World Acceptance Corp (WRLD) 2010 Q4 法說會逐字稿

Good morning, and welcome to the World Acceptance Corporation sponsored fourth quarter press release conference.

Today's call is being recorded.

At this time, all participants have been placed on listen-only mode.

A question-and-answer session will follow the presentations by the Corporation's CEO and its 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 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, Operator.

Welcome to the World Acceptance Corporation fourth quarter conference call.

As the operator said, I am Sandy McLean, the Company's Chairman and CEO.

With me are Mark Roland, our President and COO, and Kelly Malson, our Chief Financial Officer, along with other members of our management team.

As we have done in the past, I'll spend a few minutes reviewing the quarterly and annual results, after which we will be happy to answer any questions.

Throughout fiscal 2010, we have seen significant improvement in our operational performance when compared to fiscal 2009.

We are very pleased that this trend continued during the fourth quarter as well.

We are glad to be able to report the continued expansion of our office network, excellent [grows] in our receivable portfolio, ongoing control of our operating expenses, as well as continued improvement in our loan loss ratios.

Net income for the recent fourth quarter was 29.7 million, or $1.76 per diluted share, compared to 26.3 million or $1.62 per diluted share for the fourth quarter of fiscal 2009.

This represents a 12.6 increase in net income and an 8.6% increase in net income per diluted share when comparing the two quarterly periods.

Net income and earnings per share for the fourth quarter of fiscal 2009 were revised from 428 million and $1.72 respectively due to a change in accounting principles for the Company's convertible notes.

Additionally, the fourth quarter of fiscal 2009 included approximately 2.6 million in gains from interest-rate swaps and debt repurchases, whereas the current quarter had no significant gains of this nature.

Excluding these gains from both quarterly periods, net earnings and EPS would have increased by 19.8% and 15.9% respectively when comparing the two quarterly periods.

For the full fiscal year, net income was 73.7 million or $4.45 per diluted share representing a 30.4% and 29.7% increase in net income and EPS respectively over the 56.5 million and 3.43 per share earned during fiscal 2009.

Fiscal 2009 earnings and EPS were revised from 60.7 million and 3.69 due to the accounting change.

Additionally, fiscal 2010 earnings included 3.3 million of non-operating gains compared to 4.7 million in similar gains during the prior fiscal year.

Gross loans amounted to 770.3 million at March the 31st, 2010, a 14.8% increase over the 671.2 million outstanding at March 31st, 2009.

This is a substantial improvement in the year-over-year growth rate of 12.0% at the end of the prior fiscal year.

Additionally, the 14.8% increase in outstanding loans resulted from an 8.6 increase in the number of loans outstanding combined with a 6.2% increase in the average balance of those loans.

While acquisitions continued to be an important factor in our overall growth strategy, the Company did not make any significant purchase during fiscal 2010.

There were numerous small purchases amounting to 6,269 accounts and 3.9 million in loan balances.

These accounts are spread among 22 offices, one of which represented a new location.

For comparison purposes, during fiscal 2009, the Company purchased approximately 9,000 accounts and 10.9 million in gross loans in 22 offices.

Of these, 11 were new locations.

As planned and previously disclosed, we greatly reduced our branch office expansion during fiscal 2010.

We began fiscal 2010 with 944 offices.

We opened 48 offices, acquired one, and merged three, giving us a total of 990 offices at March the 31st, 2010.

Of the 48 de novo offices, 31 were in the US and 17 were in Mexico.

Because of the accelerated office opens and acquisitions during the previous year, 106, 106 and 112 net new offices in fiscal 2009, 2008, 2007 respectively, we intentionally slowed this growth for fiscal 2010 to strengthen our middle management which had become somewhat stressed in recent periods.

Our plans for fiscal 2011 are to open 55 offices in the US and 15 offices in Mexico, plus evaluate acquisitions as opportunities arise.

Total revenue for the current quarter amounted to 123.9 million, a 9.8% increase over the 112.8 million during the fourth quarter of fiscal 2009.

