Sandy McLean - Chief Executive Officer John Calmes, Jr. - VP, Chief Financial Officer and Treasurer Janet Matricciani - Chief Operating Officer.

J.R. Bizzell - Stephens Inc Bob Ramsey - FBR Capital Markets Vincent Caintic - Macquarie John Rowan - Sidoti & Company Henry Coffey - Sterne Agee Brian Steck - Mangrove Partners Randy Heck - Goodnow Investment Chad Yeftich - Trafelet Brokaw & Co John Rowan - Sidoti & Company Clifford Sosin - CAS Investment Partners.

Good morning and welcome to the World Acceptance Corporation-Sponsored Second Quarter Press Release Conference Call. This call is being recorded. At this time, all participants have been placed in a listen-only mode. Before we begin, the Corporation has requested that I make the following statement.

The comments made during this conference call may contain certain forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 that represents the Corporation’s expectations and beliefs concerning future events.

Such forward-looking statements are about matters that are inherently subject to risks and uncertainties.

Statements other than those of historical fact, as well as those identified by the words “anticipate,” “estimate,” ”intend,” “plan,” “expect,” “believe,” “may,” “will,” and “should” or any variation of the foregoing and similar expressions are forward-looking statements.

Additional information regarding forward-looking statements and any factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements are included in the paragraphs discussing forward-looking statements in today’s earnings press release and in the Risk Factors section of the Corporation’s most recent Form 10-K for the fiscal year ended March 31 2014 and subsequent reports filed with or furnished to the SEC from time-to-time.

The Corporation does not undertake any obligation to make an update to any forward-looking statements it makes. At this time, it is my pleasure to turn the floor over to your host, Sandy McLean, CEO. Please go ahead..

Thank you, Shannon and I thank everyone for joining us for the World Acceptance Corporation second quarter of fiscal 2015 conference call.

I hope all of you had a chance to take a look at our press release as well as review some of the narrative comments that we provided with that press release to try to explain some of the things that have been going on during the course of the quarter.

Number one challenge remains growth and attracting new customers in our offices, and we are focused on that challenge, and Janet has got a lot of initiatives that we hope will be beneficial as we move forward into (technical difficulty) 2015. At this point, I’m happy to open it up to any questions that you may have..

(Operator Instructions). And we will take our first question from J.R. Bizzell with Stephens Inc. Please go ahead..

Yes good morning guys, and thanks for taking my questions.

In reference to the operation changes in the loans within that change which would have been charged off under the old bonus system, I’m just wondering your expectation for collections around those loans given that they are going to be worked a little harder than the old bonus system would have allowed..

Sandy McLean:.

Well the change they are making in just 60s and below, he didn’t – he didn’t have that incentive to charge off that 90-day plus account. And we knew that this would result in an increase of the 90-day account, but because of the policy regarding reserve of those 90-day accounts, it really shouldn’t have had a major impact on the P&L.

But it’s too early to tell, but the initial analysis does appear that we are rehabilitating slightly more of those 90-plus accounts, and which seem to be moving those accounts in the 30- and 60-day bucket.

So the plan is as we established, it appears to be providing beneficial results, but it is too short of a period to determine the impact that we should have on ultimate charge-offs..

Okay, great. Thank you..

Is that helpful?.

Yes it is, thanks for the detail.

And then I guess kind of building on that and then when I think about charge offs and provisions, and John this maybe more for you, thinking about these moving forward, are the expectations for them to kind of revert back to historical levels as we kind of work through this change and season this change?.

Because of the other policy that says all accounts must be charged off once they reach the 180-day level.

And yes, what will happen is, I’m not exactly sure where those 90-plus accounts will fall out, but at some point, they can no longer grow because of the impact on 180 days, so hopefully you will see a pattern developing, and hopefully if we’re successful, that pattern -- that pattern will indicate a slight reduction to charge offs above and beyond things like mix and so forth..

Excellent, thank you. And really switching gears here, I know you were talking about some initiatives, and I know your online presence is something that's been changed. And wondering if you could give us an update of maybe the benefits you are seeing from that increased online presence.

And then mainly any other benefit you are seeing from some initiatives that you've got in place now..

I’m going to let Janet address this, because she has been responsible in these various initiatives, so I’ll turn it over to Janet..

