- Net income of $11.2 million and
diluted earnings per share of $1.01 -
- Net finance receivables growth of
$36.9 million quarter-over-quarter -
- Stable 30+ day contractual
delinquencies of 4.7% as of September 30, 2020
-
- Initiates quarterly dividend of
$0.20 per share and authorizes $30 million share repurchase
program -
Regional Management Corp. (NYSE: RM), a diversified consumer
finance company, today announced results for the third quarter
ended September 30, 2020.
“I am delighted with our third quarter performance, which is a
validation of our sustainable operating model, our team’s ability
to execute in a challenging environment, and the fundamental
resilience of our customers,” said Robert W. Beck, President and
Chief Executive Officer of Regional Management Corp. “Our
omni-channel strategy, including our implementation of remote loan
closings, enabled us to grow our loan portfolio by $37 million in
the third quarter despite macroeconomic headwinds. We accomplished
this growth while continuing to maintain our underwriting standards
and our portfolio’s stable credit profile.”
“Thanks in part to solid execution on our most recent
securitization transaction in September, we also continue to
maintain ample liquidity, including $208 million of immediately
available liquidity as of October 23, 2020, which positions us well
to withstand any additional economic challenges,” added Mr. Beck.
“To that end, based on our consistently strong performance,
liquidity profile, excess capital, and confidence in our future
prospects, we are very pleased that our Board of Directors has
authorized a new $30 million share repurchase program and initiated
a quarterly dividend of $0.20 per common share beginning in the
fourth quarter of 2020. We are confident in our business model’s
ability to generate excess capital to return to our shareholders on
a regular basis. The recurring dividend and repurchase programs
allow us to return significant value to our shareholders, while
retaining ample capital to continue our investment in omni-channel
and digital initiatives that will expand our market share and
generate sustainable long-term profitable growth.”
Third Quarter 2020 Highlights
- Net income for the third quarter of 2020 was $11.2 million and
diluted earnings per share was $1.01, compared to net income of
$12.6 million and diluted earnings per share of $1.08 in the
prior-year period.
- Net finance receivables as of September 30, 2020 were $1.1
billion, an increase of 3.6%, or $36.9 million, from June 30, 2020,
and a decrease of 0.7%, or $7.5 million, from the prior-year
period.
- Total core small and large loan net finance receivables
increased $9.8 million, or 0.9%, compared to the prior-year
period.
- Large loan net finance receivables of $655.9 million increased
$80.9 million, or 14.1%, from the prior-year period and represented
61.9% of the total loan portfolio. Small loan net finance
receivables were $382.8 million, a decrease of 15.7% from the
prior-year period.
- Total revenue for the third quarter of 2020 was $90.5 million,
a decrease of $1.2 million, or 1.3%, from the prior-year period.
- Interest and fee income decreased $1.8 million, or 2.1%,
primarily attributable to the intended product mix shift toward
large loans and the portfolio composition shift toward higher
credit quality customers with slightly lower interest rates due to
enhanced credit standards during the pandemic.
- Insurance income, net increased $1.8 million, or 34.9%, driven
by an increase in premium revenue and a decrease in non-file
insurance claims expense.
- Provision for credit losses for the third quarter of 2020 was
$22.1 million, a decrease of $2.4 million, or 9.9%, from the
prior-year period. The provision for credit losses includes a
release in the allowance for credit losses of $1.5 million related
to the expected economic impact of the COVID-19 pandemic and a $3.5
million incremental build in reserves related to portfolio growth.
- Allowance for credit losses was $144.0 million as of September
30, 2020, including a $31.9 million allowance for credit losses
associated with COVID-19. The company’s macroeconomic model assumes
elevated unemployment in 2020 with a gradual decline to 9% by the
end of 2021.
- Annualized net credit losses as a percentage of average net
finance receivables for the third quarter of 2020 were 7.8%, a 30
basis point improvement compared to 8.1% in the prior-year
period.
- 30+ day contractual delinquencies as of September 30, 2020
totaled $49.9 million, or 4.7% of net finance receivables, compared
to 6.5% in the prior-year period. As of September 30, 2020,
approximately 40% of the company’s total portfolio had been
originated since April 2020, the vast majority of which was subject
to enhanced credit standards deployed following the outset of the
pandemic.
