World Acceptance Corp (WRLD) 2009 Q1 法說會逐字稿

Good morning and welcome to the World Acceptance Corporation sponsored first quarter press release conference call. At this time all participants have been placed on listen-only mode. A question-and-answer session will follow the presentation by the Corporation's CEO and its other officers.

Before we begin, the Corporation has requested that I make the following announcement. The comments made during this conference may contain certain forward-looking statements within the meaning of Section 27A of the Securities and Exchange Act that represent the Corporation's expectations and beliefs concerning future events. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties.

Factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include changes in the timing amount (sic) of revenues that may be recognized by the Corporation; changes in current revenue and expense trends; changes in the Corporation's markets; and changes in the economy. Such factors are discussed in greater detail in the Corporation's filings with the Securities and Exchange Commission.

At this time it is my pleasure to turn the floor over to your host, Sandy McLean, Chairman and CEO.

Thank you, Vicki. Welcome to the World Acceptance Corporation first quarter conference call. As Vicki said, I'm Sandy McLean, the Company's Chairman and CEO. With me is Mark Roland, our President and Chief Operating Officer, and Kelly Malson, our CFO, along with other members of our management team.

I'd like to spend just a few minutes reviewing the quarter results, and then we'll be happy to answer any questions.

I'm once again very pleased with the quarterly financial performance, especially considering the current economic environment. Although on many occasions in the past we have stated that World is generally not affected by macroeconomic trends, the current environment is an exception. The dramatic rise in energy and food prices has an impact on everyone, especially our customers.

Net income for the first quarter was $12.1 million, or $0.73 per diluted share, compared to $10.9 million, or $0.61 per diluted share for the first quarter of fiscal 2008. This represents an 11.1% increase in net income and a 19.7% increase in net income per diluted share when comparing the two quarterly periods. The large difference between the net income and the per share increases is due to the large number of shares that the Company repurchased during the prior fiscal year under its stock repurchase plan. During fiscal 2008 the Company repurchased 1,375,000 shares for an aggregate purchase price of $41.9 million. While the Company did not repurchase any of its shares during the first quarter, it still considers share repurchases to be an important part of its long-term strategy going forward.

Gross loans amounted to $632.7 million at June 30, 2008, a 16.1% increase over the $545 million outstanding at June 30, 2007, and a 5.5% increase since the beginning of the fiscal year. While our loan balance has increased, our year-over-year growth rate is less than at the beginning of the fiscal year. We believe our loan demand was reduced during the quarter as a result of the many stimulus checks that were distributed during this period. We experienced higher than normal loan payoffs during the period than we generally expect during this time of year. We also believe that a large number of these customers will reopen accounts with us in the coming months as the need arises.

The growth that we did have was fairly evenly distributed throughout the Company, with all states experiencing at least a 9% growth rate, and nine of the 11 states exceeding a 10% growth rate.

Acquisitions continued to be an important factor in our overall growth during the first quarter of fiscal 2009, as the Company acquired approximately 4,375 accounts and $7.1 million in gross loan balances in 11 separate offices. Of the 11 offices acquired, seven remain open and the other four were consolidated into existing locations. For comparison purposes, during the first quarter of fiscal 2008 the Company purchased approximately 6,600 accounts and $2.7 million in gross loans in 16 offices. Of these, 12 offices remained open.

As expected, we continued the expansion of our branch network during the first fiscal quarter. We began fiscal 2009 with 838 offices. We opened 28 offices, acquired seven, and merged one, giving us a total of 872 offices at June 30, 2008. Of the 28 de novo offices, 25 were in the United States and three were in Mexico. Our plans for fiscal 2009 are to open 70 offices in the United States and 25 in Mexico, plus evaluate acquisitions as the opportunities arise.

Total revenue for the quarter amounted to $88.4 million, which is a 15.8% increase over the $76.4 million during the first quarter of the prior fiscal year. This corresponds to a 16.3% increase in average net loans when comparing the two quarterly periods. Revenue from the 730 offices open throughout both quarterly periods increased by 10.1%.

One item of special note -- total revenue for the quarter was positively affected by the mark-to-market adjustment of our $30 million interest rate swap. This adjustment for an unrealized gain amounted to approximately $800,000 in the first quarter, which compared to a similar unrealized gain of approximately $400,000 in the first quarter of the prior year.

