Regional Management Corp. Provides Business Update as of August 31, 2020
September 10 2020 - 4:15PM
Business Wire
- Net finance receivables increased $19.3
million from June -
- 30+ day delinquencies remain stable at 4.6%
in August, compared to 4.8% in June -
Regional Management Corp. (NYSE: RM), a diversified consumer
finance company, today provided an update on its business
operations and financial position.
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the full release here:
https://www.businesswire.com/news/home/20200910005926/en/
(1) Percentage of accounts that utilized
borrower assistance programs during the month (Graphic: Business
Wire)
As of August 31, 2020, our credit profile remains stable, demand
for our loan products continues to rebound, our balance sheet
remains strong, and we maintain access to ample liquidity to fund
our business operations and growth. Our proven operating model and
financial strength enable us to continue to provide our customers
with responsible and affordable credit solutions as the COVID-19
pandemic persists.
Stable Credit Profile
- As of August 31, 2020, our 30+ day contractual delinquency rate
was 4.6%, compared to 4.5% as of July 31, 2020 and 4.8% as of June
30, 2020. Our 30+ day contractual delinquency totaled $47.8 million
as of August 31, 2020, compared to $46.3 million as of July 31,
2020 and $49.5 million as of June 30, 2020.
- Approximately 1.6% of the loans in our portfolio as of August
31, 2020, had been deferred or renewed under our borrower
assistance programs during the month.
Rebounding Loan Demand
- Demand for our loan products has continued to recover, with
total originations increasing to $105.8 million in August, up 34%
from $79.0 million in June. Our branch originations rose 21% to
$80.8 million in August from $67.0 million in June. Our direct mail
marketing campaigns and digital channels produced $24.9 million of
originations in August, an increase of $12.9 million, or 108%, from
June. Because September is typically a slower month for
originations, we anticipate fewer branch, direct mail, and digital
originations in September than in August.
- As of August 31, 2020, we had $1.04 billion in net finance
receivables outstanding, reflecting growth of $19.3 million since
June 30, 2020. We expect net finance receivables outstanding on
September 30, 2020, to be comparable to the amount outstanding as
of August 31, 2020.
Strong Balance Sheet and Liquidity
- We continue to operate with a conservative leverage ratio. As
of August 31, 2020, we had a funded debt-to-equity ratio of
2.5x.
- Our $142.0 million allowance for credit losses as of June 30,
2020, compares favorably to our 30+ day contractual delinquency of
$47.8 million as of August 31, 2020, and provides ample coverage to
absorb an increase in delinquencies and credit losses associated
with COVID-19.
- As of August 31, 2020, we had $173 million of cash on hand and
immediate availability to draw down cash from our revolving credit
facilities, and $472 million of unused capacity on our various
credit facilities (subject to the borrowing base). We continue to
believe that we have more than adequate liquidity to support the
fundamental operations of our business throughout the COVID-19
pandemic.
Other Third Quarter Updates
- We are currently marketing a new securitization transaction
(RMIT 2020-1), which we expect to close before the end of
September. We intend to use a portion of the proceeds from the
2020-1 securitization to repay and satisfy all outstanding
obligations associated with our first securitization transaction
closed in 2018 (RMIT 2018-1). As a result, in September 2020, we
will record $0.7million of interest expense due to the acceleration
of the amortization of debt issue costs related to the RMIT 2018-1
securitization. Inclusive of this charge and the interest expense
attributable to our recent loan portfolio growth, we expect third
quarter interest expense to be approximately $9.8 million.
About Regional Management Corp.
Regional Management Corp. (NYSE: RM) is a diversified consumer
finance company that provides attractive, easy-to-understand
installment loan products primarily to customers with limited
access to consumer credit from banks, thrifts, credit card
companies, and other lenders. Regional Management operates under
the name “Regional Finance” in 368 branch locations across 11
states in the Southeastern, Southwestern, Mid-Atlantic, and
Midwestern United States, as of June 30, 2020. Most of its loan
products are secured, and each is structured on a fixed-rate,
fixed-term basis with fully amortizing equal monthly installment
payments, repayable at any time without penalty. Regional
Management sources loans through its multiple channel platform,
which includes branches, centrally-managed direct mail campaigns,
digital partners, retailers, and its consumer website. For more
information, please visit www.RegionalManagement.com.
Forward-Looking Statements
This press release may contain various “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are not statements
of historical fact but instead represent Regional Management
Corp.’s expectations or beliefs concerning future events.
Forward-looking statements include, without limitation, statements
concerning future plans, objectives, goals, projections,
strategies, events, or performance, and underlying assumptions and
other statements related thereto. 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 speak only as of the
date on which they were made and are about matters that are
inherently subject to risks and uncertainties, many of which are
outside of the control of Regional Management. As a result, actual
performance and results may differ materially from those
contemplated by these forward-looking statements. Therefore,
investors should not place undue reliance on forward-looking
statements.
Factors that could cause actual results or performance to differ
from the expectations expressed or implied in forward-looking
statements include, but are not limited to, the following: changes
in general economic conditions, including levels of unemployment
and bankruptcies; the impact of the recent outbreak of a novel
coronavirus (COVID-19), including on Regional Management’s access
to liquidity and the credit risk of Regional Management’s finance
receivable portfolio; risks associated with Regional Management’s
ability to timely and effectively implement, transition to, and
maintain the necessary information technology systems,
infrastructure, processes, and controls to support its operations
and initiatives; risks associated with Regional Management’s loan
origination and servicing software system, including the risk of
prolonged system outages; risks related to opening new branches,
including the ability or inability to open new branches as planned;
risks inherent in making loans, including credit risk, repayment
risk, and value of collateral, which risks may increase in light of
adverse or recessionary economic conditions; risks associated with
the implementation of new underwriting models and processes,
including as to the effectiveness of new custom scorecards; risks
relating to Regional Management’s asset-backed securitization
transactions; changes in interest rates; the risk that Regional
Management’s existing sources of liquidity become insufficient to
satisfy its needs or that its access to these sources becomes
unexpectedly restricted; changes in federal, state, or local laws,
regulations, or regulatory policies and practices, and risks
associated with the manner in which laws and regulations are
interpreted, implemented, and enforced; changes in accounting
standards, rules, and interpretations, and the failure of related
assumptions and estimates, including those associated with the
implementation of current expected credit loss (CECL) accounting;
the impact of changes in tax laws, guidance, and interpretations;
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 credit losses);
changes in Regional Management’s markets and general changes in the
economy (particularly in the markets served by Regional
Management); changes in the competitive environment in which
Regional Management operates or a decrease in the demand for its
products; risks related to acquisitions; changes in operating and
administrative expenses; and the departure, transition, or
replacement of key personnel. The COVID-19 pandemic may also
magnify many of these risks and uncertainties.
The foregoing factors and others are discussed in greater detail
in Regional Management’s filings with the Securities and Exchange
Commission. Regional Management will not update or revise
forward-looking statements to reflect events or circumstances after
the date of this press release or to reflect the occurrence of
unanticipated events or the non-occurrence of anticipated events,
whether as a result of new information, future developments, or
otherwise, except as required by law. Regional Management is not
responsible for changes made to this document by wire services or
Internet services.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200910005926/en/
Investor Relations Garrett Edson, (203) 682-8331
investor.relations@regionalmanagement.com
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