Certainly. In terms of our online presence, we expect that is not available yet.

We are going through a rigorous process in order to get our – we call an online starter app ready, which will have simple customer information, and that we expect to have completed at the end of the month so that we can do some quick testing on it and then have it up in running in November with a lead that will make a difference because we haven’t yet taken advantage of that online channel.

We are however, up and running with texting which is very exciting for us, as we are seeing better responses in texting for refinancing sales than with direct mail which isn’t surprising given it’s an opt-in process.

We have about 160,000 folks signed up for texting, and they are increasing at above another 10,000 every couple of weeks, and that may well go up as we – till we’re getting to a tipping point. The increase in referral fees that we’ve put in throughout every state, different referral fees for small and large loans, with a slight increase.

And it seems to be having a positive impact, of course there are many factors, not possible to tell for sure.

But that seems positive, and we tested in three state during the refinancing mail by the branches rather than doing it by corporate in the belief that the local relationship is very important in refinancing, that’s why we want to keep it at the branch level.

The three states, we give it in, showed good results, though we are now making that company wide refinancing printed mail to be chosen and selected by local branches and no longer from corporate, and we feel good about that initiative too..

Perfect. Thank you..

And we’ll take our next question from Bob Ramsey with FBR..

Hey good morning. Yeah Sandy, just to follow up a little bit on the incentive change, I know you mentioned that because of the reserve policy that there's not really an impact on P&L. And you said all loans are charged off at 180 days. Could you remind me, are they reserved for in full at 90, or what is the reserve policy? I just can’t remember..

The reserve policy is one sort of an accounts that comes, I mean 90-days the delinquent on a regency basis and their reserve through the system its 100% of growth. There obviously was dramatic increase in those 90-day account it would manage at like -- like 20 or many of those..

Yes 20 it sounds like..

Like $20 million. And we – I mean, we had infact reserve for them at a branch level at that 100%. However, I mean that kick because it charged-off on a net basis that kicked our allowance way out of less. So we did make a overall adjustment to reflect what probably would have happened had they been charged-off.

But regardless, our allowance as a percent of gross loans receivables increased from 5.8%to 6.7% which basically means our allowance on a year-over-year basis is up $10.9 million and our gross loans are only up $17.3 million. So on an incremental basis; we are reserving 63% of our total increase in loans.

So that’s why the provision impact is, it should reflect had those loans being charged off. Sandy….

I think I’ll get back to it, right. So, we estimate that 90 days increase here around $14.5 but on a net basis that’s around $10.7 in the U.S. $10.6 in the U.S..

Okay. And I could appreciate you all have taken away the incentive for the branch managers to charge-off the loan and sort of move on.

But have you created incentive for them to actually work the loans down, once they are 90 days-plus past due, and get them to cure rather than just having them out there in no man's land?.

Well I mean there is – this is a dual list both from the standpoint, but yes the delinquency is not impacted. I mean, the impact on their bonus is not affected by the increase in 90 day accounts but because we are reserving those accounts there are 100% of a gross in the P&L impact on the branch is actually greater had they charged at all.

So unless they truly believe that there is a good chance of collecting this, it’s not in their best interest to build that 90 day account..

Okay. And I just think so…..

You are going to reserve for at the branch level at a $100 if you don’t think you can collect it, and on earns run at about 80% to charge it all it basically you reverse that 100 in charge-off actually 80, so there’s a $20 impact on the branch this P&L.

So you have the advantage of getting through the delinquency level but at the same time there’s a P&L disincentive for him keeping real high amount of these 90-day accounts if he doesn’t believe he can collect..

Okay.

As you think about the new incentive structure, is it your expectation that there will be any change in total Company-wide incentive comp from this? Or are -- is somehow the rates or otherwise, are there adjustments, so that you are really changing the behaviors that you incent, but not necessarily the total incentive comp?.

We are trying to make these programs fair in balance for all levels advantage. The biggest impact on our incentives right now is the decrease in our profitability because of the lack of growth.

I don’t think there are much adjustments to these incentive programs, at least they are trying to – if they don’t have a negative impact on the operations personnel, but we do recognize that for them to maximize their personal bonuses and so forth we need to maximize profits and we are trying our best to give them the tools so they can attract additional customers and we can get back in our growth pattern that we have seen historically..

