Investor Presentation February 24-25, 2020 CONFIDENTIAL DO NOT - - PowerPoint PPT Presentation

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Investor Presentation

February 24-25, 2020

CONFIDENTIAL DO NOT DISTRIBUTE

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Certain statements in this presentation constitute “forward looking-statements” under the Private Securities Litigation Reform Act of 1995. 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. Such forward-looking statements are about matters that are inherently subject to risks and

• uncertainties. Factors that could cause actual results or performance to differ from the expectations expressed or implied in such

forward-looking statements include the following: recently enacted, proposed or future legislation and the manner in which it is implemented; the nature and scope of regulatory authority, particularly discretionary authority, that may be exercised by regulators having jurisdiction over the Company’s business or consumer financial transactions generically, including, but not limited to, the Consumer Financial Protection Bureau (the “CFPB”), having jurisdiction over the Company’s business or consumer financial transactions generically; the unpredictable nature of regulatory proceedings and litigation; and any determinations, findings, claims or actions made or taken by the CFPB, other regulators or third parties that assert or establish that the Company’s lending practices or other aspects of its business violate applicable laws or regulations; the impact of changes in accounting rules and regulations, or their interpretation or application, which could materially and adversely affect the Company’s reported financial statements or necessitate material delays or changes in the issuance of the Company’s audited financial statements; the Company's assessment of its internal control over financial reporting, and the timing and effectiveness

• f the Company's efforts to remediate any reported material weakness in its internal control over financial reporting; changes in

interest rates; risks related to expansion and foreign operations; risks inherent in making loans, including repayment risks and value of collateral; the timing and amount of revenues that may be recognized by the Company; changes in current revenue and expense trends (including trends affecting delinquencies and charge-offs); and changes in the Company’s markets and general changes in the economy (particularly in the markets served by the Company). These and other factors are discussed in greater detail in Part I, Item 1A, “Risk Factors” in the Company’s most recent annual report on Form 10-K for the fiscal year ended March 31, 2019 filed with the Securities and Exchange Commission (“SEC”) and the Company’s other reports filed with, or furnished to, the SEC from time to time. World Acceptance Corporation does not undertake any obligation to update any forward-looking statements it makes.

Cautionary Note About Forward-Looking Statements

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Table of Contents

Company Overview and Key Investment Highlights Financial Summary Business and Portfolio Overview

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Company Overview and Key Investment Highlights

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Overview

CONFIDENTIAL DO NOT DISTRIBUTE

▪ 50+ year old small-loan consumer finance company ▪ Provides loans to individuals with limited access to credit ▪ Well positioned to capitalize on favorable supply/demand imbalance within the non-prime lending space ▪ Originated over $27 billion dollars worth of loans since 1994 ▪ Focused on relationship-lending business model ▪ Current portfolio size ~ $1 billion in net loans ▪ Weighted average on net proceeds: ▪ APR – 56.8% ▪ Term – 16 months ▪ Loan amount - $1,194

Total: 1,193

Branch nch Coun unt

FY2019 Data is through 3/31/2019

217 360 441 620 910 1,138 1,186 1,177 1,193 200 400 600 800 1,000 1,200 1,400 '94 '98 '02 '06 '10 '14 '16 '18 19

9 29 77 35 77 37 298 69 47 27 65 107 78 95 124 19

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Net Charge-Offs fs

($ in millions) _________________ Note: Fiscal year-end is 3/31. (1) Return on Average Assets is calculated as net income over the Average Total Assets for the respective period. Average Total Assets are defined as a 5-quarter average, ending at the respective period end (2) 20+ Year Average represents average from 3/31/2000 to 3/31/2019 (3) FY2018 adjusted to remove $15.4 million of tax expense related to the one-time discrete revaluation of the deferred tax asset and the foreign transition tax recorded due to the passage of the Tax Cut and Jobs Act (TCJA)

20+ Y Year Averag age NCOs2: 14.4%

Net Inco come e & Return n on Average age Assets1 & 3

$6 $9 $11 $8 $8 $7 $14 $16 $19 $23 $29 $34 $39 $48 $54 $57 $74 $89 $98 $101 $99 $103 $83 $68 $64 $74 8.2% 10.8% 11.9% 8.2% 7.2% 8.4% 9.7% 8.8% 9.9% 10.4% 11.7% 11.8% 11.9% 12.6% 11.8% 11.1% 13.2% 14.4% 14.2% 13.4% 12.4% 12.7% 10.5% 9.0% 8.3% 8.8%