Delinquencies and charge-offs continued to increase during the first quarter as a result of the ongoing difficult economic environment. Accounts that were 61 days or more past due increased from 2.6% to 2.9% on a recency basis, and from 3.7% to 4.0% on a contractual basis when comparing the two quarter-end statistics. Net charge-offs as a percentage of average net loans increased from 12.7% on an annualized basis during the prior-year first quarter to 14.5% annualized during the most recent quarter. The 14.5% is the highest charge-off ratio that the Company has ever experienced during a first fiscal quarter. Previous high charge-off ratios for the first fiscal quarter were 13.9% in June of '05, 13.4% in June of '03, and 13.5% in June of '02.

While we had hoped to see this rising trend in charge-offs begin to level off during the quarter, the 14.5% is not far out of line with the Company's expectations, given the current economic environment. Additionally, we do not believe that we will see reduced ratios for several more quarters.

General and administrative expenses amounted to $48.8 million in the first fiscal quarter, a 15.6% increase over the $42.2 million for the same quarter the prior fiscal year. As a percentage of revenues, they remained consistent at 55.2% during both quarterly periods. Our G&A per average office increased by 2.8% when comparing the two fiscal quarters.

The Company's effective income tax rate decreased by about 1% when comparing the two first-quarter periods, primarily as a result of a $265,000 adjustment to our FIN 48 reserves. The exposure on our federal mark-to-market issue was reduced as a result of a settlement by another company with similar facts, which provided guidance on where we should expect to ultimately settle [on a ceded] issue.

Highlights of our expansion into Mexico include the following -- 38 offices were opened at June 30, 2008, an increase of three during the quarter. We now have approximately 38,000 accounts and approximately $18.7 million in gross loans outstanding. We had net charge-offs of approximately $183,000 during the quarter, or 6.9% of average net loans on an annualized basis, and our 61-day delinquencies of 3% and 3.6% on a recency and contractual basis, respectively. We lost approximately $270,000 during the first quarter, which we feel is very good in a rapidly expanding market.

Finally, the Company's annualized return on average assets of 9.7% and return on equity of 19.9% continued their excellent historical trend during the fiscal quarter.

At this time we would be more than happy to answer any questions that you may have.

Thank you. (OPERATOR INSTRUCTIONS.) Rick Shane, Jefferies & Company.

Two questions here -- what percentage of the originations during the quarter were renewals?

Bear with me one second. I can't remember that number exactly, but we have it right here. 76.8%. I'm sorry; it took me a second.

No problem -- so it actually declined from fourth quarter last year?

I guess so. (Inaudible). Do you know, Kelly?

I don't remember off the top of my head what the renewal percentages were for the fourth quarter. But you do have to remember, during our fourth quarter we do have a lot of pay-downs, because that's when most of our -- a large number of our customers are receiving their refunds. And so generally in the first quarter that's when they would start renewing again.

Got it. And the second question is, given in terms of what you're seeing for credit, and credit typically starts to soften a little bit in the back half of the year, where do you think losses could go?

That is extremely difficult to answer. We don't really see drastic changes from where we are currently, but we're doing everything we can on a daily basis to monitor delinquencies and charge-offs. And we're really not changing our underwriting standards, so it just depends on how difficult the economic conditions continue to get. I really cannot give you a percentage number, just on that.

Do you expect that it's going to continue to rise into the back half of the year?

I don't believe that you will see year-over-year jumps any larger than what we saw during the first quarter. Of course you know we had a pretty substantial jump when comparing to first quarter of last year to the first quarter of this year. I don't think we'll continue to see that type of increase, but once again, it's very difficult to say.

Got it. And then last question -- this is a little bit more conceptual, but -- there are a lot of interesting trends that you see during the first-quarter results. I mean, there was an impact on volumes associated with tax stimulus checks. It drove volumes down. Loan balances actually grew pretty strongly because of that, which suggests that payment rates weren't that high. But at the same time, you didn't see the benefit from tax stimulus checks in terms of credit quality. Is it fair to assume that what's happening here is the portfolio quality is sort of segregating more to the end, that you're seeing your higher-quality borrowers do better and significant deterioration on the lower end of the spectrum?

