A. Alexander McLean, III - Chairman and CEO Janet Lewis Matricciani - COO John L. Calmes, Jr. - VP, CFO and Treasurer.

Martin Terskin - FBR Capital Markets John Hecht - Jefferies & Company Vincent Caintic - Macquarie Henry Coffey - Sterne, Agee CRT.

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

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 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.

Statements other than those of historical facts, 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 update any forward-looking statements it makes. At this time it is my pleasure to turn the floor over to your host, Sandy McLean, CEO..

Thank you, Leo. Hopefully by now everyone has had a chance to review the press release and the narrative that was released at the same time. This is my 95th consecutive quarterly earnings call, I think, I believe we had one after we went public in 1991 for the first quarter but I really can’t remember back that long.

But it’s also my last, so I’d like to say I’ve enjoyed most of them over this period of time, but at this point unless anybody has any specific questions for me I'm going to turn it over to Janet and Johnny. .

Thank you Sandy and welcome everyone to what is my fifth earnings call and the first I intend to lead in terms of the Q&A section, and then we will hear Johnny Calmes, our CFO. Before we begin I thought it will be helpful to share some of the my observations in my past 18 months report and my experience in visiting many of our U.S.

states and spending a lot of time with the VPOs and Supervisors as one well as visiting as many branches as I can every time. I've been to over half a double states already, I'm visiting another three within the next two weeks and then the rest and I have also spend a week in Mexico with our senior management team and our top performer.

And what I found is that our people are incredibly motivated and enthusiastic about the company, the family culture that's been created at World is very special. And there are same positive relationships between our employees and their customers and other members of the local community in which we have our branches.

Our employees truly understand the value of the work they provide offering credit to folks who otherwise would have very limited choices and offering them credit when they need it which helps them with their lives. And everywhere I go I also find that folks are full of ideas and wanting to improve our performance in every way.

Even folks who has been with the company 20 or 30 years are excited about the change and using technology to deeper levels, and that we are not fixed in our ways.

In fact many have been waiting and hoping for some of the changes we recently made like debit cards, like the consumer focused website with the soft [indiscernible] there is tremendous appetite for change, improvement using technology.

And it doesn't surprise me, because I believe that this was the case when I came to World and I came because the company has a strong foundation.

And because there are so much opportunity for growth by taking advantage of new technology, by using data analytics in a way we've never done before, by improving marketing and making it more segmented to appeal to different customer segments appropriately and by taking actions digitally on the Internet and in a mobile manner.

It is great to see this enthusiasm in the branches, because serving our customers is really what it's all about. In fact, I like to point out that in the last five years we served more than 1.8 million new unique customers.

And in addition over the last five years more than 800,000 former borrowers obtained a new loan from us, which is a great statement of satisfaction. The point is we served a lot of unique people without us don't get credit. The former borrowers come back as they had a happy experience. Now regulation is our biggest issue, as you all know.

Even though we are heavily regulated in every state we now have the CID from the CFPB, as you know. We believe the CSPB along with all state regulators recognize the important service we provide to folks who otherwise would have very limited access to credit.

Just like our employee, who are key parts of their local community recognize this too, without us folks who's car breaks down or need an urgent housing repair or have some other sudden need for money would not have a good choice, or they just need tiding over for a short period with their utility loads.

You can't get to work if your tires on your car burst and you need $400 to get new one and you don't have access to that $400. If you can't get to work you lose your job and so you end up in a very negative situation.

We are glad to help folks with credit, we feel a huge need in the market made but in very short term extremely high rate loans for the month or two, and on the other side traditional financing that customer with great credit can achieve. We're very pleased to fill this important gap.

And we have extraordinary testimonials from our customers, that already showcase the value of our products and the demand for them. And I'd also like to talk a bit and point our use of data analytics which has increased enormously and is very much enjoyed by our folks leading the field.

Everywhere I go we discuss how that state is doing on multiple metrics. And over multiple years including the current one, how each district’s doing, what are the good, the weak, the erratic branches are, and we discussed the reasons for fulfillment [ph] and how we can improve.

How can we do better, is a happy and critical question at our company, and it always will be. And after every visit it’s amazing positive feedback, I get on how much the data’s helped the team focused on their key issues. But really nothing like pausing and looking at trends over time on key metrics.

Folks in the field are just too busy to look on a day-to-day basis and they are looking at each and every branch separately, working to get the best performance first of all. And have many pent up great ideas on how we can improve and we're taking action on them.