Okay. And I didn’t see it in the transcript this quarter. I know you all usually give same store revenues. Do you have that number handy? I might have just missed it..

1.1% that’s how I [drive] that. Yes, for the – yes 1.1% for the quarter..

Okay. Thank you. And I know Janet went through some of the strategies to try and -- I don't know, reinvigorate growth a little bit and obviously total growth continues to decelerate, and same-store sounds like it's been decelerating too.

Do you have any sense that the changes you all are implementing mean that you're closer to a trough? Do you have any sort of outlook on when things could actually begin to rebuild, or whether we continue to see a drifting in growth from here?.

Well certainly I believe the impact of the changes we had surrounding the less than 10% renewals we will be less in over the next couple of months because of the implementation date of that back in February.

But I believe our renewal activity, although Janet is – we’ve done some things to encouraging those but our renewal volume is actually down on a year-to-year basis.

But I don’t think people are renewing it frequently or there’s a general trend in people not borrowing it’s because of the size and the volume of people who are dealing with this so forth is very difficult to identify all the areas that impact our growth in loan volumes and so forth.

But I noted the things that we are doing are very positive for the company as but when like to say we are hopefully seen some of these initiatives will begin to have an impact as they get implemented and we’re getting closer to implementing those.

But whether or not this is the -- as you speak so to speak a lot depends on the growth season that’s coming up. It’s a very important time of the year for us. So we certainly are doing everything we can..

Okay. And then as you head into this important growing season, what is the way for us to think about share repurchase appetite.

I mean you obviously said in the transcript that you guys plan to keep buying back stock, but will you follow sort of a normal seasonal trend of I guess having a lot less than way of repurchases until we sort of get into the fourth quarter?.

Yes. I think that would be appropriate to assume. We are currently, I mean, as of the end of the quarter we will hit our targeted 2:1 leverage ratio, debt-to-equity. We had expected probably as we had indicated previously our buyback activity at least for the time being was somehow relate to what our net cash flow generated through earnings.

But we know we will need additional cash flow through the gross season.

So, historically this has been quarterly buyback the few shares and then generally because cash flow generated during the fourth quarter we reaccelerate that program, but that something John given the depressed share value may up, it is for some point in time we’ll certainly take every opportunity to use any available funds to take advantage of this market situation..

Okay, great. And then maybe last question and I'll hop out. But you did have a few lines about the CID in the prepared remarks, as well. Just curious -- and I guess what it says there is that counsel tells you that the Bureau hasn't requested any other information and continues to do their review.

I know you never know any sort of timeline, but any sense of what the next step might be, or when we might be might able to take it, or any other thoughts more broadly.

I would be under impression that they were supposed to respond us within six months of the point in time if we submitted our response. And that as we got closer to the October day we went back and found out that is not written rule. It was – that was kind of their general practices, but it’s certainly not anything that they required to do.

Through our enquiries it appears that they were pleased with the response, the timing of our response and the earnest of that response as if they had not completed their review and they did not currently need additional information. So, the timing of when they will get back to us is unknown and totally at their discretion.

And I would expect that there are only one or two things and probably take place either they’ll ask for additional information or they will move forward. So this is all new to me, so I think and whatever I’m saying now is speculate..

Okay. Fair enough. That’s helpful. Thank you, Sandy..

Okay..

And we’ll take our next question from Vincent Caintic with Macquarie. Please go ahead..

Hi, great, and good morning guys. Just two questions, first on loan growth and actually on margins as well. So I’ve heard the incentives for trying to grow, loans going forward.

What are your thoughts also about your margins sustainability and if you would want to drive more volume and perhaps with a lower rate?.

That we have not really contemplated lowering our rate at this point, because of the customer that we are attracting, and so forth we have found that because of the charge-off rates and so forth this has been our model.

We are constantly looking at our rate structures in charge where they are unregulated, but in those states where they’re regulated we generally charge towards the higher end of the range. But we’re trying to look at every possibility to make sure that the products we offer are suitable for these customers that we are dealing with.