For fiscal 2010, total revenue grew by 12.4% to 440.6 million compared to [392.2] million for fiscal 2009.

This corresponds to a 14.2 and 13.7% increase in average net loans when comparing the two quarterly and annual periods respectively.

Revenues from the 834 offices opened throughout both annual periods increased by 8.1%.

Revenues from our tax preparation business grew by 8.4% during the fourth quarter of fiscal 2010, although there were only a slight increase in the number of returns prepared.

During the current tax season, we completed approximately 62,000 returns compared to approximately 61,000 returns during the prior year fourth quarter.

While this represents only a 1% increase, we consider this a big success, as most preparers saw significant declines in the number of returns prepared.

Net fees generated from our tax preparation amounted to 10.2 million during the recent quarter, an 8.3% increase over the 9.4 million during the prior year quarter.

As we have noted on numerous occasions, loan delinquencies and charge-offs will always remain a primary area of management concern and focus.

Accounts that were 61 days or more past due decreased from 2.7 to 2.4% on a regency basis and from 4.2 to 3.8% on a contractual basis when comparing the two year-end statistics.

During each quarter of the current fiscal year, we have seen a reduction in our year-over-year loan losses.

Annualized net charge-offs as a percentage of average net loans decreased from 15.1% during the fourth quarter of fiscal 2009 to 13.6% during the most recent quarter.

This is much more in line with historical fourth quarter charge-off ratios and in fact, much lower than [historical].

These ratios were 15.4%, 14.4%, 13.6% and 13.9% during the fourth quarter of fiscal 2002, 2003, 2004, and 2005 respectively.

For the year ended March 31, 2010, net charge-offs for average net loans were 15.5% compared to 16.7 for the prior fiscal year.

We believe that we will continue to see slight improvement in our loss ratios in the near future.

However, there is no assurance that they will return to historical levels anytime soon.

General and administrative expenses amounted to 56.4 million in the fourth fiscal quarter, a 9.8% increase over the 51.3 million in the same quarter of fiscal 2009.

As a percentage of revenues, they were 45.1%, the same as they were during the prior year quarter, but the year ended March 31, 2010, G&A expenses increased by 8.4% to 217 million from 200.2 million for the prior year.

As a percent of revenue, they decreased from 49.2% from 51.1% over the two yearly periods.

Our G&A for average open office increased by only .8% when comparing the two fiscal years.

Our expense ratios have benefited from a more moderate office expansion during the current year.

During fiscal 2010, the Company opened or acquired 49 new offices compared to 109 in fiscal 2009.

Highlights of our expansion in Mexico include the following.

80 offices were opened at March the 31st, 2010, an increase of 15 during the current quarter and 17 during the year.

At year end, we had 77,225 accounts and approximately 33.1 million in gross loans outstanding, a 65.6% increase over the 20 million at March the 31st, 2009.

Our [growth] in loan balances as measured in US dollars benefited from the change in the exchange rate, as the value of the dollar declined against the Mexican peso during the year.

This was a reversal of the trend that we experienced during fiscal 2009.

We had net charge-offs of approximately 3 million during the year or 17.2% of average net loans.

The increase in net charge-offs during the year was primarily due to the management issues resulting from our rapid expansion primarily in the Monterey region that have been discussed in previous quarters.

Steps have been taken to relieve these issues and we expect our charge-off ratios in Mexico to return to reduced levels as we enter the new fiscal year.

Our 61-plus day delinquencies were 3.7 and 4.8% on the regency and contractual basis respectively.

During the current year, the Mexican subsidiary had a loss of approximately 154,000, which we believe is still very reasonable in a rapidly expanding market.

We expect Mexico to provide a positive contribution to fiscal 2011 earnings.

Finally, the Company's return on average assets of 12.7% and a return on equity of 22.1% during the year remained consistent with the Company's historical trends.

