- Net income of $6.5 million; diluted earnings
per share of $0.56 -
- Revenue increase of 13.4% on finance
receivable growth of 15.7% -
- Portfolio growth of $50 million sequentially
to $696 million as of September 30 -
Regional Management Corp. (NYSE:RM), a diversified consumer
finance company, today announced results for the third quarter
ended September 30, 2016.
Third Quarter 2016 Highlights
- Net income for the third quarter of
2016 was $6.5 million, comparable with the prior-year period;
non-GAAP net income was $6.7 million, an increase of 3.4% from the
prior-year period. Diluted earnings per share were $0.56, and on a
non-GAAP basis, diluted earnings per share were $0.58. Non-GAAP net
income excludes $0.4 million of non-operating system implementation
costs.
- Total finance receivables as of
September 30, 2016 were $696 million, an increase of 15.7%, or $95
million, from the prior year and up 7.8%, or $50 million,
sequentially:
- Sixth consecutive quarter that total
finance receivables have increased at least 10% over the prior-year
period.
- Large loan finance receivables of $217
million increased $97 million, or 81.3%, from the prior-year period
and now represent over 31% of the total loan portfolio.
- Total revenue for the third quarter of
2016 was $62.5 million, a $7.4 million, or 13.4%, increase from the
prior-year period, and a $5.2 million, or 9.0%, increase
sequentially. Revenue growth over the prior-year period was driven
by a 15.7% increase in receivables, partially offset by an overall
yield decline of 40 basis points. On a sequential basis, overall
yield increased by 30 basis points.
- Net charge-offs for the third quarter
of 2016 were $13.5 million, an increase of $1.0 million versus the
prior-year period. Annualized net charge-offs of 8.0% of average
finance receivables were down 50 basis points compared to the
prior-year period.
- Total delinquencies as a percentage of
total finance receivables as of September 30, 2016 were 18.2%, a
slight decline from 18.3% as of June 30, 2016 and an improvement
from 22.4% as of September 30, 2015.
- 30+ day contractual delinquencies were
7.1%, an increase sequentially from 6.8% as of June 30, 2016 –
consistent with the seasonality of Regional Management’s business –
but reduced from 7.3% as of September 30, 2015.
- In August, Regional Management amended
its senior revolving credit facility agreement, increasing the
committed line to $585 million and extending the maturity date to
August 2019. The upper limit of the accordion feature of the credit
facility was also increased to $650 million.
“Our third quarter was marked by strong growth in our core small
and large loan portfolios,” said Peter R. Knitzer, Chief Executive
Officer of Regional Management Corp. “Total finance receivables
increased nearly 16% from the prior year and grew almost 8% from
June 30th of this year alone. Our interest and fee income increased
over 15%, which tracks closely with our portfolio growth. As a
result of strong portfolio growth, our provision for credit losses
in the quarter increased $2.3 million over the prior-year period,
but our net charge-offs as a percentage of average finance
receivables improved from the prior-year period, once again showing
the stability of our credit performance. While our personnel
expense held mostly in line with previous quarters in 2016, it was
elevated from the prior-year period due to lower incentive expense
in the third quarter of 2015.”
“In addition to solid operating results for the quarter, the
transition to our new operating platform continues to progress,”
continued Mr. Knitzer. “We recently converted our third state,
North Carolina, to the new system, and as we’ve continued the
implementation process, we’ve learned that the most prudent course
of action is to successfully convert one state at a time. As a
result, we expect the system to be fully adopted in all of our
states in the first half of 2017. We are pleased with the system’s
performance thus far, and we continue to focus our efforts on
converting our remaining states, which will allow us to enhance our
opportunities for the long-term success of the Company.”
Third Quarter 2016 Results
Finance receivables outstanding at September 30, 2016 were
$696.1 million, a 15.7% increase from $601.6 million in the prior
year. Finance receivables increased primarily due to an increase in
both the small and large loan portfolios resulting from Regional
Management’s marketing efforts and the net addition of 16 de novo
branches since September 30, 2015. On a sequential basis, finance
receivables increased by $50.4 million from the second quarter.