We are not a company that’s geared towards risk-based pricing. It’s never been our expertise and I think it would be dangerous to us to move in that direction without a great deal of additional training, because of the issues surrounding risk-based pricing.

So if there is a state or a category of loans, if we believe are not appropriate on and if they are too higher then we will reassess them. And so, all of these are the things that we’re looking at, so I hope that answers your question..

Yes, that makes sense, thank you. And the second question, just to put a point on the credit. So charge-offs have declined, and that's due to the change in the incentives. But I also noticed that your provisions were higher, and so you reserve coverage is now about 11 months.

And so does it seem like that that would be the same going forward? And I guess it seems like you are reserving as if the charge-offs were a normalized 15%, and what are your thoughts there?.

I think that’s appropriate because we know that a large of that increase to 90-day accounts will ultimately charge-off. So I don’t think that by making this change we’ve created a fundamental decrease in that charge-off ratio.

This is a timing of charge-offs and as a result our allowance went up, because we reserve all these 90s and that charge-offs artificially were down because of the delay in charging them all. So that is creating as you say a 11-month coverage, and I can’t verify if that’s correct right this second, but I’m assuming that you’re correct.

And that is not what you would anticipate going forward..

And Vincent, if you were to just that charge-offs based on and assuming that what’s the [build] 90 days was actually charged-off, that coverage ratio comes down to around 8 months..

Which is consistent with the payer?.

Yes..

Right. That’s what I’m saying. Okay. That’s make a lot of sense. Thanks very much guys..

And our next question comes from John Rowan with Sidoti & Company..

Good morning, everyone..

Good morning, John..

So I’m going to beat a dead horse here and we’re happy to ask more questions about credit.

So your policy for actually charging off loans is still at 180 days, correct?.

That’s correct..

When did you make change in the incentives comp – in the incentives during the quarter?.

July 1st..

You made them on July 1. So there's -- it's not a full-quarter impact here. Or no it is a full-quarter impact, I'm sorry. So what I'm getting at is that next quarter we should see more of the same. We should see another build in the 90 days.

You will probably provision as if all of those are being charged off, and we'll continue to see a reduction in the net charge-off rate just for this next quarter.

Then as you move into March, what I'm assuming is that the average age of your 90-plus-days or the average bucket of 90-plus goes up to 180, and now you revert to a more normalized charge-off.

Does that sound about right?.

I don’t think that’s completely accurate. We noticed on a daily basis is the actual charge-offs on a year-over-year basis were less this year than last year throughout July, August and September. Beginning in October, we’re actually seeing that our charge-offs compared to last year are slightly greater than the same month of last year.

So, I believe that dramatic increase in 90 plus that we experience during the second quarter will not continue into the third, but although the third quarter always is a little higher than 90 plus bucket anyway. So, you’ll probably see some seasonality there.

And then, I’m just kind of speculating based on the trends we’re seeing through October, do you disagree, John..

No. I think that’s there. The rate at which 90 days we’re building slowed in September, right. So that they have built a lot in July and August and then slowed down in September.

And that make sense given that there’s only 90 days between the 90-day bucket and 180 days, right, so they only build for 90 days?.

Okay, so basically we revert in the third quarter to more normalized -- or slightly lower year-over-year because of the change -- but more normalized levels in the third quarter. I was thinking, yes because there's a 180-day policy that you could see six months of this before we revert back.

Obviously as you build of the 90-day bucket, and those loans age towards 180 days, you will charge off more loans. That bucket won't continue to get --..

That is correct, that’s we believe.

And certainly we hope that to be the case, because the whole policy is not only to collect the 90 plus days but its also hopefully to move the 30s and 60s and has a less percentage move into that 90-day bucket and again receive the payment in three months than you know you probably lost contact with that customer and there’s some problems going on..

Now, if I'm a store manager or vice president, whoever is affected by this change in compensation what's my incentive to move a 90 to a 30 or a 60? Wouldn't that actually hurt my compensation because my 90s and my 30s and 90s go up, or my 30s and 60s go up?.

Absolutely if you move, if you, it made contact with the 90-day customers, then that means that dumping has taken place and certainly our recent equations that’s goes back down the current, and -- you’re working within to get through his issues.

So he has an immediate impact, because I’m moving it out of the 90-day bucket there’s no reserve on it whatsoever..