In fact at our world leaders event earlier this month where we celebrate our top performers, I got all the VPOs, that's the Vice President that run each state and the four regions in Texas, brought them in half a day early, to take advantage of having them all in one place and we worked for five hours on operational issues and how to improve them and it was absolutely terrific.

Furthermore we have just hired a Vice President of Operational Excellence, who will start August the 3rd, and she will be tasked with things like focusing on improving branch performance, efficiency, best practices everywhere, optimizing local marketing activities, collection activities, physical branch layout, how we incentivize our folks to ensure its aligned with our vision in growth, project management of our new initiatives, implement successfully and on schedule and everything all about training assets, and this will be a wonderful addition to us.

And also finally I’ll say in my visit I’ve seen this incredible close relationship we have with our customers, who know our employees by name, who have wonderful positive relationships with them and we are going to take advantage of our strength in this industry space.

We’re going to move towards one branch to leverage our reputation and strong customer relationships, so every time we move a branch it becomes a well finance [ph] branch, where it’s legally possible, which is most areas, and we’ve already put stickers on all the doors in our branches that say we’ve been established since 1962, we are serving over 1 million customers.

And we’re very proud of that, of a very exciting future ahead of us. So I just wanted to give you some kind of overview about my experiences in the last 18 months and now we look forward to your questions. .

[Operator Instructions]. We’ll take our first question from Bob Ramsey of FBR Capital Markets. .

Hello this is actually Martin Terskin for Bob Ramsey.

Do you expect loan balances to contract through the rest of 2016?.

I think it is too early to say at this stage. We have various initiatives in place that we believe will contribute to growth. But I think it would be inappropriate for us to make some prediction on how we’re going to perform through the rest of the year. .

Got it. Thank you very much. And then….

Let’s talk about that, in the U.S. the loan growth is relatively flat. A lot of the decrease had to do with the move in exchange rates between the U.S. dollar and Mexican pesos, which obviously we have no control over. .

Got it.

Is it fair to add approximately 5.2 million back to expenses looking at the run rate in Q2 and beyond?.

I'm sorry.

Can you repeat the question?.

Is it fair to add approximately $5.2 million back to expenses looking at the run rate in Q2 and beyond?.

Not necessarily so. If you look at some of the things we reversed in the first quarter, including the third tranche of the Group B awards some of those had a forward impact.

So the third tranche we had been improving around for $400,000 [ph] a quarter for that tranche and we’re also recording on $100,000 quarter for Sandy’s B2 sort of the second tranche of that Group B formation plan. .

Got it.

So would you expect the expenses to go back in to the $47 million range going forward then?.

I'm not sure, what’s ahead..

Got it.

And I guess finally before I jump back into the queue could you give me some color on how you’re accessing the MCO [ph] collection and kind of just color around the conversation that you had with the buyers and maybe, if you have other avenues for selling MCOs if there is some problem with that relationship?.

Yes, as we stated and I’ll repeat, it’s early stages we’re having some conversations with the buyer. It’s really too early to say much more than what we said already, we said already that we’re in conversations with them [indiscernible] maybe effective.

I think it’s reasonable to make a general assumption that our charge off have value and there are folks who are interested in buying them and that makes us feel very good about our future cash flow from our charge-off account. .

Got it. Thank you very much for the color. .

[Operator Instructions]. We’ll move next to John Hecht of Jefferies. .

Hey, good morning, first of all Sandy, it’s been great working with you and wish you the best of luck and then Janet and John, look forward to working with you guys.

So moving on to questions in terms of growth, Janet I wonder if you can give us an update on kind of the mobile strategy when you think you'll be live with that and what the kind of activities are around the mobile and technology strategy? And then at the branch level, if you could tell us kind of what were the same store receivables trends and other endeavors you might take upon to increase the footsteps, like at the branch level.

.

Certainly. So taking the first, I'll take around mobile and technology and the rest of the [indiscernible] our fiscal [ph] activities. First of all more than half of our customers are already signed up for testing and we believe that number will absolutely grow.

The testing we use for friendly payment reminder, for marketing and our [indiscernible] time. And so letting customers know when they have the ability to refinance the loans. We're very pleased with that. Of course every customer who opts in for the texting option, we send text too.

We have debit cards in every branch, and we started emailing as a new form of marketing. We found that emailing gives a lift to direct mail, it's not expensive. And we are probably do more on that front. As well as increasing our advertising spend on the internet.

So we have more than, on a typical day 300 apps and we believe we can grow that very significantly. We are actually in the final review states of launching our completely redefined website. We have a clean customer friendly site that can be easily viewed on all devices including mobile, tablet and desktop.