Well, I don't think the spectrum -- when you segregate our portfolio between the larger loan balances, it does definitely have a higher-quality customer versus the lower-loan, small-loan customers, either segregation between the higher end and lower end is very narrow. And what you would consider a very good customer at one point in time could very easily become a charge-off customer in the near future, just by depending on what happens to that individual's circumstances. Our customers live in -- as we've said in the past -- difficult economic times all the time, just because of the nature of their economic circumstances. But it's become even more difficult currently, given the inflationary pressures of the -- two of the most important items that all of us have, the food and energy costs. I don't know if that's rambling or an attempt to answer your question, but --

No, it's the latter. Thank you guys very much.

(OPERATOR INSTRUCTIONS.) John Rowan, Sidoti & Company.

One quick question -- you said you didn't repurchase any stock in the quarter, but your share count did go down. Is that just catch-up from repurchases late in the fourth quarter?

Yes. I mean, because as you know, there are average shares during the quarter and we did purchase a great deal during the fourth quarter.

Okay. But that was purchases later, though, in the fourth quarter that flow through to the average in the first quarter?

That is correct.

Okay. And there were no one-time types of items in your G&A expense, correct?

In the G&A, no.

Okay. Thanks a lot.

James Hom, Miller Tabak.

On your facilities availability, is that $70 million -- is that an accurate assessment?

Availability -- yes, the availability at the end of the quarter was roughly $70 million.

Okay, and just one last item -- could you tell me what depreciation and CapEx was for the quarter, please?

Yes. Hold on one second.

I apologize; we weren't anticipating that question.

I understand. I know, it's not a large number, but I just needed to know some of the smaller details.

Depreciation was approximately $1 million consolidated.

What kind of capital expenditures did we have? I don't have the cash flow statement in front of me. I'm sorry.

Okay, that's fine. Thank you very much.

[James Bosch] with [Giles].

Couple questions -- one is, I wanted to get a sense of what's early-on in the funnel regarding roll-off rates. So what's the percentage of delinquencies that are 30 days past due, and how does that compare to, let's say, the last couple of quarters?

This is a number that we don't normally disclose, and we don't vary from that.

Okay. Have you disclosed directionally in the past which way it's going?

I certainly don't mind doing that. Do you know, Mark --

They're up very similarly to the 60-day-plus number that you already quoted.

They're up very similar to the 60-day-plus number that we just recently referred to.

Okay. Not in terms of the 14.5%, but in terms of direction in other words?

No, that's in terms of delinquencies. If you remember, they were 3.7% versus 4.0%. So it's up --

All right, I'm sorry -- it was 3.7% this quarter versus 4.0% last quarter?

(Inaudible). 4.0% this quarter versus 3.7% last.

Okay, I apologize. Then one more question -- in terms of, you said that 14.5% charge-off rate, you're still comfortable with those levels. What's a level that we should start getting concerned with? If it's not 14.5%, what levels do you guys get concerned with?

Well, 14.5% annualized rate is consistent with what we've had on a true annual basis for the last 10, eight years, except for one during the bankruptcies, if you remember. However, it is the largest for a first quarter. So if in fact that the trend continues to increase on a quarter-over-quarter basis by more than this 1.5% roughly that we did, then we've got to take a look at things.

Okay. And last question -- in terms of tax rebates, maybe, what do you think of the tax rebates vis-a-vis charge-off rates? So, in other words, I would think that the charge-off rates would have improved a little bit, or somewhat, because of the tax rebate situation, while at the same time I completely understand what you guys are saying in terms of lowering the amount of loan growth. But I'm wondering more on the charge-off basis, what you think the rough impact might have been from tax rebates?

Well, normally I would agree with you. As you know, every fourth fiscal quarter, which ends in March, is always our best quarter from an earnings standpoint. It's always a quarter when our customers are getting very large rebates, and it's a quarter that our charge-offs do, in fact, go down. However, given the size of these rebate checks, I think it did have an impact on our volumes, as we stated. But those people who were having other difficulties and so forth didn't necessarily use those to pay off accounts and whatever. So it's hard to quantify.

Okay. Thank you very much.

Atlantic Equity Research, Joe Gagan.

I have a follow-up question on the question he just asked about the stimulus checks. So you're saying that the stimulus checks did not lower the charge-offs, but you're saying that you think that the stimulus checks lowered the volumes, because people I guess had the money and didn't need to take out loans. Is that what you're saying?