Well, it’s the normal for the quarter..

The normal quarter, right..

Okay.

And you said, I think John said, that the increase in the 90s on a dollar basis is $14 million, is that correct?.

That’s correct, from June 30. So we’re estimating that the 90 day rate, but in the U.S. would have stayed consistent from June 30 to September 30..

Okay. And that's obviously commensurate with the $14 million in the allowance..

In the 90 days..

Yes. Okay.

Is there any operating cost implication for you guys, more man-hours, as your employees spend more time trying to collect on accounts?.

What is your last part of your question?.

Well, you have employees who are now trying to work older accounts, right? So they are going to have more accounts per employee.

Is there any implication to you guys, from an hourly standpoint, of what you are paying people that -- they are just going to be working more hours?.

Yes, because we have more in the 90 plus bucket which was our goal all along so that these accounts don’t disappear when they are workable, the branch personnel see them every day, because there in their system as oppose to charging them off before they really had a full chance to work them.

We have not seen more requirements for more personnel or longer hours or anything on that front.

We believe its simply that if you had bucket with couple of hundred accounts in it before and now you have that bucket with 400 accounts than more being worked, more efficiently folks are making more calls, more focus on it because that bucket is bigger than they were use to and in every category in that bucket 90, 150, 120, 150s, we see that’s more accounts are being collected on than they were year-on-year..

But also you have to remember they’re just spreading this increase over a 1000 offices, so the impact on our individual office is not dramatic..

But one of your peers had a little trouble with letting the accounts per employee move a little too high. And I'm just curious if you've seen -- or if you have a comparable metric, how many accounts each employee has. Or maybe just speak to -- I guess the implications we've seen from others in this space..

We believe that at this point in time I think our accounts per employee are little bit low and we would rather address that issue, but getting back in a growth mode and getting the number of accounts up. If we are unable to do so then we may have to take a look at other expense reduction measures.

But we don’t believe except in isolated cases that is the proper direction. We would like to share in some of your other company’s issues regarding having too many accounts; we would like to have them..

Okay. And then last question. Where did the share count stand at the end of the quarter, and how much are we running as far as typical dilution, at this point? Just trying to get a handle on what the share count for the third quarter will look like.

Yes. So that the ending shares count 9.5 billion shares..

Perfect. And it’s still running around….

Between 200 and 400 that depends on the share buyback..

Yes. Okay. Thank you very much..

And we’ll take our next question from Henry Coffey with Sterne Agee. Please go ahead..

Yes. Hi. A couple of things. I'm trying to understand the impetus for this change. I know historically you've always talked that you work your accounts pretty hard.

And by example back in the day when people used to buy charged-off receivables, you did make the comment that, quote nobody ever buys charge-offs twice, because you tended to do a pretty good job.

And you also kind of have the issue that this is probably not a borrower of that cures easily, so what led to this change? What information that you didn't have before led to this change?.

This came as a recommendation from our Senior VP. We don’t have to get a dramatic reduction that has a -- I mean that if they just collect few more of these accounts in a per office basis it could have a fairly dramatic impact on a company with a 1000 plus offices out there.

So, this was something they recommended and they felt strongly about it and they are in position to know the potential benefits much better than I am and if in fact the preliminary indicators are correct than they’re correct. And so I think it would be – I think it will end up proving to be a very successful strategy.

If it does it, nothing is really been harm to those 90-day account, we delayed the charge-off, they are fully reserved and ultimately they’ll be charged-off anyway.

The only impact is, what is it causing, or how much additional collection work is taking place in the branch and because its spread out over so many branches we did not believe that the impact is such that they no longer able to concentrate on the current in 30s and 60s and so forth. Because it appears that they are moving better also.

So it’s kind of if we win it was a great thing. If it doesn’t turn out, its no harm done..

So the only real financial impact, because you are providing for all this is maybe people are wasting time chasing the 90s?.

And we hopefully there the supervisors and the managers are reviewing these accounts in deciding – the goal is, once they believe if they have made all the collection efforts possible and it appears that we’re not to be able to collect it, then they are encouraged to go ahead and charge them off.

But for reason they’ve been unable to make contact, there maybe there some other type of procedures they can make to try to get contact or something this is as long as the person have a problem and whatever that problem was its been resolved and by making contact at a later date in the year and maybe that customer will than come in on those obligation..