For the third quarter ended September 30, 2016, the Company
reported total revenue of $62.5 million, a 13.4% increase from
$55.1 million in the prior-year period. Interest and fee income for
the third quarter of 2016 was $57.4 million, a 15.4% increase from
$49.7 million in the prior-year period, primarily due to an
increase in the portfolios of both small and large loans compared
to the prior-year period. Insurance income, net for the third
quarter of 2016 was $2.3 million, a decline of $0.4 million from
the prior-year period due primarily to increased claims expense.
Other income for the third quarter of 2016 was $2.7 million, a 4.7%
increase from the prior-year period.
The provision for credit losses in the third quarter of 2016 was
$16.4 million versus $14.1 million in the prior-year period,
primarily due to the growth of finance receivables in the quarter.
In addition, the allowance for credit losses increased sequentially
at the same rate as loan growth, resulting in the provision for
credit losses increasing by approximately $3.0 million from the
second quarter.
Net charge-offs were $13.5 million in the third quarter of 2016
versus $12.5 million in the prior-year period. On a sequential
basis, net charge-offs in the third quarter of 2016 increased
slightly from the second quarter of 2016. Annualized net
charge-offs as a percentage of average finance receivables in the
third quarter of 2016 were 8.0%, an improvement from 8.5% in the
prior-year period and 8.6% in the second quarter of 2016.
General and administrative expenses for the third quarter of
2016 were $30.5 million, an increase of 16.3%, or $4.3 million,
from the prior-year period. Home office expenses increased $3.7
million from the prior-year period primarily due to $2.2 million in
increased incentive expense and $0.8 million in increased salary
expense. Incentive expense increased due to reduced short- and
long-term incentive plan accruals in the prior-year period that did
not recur in the third quarter of 2016. Salaries increased
primarily due to the addition of 13 employees in the home office.
Branch expenses in the third quarter of 2016 improved $0.1 million
from the prior-year period, despite the addition of 16 net new
branches since September 30, 2015, as branch headcount decreased
due to the 2015 phase-out of field calling as a collection
activity. Sequentially, general and administrative expenses rose
$0.9 million, or 3.1%, from the second quarter of 2016. Excluding
$0.4 million in loan system conversion costs in the third quarter
of 2016, general and administrative expenses for the third quarter
of 2016 would have been $30.0 million versus $26.2 million in the
prior-year period.
GAAP net income for the third quarter of 2016 was $6.5 million,
comparable with the prior-year period. Diluted earnings per share
for the third quarter of 2016 were $0.56, an increase from $0.50 in
the prior-year period. Excluding the aforementioned non-operating
expense in the third quarter of 2016, non-GAAP net income in the
third quarter of 2016 would have been $6.7 million and diluted
earnings per share would have been $0.58. For a reconciliation of
non-GAAP financial measures to the comparable GAAP financial
measure, please refer to the reconciliation table accompanying this
release.
Nine Months 2016 Results
For the nine months ended September 30, 2016, the Company
reported total revenue of $176.5 million, a 9.9% increase from
$160.6 million in the prior-year period. Interest and fee income
for the nine months ended September 30, 2016 was $161.3 million, an
11.7% increase from $144.5 million in the prior-year period,
primarily due to a significant increase in the portfolios of both
small and large installment loans compared to the prior-year
period. Insurance income, net for the nine months ended September
30, 2016 was $7.9 million, a 10.5% decrease from the prior-year
period, primarily attributable to increased claims expense. Other
income for the nine months ended September 30, 2016 was $7.3
million, comparable with the prior-year period.
The provision for credit losses for the nine months ended
September 30, 2016 was $43.6 million versus $35.9 million in the
prior-year period. Net charge-offs for the nine months ended
September 30, 2016 were $41.9 million compared to $38.6 million in
the prior-year period. Annualized net charge-offs as a percentage
of average finance receivables for the nine months ended September
30, 2016 was 8.7%, a decline from 9.2% in the prior-year
period.