Well, what I was saying is that's a possibility. We do not know for sure what impact the stimulus checks had on our charge-offs. We know that they went up, and that's kind of contrary to what you would expect, given the decrease in our volumes. We also know, given what's going on in the -- and we generally don't like to talk about what's going on in the future -- but we know that our volumes in the month of July are increasing when compared to prior year just sort of loan volume, when you compare to prior-year July quarter. So we're pretty sure that the stimulus checks did have an impact on our volumes and, as a result, probably had an impact on our year-over-year growth, but it's extremely difficult to quantify what impact it had on charge-offs. It's obvious --

But if they did have an effect on your volumes, why wouldn't they have just used the money to pay you off? It just doesn't make any sense. Now you did mention in the press release that some people were reluctant to take on new loans, I guess, because of the economic things going on. Is that -- can you elaborate on that? Is that what you're finding, that people don't want to take on more debt?

The first part of your question -- this is Mark Roland -- in the first quarter, when we are in our fourth fiscal quarter, when our customers are receiving large tax refunds, those are averaging in the $2,000, $3,000, $4,000 range and they certainly have implications with regards to our overall delinquency. These tax stimulus checks, especially at the levels that our borrowers were receiving them, were $300, what, individual, $600 on the high end. That may have precluded a renewal of a loan, of an existing loan or perhaps done some other things. But, for the most part, that was enough money to offset fuel, put some gas in the car, do something at the grocery store. It wasn't as significant as what we see in our fourth quarter in terms of payoffs, pay-downs, and reduction in delinquencies.

Okay, but now the gross loan growth was 11%, right? Which was, I guess it was 21% the year before, right? So I guess my question is, forgetting about the stimulus check, are your people that work in your offices telling you that they're having a tough time generating new loans? Is that what's going on?

Well, let's correct the numbers first. The gross loan increase was 16.1% when you compare the two yearly periods and it was like 18.5% as of the end of the fiscal year, and similar to that last year. So the differences are not that dramatic.

I thought I saw some 11% figure in there. What was --

That's the -- this is Kelly. The number you're referring to is the volume number. So the volume number had an 11% increase in the current year, where in the prior year the volume number had about a 20%.

Okay. And so, I guess what we can take from that is the amount of the loans are going up, but the number of loans are not. The amount the loans are going up higher than the number of loans, correct?

No.

No.

Because you're dealing with the renewal volumes and so forth. I don't -- can you handle that?

Yes. In short, to answer your question, the average size of the loan made from a volume standpoint went up a very, very tiny amount.

Okay, but my question was, so from what you're saying here, you said that the gross loan outstanding went up 16% and the loan volume went up 11%, right? So the only thing I can figure out is if the gross loan outstanding was 16% and the loan volume was 11%, then the amount per loan had to go up, right? Is there any other mathematical answer to that?

No, a lot of it depends -- as Mark said, that possibly because of the stimulus checks they did not come in and renew that loan this month. That doesn't change the fact that his balances are still there. It's just that our loan volume per se for this current quarter was not, as of the percentages of the loans outstanding and so forth, were maybe not as high as they had been previously. But the fact that we're, as I told you earlier, we're experiencing greater loan volume in July than we had the same period of last July -- I don't think what happens on any one quarter from a loan volume standpoint is as indicative as what happens as far as your outstanding portfolio.

Okay. One more question -- so the charge-offs went up to 14.5% from 12.7%, right? So the question -- but your allowance as a percentage of gross loans is still around 5.5% and it's been that way for a number of years. Is there a reason for that? Is that going to eventually go up do you think, or is that going to remain the same?

Obviously that's something that the Company and its external auditors discuss in great detail at the end of every quarter. And we have seen fluctuations in the past. We use certain models and so forth to determine the adequacy of those reserves. In the past we have seen our charge-off levels go down and we did not reduce the allowance at that time. And we've seen them fluctuate up and we don't change our modeling. But yes, to answer your question, if in fact this trend continues beyond a certain point, and we'd have to continue to evaluate that, then you will see our allowance as a percent of loans also tick up.

Okay. Thank you.

Tieton Capital Management, Bill Dezellem.

A couple of questions -- relative to share repurchases, since you did not purchase any in the quarter, would you discuss strategy-wise, why you chose not to purchase any shares in the quarter?

I think a lot of it was due to the great fluctuations that were going on with the stock price, as well as we were in the throes of renewing our loan agreements and so forth. And we just -- it just was not a priority during the quarter.

