“Our charge-off rate decreased as a percent of net loans on an annualized basis from 14.8% for the three months ended September 30, 2011, to 13.9% for the three months ended September 30, 2012. Managing our credit risks is a key driver of our earnings growth. Additionally, our past due loans as measured by those that are 61+ days delinquent has remained flat at 4.2% on a contractual basis for the two quarterly periods,” stated Mr. McLean.
The provision for loan losses rose 7.8% to $32.4 million in the second quarter of fiscal 2013 compared to the second quarter of fiscal 2012. “We remain focused on monitoring our loan portfolio in light of the difficult economy and we believe that our allowance for loan losses is adequate based on the current outlook,” noted Mr. McLean.
The Company’s general and administrative expenses increased by 7.6% compared with the second quarter of the prior year due primarily to the new office openings during fiscal 2013. The Company opened 35 new offices, purchased three new offices and closed two offices during the first six-months of the fiscal year resulting in a total of 1,173 offices at September 30, 2012. General and administrative expenses as a percent of total revenues increased from 46.5% in the prior year quarter to 47.5% during the current fiscal quarter, primarily due to the lower revenue growth.
The Company’s second quarter effective income tax rate increased to 37.7% compared with 36.5% for the prior year’s second quarter. The increase was primarily due to the effects of a discrete event in the prior year quarter resulting from the release of a reserve related to a state refund.Other key return ratios for the second quarter included a 13.4% return on average assets and a return on average equity of 25.1% (both on a trailing 12 month basis).