Before opening the call to questions, I'd like to give a brief overview of the regulatory and legislative landscape.

As you know, legislative risk has always been our most significant company risk.

This is a risk that we have successfully managed throughout our Company's history.

At the state level, there's very little activity that would have a negative impact on our business.

There is a bill that was introduced in Illinois Senate that would establish the capital interest rates, but this would have only a limited impact on the loan products we offer.

At the federal level, the Company is uncertain of the impact that a proposed consumer financial protection agency will have on its future.

As you know, the House passed the Financial Services Reform Bill several months ago and the Senate is prepared to [take up] debate on Senator Dodd's bill next week.

Both of these bills provide for a consumer protection agency, which is likely to be created in some form.

While the proposed bills do not currently provide the authority to establish rate caps, we do not know at this point if this agency will ultimately limit in other ways our ability to offer small loan products to those customers that need them.

We will continue to be active with American Financial Services Association and National Installment Lenders Association and work with this agency, if created, and other regulatory bodies to demonstrate the need for our products and services.

At this time, any of us would be more than happy to answer any questions.

Operator?

Thank you.

(Operator Instructions).

We'll take our first question from Rick Shane with Jefferies & Company.

Thanks, Sandy, for taking my question.

Sure.

Can we just look at Illinois a little bit more closely?

You've made some sort of high-level comments.

There is a bill that's proposed.

What do you think the legislative policy intent there is?

And then if you can put, to the extent there is a rate cap, talk about where your rates are in Illinois versus the proposed cap.

I mean, I can't say exactly what the intent is.

I suspect it is an ongoing attempt to more regulate the payday lending industry where a specific bill was passed in the past and a lot of those companies have now begun to offer products under the normal installment loan (inaudible) as a way to get around that previous law, but the bill as presented does have a 99% -- 100% --

99.

-- 99% maximum rate which really we -- we don't necessarily support rate caps, but we're not necessarily opposed to that bill in the sense that we have very, very few loans that would exceed that rate.

That would only be the very small or short-term loans.

So we do not anticipate the bill as written to be a serious negative financial burden to us going forward.

We're not happy with the proposed database that they're requiring because we have databases through our credit bureaus and so forth, but if that's what -- if that's the direction that we're going in the state, then so be it, but anyway, I hope that answers your question.

It does.

So your conclusion is that this is an installment bill that is intended to eliminate some loopholes for other -- for ancillary products, not really your core product?

I don't believe it's their intent to eliminate the installment loan product in the sense that there was a lot of discussions that took place prior to the introduction of the bill, and if those discussions had -- which our Trade Association was involved.

So I don't believe -- if we were the target of that bill, then we would be that actively involved in those discussions.

Got it.

And my understanding -- and correct me if I'm wrong -- is that the Trade Association is actually supporting that bill.

We're definitely not opposed to it.

I'm not sure to the extent how actively they are supporting it, but we're not opposed to it.

Okay, great.

Thank you very much.

Our next question comes from David Burtzlaff with Stephens.

Good morning, guys.

A few questions here -- first, Sandy, can you talk a little bit about what's going -- the South Carolina.

Have they closed the loophole for payday lenders trying to go to the supervised lending law?

(Inaudible).

Not yet?

The bill has come out of the Senate and it has not yet been introduced in the House.

Okay.

But there seems to be an effort to do something similar to that.

Okay.

All right.

And then the occupancy costs in the fourth quarter were down like 10% sequentially from the third quarter, yet you're still opening stores.

What -- is there something going on in that line item?

I'm not prepared to answer that question, I'm sorry, but it's up 6.7% on a year-over-year basis and I'm talking after that.

Okay.

It does look a little unusual, but we did open a pretty substantial number of offices in the fourth quarter, but it was the latter part of the fourth quarter.

Okay.

I would like to get back with you on that, but I'm not prepared to answer that at this point.

Okay.

And then finally in Mexico, your stores along the border, are they -- how are they still performing, I mean, given either the violence going on there or more customers maybe returning to the -- going back home to the interior because of the recession and less jobs?