0.0% 4.0% 8.0% 12.0% 16.0% $0 $40 $80 $120 $160 $200 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

Includes operating with strong and stable margins in various economic environments Consistent Profitability

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Strong Balance Sheet and Cash Flow

Stron rong g cash sh flows

• ws have

e allo lowe wed opera erati tion

• ns at low

w levera everage ge level evels

Lever erag age e Profile e (Debt bt/Eq /Equi uity) y) Cash sh Flows ws From Opera erations ns

_________________ Note: Fiscal year-end is 3/31 (1) 20 - Year CAGR represents CAGR from 3/31/2000 to 3/31/2019 (2) 20+ Year Average Leverage represents average from 3/31/2000 to 3/31/2019 ($ in millions)

20+ Y Year Averag age Leverage ge2: : .8x

1.5x 1.4x 1.3x 1.2x 1.1x 0.8x 0.9x 0.6x 0.4x 0.5x 0.8x 0.9x 0.7x 0.4x 0.4x 0.7x 1.1x 1.7x 1.6x 1.0x 0.6x 0.5x 0.5x 0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x 4.0x 4.5x '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 $21 $19 $21 $32 $39 $48 $55 $70 $88 $98 $110 $136 $154 $184 $200 $219 $232 $246 $242 $206 $219 $218 $245 $0 $50 $100 $150 $200 $250 $300 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

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Traditional Loan Product Provider to Underserved Clients

Payday day Pawn Tradit itiona ional Installm allment Credit t Card

_________________ Source: Company filings, CFPB, Center for Responsible Lending Report (Feb 2013), Wall Street Research (1) Center for Responsible Lending, “The State of Lending in America & its Impact on U.S. Households." Data represents 30-Day Balloon Payment Car-Title Loans (2) CFPB, “Payday Loans and Deposit Advance Products”

Auto Title Loans Past Due Resolution tion

Auto debit bank account Sale of loan collateral Branch outreach Centralized calling Sale to a 3rd party Repo automobile

Loan Amortiz ization ation

Balloon Balloon Fully amortizing Fixed, equal monthly payments Revolving Low minimum payment Balloon

Credit t Reportin ing

No reporting No reporting Report to bureaus Report to bureaus No reporting

Renewals ls

Borrower’s option Average 0 – 3 renewals/year Revolving

Unde derwr writin iting g Approac

• ach

Bank account and employment Solely collateral value Ability to pay Ability to pay and credit history Solely collateral value 8 renewals/year1 9 renewals/year2

Simpl mple e and attr tracti tive e produc uct t to an unders erserv rved cus usto tome mer r base, se, focu cusing ng on the e cus usto tome mer' r's stabilit ity, y, abil ility ty and wil illi lingn ngness ss to pay

Averag age Term

2 - 3 weeks2 2 – 4 months Large: 3-5 years Small: 12-24 months Revolving 30 days1

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Business and Portfolio Overview

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World Acceptance Branch Overview

Branc nch h Mana nage gers rs have e full ll branc nch h P&L resp spon

• nsi

sibili lity ty promoti moting ng an ownership nership atti titu tude e

Repre rese sentative ive Bran anch ch Typica ical l Bran anch ch Portfo folio lio Bran anch ch Employees Charac racteristi ristics cs

▪ 1,500 square feet ▪ $1,470 per month lease ▪ Rural America – typically downtown

• r small strip

center ▪ $950,000 gross loans receivables ▪ 735 accounts ▪ $456,000 avg. revenue during fiscal 2019 ▪ 2.8 employees per branch ▪ Manager, Account Specialists

_________________ Note: Data as of 3/31/2019

• Each Branch is operated by a state level company subsidiary.
• Branches and personnel are licensed and insured as required by state

law.

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Historical Branch Growth

Branch Count Over Time

Cons nserv ervat ative e and disc scip iplined ned manner ner of enteri tering ng stat ates es and openi ning ng branc nche hes

1962 1974 1974 1980 1991 1991 1993 1993 1996 1996

July y 1962: South Carolina

2000 2000 2003 2003 2010 2010 2013 2013

December 1974: Texas and Georgia Octob

• ber 1980:

Oklahoma May ay 1991: Louisiana April 1993: Tennessee 1996 1996: Illinois, Missouri and New Mexico March 2000: Kentucky January y 2003: Alabama Decembe ber 2010: Wisconsin September 2012: Indiana

2012 2012 2014 2014

Octob

• ber 2018:

Utah September 2013: Mississippi

_________________ Note: Total branch count over time is as of 3/31/2019

2018 2018

Octob

• ber 2014:

Idaho State Date of Entry 1995 2000 2005 2010 2015 2018 2019 South Carolina July '62 59 63 65 95 99 97 95 Georgia December '74 38 48 76 101 113 123 124 Texas December '74 93 135 164 229 300 291 298 Oklahoma October '80 33 43 51 82 83 71 69 Louisiana May '91 15 21 20 38 49 47 47 Tennessee April '93 6 35 55 95 107 105 107 Illinois September '96 30 33 64 82 82 77 Missouri August '96 18 36 62 78 76 77 New Mexico December '96 13 20 39 44 38 37 Kentucky March '00 4 36 61 79 78 78 Alabama January '03 21 44 68 65 65 Wisconsin December '10 28 27 29 Indiana September '12 22 32 35 Mississippi September '13 12 25 27 Idaho October '14 8 20 19 Utah October '18 9 Total 244 410 577 910 1,172 1,177 1,193

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Loan Characteristics

World rld Acc ccept eptanc nce opera erates es predo edominatel minately y in the e small ll-loa

• an

n inst stallment lment space

Small l Installm allment – 66% Large Instal allm lment nt – 34% 34% Size Averag rage Term (1) ▪ Average: $3,645 ▪ Range: $2,500 to $20,000 ▪ 23 months ▪ Average: $900 ▪ Range: $200 to $2,499 ▪ 12 months Averag rage APR (1) ▪ 68.6% ▪ 33.9%

_________________ (1) Weighted average based on initial net proceeds

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Portfolio Overview

Portfolio By Geograp aphy hy1

Div ivers ersifi fied ed Portf tfoli

• lio
• by Geograph
• graphy and Beacon
• n Scor

core

▪ No state has greater than a 21% loan concentration ▪ Larger loans (>$2,500) have been growing as a percentage of the portfolio ▪ Currently comprise approximately one-third of World Acceptance’s loan portfolio

_________________ (1) Based on gross loans receivable as of 3/31/2019 (2) Represents U.S. portfolio, data as of 3/31/2019 (3) Other states include Louisiana, New Mexico, Wisconsin, Indiana, Mississippi, Idaho and Utah

20.7% 12.9% 11.6% 9.0% 8.3% 7.0% 6.9% 7.1% 5.0% 11.5%

Texas Missouri Oklahoma Illinois Kentucky Tennessee Georgia Alabama South Carolina Other Portfolio By Beaco con n Sco core2

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%

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Portfolio Overview Continued

Portfolio By APR1

Deep ep knowle wledge ge of its s borrow rower er base se has s enable led World rld Accep cceptanc tance e to lend end effe fecti ctivel ely acros ross s the e non-pri rime me segme gment nt

▪ Approximately 27% of the loans in the U.S. portfolio have APRs of 36% or less ▪ Approximately 92% of U.S. loans have an APR of less than 100% ▪ Portfolio spreads across a broad spectrum of borrowers

(1) Data as of 3/31/2019 27.0% 23.9% 13.6% 4.7% 4.8% 3.7% 13.8% 8.4% 0.1%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 0%- 36% 37%- 50% 51%- 60% 61%- 70% 71%- 80% 81%- 90% 91%- 99% 100%- 149% 150%- 200%

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Rigorous Loan Underwriting Process

• Time-tested underwriting principles produce consistently strong

performance

• Mitigate net charge-off volatility through various economic cycles
• Stability, ability and willingness to pay
• Underwriting policies with objective credit evaluation criteria,

including a custom in-house credit grade calculated for each new borrower

• Relationship-based branch lending enhances servicing effectiveness
• Establishes initial contact with the borrower, building an ongoing

customer relationship

• Individual loan approval authority based on experience and

position

• Generally decentralized loan approval and collections
• Comprehensive analytical and management oversight

Detail tailed ed underwri erwriti ting ng coup upled ed with th analyt lytics s and an under erst stand nding ng of the e loca cal demogra

• graphic

ic profil

• file

e has s yield elded ed stron rong g perfo forman rmance ce

Take Appli pplica cation Budg dget Review w Verify ify Job, Reside denc nce and Credit dit Refere rences ces Loan Decisio ision Execut ute Documents s Disburse burse Funds s Revi view w Credit dit and Custom Credit dit Based Borrow rrower r Grade ade 1 2 3 4 5 6 7