And then looking at some of your Internet initiatives is the focus of the program to use more cost-effective forms of marketing? Is it to actually originate loans through the Internet channels? Or is it just that you'll create more efficient ways for customers to get information about their accounts.

Where exactly does the new Internet initiative ultimately take the Company?.

Initially as you know our primarily source of marketing has been direct mail. And we believe that -- I think we still do as good a job as anybody, but direct mail in all categories is not quite as effective as it used to be, because people just don’t respond to direct mail as much as they used to.

And that’s not to say, we’re going to eliminate direct mail, but we want to enhance it with other mechanisms to attract our additional customers. That’s the new customers are the life blood of this business and it remains our number one focus.

So our initial initiative will be a very basic application, very simple application that will be directed towards the closest branch, who will then get in touch with the customer and pursue a formal application and underwriting process.

The initial enquiry for the system is not even going to constitute a true application, because it doesn’t have any sensitive information there. But this is the beginning.

It is new and we don’t know how successful it will be, but I know a lot of our competitors are getting a lot of their accounts from these type of initiatives, and to a certain extent well behind the task. But ultimately, the next phase, it could be true applications that are automatically uploaded to the branch, that then are evaluated at the branch.

And I mean you’ve got to walk before you can run. So this is our, this is our walk – actually this is our crawling stage and we believe that the future could be something quite different.

But its takes time in the current security conscious world to -- you got to be very cautious of all customer data and whenever its put out there on the internet, you’ve got to make sure that all your compliance procedures are in place, such that you’re not exposing yourselves to other types of problem.

So hopefully this is going to be very successful on initial basis and extremely successful going forward, but please remember that forward-looking statement comment because I don’t have this to -- out..

Historically you have not marketed heavily against the payday loan product.

Do you think you might be shifting towards something like that in the future as well?.

Because payday loans do not report to the credit bureau, it’s hard to identify those individuals that are you allowing best type of credit as apposed to other installment type credit. So I don’t think it will ever, could target payday customer per say, because of that inability to do so.

But hopefully, I believe that there’s overlap and hopefully we are competing with those – competing to get those customers on an ongoing basis..

Thank you very much..

Okay, Henry..

And we’ll take our next question from Brian Steck with Mangrove Partners..

Hey, guys. Thank you for taking my call. I noticed that the loan volume was down something like 10% year-over-year, but that activity with new and returning borrowers seemed to be relatively flat, which seems to suggest that a lot of this reduction in loan volume is coming from a slowdown in renewals.

Is that the case? And if so, what's really driving that?.

Actual breakdown on consolidated basis, our new borrowers were actually down 1.6%. Our former borrowers were down 0.1%, and that’s really a new likelihood and our present borrowers were down 16.8%..

That’s on a quarter basis, I think we’re within that and there it was on a year-to-date basis..

Okay. But for the current quarter, which overall our volume is down 12.7%. And some of the fees are – some of the impact -- obviously we try to address the new borrowers and the former borrowers, but there is still an impact from the less than 10% renewals, but I think it’s also above and beyond the less than 10% renewals.

I think that people are not borrowing as often and paying down more and so forth, but we’re continuing to address these issues as well..

Are there any geographic differences in the renewal rate so for example in Texas and Georgia where you’re enjoying larger upfront fees or the renewal frequency is slowing down as it takes longer to build equity? Or you’re seeing this really across the board in all of your states?.

Certainly, if you remember a year ago, we projected that impact on earnings in Texas assuming that we would have the same type of volume numbers. Well, it has had an impact on volume. And because of the increase fees if people are not renewing as frequently and so yes, and so we are not enjoyed the benefits of that – it was projection.

It was an illustration of what could happen if in fact we maintain the same type of volume numbers..

:.

But there's nothing that you're doing other than not marketing to the less than 10% category that has changed in terms of seeking the renewal opportunity with your borrowers..

That’s correct. We are changing – as Janet mentioned we’re actually moving some of the initiation of the renewal mail from central app location to a branch location where we believe those branches and those managers know people circumstances better than marketing can strictly by looking at availability of funds.