Well, of course, our original point of entry was Juarez where there's certainly a great deal of turmoil been taking place, and those offices are performing -- wouldn't you say, Mark -- better than any others that we have?

Yes.

Our primary concern, issues have taken place in the Monterey region where there's a lot more competition, so if the -- there has not been an impact on our operations there as a result of the violence that's taken place, but we've had more of an impact as a result of the unemployment that's taken place, where the economy down there has been hit substantially and probably worse than it has here.

And that's the Monterey --

No, that's throughout --

Okay.

-- where all those big plants are.

Okay.

That's all I had.

Thank you very much.

Okay.

Our next question comes from John Rowan with Sidoti & Company.

Good morning.

Hi, John.

Just a quick question maybe, Kelly.

What was the reason for the jump in the tax rate and what do you expect it going forward?

Regarding the tax rate between the third quarter and the fourth quarter, a lot of that deals with the FIN-48 and basically how the accounting rules treat when you can release reserves related to that to expiring, and when you add the FIN-48 exposure to any new item.

And if I could add to that, that's also -- when we do our state true-ups and it turned out this year that the state taxes causes differences among the various state rates, it turned out to be a little higher than we expected.

Okay.

And what would you expect at -- is that a new run rate or will it turn back down a little bit?

I would think that the -- for the full year, we would anticipate that the current annualized rate would be very close to what you should anticipate yesterday -- this year, and that's in the 38.3 to 38.5% range.

Okay.

Sandy, you went over a couple of things and I didn't get them all down, but the 15% loan growth, I know you broke it up into a 6.2% increase in loan balance, but what was the rest of that?

It was just -- I was just trying to give an idea of the -- how the mix (inaudible) changed, but we had an 8.6% increase in the number of outstanding loans and customers and a 6.2% increase in the average balance of those loans.

Okay.

All right.

Thank you very much.

Okay.

We'll move on to Henry Coffey with Sterne, Agee.

Yes, good morning, everyone, and thank you for pulling off quite a great year.

You've been a big buyer of your converts.

Can you do a couple of things for us on that?

Tell us how much you bought back this year and what is both the accounting and the contractual balance of that security?

Henry, this is Kelly.

From a contractual standpoint, the remaining balance is $77 million.

Year-to-date, we've repurchased 18 million par value versus 15 million par value in the prior year.

And the net balance when you take into consideration APB14-1 is roughly 71.5 million.

Do you know --

Did you know, Henry, we -- last year and the beginning of this fiscal year, we bought back quite a bit at substantial gains, but due to the change in our stock price and so forth, the current -- any purchase that we would do right now would ultimate -- would end up in (inaudible) losses.

No.

What is your case for stock buybacks in this environment?

As you know, we have always thought that stock repurchase is a really good use of our funds, excess funds.

We believe that with the current price and our expected earnings that these -- any purchases we do right now would be very accretive to earnings.

We currently have a 13.5 million authorization by the Board and I would anticipate going forward that we would be active in repurchasing stock.

And does the Board -- do you think they're likely to let you increase the buyback authorization above that 13 or how do they tend to manage that?

They have never been resistant to it in the past when we have requested additional authorizations.

Thank you, and great quarter and excellent year.

Thank you, Henry.

(Operator Instructions).

And we'll move to Dan Bandi with Integrity Asset Management.

Thanks for taking my question.

I echo Henry's congratulations on the quarter and the year.

Thank you.

And we certainly appreciate it.

Sandy, I'm wondering, and I guess it's probably a hard question to answer, but when you look at the Consumer Financial Protection Act or your Trade Group -- maybe that's a fairer way to ask it -- looks at that, what do they see as the biggest risk coming out of this?

And then kind of what's their strategy to try to neutralize that?