- In September 2020, 2.1% of customer accounts were renewed or
deferred under internal borrower assistance programs, which is
lower than the average of 2.2% over the 12 months preceding the
pandemic.
- General and administrative expenses for the third quarter of
2020 were $43.8 million, an increase of $3.6 million, or 8.9%, from
the prior-year period. The year-over-year increase in expenses was
primarily due to the following:
- $0.8 million of non-operating severance expense to adjust the
company’s workforce and reposition the business for future growth;
the savings will be used to fund the company’s omni-channel and
digital investments.
- $0.9 million less in deferred loan origination costs, which
increased personnel expense from the prior-year period.
- $0.9 million in additional marketing expense to support growth
initiatives.
- $0.8 million of incremental costs related to net new branches
that opened since the prior-year period.
- The operating expense ratio (annualized general and
administrative expenses as a percentage of average net finance
receivables) for the third quarter of 2020 was 17.0%, an increase
of 150 basis points compared to the prior-year period. The expenses
identified above impacted the operating expense ratio by 130 basis
points in the third quarter of 2020 compared to the prior-year
period.
- In September 2020, the company closed its fourth asset-backed
securitization, a $180 million note issuance with a
weighted-average coupon of 2.85%.
- As of September 30, 2020, the company had total unused capacity
on its revolving credit facilities of $507 million, subject to the
borrowing base, and available liquidity of $193 million, including
unrestricted cash on hand and immediate availability to draw down
cash from its revolving credit facilities.
Quarterly Dividend and Share Repurchase Program
Regional’s Board of Directors has approved the initiation of a
quarterly dividend of $0.20 per common share. The initial dividend
will be paid on December 4, 2020 to shareholders of record as of
the close of business on November 17, 2020. The declaration and
payment of any future dividend will be subject to the discretion of
Regional’s Board of Directors and will depend on a variety of
factors, including the company’s financial condition and results of
operations.
Regional’s Board of Directors has also authorized a new share
repurchase program allowing for the repurchase of up to $30 million
of its outstanding common stock. The authorization is effective
immediately and will continue through October 22, 2022.
Stock repurchases under the share repurchase program may be made
in the open market at prevailing market prices, through privately
negotiated transactions, or through other structures in accordance
with applicable federal securities laws, at times and in amounts as
management deems appropriate. The timing and the amount of any
common stock repurchases will be determined by the company’s
management based on its evaluation of market conditions, the
company’s liquidity needs, legal and contractual requirements and
restrictions (including covenants in the company’s credit
agreements), share price, and other factors. Repurchases of common
stock may be made under a Rule 10b5-1 plan, which would permit
common stock to be repurchased when the company might otherwise be
precluded from doing so under insider trading laws. The repurchase
program does not obligate the company to purchase any particular
number of shares and may be suspended, modified, or discontinued at
any time without prior notice.
Liquidity and Capital Resources
As of September 30, 2020, the company had net finance
receivables of $1.1 billion and outstanding long-term debt of
$700.1 million ($698.3 million of outstanding debt and $1.8 million
of interest payable), consisting of:
- $228.5 million on its $640.0 million senior revolving credit
facility,
- $31.0 million on its $125.0 million revolving warehouse credit
facility, and
- $440.6 million through its asset-backed securitizations.
The company’s unused capacity on its revolving credit facilities
(subject to the borrowing base) was $507 million, or 66.2%, as of
September 30, 2020.
The company had a funded debt-to-equity ratio of 2.6 to 1.0 and
a stockholders’ equity ratio of 26.3%, each as of September 30,
2020. On a non-GAAP basis, the company had a funded
debt-to-tangible equity ratio of 2.7 to 1.0, as of September 30,
2020. Please refer to the reconciliations of non-GAAP measures to
comparable GAAP measures included at the end of this press
release.
Branch Network
As of September 30, 2020, the company’s branch network consisted
of 368 locations. During the fourth quarter of 2020, subject to the
changing economic environment, the company plans to open one de
novo branch.
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) 327-6837
(toll-free) or (631) 891-4304 (direct). Please dial the number 10
minutes prior to the scheduled start time.
