivoted to serve only customers eligible for loans below 36% in Illinois, impacting about 70% of its previous customer base in that state [10] Market Data and Key Metrics Changes - The company reported a net loan amount of around $60 million in Illinois at the end of December, down from $91 million in March, reflecting the impact of new legislation [16] - The new Illinois legislation is expected to limit the company's ability to extend credit to a significant portion of the population, affecting approximately 2.5 million to 2.7 million people [24] Company Strategy and Development Direction - The company is focusing on compliance with new regulations and intends to pivot its business model to accommodate the changes, particularly in Illinois [22][23] - There is an opportunity to expand into new customer segments with higher credit scores, which the company has not traditionally targeted [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to adapt to regulatory changes while maintaining a commitment to serving subprime customers [22][24] - The company does not anticipate needing to loosen credit criteria despite the stimulus, as demand has returned rapidly from existing and former customers [30][31] Other Important Information - The company has around $18 million available for stock buybacks, with $10 million already spent in January, indicating a proactive approach to capital management [18] Q&A Session Summary Question: Impact of stimulus on loan demand - Management noted a significant drop in demand initially with the first round of stimulus but observed a rebound in the third quarter, indicating a complex relationship between stimulus and demand [9] Question: Exposure to new Illinois legislation - Management confirmed that existing loans above 36% remain collectible, but new customer origination will be limited to those eligible for loans below 36% [13][16] Question: Repurchase strategy and cadence - Management indicated that repurchase levels would depend on bank cooperation and existing capacity, with a focus on maintaining a sustainable buyback strategy [18][20] Question: Regulatory changes under the new administration - Management emphasized a commitment to compliance and the ability to pivot operations as needed, while also addressing the potential loss of access to credit for many customers [22][24] Question: Credit performance and future growth avenues - Management stated that credit quality has improved and that they do not plan to loosen credit criteria, focusing instead on meeting customer needs through other products [30][31]