General and administrative expenses for the nine months ended
September 30, 2016 were $89.8 million, an increase of $2.8 million,
or 3.2%, from $87.0 million in the prior-year period. The nine
months 2016 results included $1.4 million in non-operating loan
system conversion costs, while the nine months 2015 results
included $2.7 million in non-operating expenses.
GAAP net income for the nine months ended September 30, 2016 was
$17.6 million, a 9.8% increase compared to GAAP net income of $16.0
million in the prior-year period, and diluted earnings per share
for the nine months ended September 30, 2016 were $1.44 compared to
$1.22 in the prior-year period. Excluding the aforementioned
non-operating expenses, non-GAAP net income for the nine months
ended September 30, 2016 totaled $18.5 million and non-GAAP diluted
earnings per share were $1.51, compared to non-GAAP net income of
$17.7 million and non-GAAP diluted earnings per share of $1.35 in
the prior-year period.
2016 De Novo Outlook
As of September 30, 2016, the Company’s branch network consisted
of 338 locations. Due to its focus on implementing its new loan
management system, the Company plans to return to opening
additional de novo branches in early 2017.
Liquidity and Capital Resources
As of September 30, 2016, the Company had finance receivables of
$696.1 million and outstanding long-term debt of $481.8 million
(consisting of $435.4 million of long-term debt on its $585.0
million senior revolving credit facility and $46.4 million of
long-term debt on its $75.7 million amortizing loan).
Conference Call Information
Regional Management Corp. will host a conference call and
webcast today at 5:00 PM ET to discuss these results.
The dial-in number for the conference call is (855) 590-2959
(toll-free) or (503) 343-6651 (direct), passcode 95219899. Please
dial the number 10 minutes prior to the scheduled start time.
*** A supplemental slide presentation will be made available
on Regional Management’s website prior to the earnings call at
www.RegionalManagement.com. ***
In addition, a live webcast of the conference call will also be
available on Regional Management’s website at
www.RegionalManagement.com.
A replay will be available following the end of the call through
Thursday, November 3, 2016, by telephone at (855) 859-2056
(toll-free) or (404) 537-3406 (direct), passcode 95219899. A
webcast replay of the call will be available at
www.RegionalManagement.com for one year following the call.
Forward-Looking Statements
This press release may contain various “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, which represent Regional Management Corp.’s
expectations or beliefs concerning future events. Words such as
“may,” “will,” “should,” “likely,” “anticipates,” “expects,”
“intends,” “plans,” “projects,” “believes,” “estimates,” “outlook”
and similar expressions may be used to identify these
forward-looking statements. Such forward-looking statements are
about matters that are inherently subject to risks and
uncertainties, many of which are outside of the control of Regional
Management. Factors that could cause actual results or performance
to differ from the expectations expressed or implied in such
forward-looking statements include, but are not limited to, the
following: the continuation or worsening of adverse conditions in
the global and domestic credit markets and uncertainties regarding,
or the impact of, governmental responses to those conditions;
changes in interest rates; risks related to acquisitions; risks
related to opening new branches, including the ability or inability
to open new branches as planned; risks inherent in making loans,
including repayment risks and value of collateral, which risks may
increase in light of adverse or recessionary economic conditions;
recently-enacted or proposed legislation; the timing and amount of
revenues that may be recognized by Regional Management; changes in
current revenue and expense trends (including trends affecting
delinquencies and charge-offs); changes in Regional Management’s
markets and general changes in the economy (particularly in the
markets served by Regional Management); changes in operating and
administrative expenses; and the departure, transition or
replacement of key personnel. Such factors and others are discussed
in greater detail in Regional Management’s filings with the
Securities and Exchange Commission. Regional Management will not
update the information contained in this press release beyond the
publication date, except to the extent required by law, and is not
responsible for changes made to this document by wire services or
Internet services.
About Regional Management Corp.
Regional Management Corp. (NYSE:RM) is a diversified consumer
finance company providing a broad array of loan products primarily
to customers with limited access to consumer credit from banks,
thrifts, credit card companies and other traditional lenders.