That's helpful. And relative to your customers, would you discuss any trends that your customer base may be experiencing? I have to admit sometimes I'm not quite in touch with your customer base.

Well, I cannot tell -- well, I guess the only way to answer that is the trends that they are experiencing are the trends that all of us are experiencing. You know, Bill, you're affected by the increases that are going on in energy and food prices. Fortunately for you, that it's such a small part of your disposable income that it really doesn't have an impact. But to our customers, it's a pretty substantial part of their disposable income. But I think that they're experiencing difficult economic circumstances.

In that same vein, does your customer tend to be one of the first that's laid off, and so when we hear about unemployment rate ticking up a little bit, that in fact your customer base may be more impacted than the general population?

Well, those are the economic trends that we have historically said really don't have as much of an impact on us as other institutions, because our customers, they can find jobs. Even if they're laid off at a mill or something, they can find alternative sources of income, whereas the middle-income individuals that get laid off from banks or large automobile manufacturing facilities and so forth face totally different challenges. So I'm really less -- well, I'm very concerned from an overall economy of what goes on with unemployment, but as far as World's success and so forth, we've been extremely successful despite what happens with the unemployment rates.

So, Sandy, really your perception is that the bigger issue with your customer is their budget squeeze rather than employment or some of those other bigger issues?

That is what we believe; that is correct.

All right. Thank you. And then, you had mentioned that July -- that the loan volume had improved. And has it bounced back to that 15%, 20% sort of growth rate that you have historically experienced?

It's difficult to tell. For one reason, every, you know, Julys are different. We have more working days, less working days. When does the 4th of July fall? When does the month end fall? I mean, we'll know that on Thursday for certain, but it appears to be reaching a more normal level than this kind of the depressed, or suppressed, level of volume that we saw for a large portion of the first fiscal quarter.

And in response -- or not a response, but just following up on a prior questioner's question relative to the loan volume versus the loans outstanding, the loan volume, what you're talking about there is the amount of new loans that you write in any given quarter. Is that a correct definition?

That is correct in the sense that it covers three types of loan. It's loans to new customers. It's loans to former customers that are coming back in and taking out new loans, as well as renewals of loans to existing customers. But that is correct. When we talk about loan volume, that is the dollar amount of new loans written during a period as opposed to balances outstanding.

And one of these things -- I just want to make sure we're understanding how you're thinking about your business -- that with these stimulus checks you are feeling that there were less renewals. So, customers that had loans that pulled the balance down a bit and enough that you would be comfortable writing them a new loan and letting them walk out of the branch with a check, that -- given that they actually received a check in the mail, their stimulus check, your customer didn't have a desire to do that renewal, is the way it appears. Is that what you were trying to convey before?

And it's not only renewals. It's new customers. A person that normally may have come in this time of the year, for whatever reason, to take a vacation or for whatever reason, may not have felt the need to do that during this period because he did receive the stimulus check at that point in time. But from an overall standpoint, we actually had less new customer loans made during the quarter compared to the same quarter last year, although we were that much larger. But that's why we believe that we'll see the -- we'll get the benefit as we go forward.

And then, lastly, as we think about the World underwriting, would you please remind us when the last time was that you changed your underwriting standards?

We have never really changed those underwriting standards from the standpoint that we go through a very thorough application process. We determine, or attempt to determine, all available income that our customers have, and then we attempt to determine all of the debt that that person has outstanding in the process of calculating a free income. And once we determine that free income, we look at the normal expected amount of payouts on a normal -- I mean, you have to live and so forth. And if there's money available to repay us, then we consider that a good loan.

Now, the only thing we may change is the amount that you would normally expect, because of some inflationary pressures that our customers are facing now. But the process is the same as it's always been.

And that underwriting criteria has not changed for 20 or 30 years then?

Really, the Company's been around since 1962, and the process has always been very good.

Great. Thank you both.

Marc Abizaid, Mohican Financial.

Can you give me a bit more color on your experience so far in Mexico -- how many locations you currently operate, how many you expect to open the remainder of the year, and how you see the business going forward?

Yes, I'd be happy to. We currently have 38 offices. We expect to open -- we've already opened three and we expect to open a total of 25 during the year, which we will take us to 60 offices as of March 30, 2009. We're experiencing extremely -- we're very pleased with the growth that we're experiencing there, and so far we are very pleased with the performance of the portfolio.