Well, the biggest risk obviously is if during debate in the Senate bill or in the reconciliation, if the Senate bill -- if and when the Senate bill passes and the reconciliation between the Senate and the House bill, ultimately, the authority is given to this agency or bureau to set rates; and for some reason, the head of this agency has the authority to do so without proper review and control, then they're establishing some kind of arbitrary rate of 36% or lower or higher, it would have a serious detrimental impact on our financial stability.

So that's the worst-case scenario.

And beyond that, I mean, if you assume, as the current -- as it's currently written where there is no rate cap, is there -- I guess is there more concern that they just prohibit a product like yours?

Well, so much depends upon the nature and the authority that this agency is given.

As you know, there are people out there that don't necessarily like the products that we offer because they don't understand the nature of rates and the fact that only a small loan with short terms, you need a higher APR to cover your fixed costs.

And there are people that think that regardless of that, anything over a certain percent just shouldn't be allowed or the people should not be given the choice to make that loan or not make that loan.

And our concern is that this agency is created and it's given the authority to do that and then that type of individual is put into position to make these decisions, and at this level, it's a national rule or law or regulation, and there's no fighting it.

So that's your worst-case scenario.

Now, do I personally believe that that's going to take place?

No, I do not, but so much depends on what happens in the next few weeks in the Senate and ultimately what happens in the reconciliation between the Senate and the House.

And we got a long way to go in this process.

And the Trade Group in terms of their strategy, I mean, what are they -- I understand they're lobbying, but is there a certain angle they're taking on this to try to prevent that from happening?

Certainly.

I mean, a lot of the people in Washington don't even know that the small-loan business exists.

We are -- we only operate in certain states where the laws are there to provide the alternate rates that allow these small loans to be offered to people that really can't get bank credit or under banks.

And so it's up to us to educate people on the service that we provide and the product that we provide, and to convince them that these products are necessary and without them, a very large population -- a segment of the population will not have access to credit.

And I think that that would be very detrimental to the Company -- country going forward.

So it's our job to get with as many legislators and regulators to educate them about our Company, our industry and our products.

Okay.

And then on Mexico, I don't know if you've mentioned this or not.

You mentioned the loss for the year, but what -- was Mexico profitable in Q4?

Bear with me one second.

It's profitable on a pretax basis, but because of the timing issues and [permanent] issues and so forth down there, the taxes took it into a loss situation, but there was actually profitability (inaudible).

If it was, it was very -- just a small amount of money.

Yes, and it's Kelly.

And for the fourth quarter, the after-tax or -- yes, the after-tax loss was only $60,000.

Okay.

So you're still running around breakeven then on a run rate?

Yes.

That is correct.

Okay.

And we would anticipate that changing this year.

And Sandy, you had talked about kind of addressing the management issues down there and maybe expecting credit losses to come down.

Just curious, but it seems like your expansion plans are pulled back a little bit in Mexico, even on a numbers and also on a percentage of the basis.

Is that purely do the management and personnel?

Well, if you think of it from a numbers standpoint, we projected 15 last year and ended up opening 17 and we're projecting 15 again this year.

Now, the 15 is on a base of 80 and last year, it was on a base of 63.

So from a percentage standpoint, it is smaller, but that is certainly as a result of the rapid expansion and so forth.

But we've hired a couple of good, really good, outside people from a high-level vice president to a regional vice president that we believe will help Javier quite a bit.

He's had quite a job as this thing has grown from zero to 80 offices in a mere four years.

So I think that we're in a much better position in Mexico as we enter fiscal 2011 than we have been for some time.

Okay.

And then on the -- just on the overall credit front across the firm, this quarter was, as you mentioned, better than some of the previous quarters, even kind of better than a normalized basis.

Just -- I'm curious, one, any thoughts as to why you think that is with unemployment still at whatever it is.

And I know things are always tough in kind of your customer space, but certainly there's been continued improvement there and we haven't seen improvement in unemployment, you haven't seen improvement really in gasoline prices, and many other factors.