And these changes will comply with the recent Google requirement to have top of page placement and improve organic search if you do these activities and we are very focused on that and excited about it.

The website of course will still include our branch locator and will still allow prospects and borrowers to have that application online as well as we're adding in house tracking of all device right on the website and it will also have our informational video in the loan section, on how to apply for a loan.

We are on schedule to launch that in the next month or so how we are faring with that, on the mobile and technology front. You asked about the branches and what we're doing locally, and same-store receivables I don’t have the numbers for same-store receivables right in front of me.

But locally, we have a strong push to give branches autonomy to do what they think is right in the local areas. Branches are able to send refinancing mailing out to the local customers they know as they think appropriate.

They also have a sales and business development manual which goes through all relevant choices of local marketing activity to help them grow. When we found and that will surprise you that the branches who do more in our local community are the ones that grow more. So we're focused on that area too..

Great, thanks very much for that. And then, can you tell us so what's going on in terms of Mexico volumes or balances ex the currency impact. .

I can to a certain degree, the volumes are down in the Mexico as well. If you assumed the exchange rate in Mexico for gross warrants [ph] was the same as it was at June 2014 that would have been up $17.6 million in U.S. dollars. .

You said 17.6 there?.

Yeah, that's right. .

Okay great. Thanks very much. .

We'll take our next question from Vincent Caintic of Macquarie. Your line is open. .

Hi, good morning. Thanks very much guys. I have a couple of questions, first on the credit. Seems like delinquencies picked up a bit.

And I was just wondering broadly does the rate of loan growth that has any implications for how your credit behaves?.

I'm not sure what the second question. .

Just the -- I guess with maybe your loan growth having moderated a bit. I just wondered with your -- does that have an impact for your charge, just broadly like is there a relationship between how the amount that you originate relative to how you think about delinquencies and charge-offs. .

No, I don't think so. .

Okay, got that. And then just on liquidity we had a lot of things going on in the quarter.

I was just wondering if you can address that broadly, are you satisfied with your liquidity are there more actions that you expect to take, such as the postponement of the debt raise maybe reviving that? And then how maybe a view in how your existing credit facility providers kind of in the current situation?.

Sure so the most important thing to point out here is that we have more than enough capital to operate the business as usual.

The only thing that we’ve really lost through the amendment is the ability to buy shares back and the bank’s view is with all of the uncertainty around the CID and the CFPB, if they decide to see us deleverage at least with them, until there’s little more clarity.

So I’ll say they’re making sure and have made sure that we are putting capital to continue to operate this business. If at some point in the future we felt like we can get appropriate pricing to buy shares back, if we believe the bank will be opened and would consent to see that those funds to buy the shares back, repurchase shares. .

Got it.

In terms of timing, is there any thoughts on that, plus if I understand correctly so this doesn’t have an impact for maybe the loan growth side of the balance sheet?.

It doesn’t. So we believe we can grow as fast as we would like with our current facility. And as far as timing it wouldn’t make sense until we had some more clarity and the event I could provide that is more of a clear of where actual proposed rules from CFPB or the resolution of CID.

Until one of those two things happens and we feel like it adds that clarity then we likely wouldn’t do anything. .

Got that, okay. I’ll get back in the queue, thank you. .

Our next question comes from the site of Henry Coffey of Sterne Agee. .

That’s Sterne Agee CRT. Hi guys, Sandy it’s going to be sad not having you to talk to from now on, but congratulations. Henry we will just have to sit around, maybe we can go buy a cracker barrel some place or so. Okay, but no congratulations and it’s been a -- you’ve been a good man for a long time.

Looking at the overhead numbers in simple math if you add up all the one-time items I get $4.2 million, is that correct?.

It’s close to that. I had around $4 million. .

Well it’s $5.6 million of cost and then a $1.4 million of -- $5.6 million of lower cost straight, 1 plus 1.2 plus 3 minus 0.4 and minus 0.1 related to the deal.

What am I missing there, did I skip a beat or something?.

We’ll go at 4.2 if we look at your math. .

Okay.

Yeah add that back to expenses and you subtract $500,000 to kind of get to a run rate, is that accurate?.

That should be about right yes. .

Okay so we’re talking about a run rate of $71.1 million going forward, on the existing business? Okay great.

And the second thing in terms of where you stand with your debt facility, the increased borrowing costs are only a small portion of that was captured in the June quarter right?.

Yes, that’s correct, yes. .

And then there’s a high credit issue every December.

So a year from now the high credit will be $500,000, is that how we should understand the facility?.

That’s correct. .