*** A supplemental slide presentation will be made available
on Regional’s website prior to the earnings call at
www.RegionalManagement.com. ***
In addition, a live webcast of the conference call will be
available on Regional’s website at www.RegionalManagement.com.
A webcast replay of the call will be available at
www.RegionalManagement.com for one year following the call.
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 September 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; the timing and amount of future cash dividend payments;
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.
Regional Management Corp. and
Subsidiaries
Consolidated Statements of
Income
(Unaudited)
(in thousands, except per
share amounts)
Better (Worse)
Better (Worse)
3Q 20
3Q 19
$
%
YTD 20
YTD 19
$
%
Revenue
Interest and fee income
$
81,306
$
83,089
$
(1,783
)
(2.1
)%
$
248,370
$
233,385
$
14,985
6.4
%
Insurance income, net
6,861
5,087
1,774
34.9
%
20,460
14,266
6,194
43.4
%
Other income
2,371
3,531
(1,160
)
(32.9
)%
7,632
10,078
(2,446
)
(24.3
)%
Total revenue
90,538
91,707
(1,169
)
(1.3
)%
276,462
257,729
18,733
7.3
%
Expenses
Provision for credit losses
22,089
24,515
2,426
9.9
%
99,110
73,572
(25,538
)
(34.7
)%
Personnel
26,207
23,791
(2,416
)
(10.2
)%
82,581
68,695
(13,886
)
(20.2
)%
Occupancy
6,851
6,367
(484
)
(7.6
)%
18,875
18,742
(133
)
(0.7
)%
Marketing
3,249
2,397
(852
)
(35.5
)%
6,373
6,309
(64
)
(1.0
)%
Other
7,447
7,612
165
2.2
%
23,693
22,347
(1,346
)
(6.0
)%
Total general and administrative
43,754
40,167
(3,587
)
(8.9
)%
131,522
116,093
(15,429
)
(13.3
)%
Interest expense
9,300
10,348
1,048
10.1
%
28,596
29,840
1,244
4.2
%
Income before income taxes
15,395
16,677
(1,282
)
(7.7
)%
17,234
38,224
(20,990
)
(54.9
)%
Income taxes
4,157
4,105
(52
)
(1.3
)%
4,851
9,175
4,324
47.1
%
Net income
$
11,238
$
12,572
$
(1,334
)
(10.6
)%
$
12,383
$
29,049
$
(16,666
)
(57.4
)%
Net income per common share:
Basic
$
1.02
$
1.11
$
(0.09
)
(8.1
)%
$
1.13
$
2.51
$
(1.38
)
(55.0
)%
Diluted
$
1.01
$
1.08
$
(0.07
)
(6.5
)%
$
1.11
$
2.44
$
(1.33
)
(54.5
)%
Weighted average common shares
outstanding:
Basic
10,977
11,302
325
2.9
%
10,945
11,572
627
5.4
%
Diluted
11,092
11,677
585
5.0
%
11,117
11,924
807
6.8
%
Return on average assets (annualized)
4.4
%
4.7
%
1.6
%
3.9
%
Return on average equity (annualized)
16.9
%
17.2
%
6.2
%
13.4
%
Regional Management Corp. and
Subsidiaries
Consolidated Balance
Sheets
(Unaudited)
(in thousands, except par
value amounts)
Increase (Decrease)
3Q 20
3Q 19
$
%
Assets
Cash
$
4,292
$
2,044
$
2,248
110.0
%
Net finance receivables
1,059,554
1,067,086
(7,532
)
(0.7
)%
Unearned insurance premiums
(30,024
)
(24,900
)
(5,124
)
(20.6
)%
Allowance for credit losses
(144,000
)
(60,900
)
(83,100
)
(136.5
)%
Net finance receivables, less unearned
insurance premiums and allowance for credit losses
885,530
981,286
(95,756
)
(9.8
)%
Restricted cash
58,219
43,659
14,560
33.3
%
Lease assets
27,855
25,688
2,167
8.4
%
Property and equipment
15,054
14,512
542
3.7
%
Intangible assets
8,677
9,574
(897
)
(9.4
)%
Deferred tax asset
22,960
1,445
21,515
1488.9
%
Other assets
14,972
7,964
7,008
88.0
%
Total assets
$
1,037,559
$
1,086,172
$
(48,613
)
(4.5
)%
Liabilities and Stockholders’
Equity
Liabilities:
Long-term debt
$
700,139
$
743,835
$
(43,696
)
(5.9
)%
Unamortized debt issuance costs
(8,603
)
(7,828
)
(775
)
(9.9
)%