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Robust Collections Process

▪ Internal data system generates customizable notices on delinquent accounts ▪ Friendly text message payment reminders sent once per week to every opt-in customer with payment due the following week ▪ Accounts 30+ days past due considered an advanced collection situation ▪ Accounts charged off after 180 days ▪ Extensions allowed in special situations ▪ All charge-offs reviewed and approved by district managers ▪ Branch managers earn up to 10% of Monthly Rating Sheet Profit if certain delinquency, profitability and growth goals are met ▪ Other branch staff also earn a percentage of Monthly Rating Sheet Profit based on the performance of the branch Collection Process Branch Incentive Program

Early rly Stage ge Mid Stage ge Late te Stage ge

▪ Automatic reminder letters ▪ Branch follow-up calls ▪ Text messages ▪ Payment incentives ▪ Escalated letter campaign ▪ Phone additional contacts ▪ Begin migration to centralized collection process ▪ Internal Recovery Unit (IRU) Charge-off decisioning ▪ Third party collections

World rld Acc ccept eptanc nce foll llow

• ws

s a robust ust coll

• llec

ecti tion n proce

• cess

ss makin ing g numerou erous attempt tempts to work rk wit ith h the e cus usto tome mer r prior ior to chargi rging ng-off

• ff a loan

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Portfolio Composition and Credit Performance

Gross Loan Balance by Customer Tenure at Origination Period Ended Less than 2 Years More Than 2 years Total 12/31/15 $331,976,598 $792,223,760 $1,124,200,358 12/31/16 $303,303,989 $761,820,791 $1,065,124,780 12/31/17 $337,780,636 $789,638,745 $1,127,419,381 12/31/18 $428,032,549 $830,875,356 $1,258,907,905 12/31/19 $487,842,960 $884,925,620 $1,372,768,580 YOY Change in Gross Loan Balance by Customer Tenure at Origination ($'s) Period Ended Less than 2 Years More Than 2 years Total 12/31/15 ($27,383,334) ($11,650,372) ($39,033,706) 12/31/16 ($28,672,609) ($30,402,969) ($59,075,578) 12/31/17 $34,476,647 $27,817,954 $62,294,601 12/31/18 $90,251,913 $41,236,611 $131,488,524 12/31/19 $59,810,411 $54,050,264 $113,860,675 YOY Change in Gross Loan Balance by Customer Tenure at Origination (%'s) Period Ended Less than 2 Years More Than 2 years Total 12/31/15 (7.6%) (1.5%) (3.4%) 12/31/16 (8.6%) (3.8%) (5.3%) 12/31/17 11.4% 3.7% 5.8% 12/31/18 26.7% 5.2% 11.7% 12/31/19 14.0% 6.5% 9.0%

Rapid portfolio io growth in recent years s has shifted the weightin ing of less tenured customer ers

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Portfolio Composition and Credit Performance (contd.)

Portfolio Mix by Customer Tenure at Origination Period Ended Less Than 2 Years More Than 2 Years 12/31/15 29.5% 70.5% 12/31/16 28.5% 71.5% 12/31/17 30.0% 70.0% 12/31/18 34.0% 66.0% 12/31/19 35.5% 64.5% Indexed 3rd Quarter Charge-off Rates by Tenure Since Fiscal 2016 3 Months Ended Less Than 2 Years More Than 2 Years Total 12/31/15 1.47 0.61 0.86 12/31/16 1.69 0.74 1.00 12/31/17 1.54 0.65 0.91 12/31/18 1.65 0.68 0.99 12/31/19 1.70 0.64 1.02

Key Notes

▪ When comparing the 3rd quarters of FY ‘17 and ‘20, the charge-off rate of the lower-tenure population increased by 0.7% while the higher-tenure population’s rate decreased 12.5%. ▪ Even with essentially the same charge-off rate in the lower-tenure population and reduction in the higher-tenure population, the increase in portfolio weight of the lower-tenure group has led to an

• verall increase in the charge-off rate of 2.2% over

this period. ▪ The Company continues to expect the return on these pools of customers to exceed its cost of capital and be in line with long-term performance expectations.