And then the next year high credit will be 400 and that’s what you would be planning the business around?.

That’s correct. .

In other words, it’s like based on not March balances but the real problem is going to be what occurs in December?.

That’s right. .

And then Janet, this is sort for you but two or three questions on the Big Data front. I think it would be fair to say that in today’s world you can underwrite a small loan accurately with Big Data or some variation on credit scoring.

Is it probable that the branches are going revolve in that direction or are you still going to kind of continue with the manual process?.

All right, so let me address that. A lot of our customers are in thin files, right and what that means, what that wording means is customers who don’t have a credit score for a long enough time. And that’s a very difficult thing to model out. There are very different specific situations.

And we believe that knowing our customers so well, and knowing the situation they're in, in the branches and having that relationship is something that a model can’t replicate. Could you use various different constrain techniques with new managers to help them on their way as they're learning and so on and so forth, that could be possible.

And I don't think that we want to miss the opportunity to understand the customer and our ability to make specific lending decisions based on that specific situation. It doesn’t necessarily have a numeric value attached. .

Have you had any real dialogue with the CFTB in the last 90 days?.

Dialogues with them. .

And any -- I mean their approach to -- their approach to this whole process is -- seems to be apolitical and if you read any of their press releases, they have a propensity towards pejorative language or they obviously didn't learn their manners in high school or something. So it's very bombastic press releases et cetera, et cetera.

I was wondering with the real dialogue is like with them as they start to review these issues with you. .

I can’t say any more than they have requested information from us and in many of their public statement they have said how much they appreciate that a small loan customer, a customer with difficult credit situation needs that type of credit. And they do not want to take away the credit from that kind of customer, which is our kind of customer.

So we feel that is a positive statement towards what our industry provides. .

The high point seems to be around ancillary products, there’s probably no proof, of credit insurance or auto club or real product, they seem to be more -- they were are originally presented back in the ancient days, as sort of intended to be yield enhancers.

Is it possible, or is there any more afoot to go into those states where you are heavily dependent on ancillary products to make the numbers work to get the rate change to a real rate. Like in Texas you charge a series of season rates that are just based on the cost to loan, that work very well for you but can't do that in the State of Georgia.

Is there any movement afoot to correct that?.

That's not a focus as far as we know. So I think we'll continue to run up at least in the manner that we feel is most appropriate and provides value for our customers. .

No I’m just saying that if you -- if the CFPB objects to the ancillary products, has anyone at the state level begun the thought process of saying what's also their equation, so that will charge -- and the State of Georgia will allow customers, will allow lenders to charge the actual rate required.

And will simplify the borrowing equation for the customer..

This kind of thing has been discussed in various states but so far nothing has actually been done or taken place on this topic. .

An amazing foot like what we saw in Texas where you are able to dramatically increase rates. .

As far as we know we don't know anything about increasing rates in other states. .

Great, thank you and congratulations on taking over the ring. .

Thank you very much. .

[Operator Instructions]. We'll move next to John Rollin [ph]. .

Good morning, I’ll echo everyone else's appreciation for Sandy on the call over these many years. It’s been great working with you. As far as just say kind of get back to their run rate and G&A. Obviously there is for -- net it out for $4.2 million in add backs.

But I also wanted to kind of point out and get your take on, seasonally how those ramp, because it doesn’t seem like you should kind of straight line the G&A because there are, if I'm not mistaken some programs that hit in June and December that you have to accrue for. It would be annual employee appreciation program.

So do you guys still run those and are those still a contributor in the June and the December quarter. .

We still do have an appreciation day, what it is called world leaders day. Now that happened in July of this year, it’s not a significant amount of cost. And it is slightly less than it would have been in the past. I would say in the December quarter you’ll have additional marketing expense as we ramp up our campaigns going into the Christmas season. .

Okay. And then just to be clear on the $1.2 million of expenses that you flag for the debt expense. I just want to make sure that was a one-time item. That's not the amortization of the origination expense.

I assume that's all coming through -- is going to be accretive to the amortization -- to the interest expense line, correct?.

That's correct, 1.2 is accounting fees and legal fees and rating agency fees, that we will incur as a part of bond [ph] offering. .

Okay. And then just kind of the timing, trying to hit on someone else's question. The timing of de-leveraging right. Did I hear you right to say that your view 500 as basically the ceiling for the December quarter meaning that -- is that contractually that you have to be….

No, I’d say, for this [indiscernible] over to next December. So this December the ceiling is 600. .

Okay, so you can obviously go over $500 million in the December quarter and then use the seasonal pay downs to reduce your facility to $500 million at the end of March correct?.