Net long-term debt
691,536
736,007
(44,471
)
(6.0
)%
Accounts payable and accrued expenses
43,576
25,764
17,812
69.1
%
Lease liabilities
29,983
27,714
2,269
8.2
%
Total liabilities
765,095
789,485
(24,390
)
(3.1
)%
Stockholders’ equity:
Preferred stock ($0.10 par value, 100,000
shares authorized, none issued or outstanding)
—
—
—
—
Common stock ($0.10 par value, 1,000,000
shares authorized, 13,821 shares issued and 11,337 shares
outstanding at September 30, 2020 and 13,513 shares issued and
11,409 shares outstanding at September 30, 2019)
1,382
1,351
31
2.3
%
Additional paid-in-capital
105,866
101,682
4,184
4.1
%
Retained earnings
215,290
233,146
(17,856
)
(7.7
)%
Treasury stock (2,484 shares at September
30, 2020 and 2,104 shares at September 30, 2019)
(50,074
)
(39,492
)
(10,582
)
(26.8
)%
Total stockholders’ equity
272,464
296,687
(24,223
)
(8.2
)%
Total liabilities and stockholders’
equity
$
1,037,559
$
1,086,172
$
(48,613
)
(4.5
)%
Regional Management Corp. and
Subsidiaries
Selected Financial
Data
(Unaudited)
(in thousands, except per
share amounts)
Net Finance Receivables by
Product
3Q 20
2Q 20
QoQ $
Inc (Dec)
QoQ %
Inc (Dec)
3Q 19
YoY $
Inc (Dec)
YoY %
Inc (Dec)
Small loans
$
382,785
$
380,083
$
2,702
0.7
%
$
453,969
$
(71,184
)
(15.7
)%
Large loans
655,932
618,134
37,798
6.1
%
574,988
80,944
14.1
%
Total core loans
1,038,717
998,217
40,500
4.1
%
1,028,957
9,760
0.9
%
Automobile loans
4,892
6,059
(1,167
)
(19.3
)%
12,144
(7,252
)
(59.7
)%
Retail loans
15,945
18,359
(2,414
)
(13.1
)%
25,985
(10,040
)
(38.6
)%
Total net finance receivables
$
1,059,554
$
1,022,635
$
36,919
3.6
%
$
1,067,086
$
(7,532
)
(0.7
)%
Number of branches at period end
368
368
—
0.0
%
358
10
2.8
%
Average net finance receivables per
branch
$
2,879
$
2,779
$
100
3.6
%
$
2,981
$
(102
)
(3.4
)%
Averages and Yields
3Q 20
2Q 20
3Q 19
Average Net Finance
Receivables
Average Yield
(Annualized)
Average Net Finance
Receivables
Average Yield
(Annualized)
Average Net Finance
Receivables
Average Yield
(Annualized)
Small loans
$
377,390
37.7
%
$
404,019
36.2
%
$
446,621
38.4
%
Large loans
632,106
28.3
%
618,860
27.3
%
546,582
28.1
%
Automobile loans
5,492
13.5
%
6,820
14.8
%
13,834
14.9
%
Retail loans
17,145
18.9
%
20,114
18.0
%
26,902
19.1
%
Total interest and fee yield
$
1,032,133
31.5
%
$
1,049,813
30.5
%
$
1,033,939
32.1
%
Total revenue yield
$
1,032,133
35.1
%
$
1,049,813
34.2
%
$
1,033,939
35.5
%
Components of Decrease in
Interest and Fee Income
3Q 20 Compared to 3Q
19
Increase (Decrease)
Volume
Rate
Volume & Rate
Total
Small loans
$
(6,646
)
$
(724
)
$
113
$
(7,257
)
Large loans
6,011
233
37
6,281
Automobile loans
(312
)
(48
)
29
(331
)
Retail loans
(466
)
(16
)
6
(476
)
Product mix
1,268
(1,086
)
(182
)
—
Total decrease in interest and fee
income
$
(145
)
$
(1,641
)
$
3
$
(1,783
)
Net Loans Originated (1)
(2)
3Q 20
2Q 20
QoQ $
Inc (Dec)
QoQ %
Inc (Dec)
3Q 19
YoY $
Inc (Dec)
YoY %
Inc (Dec)
Small loans
$
144,132
$
79,265
$
64,867
81.8
%
$
177,629
$
(33,497
)
(18.9
)%
Large loans
162,120
90,980
71,140
78.2
%
166,835
(4,715
)
(2.8
)%
Retail loans
1,835
1,907
(72
)
(3.8
)%
4,421
(2,586
)
(58.5
)%
Total net loans originated
$
308,087
$
172,152
$
135,935
79.0
%
$
348,885
$
(40,798
)
(11.7
)%
(1) Represents the balance of loan origination and refinancing
net of unearned finance charges. (2) The company ceased originating
automobile loans in November 2017.