The reason we're still not making money is because we have so many new offices that have not been opened long enough to have reached a critical mass necessary to support the expense structure. But those offices that have been opened now for going on a little over two years, all of those are performing extremely well. And we believe as the number of offices in Mexico grow, and we have more mature offices, then it should be extremely profitable for us, for indefinitely. We just think the prospects there are outstanding.

Okay. And how do you target which regions in Mexico you're going to move into? Is it mostly border-type regions, or -- ?

Just to give you some examples, primarily initially we have focused on the northern part of the country, but certainly not necessarily just border towns. But as of right now, I'll just give you an indication of some of the towns we are in. We're in Juarez, Matamoros, Reynosa, Monterrey, Saltillo, Chihuahua, Torreon, Nuevo Laredo, and Casas Grandes. And these are primarily north and then kind of surrounding the Monterrey area. And it's our intent to go throughout Mexico, except currently we are kind of avoiding the Mexico City area.

And how would you describe the competition in Mexico?

Certainly on a comparative basis it's substantially less competitive than what we see in the United States, because of the historical lack of credit. But as time goes on it will become more competitive, but it's such a tremendous market that that should not be a serious problem for many years to come.

And the regulatory environment in Mexico?

It's been extremely good. We've been very pleased and we are -- (inaudible) that is a regulated body. But it's not heavily regulated and it gives us some protections, and I think it's just a very good environment for us to operate.

Okay, thanks. And then, back here in the U.S., how many branch managers do you currently have?

One for every office, and we have currently 834 offices. And so we have one for each branch.

Okay. And how would you describe the turnover in those branch managers?

Branch manager turnover is running somewhere around 20% on an annualized basis.

Okay. And is that increasing or stable or -- ?

Been very stable for the last two or three years.

Okay. Thank you.

Daniel O'Sullivan, Utendahl.

Just a couple follow-on questions to Mexico. Sandy, can you elaborate a little bit more why you don't think central Mexico is attractive for you guys?

It's not particularly central Mexico. It's Mexico City proper, and it's because of safety concerns for individuals from the United States traveling there, as well as for our own employees in that market. Until we feel more comfortable moving around Mexico City, there is plenty of places to go to avoid that.

And also Mexico, obviously you guys are much closer to it than we are. Can you give us a sense of the trends in the economy there and any impact on your consumer base?

As far as trends and so forth, I don't know that -- I mean, I know that it's been pretty good from the standpoint that the exchange rate has acted favorably over the last year or so, and that they're not faced with serious unemployment, to my knowledge. But I really can't -- I personally just can't get into any real differences --

Some of the things that we're faced with in the United States aren't there. Fuel prices are heavily subsidized in Mexico, so we're not seeing wild fluctuations in what it's taking those folks to fill up their cars with gas. And food similarly doesn't seem to be under that kind of pressure as well.

Okay. But I mean, food prices are probably increasing?

I don't know.

I couldn't tell you for certain. I mean, I don't go to the grocery store there. But in terms of eating there, restaurants, whatever, I have not noticed a substantial change at all.

We're not seeing a deterioration in credit quality at this point in time.

Okay. And I'm sorry if I missed this. I actually got on the call a few minutes late. But can you update us on your planned store openings for fiscal '09?

Yes. We plan to open 70 in the U.S. and 25 in Mexico, plus whatever acquisition opportunities that may -- we'll evaluate those as those opportunities arise.

Okay. Actually, that's a segue to my next question -- are you seeing small operators, given the credit crunch and the move up in charge-offs and things like that, maybe under pressure and maybe some acquisition opportunities will arise this year?

We see acquisition opportunities on an ongoing basis. Last year the activity was, as you know, not quite as great as in previous years. So far, the beginning of this year we've evaluated numerous small type acquisitions and have closed several. And I don't know that it's -- if we're going to see a major increase as a result of what's going on or not at this point.

Okay. And lastly, can you give us a regulatory update -- is there anything lingering in any of the states you're in right now? I know most of the sessions have ended, but is there anything still outstanding there?

The only place where there's a lot of -- there's certainly been some activity -- is in Illinois. And a senator there is going through some kind of exploratory meetings and so forth, trying to become more educated in the small loan credit. And there was an attempt made last year to try to do some kind of regulations to regulate the payday lending industry. And in all likelihood those discussions will continue into this year, but nothing pending, except -- and then again, on Senator Durbin's bill that was introduced on a national level for an overall 36% rate cap is certainly of concern, but we hopefully don't believe that that will take hold and ever pass.