Absolutely, yes, yes. That would have been clear [ph] yes. So in December 2015 this ceiling is $600 million and then it will [indiscernible] in December of 2016. .

Okay and in conjunction with that question, John I just want to know, what funding options do you think you have available to you? And how close do you want to apply to that frame right. I mean if you look -- obviously I think you're funding your cash flow to fund the business.

But there are step downs and it's heavily dependent on tax refund season and the timing of it, ultimately Congress delays tax refunds for whatever reason it might be.

I just want to know your comfort level with flying above that step down at the end of March, I mean the December quarter and just relying on the typical seasonal pay down that would come and what options do you think you have as a lateral move. Should there be something that changes outside of your control. .

Right we've obviously done projections for the next three years to make sure we thought we have enough availability under that facility. And we've also built in a lot of cushions above this new operating -- the new operations of the business including growth.

So within that, well I'd say we have enough capital to run the business, that includes any kind of unknown event that may happen, whether be it a fine of some sort or anything else within reason, right. So based on the projections I still feel we probably have about $50 million to $60 million of cushion above our projected growth. .

Okay and then just last question, you've touched on it obviously, does CFPB likes to find some type of finer bull [ph] sense.

If something were to come down is it by default a consent order and how do your lenders view the consent order vis-à-vis level one or level two event under your covenants?.

It would certainly be at the level one event which would require us to notify the banks. A key part of the level two is that has to have an impact of the material adverse change our business. So it would depend on the consent order and what it does to our business. .

Okay, but it’s a consent order by definition it's not like it's a conjunction or stay which were vested in the debt covenants. That would be below those types of notifications. .

We believe all of those would be at level one territory and which would have required notification. If those things also call as material average change in our business it will be a level two regulatory event.

Which, all that really does is it gives the banks group a voice before for whatever reason we had to really change our business it gives in the voice to on the path four versus having to wait until we broke the covenant or deposit on a payment. So that's all that's doing. .

Okay. And just what are the funding options. Are you looking for -- I mean are you waiting for the clarity on the CID or in order to tap the debt markets.

Are you looking at any other alternative vehicles when and if you'll need capital?.

Right so what gives more clarity. There is a possibility we will go back to the high yield market as well as keeping the bank facility. There’s also the option about the private market which typically carries higher rates with it.

So we have options out there that in the short term in the next couple of months, we don’t anticipate doing anything at the moment but that can always change. .

Okay, fair enough. Thanks for answering my questions. .

[Operator Instructions] We’ll move next to J R Basale [ph] of Stephens. .

Yeah, good morning and thanks for taking my questions. Janet I was interested, your U.S. tour of the stores.

I'm wondering if you could kind of point out maybe the most common issue you saw and noticed while you were on the road and kind of the complaints or recommendations by the Regional Directors as well as the store managers, kind of what was the resounding issue that you saw out on the road?.

Well, to take your question I think a lot of folks have realized they can do more in a local community through our wonderful customer relationships regarding things like referrals and relationships with local businesses.

And I think that’s going to become a very strong push to us just by looking at the branches the see more of action, the results they get.

I can tell you that our folks are absolutely thrilled to have the debit card option to provide to customers and the part of our mission is to provide the best possible customer service and for customers who want to pay on the debit card offering that service makes the real difference. But those are a couple of things that come up also.

Also is really around increasing our visibility in our local communities in a variety of different ways and we are hoping like the techniques on how to do that and sharing what works in the branches.

But one of the things I was most excited about is that people who have been with the company even 20, 30 years you might think were set in their ways and want to do things the same way, they are huge proponents of bringing in new technology and making changes to help the business grow and that appeals the customers. .

Great and switching gears and last one from me, the yields appear to kind of sequentially drop and just wonder John maybe if you can talk around what was kind of the driver there and then how you are thinking about yields moving for the remainder of the year?.

Sure, so the yields will be driven by towards -- the volume and the size of the loan portfolio but also when you compare year-over-year and you look at the average earning assets it’s down around 3% compared to the prior year. As you know once the loan goes about 60 day contracting – to in the U.S.

and traditional portfolio in Mexico we stop accruing interest on those. So because we’re gearing a higher level of this the 90 day past due accounts that had an impact on the average earning assets. .

Great, well guys thanks for taking my questions. .

[Operator Instructions] We’ll move next to Randy Hecht of [Indiscernible]..

Hi, can you hear me? John?.

Good morning Randy. .

Sorry, can you hear me now?.

We can hear you. .