Other Key Metrics
3Q 20
2Q 20
3Q 19
Net credit losses
$
20,089
$
27,899
$
20,815
Percentage of average net finance
receivables (annualized)
7.8
%
10.6
%
8.1
%
Provision for loan losses (1)
$
22,089
$
27,499
$
24,515
Percentage of average net finance
receivables (annualized)
8.6
%
10.5
%
9.5
%
Percentage of total revenue
24.4
%
30.6
%
26.7
%
General and administrative expenses
(2)
$
43,754
$
41,525
$
40,167
Percentage of average net finance
receivables (annualized)
17.0
%
15.8
%
15.5
%
Percentage of total revenue
48.3
%
46.2
%
43.8
%
Same store results (3):
Net finance receivables at period-end
$
1,049,327
$
1,016,776
$
1,053,166
Net finance receivable growth rate
(1.5
)%
2.2
%
17.1
%
Number of branches in calculation
347
349
332
(1) Includes COVID-19 pandemic impacts to provision for credit
losses of $(1,500) and $9,500 for 3Q 20 and 2Q 20, respectively.
(2) Includes non-operating severance costs of $778 for 3Q 20. (3)
Same store sales reflect the change in year-over-year sales for the
comparable branch base. The comparable branch base includes those
branches open for at least one year.
Contractual Delinquency by
Aging
3Q 20
2Q 20
3Q 19
Allowance for credit losses (1)
$
144,000
13.6
%
$
142,000
13.9
%
$
60,900
5.7
%
Current
929,778
87.8
%
896,928
87.8
%
896,051
83.9
%
1 to 29 days past due
79,838
7.5
%
76,172
7.4
%
102,120
9.6
%
Delinquent accounts:
30 to 59 days
16,105
1.5
%
15,277
1.4
%
23,058
2.2
%
60 to 89 days
11,014
1.0
%
9,764
1.0
%
16,240
1.5
%
90 to 119 days
8,375
0.8
%
7,014
0.7
%
11,797
1.1
%
120 to 149 days
7,967
0.8
%
8,081
0.8
%
9,728
0.9
%
150 to 179 days
6,477
0.6
%
9,399
0.9
%
8,092
0.8
%
Total contractual delinquency
$
49,938
4.7
%
$
49,535
4.8
%
$
68,915
6.5
%
Total net finance receivables
$
1,059,554
100.0
%
$
1,022,635
100.0
%
$
1,067,086
100.0
%
1 day and over past due
$
129,776
12.2
%
$
125,707
12.2
%
$
171,035
16.1
%
Contractual Delinquency by
Product
3Q 20
2Q 20
3Q 19
Small loans
$
22,904
6.0
%
$
24,465
6.4
%
$
36,719
8.1
%
Large loans
25,489
3.9
%
23,660
3.8
%
28,852
5.0
%
Automobile loans
337
6.9
%
291
4.8
%
1,153
9.5
%
Retail loans
1,208
7.6
%
1,119
6.1
%
2,191
8.4
%
Total contractual delinquency
$
49,938
4.7
%
$
49,535
4.8
%
$
68,915
6.5
%
(1) Includes incremental COVID-19 allowance for credit losses of
$31,900 and $33,400 in 3Q 20 and 2Q 20, respectively.