Regional Management began operations in 1987 with four branches in
South Carolina and has since expanded its branch network across
South Carolina, Texas, North Carolina, Tennessee, Alabama,
Oklahoma, New Mexico, Georgia and Virginia. Each of its loan
products is structured on a fixed rate, fixed term basis with fully
amortizing equal monthly installment payments and is repayable at
any time without penalty. Regional Management’s loans are sourced
through its multiple channel platform, including in its branches,
through direct mail campaigns, independent and franchise automobile
dealerships, online credit application networks, retailers and its
consumer website. For more information, please visit
www.RegionalManagement.com.
Regional Management Corp. and
Subsidiaries
Consolidated Statements of
Income
(Unaudited)
(in thousands, except per share
amounts)
Better (Worse) Better (Worse) 3Q’16
3Q’15 $ %
YTD’16 YTD’15 $
% Revenue Interest and fee income $ 57,420 $ 49,741 $ 7,679
15.4 % $ 161,309 $ 144,474 $ 16,835 11.7 % Insurance income, net
2,346 2,767
(421
)
(15.2
)%
7,886 8,816
(930
)
(10.5
)%
Other income 2,709 2,588 121
4.7 % 7,302 7,331
(29
)
(0.4
)%
Total revenue 62,475 55,096
7,379
13.4
%
176,497 160,621 15,876
9.9
%
Expenses Provision for credit losses 16,410 14,085
(2,325
)
(16.5
)%
43,587 35,899
(7,688
)
(21.4
)%
Personnel 18,180 15,993
(2,187
)
(13.7
)%
51,981 51,964
(17
)
(0.0
)%
Occupancy 5,175 4,458
(717
)
(16.1
)%
14,808 12,791
(2,017
)
(15.8
)%
Marketing 1,786 1,134
(652
)
(57.5
)%
5,363 5,614 251
4.5
%
Other 5,312 4,597
(715
)
(15.6
)%
17,654 16,679
(975
)
(5.8
)%
Total general and administrative 30,453 26,182
(4,271
)
(16.3
)%
89,806 87,048
(2,758
)
(3.2
)%
Interest expense 5,116 4,335
(781
)
(18.0
)%
14,637 11,871
(2,766
)
(23.3
)%
Income before income taxes 10,496 10,494 2 0.0 % 28,467
25,803 2,664 10.3 % Income taxes 4,020 3,987
(33
)
(0.8
)%
10,903 9,805
(1,098
)
(11.2
)%
Net income $ 6,476 $ 6,507
$
(31
)
(0.5
)%
$ 17,564 $ 15,998 $ 1,566
9.8
%
Net income per common share: Basic $ 0.57 $ 0.51
$ 0.06 11.8 % $ 1.47 $ 1.25 $ 0.22
17.6
%
Diluted $ 0.56 $ 0.50 $ 0.06
12.0
%
$ 1.44 $ 1.22 $ 0.22
18.0
%
Weighted-average shares outstanding: Basic 11,384
12,881 1,497
11.6
%
11,963 12,835 872
6.8
%
Diluted 11,664 13,111 1,447
11.0
%
12,194 13,063 869
6.7
%
Return on average assets (annualized) 3.9 %
4.5 % 3.7 %
3.9
%
Return on average equity (annualized)
13.2
%
13.4 % 11.7 % 11.4 %
Regional Management Corp. and
Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(in thousands, except par value
amounts)
Increase (Decrease) 3Q’16 3Q’15
$ % Assets Cash $ 3,959 $ 4,922
$
(963
)
(19.6
)%
Gross finance receivables 887,316 743,003 144,313 19.4 % Unearned
finance charges, insurance premiums, and commissions
(191,167
)
(141,395
)
(49,772
)
(35.2
)%
Finance receivables 696,149 601,608 94,541 15.7 % Allowance for
credit losses
(39,100
)
(37,786