Okay, sorry about that. So the question of liquidity in the cushion, it says right in your annual report that fiscal year ’15 for the last 12 months you generated $138 million of free cash flow. Now some of that could be considered one-time because I think in that number you sold the charge-off loans.

I think you took in $10 million or something like that. So let’s call it a $128 million.

Assuming you’re not growing your loan base, your overall loan base for the next 12 months, is there any reason why free cash flow would be any less -- materially less than that number?.

Under normal conditions we would expect the same levels of free cash flow. .

Right, so this idea that you may have an issue with your liquidity can at your March of ’16 your line of credit 500 million, your debt right now is $488 million, you did $125 million of free cash flow; you have a very large cushion?.

We believe so. .

Okay, all right. Just wanted to clarify that. Thank you. .

We have a follow up question from Bob Ramsey of FBR Capital Markets. Your line is open. .

Hello, just one -- two quick follow-ups.

Do you have any thoughts on the military lending accruals…?.

On truth, the military lending act has very little effect on our business because that's the timing portion of our customers are part of the military as determined by the military act. So we think that has very limited effect.

Now as the database comes out that was -- one of the parts of this is there will be a database on which you'll have to check every single customer.

Obviously we still have to hope that the database is quite expedient and works perfectly, as well every single other company in this industry, but for the actual military loans that we make it as an insignificant percentage of what we do. .

Thanks for the color.

And lastly, Janet what's your outlook for World in next three years and would you plan to do differently at the helm?.

I think a lot of it is building on our strong foundation, that bringing more end users’ data and more end use of new technology. I think there is a lot more we can do on the Internet and digitally.

Some companies have a much higher percentage of applications coming through in that method than we are, at the low end and that's not surprising because we really have only been doing this hardly even a year.

And I think also you can look to us we will be using data to really hone down on where we have branches that aren’t performing as well as they can and specific ideas for where the issues are and how they can do that.

So I think this would allow us to significantly improve performance in our existing branches as well as to have better means of locating new de novos where we grow. As state regulations change and other stages that come attractive you can expect to see us enter new states. This is something we monitor regularly.

It will be good to expand as our products allow. And I think you will see us get a lot more into look at the profitability of different loan segments to allow us to improve our underwriting decisions and understands for each of the different segments of loans we provide from the very small to the larger size. How we can grow them successful. .

Thank you very much for all the color. .

Welcome. .

[Operator Instructions]. We'll move next to the site of Paulo Rebelo [ph] of BMO Capital Markets. .

Good morning. I'm sorry if you already answered the question but I keep getting dropped out of the webcast. But my question in relation to the sale of previously charge off loans. I couldn’t find in your release any specific comments on that other than you had some problem with the buyer.

But is it safe to assume that the $1 million in net income that you told us last quarter that you're going to have per month for the next 18 months is still in place. Did you have it this quarter and you expect to have it for the following 15 months. .

So let me clarify on the $1 million and then I'll hand it over to Janet. So we didn’t say it was $1 million in net income. We said it was $1 million in gross sales per month just to clarify. And I'll let Janet answer from here. .

Yeah, however I think you missed we said before this is recent conversations with the buyer and it's really too early to say more than that. We're in conversations with them, the Board [ph] flows out maybe affected. We don't know more at this moment, so we can’t really add much more color to that at the moment. .

But this quarter than you had $1 million in gross sales. .

It as -- as I said in the release it’s $1.8 million in gross sales, actually net sales, but not net income. .

And how much was in gains then?.

It would be 63% of that. .

All right, perfect. Great thank you. .

We'll take our next question from Clifford Sausen [ph] of CAS Investment Partners. .

Hi, guys. Sandy, thank you very much for stewarding the business through all these years. And I wish you all the best going forward. And Janet, I guess one thing that you guys got put up earlier this year was your -- was your new improved customer database.

And I was wondering if it might be possible for you to share some insights about customer profiles, in terms of different customer behavior, customer lifetime value.

Also obviously questions like how many times the customer renews a loan over their life and so difficult to cheese out from the aggregate just as we have and now you guys have some better data you might be able to share some observations there?.

Our use of our customer database doesn’t really help on several of these different fronts and we track very effectively by customer including age and behavior a number of refinancing but we don’t usually disclose this kind of information. We use internally to help us improve our performance and that’s what we’re doing. .

Okay, fair enough.

And new customer challenge, weren’t in the release this quarter is that something you guys can still share?.

Yes, so the new customer volumes on advices was down around 4.8% quarter-over-quarter..

And that’s count, that’s number or dollars?.

Those are number of customer, that’s correct. .