Income Statement Quarterly
Trend
3Q 19
4Q 19
1Q 20
2Q 20
3Q 20
QoQ $
B(W)
YoY $
B(W)
Revenue
Interest and fee income
$
83,089
$
87,784
$
86,997
$
80,067
$
81,306
$
1,239
$
(1,783
)
Insurance income, net
5,087
6,551
5,949
7,650
6,861
(789
)
1,774
Other income
3,531
3,649
3,128
2,133
2,371
238
(1,160
)
Total revenue
91,707
97,984
96,074
89,850
90,538
688
(1,169
)
Expenses
Provision for credit losses
24,515
26,039
49,522
27,499
22,089
5,410
2,426
Personnel
23,791
25,305
29,511
26,863
26,207
656
(2,416
)
Occupancy
6,367
5,876
5,771
6,253
6,851
(598
)
(484
)
Marketing
2,397
1,897
1,686
1,438
3,249
(1,811
)
(852
)
Other
7,612
7,813
9,275
6,971
7,447
(476
)
165
Total general and administrative
40,167
40,891
46,243
41,525
43,754
(2,229
)
(3,587
)
Interest expense
10,348
10,285
10,159
9,137
9,300
(163
)
1,048
Income (loss) before income taxes
16,677
20,769
(9,850
)
11,689
15,395
3,706
(1,282
)
Income taxes
4,105
5,086
(3,525
)
4,219
4,157
62
(52
)
Net income (loss)
$
12,572
$
15,683
$
(6,325
)
$
7,470
$
11,238
$
3,768
$
(1,334
)
Net income (loss) per common share:
Basic
$
1.11
$
1.44
$
(0.58
)
$
0.68
$
1.02
$
0.34
$
(0.09
)
Diluted
$
1.08
$
1.38
$
(0.56
)
$
0.68
$
1.01
$
0.33
$
(0.07
)
Weighted-average shares outstanding:
Basic
11,302
10,893
10,897
10,962
10,977
(15
)
325
Diluted
11,677
11,327
11,253
11,013
11,092
(79
)
585
Net interest margin
$
81,359
$
87,699
$
85,915
$
80,713
$
81,238
$
525
$
(121
)
Net credit margin
$
56,844
$
61,660
$
36,393
$
53,214
$
59,149
$
5,935
$
2,305
Balance Sheet Quarterly
Trend
3Q 19
4Q 19
1Q 20
2Q 20
3Q 20
QoQ $
Inc (Dec)
YoY $
Inc (Dec)
Total assets
$
1,086,172
$
1,158,540
$
1,078,890
$
1,000,225
$
1,037,559
$
37,334
$
(48,613
)
Net finance receivables
$
1,067,086
$
1,133,404
$
1,102,285
$
1,022,635
$
1,059,554
$
36,919
$
(7,532
)
Allowance for credit losses
$
60,900
$
62,200
$
142,400
$
142,000
$
144,000
$
2,000
$
83,100
Long-term debt
$
743,835
$
808,218
$
777,847
$
683,865
$
700,139
$
16,274
$
(43,696
)
Other Key Metrics Quarterly
Trend
3Q 19
4Q 19
1Q 20
2Q 20
3Q 20
QoQ
Inc (Dec)
YoY
Inc (Dec)
Interest and fee yield (annualized)
32.1
%
32.0
%
31.0
%
30.5
%
31.5
%
1.0
%
(0.6
)%
Efficiency ratio (1)
43.8
%
41.7
%
48.1
%
46.2
%
48.3
%
2.1
%
4.5
%
Operating expense ratio (2)
15.5
%
14.9
%
16.5
%
15.8
%
17.0
%
1.2
%
1.5
%
30+ contractual delinquency
6.5
%
7.0
%
6.6
%
4.8
%
4.7
%
(0.1
)%
(1.8
)%
Net credit loss ratio (3)
8.1
%
9.0
%
10.5
%
10.6
%
7.8
%
(2.8
)%
(0.3
)%
Book value per share
$
26.00
$
27.49
$
22.49
$
23.11
$
24.03
$
0.92
$
(1.97
)
(1) General and administrative expenses as a percentage of total
revenue. (2) Annualized general and administrative expenses as a
percentage of average net finance receivables. (3) Annualized net
credit losses as a percentage of average net finance
receivables.