)
(1,314
)
(3.5
)%
Net finance receivables 657,049 563,822 93,227
16.5
%
Property and equipment, net of accumulated depreciation 10,701
8,250 2,451
29.7
%
Restricted cash 7,906 2,900 5,006
172.6
%
Intangible assets, net 4,608 1,697 2,911
171.5
%
Goodwill 716 716 —
0.0
%
Repossessed assets at net realizable value 429 343 86
25.1
%
Deferred tax asset, net — 265
(265
)
(100.0
)%
Other assets 5,961 4,593 1,368
29.8
%
Total assets $ 691,329 $ 587,508 $ 103,821
17.7
%
Liabilities and Stockholders’ Equity Liabilities:
Long-term debt $ 481,766 $ 379,617 $ 102,149
26.9
%
Unamortized debt issuance costs
(2,403
)
(1,458
)
(945
)
(64.8
)%
Net long-term debt 479,363 378,159 101,204
26.8
%
Accounts payable and accrued expenses 11,436 11,754
(318
)
(2.7
)%
Deferred tax liability, net 432 —
432
100.0
%
Total liabilities 491,231 389,913 101,318
26.0
%
Commitments and Contingencies Stockholders’ equity: Preferred
stock, $0.10 par value, 100,000 shares authorized, no shares issued
or outstanding — — — — Common stock, $0.10 par value, 1,000,000
shares authorized, 12,984 shares issued and 11,438 shares
outstanding at September 30, 2016 and 12,914 shares issued and
outstanding at September 30, 2015 1,298 1,291 7
0.5
%
Additional paid-in-capital 91,524 88,913 2,611
2.9
%
Retained earnings 132,322 107,391 24,931
23.2
%
Treasury stock, at cost, 1,546 shares at September 30, 2016
(25,046
)
—
(25,046
)
(100.0
)%
Total stockholders’ equity 200,098 197,595
2,503
1.3
%
Total liabilities and stockholders’ equity $ 691,329
$ 587,508 $ 103,821
17.7
%
Regional Management Corp. and
Subsidiaries
Selected Financial Data
(Unaudited)
(in thousands, except per share
amounts)
Averages and Yields 3Q’16
2Q’16 3Q’15 Average
FinanceReceivables Average Yield
(Annualized)
Average FinanceReceivables Average
Yield
(Annualized)
Average FinanceReceivables Average
Yield
(Annualized)
Small loans $ 337,674 43.3 % $ 313,388 43.0 % $
323,491 43.2 % Large loans 206,437 29.0 % 178,683 28.8 %
106,155 27.6 % Automobile loans 99,113 17.7 % 103,626 17.9 %
133,857 18.8 % Retail loans 31,317 19.4 %
29,007 19.1 % 25,022 19.1 % Total interest and
fee yield $ 674,541 34.0 % $ 624,704 33.7 % $
588,525 33.8 % Total revenue yield $ 674,541 37.0 % $
624,704 36.7 % $ 588,525 37.4 %
Components of Increase in Interest and Fee Income
3Q’16 Compared to 3Q’15
Increase (Decrease)
Volume Rate Net
Small loans $ 1,534 $ 93 $ 1,627 Large loans 7,262 391 7,653
Automobile loans
(1,556
)
(367
)
(1,923
)
Retail loans 305 17 322
Total increase in interest and fee income $ 7,545 $ 134
$ 7,679
Net Loans Originated
(1) 3Q’16 2Q’16
QoQ $
Inc (Dec)
QoQ %
Inc (Dec)
3Q’15 YoY $
Inc (Dec)
YoY %
Inc (Dec)
Small loans $ 160,642 $ 153,049 $ 7,593 5.0 % $ 144,322 $ 16,320
11.3 % Large loans 62,846 72,174 (9,328 ) (12.9
)%
44,911 17,935 39.9 % Automobile loans 11,099 9,355 1,744 18.6 %
7,665 3,434 44.8 % Retail loans 9,258 8,627