And I believe that’s having -- as Janet mentioned, I believe, we believe that’s having a slight beneficial impact so far. .

And as the tax-based marketing for renewal opportunity something that is in place across the country or is that piloted in certain states?.

It is across the country and limited to those that are been up to the end..

And how long is that been in place?.

Its been running a couple of months and we are aggressively marketing that in all branches to every customer that comes in, because we believe it is a cheap and efficient and optimal method of contacting the customer when there is refinancing opportunity available to them and they by offering and letting us know they’re going to be happy to read about that on their mobile phone..

And then one last area that I'm interested in. In terms of the buyback and the capital structure of the company, it looks like you're at about 1.9 times your debt-to-equity. And you targeted 2 times.

But with the typical ramp-up in loans going into the holiday season, what's your intention in terms of how much loan growth you might see going into the holidays? And where might that leave you in terms of debt-to-equity at the end of the calendar year?.

Its so much depends upon the success of the growth season. We will certainly be monitoring very closely the availability of funding for both loans and excess funding for buying opportunities plus historically given the combination of growth season and the reduced earnings during the third quarter.

Our debt-to-equity reaches the -- all things being equal, reaches the maximum percentage at the end of December and then we see a substantial pay down because of tax refund and so forth. During the fourth quarter and historically that’s been the quarter that we had the most available funding for purposes of repurchasing and debt repayment.

Those as I said earlier, we would anticipate to see slower buyback, but we can’t quantify what that’s going to be, but the market has provided a tremendous opportunity for us – that’s what we will be evaluating ongoing basis..

Thanks again for taking the questions..

Thanks..

And we’ll take our next question from Randy Heck with Goodnow Investment..

Good morning, Randy..

Mr. Heck, your line is now open. Please check your mute function..

Hello, I’m sorry. Yes, the mute button sorry about that. Good morning. My question has to do with the Mexican business.

What has historically been the charge-off rate on the payroll deduct loans in Mexico? And how fast is that business growing, that part of the business?.

That has historically been the lowest charge-off ratios if you considered albeit its’ three books of business in the U.S. installment, the Mexican installment and the – payroll deduct, those charge-offs are running somewhere around 1.9%.

Now as we have mentioned on multiple calls, currently we are – we have a couple of unions that are delinquent in our payments, there are several payments behind, but we are still been assured that these payments are all forthcoming and to my knowledge and for what I’m told there has never been any incidences where our union has not ultimately made these payments, but we have a -- we have a really what we consider a pretty high delinquency rate in a couple of unions we have stopped lending in those unions until such times as we start getting those payments and we have done one or two, but they are quite a few behind not all.

We are still comfortable, and we believe that whether these payments will be forthcoming, so we believe this product is still by far one of our best opportunities both in the U.S.

and in Mexico and it is currently growing at a fastest rate of any of these from the prior year it’s growing around at 45% it’s going from been 2.8% of our portfolio at September of last year to 3.8% of this sort of rate this year..

Okay, so that’s still over 40% of your Mexican portfolio is the union, the payroll deduct product..

And the opportunity is certainly very great. We are currently working with several more unions that believe that that still remains one of our really good opportunity..

Okay. All right. And just a follow up on that. Yet because of the gross to delinquent numbers, the delinquency numbers have ticked up even though the ultimate charge-off would be substantially less than the Company average -- the expected charge-off I should say..

That the ultimate expected charge-off, we don’t believe its going to be substantially less, we think it will be inline with historical rates as it just appeared to be substantially less during the quarter, because the build up in the 90s that previously would have been charged off in a large part will ultimately be charged off under this revision..

No, no Sandy I was referring to the Mexican business, the payroll deduct….

That’s not as yet, but it’s correct..

Okay. Thank you..

And we’ll take our next question from John Rowan with Sidoti & Company..

Hey guys sorry for the follow-up. I want to try to understand, exclusive of this change in reserving and incentive policy, what the credit costs would've been.

So is it correct to just take the actual charge-off number add $14 million, and then do a net charge-off rate that way? Because if I do that, it looks like you actually had a relative -- it would have been a relatively big increase in credit costs on a year-over-year basis in your organic….

Yes [indiscernible] in the organic..

I’m sorry….