Averages and Yields
YTD 20
YTD 19
Average Net Finance
Receivables
Average Yield
(Annualized)
Average Net Finance
Receivables
Average Yield
(Annualized)
Small loans
$
413,051
36.9
%
$
436,432
38.1
%
Large loans
628,173
27.7
%
494,880
27.6
%
Automobile loans
6,971
13.9
%
18,327
14.8
%
Retail loans
20,094
18.2
%
28,568
18.8
%
Total interest and fee yield
$
1,068,289
31.0
%
$
978,207
31.8
%
Total revenue yield
$
1,068,289
34.5
%
$
978,207
35.1
%
Components of Increase in
Interest and Fee Income
YTD 20 Compared to YTD
19
Increase (Decrease)
Volume
Rate
Volume & Rate
Total
Small loans
$
(6,682
)
$
(3,982
)
$
213
$
(10,451
)
Large loans
27,631
317
85
28,033
Automobile loans
(1,260
)
(117
)
72
(1,305
)
Retail loans
(1,197
)
(135
)
40
(1,292
)
Product mix
3,000
(2,041
)
(959
)
—
Total increase in interest and fee
income
$
21,492
$
(5,958
)
$
(549
)
$
14,985
Net Loans Originated (1)
(2)
YTD 20
YTD 19
YTD $
Inc (Dec)
YTD %
Inc (Dec)
Small loans
$
343,421
$
481,314
$
(137,893
)
(28.6
)%
Large loans
358,748
420,276
(61,528
)
(14.6
)%
Retail loans
7,315
15,797
(8,482
)
(53.7
)%
Total net loans originated
$
709,484
$
917,387
$
(207,903
)
(22.7
)%
(1) Represents the balance of loan origination and refinancing
net of unearned finance charges. (2) The company ceased originating
automobile loans in November 2017.
Other Key Metrics
YTD 20
YTD 19
Net credit losses
$
77,410
$
70,972
Percentage of average net finance
receivables (annualized)
9.7
%
9.7
%
Provision for loan losses (1)
$
99,110
$
73,572
Percentage of average net finance
receivables (annualized)
12.4
%
10.0
%
Percentage of total revenue
35.8
%
28.5
%
General and administrative expenses (2)
(3) (4)
$
131,522
$
116,093
Percentage of average net finance
receivables (annualized)
16.4
%
15.8
%
Percentage of total revenue
47.6
%
45.0
%
(1) Includes COVID-19 pandemic impacts to provision for credit
losses of $31,900 for YTD 20. (2) Includes non-operating executive
transition costs of $3,066 for YTD 20. (3) Includes non-operating
loan management system outage costs of $720 for YTD 20. (4)
Includes non-operating severance costs of $778 for YTD 20.
Non-GAAP Financial Measures
In addition to financial measures presented in accordance with
generally accepted accounting principles (“GAAP”), this press
release contains certain non-GAAP financial measures. The company’s
management utilizes non-GAAP measures as additional metrics to aid
in, and enhance, its understanding of the company’s financial
results. Tangible equity and funded debt-to-tangible equity ratio
are non-GAAP measures that adjust GAAP measures to exclude
intangible assets. Management uses these equity measures to
evaluate and manage the company’s capital and leverage position.
The company also believes that these equity measures are commonly
used in the financial services industry and provide useful
information to users of the company’s financial statements in the
evaluation of its capital and leverage position.
This non-GAAP financial information should be considered in
addition to, not as a substitute for or superior to, measures of
financial performance prepared in accordance with GAAP. In
addition, the company’s non-GAAP measures may not be comparable to
similarly titled non-GAAP measures of other companies. The
following tables provide a reconciliation of GAAP measures to
non-GAAP measures.
3Q 20
Long-term debt
$
700,139
Total stockholders' equity
272,464
Less: Intangible assets
8,677
Tangible equity (non-GAAP)
$
263,787
Funded debt-to-equity ratio
2.6
x
Funded debt-to-tangible equity ratio
(non-GAAP)
2.7
x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201029006159/en/
Investor Relations Garrett Edson, (203) 682-8331
investor.relations@regionalmanagement.com
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