631 7.3 % 7,868 1,390 17.7 % Total net loans
originated $ 243,845 $ 243,205 $ 640 0.3 % $ 204,766 $
39,079 19.1 %
(1) Represents the balance of loan
origination and refinancing net of unearned finance charges
Other Key Metrics 3Q’16
2Q’16 3Q’15 Net charge-offs $
13,510 $ 13,416 $ 12,470 Percentage of average finance receivables
(annualized) 8.0% 8.6% 8.5% Provision for credit losses $
16,410 $ 13,386 $ 14,085 Percentage of average finance receivables
(annualized) 9.7% 8.6% 9.6% Percentage of total revenue 26.3% 23.4%
25.6% General and administrative expenses $ 30,453 $ 29,548
$ 26,182 Percentage of average finance receivables (annualized)
18.1% 18.9% 17.8% Percentage of total revenue 48.7% 51.5% 47.5%
Same store results: Finance receivables at period-end $
657,764 $ 611,589 $ 573,221 Finance receivable growth rate 12.3%
9.5% 7.1% Number of branches in calculation 315 306 293
Finance Receivables by Product 3Q’16
2Q’16 QoQ $
Inc (Dec)
QoQ %
Inc (Dec)
3Q’15 YoY $
Inc (Dec)
YoY %
Inc (Dec)
Small loans $ 349,390 $ 320,077 $ 29,313 9.2 % $ 328,207 $ 21,183
6.5 % Large loans 217,102 194,857 22,245
11.4 % 119,731 97,371 81.3 % Total core
loans 566,492 514,934 51,558 10.0 % 447,938 118,554 26.5 %
Automobile loans 97,141 100,721 (3,580 ) (3.6
)%
128,131 (30,990 ) (24.2
)%
Retail loans 32,516 30,089 2,427 8.1 %
25,539 6,977 27.3 % Total finance receivables
$ 696,149 $ 645,744 $ 50,405 7.8 % $ 601,608 $ 94,541
15.7 % Number of branches at period end 338 338 — 0.0
% 322 16 5.0 % Average finance receivables per branch $ 2,060 $
1,910 $ 150 7.9 % $ 1,868 $ 192 10.3 %
Contractual Delinquency by Aging 3Q’16
2Q’16 3Q’15 Allowance for credit
losses $ 39,100 5.6 % $ 36,200 5.6 % $
37,786 6.3 % Current 569,412 81.8 % 527,080
81.7 % 466,847 77.6 % 1 to 29 days past due 77,097 11.1 %
74,439 11.5 % 90,626 15.1 % Delinquent
accounts: 30 to 59 days 17,323 2.4 % 16,710 2.5 % 17,094 2.8 % 60
to 89 days 10,966 1.6 % 10,045 1.6 % 9,952 1.7 % 90 to 119 days
8,363 1.3 % 7,237 1.1 % 6,874 1.1 % 120 to 149 days 7,215 1.0 %
5,358 0.8 % 5,766 1.0 % 150 to 179 days 5,773 0.8 %
4,875 0.8 % 4,449 0.7 % Total contractual delinquency $
49,640 7.1 % $ 44,225 6.8 % $ 44,135 7.3 % Total finance
receivables $ 696,149 100.0 % $ 645,744 100.0 % $ 601,608 100.0 %
1 day and over past due $ 126,737 18.2 % $ 118,664 18.3 % $
134,761 22.4 %
Contractual Delinquency by
Product 3Q’16 2Q’16
3Q’15 Small loans $ 30,169 8.6 % $ 26,436
8.3 % $ 29,771 9.1 % Large loans 10,142
4.7 % 8,459 4.3 % 3,829 3.2 % Automobile loans 7,459 7.7 % 7,768
7.7 % 9,327 7.3 % Retail loans 1,870 5.8 % 1,562 5.2
% 1,208 4.7 % Total contractual delinquency $ 49,640 7.1 % $
44,225 6.8 % $ 44,135 7.3 %
Quarterly
Trend 3Q’15 4Q’15
1Q’16 2Q’16 3Q’16
QoQ $
B(W)
YoY $
B(W)
Revenue Interest and fee income $ 49,741 $ 51,320 $ 51,300 $ 52,589
$ 57,420 $ 4,831 $ 7,679 Insurance income, net 2,767 2,838 2,939