Okay. And lastly, can you give us a sense of what states maybe where you're looking at for next year?

Right now the only possibility, I think, is Mississippi, but we don't have any definite plans at this point. We have not established a timetable or identified any locations.

Okay. Great. Thanks a lot.

(OPERATOR INSTRUCTIONS.) Andy Wagstaff, Touchstone Investments.

I wanted to -- if you guys can, please give me the delinquency breakdown you guys gave on recency greater than 61 days and then also on a contractual basis. What were those numbers again?

This is Kelly. On a recency basis, it was 2.9% and on a contractual basis it was 4.0%.

Okay. So that contractual number is flat with the fourth quarter, is that correct -- or flat with the last quarter, is that correct?

The prior-year first quarter?

The last quarter.

Oh, I don't -- hold on one second.

Bear with me one second. That is correct. Contractual was 4.4% and recency was 2.6%.

Got it. Got it. A couple of additional -- and I'm hoping you guys can provide some additional color and, really, questions. Why it is that we can't get the delinquency data on a quarterly basis by dollars and percentages?

Delinquency data on a quarterly basis by dollars and percentages -- we do. I mean, we provide the 60-plus day numbers for both recency and contractual, in both dollars and percent.

Right, but in terms of 61 to 90, and then greater than 90?

We just never have. I mean, it's not anything that we're hiding. It's just never been a way that we've been presenting that information.

Got it. Okay. What is the total number of accounts that you guys have open and how many customers have multiple accounts?

We currently have 696,035 loans open and I could not tell you at this point in time exactly the percentage that have more than one loan, of those loans how many customers have more than one loan. But we believe it's a very small percent. I mean, we know it's a very small percent. But, Mark, do you want to add to that?

Our World Class Buying Club product, our sales financing product, is given almost solely to existing borrowers. So whatever that number is, and Sandy has it right here --

Thirteen thousand.

Thirteen thousand customers I can tell you certainly are duplicated. We have states where that is the only duplication allowed. Our largest state, Texas, will not allow any loan duplication whatsoever, so there are states that allow dual loans. Typically for World it will be, a guy has a loan at our Colonial Finance store on one side of town and maybe World on the other. But both branches are certainly aware that they have a duplicated account and they underwrite accordingly, given that they know that. But I would guess that the overall duplication rate in the portfolio of two actual loans is way, way south of 5%.

Right. Okay. And then the last question is, the net charge-offs -- obviously we have the percentage. Can you give me what the dollars of net charge-offs were in the quarter versus the year-ago quarter?

Yes, I can if you'll bear with me one second. Net charge-offs for the quarter were $16.4 million and for the prior year quarter was $12.4 million.

$12.4 million -- and what was it in the March quarter?

I don't have that number. I'm sorry.

Okay. All right. Thank you.

Jordan Hymowitz, Philadelphia Financial.

I'm sorry. All of my questions have been answered, just except for one. You mentioned a Durbin bill. I'm not familiar with that bill. What does that do again?

It's Senator Dick Durbin out of Illinois at the federal level introduced legislation somewhat mirroring the military 36% rate cap. It would be a federal rate cap. Our federal trade association, AFSA, believes that that bill won't even get a reading this year. It's really posturing for some move next year to -- as you're aware, Senator Obama in his presidential platform states that he is in favor of a 36% national rate cap. So we believe it's posturing for now to see what will happen later.

And not that it's going to happen now, but would a 36% pay cap, would that apply to all loans? It's not just, obviously, short-term loans -- it implies a payday or the Internet or would this be national in scope?

It would apply to every loan made in the U.S. and it's not actually an APR. It includes things like late charges and whatever. So it would affect not only World and payday, but also bank credit cards, and almost everything that you see.

Okay. Thank you.

A follow-up from Rick Shane with Jefferies & Company.

Thanks for taking a follow-up. Obviously, one of the questions that people are really focused on is trying to figure out what the impact of tax stimulus checks are on loan volumes. And especially when you look at the store growth on a year-over-year basis, basically loan volume grew roughly in line with store growth. And again, that gets a little bit skewed, because I'm sure that over those 12 months there's a ramp in loan volume within those stores. Do you have same-store loan volume for 12-month-old stores that we can look at for the first quarter? And it would actually be really interesting to compare that to fourth quarter same-store loan volume growth, so that way we could try to parse out what is a function of tax stimulus checks versus sort of a slowdown in loan volume.