We’re seeing $90 a quarter on a gross basis, right. So the increase in the net would have been around $10.6.

$10.6. Okay that’s what I needed to know. Thanks..

And our next question comes from Chad Yeftich with Trafelet Brokaw. Please go ahead..

Good morning and thank you for taking my call. I just have a quick regulatory question I guess.

Given the change in auditor during the quarter, has the new firm been able to conduct its customary review for 2Q, and I guess, does this transition impact any ability to file your 10-Q in a timely way?.

Sandy McLean:.

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That’s correct. Yes so there shouldn’t be entries filing the queue within the 40 day time line..

Excellent. Thank you..

(Operator Instructions) And we’ll take our next question from Clifford Sosin with CAS Investment Partners..

First, on the subject of growth year-over-year for the quarter, in the past I think you've parsed it between the U.S. and Mexican operations. Do you mind parsing growth between the U.S.

and Mexican operations in terms of the accounts, any new accounts in particular?.

As far as volume for gross loans? Let’s talk about gross loan. Consolidated growth was – consolidated is 3.65% year-over-year growth which we know are about 1.1% of that is due to the increase and on the 90 day account. At the U.S.

level our year-over-year growth was 1.62%, which would have been almost flat up slightly but pretty much flat, it’s happily been adjusted for those 90 day account. And finally, our Mexican operation is up on a year-over-year basis at [13 point] but at 14% of which a substantial amount of that came from the union loans.

Now we can’t quantify in those balances which one has constituted new loans based during the quarter as opposed to non-new loans. All we can do is say, during the quarter, what happens to the percentages in volumes and so forth. And I can tell you that as we said, overall loan volume for the quarter in and consolidated was down 12% for U.S.

it was down 13% and in Mexico because of the – it was also reduction in that renewal volume of about 4%. Hopefully that gets close to the answer of answering the question that you asked..

That's very helpful. Is there any chance you can elaborate on the loans to new customers? I think you said it was minus 1.6% year-on-year in the quarter. I was wondering if you could break that out between the U.S. and Mexico..

In the U.S. it was down 2.3% and in Mexico it was up 1.3%..

Thank you very much.

And I was wondering if you might be able to elaborate a bit on the impact of the proposed change in the rules from the Military Lending Act that were promulgated by the DoD?.

Sandy McLean:.

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Substantially less than 1% of your loans outstanding would be to military members and less impacted by the rate cap?.

That’s correct..

Okay, that’s helpful. That's very helpful. And then, just lastly just to elaborate a little bit more on a question that Brian was asking about the decline in refi activity year-over-year. Last year by my math, refi activity was down something -- so, last quarter year-over-year refi activity was down something about 6.5%.

And that was an improvement from the 11% year-over-year in the prior quarter when the new marketing rules were first put into place. And this quarter it seems to be down about 10%, which is a bigger decline.

And I would have thought that as the change in the marketing rules seasoned that they would have been an improvement so to speak in the amount of refinancing activity year-over-year.

I guess, you've talked about this a bit, but I wanted to ask has there been any historical seasonality in the level of less than 10% refinances which would be impacted by this change? Or is it fair to say that the relative weakness in refinancing is difficult to get to the bottom of?.

It’s, I would say the latter. It’s very difficult to isolate and specifically identify the impact resulting from the less than 10% as opposed to weakness in demand by our customers.

The biggest change that we make to our systems took place in February of last year and while as you know we will continue to make those loans of less than 10% if the customer wants us to we just start marketing like we previously have said.

So we will probably see a weakness in these renewal volumes up until we make that lap of the February timeframe. But, we also like you would have expected that impact to be less this quarter compared to the last quarter, but there maybe some seasonality.

We do have seasonality within our portfolio and at this point in time we have not been able to drive down deep enough to isolate the various causes of what’s going on..

Thank you very much. That answers my question..

And ladies and gentlemen, this does conclude today’s question and answer session. I would like to turn the conference back over to management for any closing or additional remarks..

I just want to say just thank you for your continued interest in World Acceptance Corporation and we will continue to do the things that we have elaborated on the base however best we can. Thank you very much..

And ladies and gentlemen, thank you so much for your participation in today’s conference. This does concludes the World Acceptance Corporation quarterly teleconference. You may now disconnect..