2,601 2,346 (255 ) (421 ) Other income 2,588 2,527
2,458 2,135 2,709 574 121
Total revenue 55,096 56,685 56,697
57,325 62,475 5,150 7,379
Expenses Provision for credit losses 14,085 11,449 13,791
13,386 16,410 (3,024 ) (2,325 ) Personnel 15,993 17,283
17,127 16,674 18,180 (1,506 ) (2,187 ) Occupancy 4,458 4,522 4,863
4,770 5,175 (405 ) (717 ) Marketing 1,134 1,403 1,515 2,062 1,786
276 (652 ) Other 4,597 5,342 6,300
6,042 5,312 730 (715 ) Total general
and administrative 26,182 28,550 29,805 29,548 30,453 (905 ) (4,271
) Interest expense 4,335 4,350 4,710
4,811 5,116 (305 ) (781 ) Income before
income taxes 10,494 12,336 8,391 9,580 10,496 916 2 Income taxes
3,987 4,969 3,215 3,668 4,020
(352 ) (33 ) Net income $ 6,507 $ 7,367 $ 5,176 $
5,912 $ 6,476 $ 564 $ (31 ) Net income per common share:
Basic $ 0.51 $ 0.57 $ 0.41 $ 0.50 $ 0.57 $ 0.07 $ 0.06
Diluted $ 0.50 $ 0.56 $ 0.40 $ 0.49 $ 0.56 $ 0.07 $
0.06 Weighted-average shares outstanding: Basic
12,881 12,891 12,756 11,756
11,384 372 1,497 Diluted 13,111
13,105 12,949 11,974 11,664 310
1,447 Net interest margin $
50,761 $ 52,335 $ 51,987 $ 52,514 $ 57,359 $ 4,845 $ 6,598
Net credit margin $ 36,676 $ 40,886 $ 38,196 $ 39,128 $
40,949 $ 1,821 $ 4,273
3Q’15
4Q’15 1Q’16 2Q’16 3Q’16 QoQ $
Inc (Dec)
YoY $
Inc (Dec)
Total assets $ 587,508 $ 626,373 $ 609,707 $ 642,803 $ 691,329 $
48,526 $ 103,821 Finance receivables $ 601,608 $
628,444 $ 607,363 $ 645,744 $ 696,149 $ 50,405 $ 94,541
Allowance for credit losses $ 37,786 $ 37,452 $
36,230 $ 36,200 $ 39,100 $ 2,900 $ 1,314 Long-term
debt $ 379,617 $ 411,177 $ 396,543 $ 441,147 $ 481,766 $ 40,619
$ 102,149
Headcount Trend
3Q’15 4Q’15 1Q’16
2Q’16 3Q’16
QoQ
Inc (Dec)
YoY
Inc (Dec)
Legacy branch headcount 1,256 1,280 1,237 1,184 1,178 (6 ) (78 )
2016 new branch headcount 17 17 17 — 17
Total branch headcount 1,256 1,280 1,254 1,201 1,195 (6 ) (61 )
Home office headcount 129 133 137 140 142 2 13 Total
headcount 1,385 1,413 1,391 1,341 1,337 (4 ) (48 ) Number of
branches 322 331 339 338 338 — 16
General & Administrative Expenses Trend
3Q’15 4Q’15 1Q’16
2Q’16 3Q’16
QoQ $
B(W)
YoY $
B(W)
Legacy branch expenses $ 18,794 $ 18,724 $ 18,822 $ 16,689 $ 18,047
$ (1,358 ) $ 747 2016 new branch expenses 548
606 619 (13 ) (619 ) Total branch
expenses 18,794 18,724 19,370 17,295 18,666 (1,371 ) 128 Marketing
expenses 1,134 1,403 1,515 2,062 1,787 275 (653 ) Home office
expenses 6,254 8,423 8,920 10,191
10,000 191 (3,746 ) Total G&A
expenses $ 26,182 $ 28,550 $ 29,805 $ 29,548 $ 30,453 $ (905 ) $
(4,271 )
Averages
and Yields YTD’16 YTD’15 Average
FinanceReceivables Average Yield
(Annualized)
Average FinanceReceivables Average
Yield
(Annualized)
Small loans $ 327,626 42.5 % $ 311,897 44.5 % Large loans 179,508
28.7 % 79,806 27.4 % Automobile loans 104,797 17.9 % 142,417 19.1 %
Retail loans 29,464 19.2 % 24,983 18.7 % Total
interest and fee yield $ 641,395 33.5 % $ 559,103 34.5 % Total