Right which is likely one of our highest focuses to grow our new customers. .

Sure, although that seems to be an improvement in the year-over-year performance versus the fourth quarter, if I'm not mistaken?.

I don’t have the fourth quarter in front of me but it maybe. .

Okay and lastly I’ll take one stab at this because I know you don’t really -- tempt to answer in a public forum.

Obviously it’s difficult to dig out what the CFPB is thinking with regards to CID and you are limited in what you can share, right based on the conversations you had with them or the information that they have requested do you have any sense as to their primary areas of focus or what sorts of what they may be asking of you at some point as their investigation wraps up or the timing, or anything else that you might be able to share?.

No, we really don’t. We don’t know what their focus is. All the questions in the very beginning were very general. So it’s very hard for us to say. Based on our counsel CFPB guidelines that re 1.5 to two years so we could expect to hear back in the next six months but these are just guidelines.

We cannot know for sure what their focus is or when they intend to get back in touch with us. So anything else we said on this topic would just be guessing as much as anyone reading news about CFTB is guessing..

Great, thank you guys very much. .

We have a follow-up question from John Rolling [ph]. Your line is open. .

Yeah, thanks actually I have two quick questions. I was under the impression that the forward flow of the debt buyer was somewhat of a contract and not necessarily subject to change.

Can you just clarify if you actually have a contract or so or if it’s more out…?.

There is a contract in place. .

So if they stop buying do they have to pay any type of termination penalty?.

Again it’s too early to discuss that and speculate. .

Okay, and then just kind of -- not the hard part but just to kind of understand again how seasonal expenses move into the second quarter.

Obviously we talked about the employee appreciation program but also isn’t there -- can you give out restricted stock units to managers in the first quarter as well, because there’s always been a little bit of a seasonality and a drop off from the run rate in G&A between the first and the second quarter.

I am trying to understand if that’s still in place. .

The annual grants simply adds in the fiscal third quarter. .

Okay..

So yes I'm not very sure..

Okay, thank you. .

We have a follow up question from Henry Coffey of Sterne Agee CRT. .

Yeah, good morning. A couple of questions. Historically you had people buy your charge-off receivables and to quote one of your former executives they’ve done it once they don’t tend to do it twice.

We actually are very good at collecting charge-off receivables, and we work on accounts very, very hard and I was surprised that you were able to bring a buyer in this time.

Is there something different about the current arrangement that’s different than the historical results or is just a repeat of what we’ve seen in the past that you guys do a great job of collecting your own accounts and the residual value in the charge-off receivables is good but not good enough to warrant an aggressive purchase program. .

We believe there is value in our charge off receivables. I can't speak to the past because I'm not familiar with any previous contracts done in the history of the company and the details therein or not. We believe there is absolutely value in the charge off accounts, there is a whole industry that provides charge off receipt of those.

And it's extremely complex with the use of technology and analytics and deep experience of people involved in that industry that there is value in the charged off receivables of companies in our industry space. So the market is there and it happens.

They are certainly more interested in [indiscernible] loans now than that can parse but I think the use of data and the analytics in that industry space has changed. Well it's not our expertise on how to manage charge off receivables or prepare [ph] it at the time. It’s certainly in the expertise of many other companies. .

And then going back to some of John's earlier questions, I think there’s only one other public company in the auto/installment small loan area that is only using bank debt. So at this point and I know you're interested in diversifying in your funding sources.

So regardless of the outcome with the banks regardless of the outcome of the CFPB, what are the viable options that you'll be looking at to move away from bank-based financing. I know none of the pawn shops use it, none of the small -- none of the public installment lenders use it.

It's almost like not -- you experience not a great source of permitted capital. What on the to-do list when it comes to generating new sources of funding and where do you have a capital issue or not and I don't think you do. I think anybody with hand calculator knows you can pay off this debt and continue to grow the business.

But having said that what are the options that you would be exploring. .

Sure, obviously one option is the high yield market, the one [indiscernible] market. And there is also a private market which typically carries a higher interest rate with that, but it is an option. And then of course there is the securitization. And I think we were a little way out from that but it maybe something that we can explore in the future. .

Great, thank you. .

Our next question follow-up comes from Vincent Caintic with Macquarie. .

Hi thanks. Just two more from me. So one, on the commentary on the buyer of the charge off loans. I understand you can't talk in too much detail, but I guess I'm just kind of surprised that the early performance hasn't matched the projections when it's only been less than six months. If there’s any color on what that might be, that would be helpful.

And then just on the text about -- could potentially impact the amounts received.