So I'm curious of your thoughts there and then if you think that going forward that then that kind of indicates that maybe we could expect better than normalized credit next year, or should -- as we're looking at it, just kind of expect maybe more normal type credit losses next year?

Well, due to the timing and so forth, I wouldn't get -- I wouldn't put a whole lot of faith in any change in any one given quarter, and we are very, very encouraged that we've had four consecutive quarters of loss improvements.

And we're very encouraged that our loss ratios dropped from 16.7% in fiscal 2009 to 15.5 in fiscal 2010, but I'm not going to go a lot further than that.

As I said in the comments earlier, that we expect in the near term to see improvements.

Now, we would love to see them go back to historical levels of 14.5%, but we're just not in a position to predict that and certainly don't know if and when that'll take place.

Now, as to why we've seen this improvement in these times is something that we've had a lot of discussions about internally, and I think the best answer is that because of the short-term nature of these loans, the unemployment has been high for quite some time.

And I don't know that it's actually rising, but as we bring in new customers, these customers we're looking at have an income of some sort, either fixed income or a job, and those that have lost their jobs have probably been written off of our books last year or some other time.

So unless we continue to see a deteriorating unemployment picture which doesn't appear to be the case, all indications are that we are a little bit -- this recession is behind us and it may take some time, but employment is improving.

Then I would not anticipate -- we're certainly not making loans to unemployed individuals, so I don't know.

I don't know if I'm rambling or if that answers your question, but that's about the best I can do.

Well, okay.

Well, thanks, and thanks again for a great year.

Thank you.

From East Shore Partners, we'll take Tom Kaplan.

Hello, good morning.

Thank you for taking my call.

I just have a simple question on the expense line items, and I just do a calculation of recorder which kind of looks at personnel expense divided by average units.

And I noticed that that number, and you said to trust my math, was up almost 5.5% in the most recent quarter and was at the highest in about the last seven quarters.

And I'm just wondering is there something going on in terms of manager salary at the office level or just if you could shed a little light on that?

It will be difficult.

I can tell you that, no, there's not.

We have not increased -- I mean, our management structure is very similar to what it has been forever.

Our supervisor will manage nine to 11 offices, a vice president will manage a state, or in Texas, a third of the state or whatever.

And certainly we have not done any across the board increases.

I think that they could be impacted because of the number of offices that we opened in the last quarter.

I think of the 17 offices we opened in Mexico, all but one or two of them were opened during the fourth quarter.

So I think it's somewhat of a timing issue and also I think that our bonus accruals during the quarter were up from prior year as well as earlier because we certainly ended up during the year on an operational basis much better than we did last year, and we anticipate it as we began this year.

So I think it's got -- it's a combination of many factors, but those are the two that I think talk about best right now.

Okay, fair enough.

It's just that I'm trying to get a sense of what the personnel run rate is and given that there was a 12% sequential increase versus a 1% increase in offices opened, I just -- I don't know what to do with that going forward.

So I'm just looking for a little color.

Is that 38 a good run rate?

I would not -- I mean, if you look at our G&A to revenue, it has consistently come down over time.

I've never looked -- I mean, I think that's -- certainly, we look at personnel costs at all levels, but I never have really thought about it in the terms you're saying it, but answering that question is a little difficult, but --

Okay.

Only because it's the largest expense item by quite a bit, so that's why --

I understand (inaudible).

(Inaudible).

All right.

Well, Thank you very much.

Okay.

(Operator Instructions).

And we'll move now to Bill Dezellem with Tieton Capital Management.

Thank you.

Interestingly, my first question actually dovetails on the last questioner's question and it seems as though the personnel cost goes up seasonally in the fourth quarter.

In the Q4 of last year, it also jumped from the Q3.

And so I guess my question is a little different angle, which is what is it that causes the personnel cost to increase on a seasonal basis into Q4?

Well, primarily, that's -- if you know, that's also the quarter that we make the most money and that's our -- all of our management team gets a bonus based on the profitability of offices.