Effec ects ts of port rtfol folio

• growth
• wth and cust

stomer

• mer tenu

nure re cont ntinu nue to impact ct overa erall l charge rge-off

• ff rates

tes

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Credit Performance

Net Charge-Offs fs Loan an Delinq nque uency cy – 61+ Days ys

Rigorous gorous underw derwrit riting ng stan anda dards rds have ve led d to stab able e perfo form rman ance ce acro ross ss economic conomic cycl cles es

14.7%14.6% 14.8% 13.4% 14.7% 16.7% 15.4% 14.1% 13.8% 13.7% 14.6% 12.8% 15.0% 16.2% 14.9% 16.1% 0.0% 4.0% 8.0% 12.0% 16.0% 20.0% 24.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Net Charge-offs 2.3% 2.5% 2.1% 2.2% 2.6% 2.7% 2.3% 2.4% 2.4% 2.6% 2.9% 4.2% 4.4% 5.0% 5.4% 5.8% 3.8% 4.1% 3.4% 3.6% 4.0% 4.2% 3.8% 3.8% 3.8% 4.2% 4.9% 6.2% 6.5% 7.0% 7.5% 7.8% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Recency Contractual

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Risk Management

High Levels ls of Management nt Involv lvement nt Culture ure of Complia plianc nce Management Controls ▪ Regulatory matters ▪ Setting policy and procedures ▪ Risk oversight and management ▪ Information technology ▪ Annual risk and fraud assessments ▪ Addressing state audit reports Information System Controls and Security Infrastructure Internal Audit Department

▪ Quarterly supervision of each branch ▪ Compliance monitoring ▪ Surprise cash counts ▪ Data Analytics ▪ Monthly underwriting and loan documentation reviews ▪ Detailed operational performance monitoring

3 Lines of Defense Model

▪ Unified loan management platform provides strong IT control structure ▪ Proprietary platform fully customizable ▪ Detailed branch statistics and monitoring ▪ 12 full-time auditors ▪ 9-18 month frequencies ▪ Loan documentation audits ▪ Detailed risk and fraud assessment process ▪ Risk-based audit approach focused on high-risk areas and fraud prevention and detection

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Risk Management

World rld Acc ccept eptanc nce has s buil ilt a cul ultu ture re of complianc nce e that t anti tici cipates es and adapts ts to a cons nstantl tantly changi nging ng regul ulatory

• ry environ

ronme ment nt

▪ Implement controls to address weaknesses noted during risk assessments, branch audits, external compliance audits, state regulatory audits and customer complaints ▪ Aligning the compliance program with changing business and regulatory conditions

Contro rol

▪ Continuously monitor trends in branch audits, state regulatory audits and customer complaints for quick identification of systemic issues ▪ Participate and consult on key business initiatives

Monitor

▪ Maintain a compliance program to identify deficiencies within our business processes ▪ Perform compliance and fair lending risk assessments ▪ Review all regulatory environment changes and translating those to changes in policies and procedures

Ident ntify ify

▪ Monthly detailed reporting throughout the business ▪ Quarterly reporting to the Board, Board Committees and senior management ▪ Escalation of high-risk systemic issues

Report rt

▪ Develop branch-level compliance training for key risk areas and systemic issues ▪ Ensure all employees and directors receive annual compliance training

Train

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Financial Summary

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Gross ss Loans Receivabl ivables Loan Orig igin inat atio ion n Volume Revenue ue Earni ning ngs s Per Share (1)

Historical Financial Performance

($ in millions) ($ in millions) ($ in millions) _________________ Note: Fiscal year-end is 3/31. Data is through 3/31/2019. (1) FY2018 adjusted to remove $15.4 million of tax expense related to the one-time discrete revaluation of the deferred tax asset and the foreign transition tax recorded due to the passage of the Tax Cut and Jobs Act (TCJA)

$2,702 $2,840 $2,788 $2,564 $2,473 $2,361 $2,487 $2,720 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 2012 2013 2014 2015 2016 2017 2018 2019 $912 $982 $1,015 $1,016 $965 $943 $1,004 $1,128 $0 $200 $400 $600 $800 $1,000 $1,200 2012 2013 2014 2015 2016 2017 2018 2019 $505 $543 $567 $577 $515 $491 $503 $545 $440 $460 $480 $500 $520 $540 $560 $580 $600 2012 2013 2014 2015 2016 2017 2018 2019 $6.39 $7.62 $8.44 $11.05 $9.59 $7.72 $7.20 $8.03 $- $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 2012 2013 2014 2015 2016 2017 2018 2019

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Return on assets and equity

14.2% 13.4% 12.4% 12.7% 10.5% 9.0% 8.3% 8.8% 23.6% 26.6% 30.0% 36.1% 25.3% 17.1% 13.9% 13.6% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 2012 2013 2014 2015 2016 2017 2018 2019 Return on Average Assets Return on Average Equity

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