Does that imply the gains from last quarter is also under question or is that all set?.

As we pointed out in fact it's been a very short period of time, in fact it’s been about three months. It's very early stages and we've only just started having conversations with the buyer. So we've ready can't say more than these are early conversations.

But there may be an impact on forward slow but we'll be able to give more information when we have further conversations with the buyer. .

Got it, and then for the prior flow for the last quarters.

Is that also potentially impacted?.

We don't expect to have any impact on the prior sales. .

Okay, got it. And then on the operational issues, I think that was very helpful to talk about your room for improvement and I was just wondering where Janet you see yourself, or you see the company now and where you see the upside in terms of the improvement and if I’m correct in saying credit specifically any action items you plan to do there.

Thank you. .

Yes, on the operational issues, there is a lot that we can do to get more efficient and more effective, even things like us precisely looking at overtime hours and branch opening and closing hours and the aligning them better with our busiest times so that we use less overtime for example.

And on collections looking at what we collect back for example from field schools [ph] versus the cost of during field schools and mileage reimbursement.

So we're looking at all kinds of things at that level of detail that have not been looked at before to make sure that our activities are aligned with profit maximization, at the same time of serving the customer. .

Guys, and anything on the credit specifically. .

Well our underwriting practice has serves us well since 1962 based on knowing the customer and the stability, ability and willingness to pay.

Can we hope in areas for example where there is a new manager who has less experience? Yes, I think we can help providing some guideline to clear that to help them as they get comfortable making the right levels of risk, not too much not too little but the right levels, but certainly looking at things they can do in that kind of situation.

But branches have been around for long time, the managers know their local community and they know the folks there and they know customer behavior..

Okay, got it. Thanks very much. .

We have a follow up from Clifford Sausen [ph] of CAS Investment Partners. .

Hi, on two topics. First, on the charge off receivable sales, can you help us think about the magnitude, I suppose of the ongoing $12 million of annual sales that's at risk. Is this that the buyer is saying look we might have built the 12, there might be 10. Or is the buyer saying this may not be 12 but it may be zero.

If you can just give me a sense of kind of what they think. And not so much with regards to 18 month contract window but with regards to the value of the receivable, the charge offs receivables on a longer term basis. .

Again, it is too early. We've done all this for days. So it is too early to speculate. .

Got it, and then secondly I think there have been some experiments with branch manager incentives and the impact of those experiments on volume growth. And I guess I was wondering if you might share with us some of your thoughts there on and the impact that, that has had where it’s been rolled out and the potential of that kind of business. .

So the biggest change in incentives is that we now allow branch managers to keep accounts in the branch at 90 plus days without having that effect their performance metrics.

So as before the branch manager might have desire to charge off an account at 90 plus days that they think they can collect before 180 days have passed, because it affected their metrics. Now they can work those accounts for longer. And so to your questions earlier as an example that’s something we can do also with the customer database.

We look at -- for these 90 plus bucket are we rehabilitating, bringing back into the court if you like, more of these 90 plus accounts.

And the answer is we are, for these 90 plus accounts now and are now these are showing up that the rehab rate, meaning the number of accounts that are making at least one payment from this pool of 90 plus late has doubled.

Now it's not a huge number obviously because as you can see the different buckets 30-60-90 you have fewer accounts you're going to rehab as time passes. But nevertheless the account is making one payment or more is doubled as compared to where it was a year ago. So we're pleased about that. .

That's wonderful but actually my question was had more to do with volume growth. Are there new account acquisitions encouraging maybe managers who've become somewhat comfortable to work harder to find more new customers, things of that nature. .

Yes I think we have the right incentives there, because what we have done with our branch manager is that part of their incentives are based on account growth. And that is account growth based on the month before, not the year before.

So if you are branch manager who happens to be quite a bit lower than the year before, you're still incentivized if you can grow your number of accounts by one or two accounts and implement growth in the next month and you're rewarded rather than looking at a year ago.

So not feeling you have with your 20 accounts down from the year as you have to add the whole 20 you only have to add it based on your number of accounts in the previous month. And we believe that is a positive because you want incentives that can be achieved every month..

Thank you. .

And we have a follow up from Henry Coffey of Sterne Agee CRT. .

Yeah I apologize I didn’t ask this earlier.

What percentage of your accounts are actually with the military, the number is small but what is the percentage?.

It is less than 1%. .

Thank you. .

Very small number. .

And there are no further questions at this time. .

Thank you very much for participating in our earnings call. And wish everyone a great day..

Thank you for your participation. This concludes the World Acceptance's Corporation quarterly teleconference..