revenue yield $ 641,395 36.7 % $ 559,103 38.3 %
Components of Increase in Interest and Fee Income
YTD’16 Compared to YTD’15
Increase (Decrease)
Volume Rate Net
Small loans $ 5,126 $ (4,926 ) $ 200 Large loans 21,420 836 22,256
Automobile loans (5,124 ) (1,245 ) (6,369 ) Retail loans 643
105 748 Total increase
(decrease) in interest and fee income $ 22,065 $ (5,230 ) $
16,835
Net Loans Originated (1)
YTD’16 YTD’15 YTD
$
Inc (Dec)
YTD %
Inc (Dec)
Small loans $ 428,068 $ 427,909 $ 159 0.0 % Large loans 183,589
120,874 62,715 51.9 % Automobile loans 28,939 34,057 (5,118 ) (15.0
)%
Retail loans 26,586 22,731 3,855 17.0 %
Total net loans originated $ 667,182 $ 605,571 $ 61,611 10.2
%
(1) Represents the balance of loan origination and refinancing
net of unearned finance charges
Other Key Metrics YTD’16
YTD’15 Net charge-offs $ 41,939 $ 38,624 Percentage
of average finance receivables (annualized) 8.7 % 9.2 %
Provision for credit losses $ 43,587 $ 35,899 Percentage of average
finance receivables (annualized) 9.1 % 8.6 % Percentage of total
revenue 24.7 % 22.4 % General and administrative expenses $
89,806 $ 87,048 Percentage of average finance receivables
(annualized) 18.7 % 20.8 % Percentage of total revenue 50.9 % 54.2
%
Because it adjusts for certain non-operating and non-cash items,
the Company believes that non-GAAP measures are useful to investors
as supplemental financial measures that, when viewed with its GAAP
financial information, provide information regarding trends in the
Company’s results of operations and credit metrics, which is
intended to help investors meaningfully evaluate and compare the
Company’s results of operations and credit metrics between
periods.
Non-GAAP Reconciliation 3Q‘16
Adjustments Non-GAAP General and
administrative expenses $ 30,453
$
(412
)(1)
$ 30,041 Income taxes $ 4,020
$
158
(5)
$ 4,178 Net income $ 6,476 $ 254 $ 6,730 Diluted net income per
common share $ 0.56 $ 0.02 $ 0.58
Non-GAAP Reconciliation
YTD’16 Adjustments
Non-GAAP General and administrative expenses $ 89,806 $
(1,440 )(2) $ 88,366 Income taxes $ 10,903 $
552
(5)
$ 11,455 Net income $ 17,564 $ 888 $ 18,452 Diluted net income per
common share $ 1.44 $ 0.07 $ 1.51
Non-GAAP
Reconciliation YTD’15 Adjustments
Non-GAAP General and administrative expenses $ 87,048 $
(2,676 )(2)(3)(4) $ 84,372 Income taxes $ 9,805
$ 1,017
(5)
$ 10,822 Net income $ 15,998 $ 1,659 $ 17,657 Diluted net income
per common share $ 1.22 $ 0.13 $ 1.35
(1) Exclude loan system conversion costs of $412 for 3Q’16(2)
Exclude loan system conversion costs of $1,440 and $613 for YTD’16
and YTD’15(3) Exclude executive retirement agreement costs of
$533(4) Exclude CEO equity award costs of $1,530(5) Tax effect of
the adjustments
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161027006585/en/
Investor RelationsGarrett Edson, 203-682-8331
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