I do not have that number. The only number that we calculate internally as far as same-store sales type of things is the revenue, same-store revenue that we mentioned earlier. That's not to say we couldn't calculate it, but it's quite a model to go through the process and it's just not something that we have done in the past. I mean, like we said, it's not something that we don't have the ability to do. We've certainly got the reports and so forth, but it's just not anything -- I don't have that number.

Okay. I mean, I guess going forward if you continue to see what is relative weakness in terms of loan volume, that would be very helpful data. I mean, if this is a one-quarter aberration, that's one thing. But certainly, given the data we're looking at today, I think people would be very interested in seeing that.

Absolutely.

Thanks, guys.

We'll take that into consideration.

A follow-up from Joe Gagan with Atlantic Equity Research.

I have one quick question. How much was the operating cash flow for the quarter and how much was the line item increase in loans receivable?

Operating cash flow -- guess would be the same as operating income -- was $21.8 million and the increase in loans receivable -- Kelly, do you have that also?

Yes. The increase in loans receivable was roughly $32 million.

Okay. And do you know why the operating cash flow -- like last year it was $20.5 million and this year was $21.8 million, right? So it went up a very negligible amount, right? Yet your --

Last year it was 19 point -- or it was $20.0 million versus $21.8 million. It's up 9%.

Right. Okay. So -- I mean I have a 20 -- but whatever, okay. So it went up 9%. But I guess my question is, why do you think that -- so say it is up 9%, the operating cash flow -- and how much was the net income up, the net income percentage up?

Net income was up 11.1%.

And you've been kind of tracking that for awhile, where the net income is up more than the operating cash flow. Do you know why that is?

I mean, the only real difference between our operating income and our pre-tax income is our interest expense, which has remained fairly constant. I'm not sure -- so therefore your income tax rate is generally about the same, so you would expect your net income to kind of track your operating income -- if I'm answering your question correctly.

No. I'm asking about the net income growth compared to the operating cash flow growth. In other words, the operating cash flow growth, from my looking at it, has the operating cash flow growth has not been as strong as the net income growth. Any thoughts there, or -- ?

Well, that would be the fact that from -- with the excess cash flow to a certain extent we have paid down a certain amount of our debt. Plus this past year we have had a reduction in interest rates when compared to the prior year. Like I said, the primary difference between pre-tax earnings and operating cash flow is our interest cost.

Okay, good. All right, well thank you very much.

A follow-up from Mohican Financial, Marc Abizaid.

Just a quick follow-up on the long-term Mexico operations. Just wondering, what are the impediments to a more aggressive growth plan in Mexico? What would you have to see, or when would you feel more comfortable with growing more substantially, maybe even through acquisitions or whatnot?

Our biggest impediment to growth there is acquiring -- I mean not acquiring, but attracting and training qualified individuals to manage the operation from both the branch level to supervisor level and the VP level. We have not been moving people across the borders there. We did initially, took a few people over, but because there's differences in the salary structures and so forth, we have grown this from internally by hiring employees from the various cities where we're operating. So the larger we become the faster we can train individuals and the faster we can accelerate that growth. And as far as acquisition opportunities, we're not aware of any. Certainly, if they become available we'll evaluate them.

Thank you.

And at this time there are no further questions. I'll turn the conference back over for any additional or closing remarks.

We just appreciate your being with us today. Thank you very much.

Thank you for your participation. Before concluding this afternoon's teleconference, the Corporation has asked me again to remind you that the comments made during this conference may contain certain forward-looking statements within the meaning of Section 27A of the Securities and Exchange Act that represent the Corporation's expectations and beliefs concerning future events. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties.

Factors that could cause actual results to -- or performance to differ from the expectations expressed or implied in such forward-looking statements include changes in the timing amount (sic) of revenues that may be recognized by the Corporation; changes in current revenue and expense trends; changes in the Corporation's markets; and changes in the economy. Such factors are discussed in greater detail in the Corporation's filings with the Securities and Exchange Commission.

This concludes the World Acceptance Corporation quarterly teleconference.