So as I bear -- profitability at the branch level increases, not only from the -- [some of] the payoffs that we get as a result of tax season with the tax season that area going in there, then that's the most profitable time of the year for the branch levels.

So therefore, branch bonuses are the highest during that time of year.

That is helpful, thank you.

And then the second question is following up relative to Mexico, it seems from your comments that you are feeling as though you have pretty well got your growing pains under control.

Is that a fair interpretation, Sandy?

I think that might be an overstatement.

I don't know that we have everything under control.

I just -- I feel like that we've made a lot of progress to that end and if we didn't feel like we were making a lot of progress, then we would not continue office expansion as we plan to currently.

But we believe with the additional personnel at the management level, senior and middle management level, that we are in a much better position to manage this growth going forward.

And Sandy, I tend to think of Mexico as just Mexico, but as you pointed out, Monterey is different than Juarez, and so with the 15 offices that you're planning on opening in fiscal '11, would it be fair to interpret that those openings are taking place in regions in Mexico that you are more comfortable with the management situation and the dynamics down there?

We're going to some new territories, but we always -- we never go into a place that we don't -- we feel uncomfortable in as we enter.

And also (inaudible) as in the United States, some offices turn out better than others as far as their growth and their -- the time it takes for them to become profitable and so forth, but we always go through an analysis and we feel like the locations we pick should be successful locations.

Thank you.

And then finally, relative to acquisitions, you had mentioned that you really didn't have much of significance in fiscal '10.

As you look out to fiscal '11, do you see factors that either are or might be leading to additional pressure on sellers which, if we understand your business correctly, that's really what -- where acquisitions come from is the sellers making the decision.

So presumably, it's pressure on the seller in some fashion.

Do you see some overriding factor that's worthy of mentioning there?

I think the only overriding factor that I could come up with, I think would be what happens in the credit markets and the availability of funding for these small independent operators.

A lot of the banks have made it more difficult to lend and those that are lending are doing so at higher rates.

So if in fact some of these smaller independent operators are having difficulty with their lending relationships, or being squeezed because of the additional cost of money, then that certainly could lead to opportunities that we did not see last year, but there's no indication at this point in time that that's going to take place.

Thank you for the time.

Sure.

(Operator Instructions).

And we have a follow up from Henry Coffey.

Thank you.

Going back to the regulatory level at the federal level, I'm sure you guys are sort of closer to these issues than we are, but the House version actually specifically prohibited rate cap.

Do you get any feeling from your own organization what sort of compromises occurred in the sort of 48 hours that allowed the Republications to let the bill go forward, or we're sort of -- IBC, it's all very micromanaged, but it's kind of interesting, the original House version prohibited rate cap, and you actually had people in the House with very positive payday loan regulation.

So it's hard to figure out where the compromises are right now.

I was wondering if you had any kind of on-the-spot views or have heard anything in the last couple of days as to what triggered the Republicans to allow the bill to go forward?

Well, I think it's certainly -- currently, we're very interested in what goes on and we are involved on an hourly basis just to make sure we know, but I don't believe that the Republicans thought that they could indefinitely prohibit this bill going to the floor for discussion in hostile amendments and so forth.

And I think that they did so initially to try to encourage more partisan discussions, and I think those discussions took place and I think there were probably some things that were some compromises done on the derivatives front.

And I certainly can't begin to tell you all of the items in this 1,400 to 2,000-page bill, but I think we've got to the point that further compromise was not going to take place prior to forward discussion.

So at that point in time, I believe that the Republicans said "Okay, well, let's go forward and take it to the floor and start discussing and see what we can do."

Thank you.

Okay.

It appears we have no further questions at this time.

I'd like to turn the call back over to our speakers for any additional or closing remarks.

I just appreciate you being here today.

Operator?

Thank you for your participation.

Before concluding this morning's teleconference, the Corporation has asked to again 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 or performance to differ from the expectations expressed or implied in such forward-looking statements include changes in the timing amount 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.