- Net income of $7.5 million and diluted earnings per share of $0.68 -

- 6.6% year-over-year revenue growth and 9.9% average net finance receivables growth -

- Historical low 30+ day contractual delinquencies of 4.5% as of July 31, 2020 -

- Available liquidity of $162 million as of July 31, 2020 -

Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the second quarter ended June 30, 2020.

“Our omni-channel capabilities and proactive credit initiatives have successfully supported our customers and enabled us to navigate through this challenging period,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “Our customers have accessed our borrower assistance programs as needed, and along with the government stimulus, these programs have enabled us to maintain a low 30+ day delinquency rate during the crisis. In addition, demand for loan originations continues to rebound steadily from the low point in April, and our new remote loan closing capabilities have provided our customers with a safe and effective way to access our responsible and affordable credit solutions.”

“Additionally, we continue to maintain a strong liquidity profile, buoyed by the work we accomplished over the past several years to strengthen our balance sheet,” added Mr. Beck. “As of July 31, 2020, we had $162 million of available liquidity and $486 million of unused capacity on our revolving credit facilities. Looking ahead, we expect to remain focused in the coming months on further enhancing our digital capabilities, gradually relaunching additional marketing initiatives as demand returns, and continuing to originate loans that meet our advanced and measured underwriting criteria. With a proven operating model, a strong balance sheet, and ample liquidity, we remain well positioned to manage through the current environment and are prepared to return to strong growth as the economy rebounds.”

Second Quarter 2020 Highlights

  • Net income for the second quarter of 2020 was $7.5 million and diluted earnings per share was $0.68, compared to net income of $8.4 million and diluted earnings per share of $0.70 in the prior-year period.
  • Net finance receivables as of June 30, 2020 were $1.0 billion, an increase of 2.8%, or $27.7 million, from the prior-year period.

- Total core small and large loan net finance receivables increased $46.7 million, or 4.9%, compared to the prior-year period.

- Large loan net finance receivables of $618.1 million increased $102.1 million, or 19.8%, from the prior-year period and represented 60.4% of the total loan portfolio. Small loan net finance receivables as of June 30, 2020 were $380.1 million, a decrease of 12.7% from the prior-year period.

  • Total revenue for the second quarter of 2020 was $89.9 million, a $5.6 million, or 6.6%, increase from the prior-year period.

- Interest and fee income increased 5.4%, primarily attributable to a 9.9% increase in average net finance receivables compared to the prior-year period.

- Insurance income, net increased $2.6 million, driven by an increase in premium revenue and a decrease in non-file insurance claims expense.

  • Provision for credit losses for the second quarter of 2020 was $27.5 million, an increase of $1.8 million, or 6.9%, from the prior-year period. The provision for credit losses includes an incremental build in the allowance for credit losses of $9.5 million related to the expected economic impact of the COVID-19 pandemic, offset by a $9.9 million base reserve release related to portfolio liquidation.
  • Annualized net credit losses as a percentage of average net finance receivables were 10.6%, a 20 basis point increase from 10.4% in the prior-year period.
  • 30+ day contractual delinquencies as of June 30, 2020 were 4.8%, compared to 6.3% in the prior-year period. 30+ day contractual delinquencies stood at 4.5% as of July 31, 2020, an additional improvement of 30 basis points from June 30, 2020. In June, 2.3% of customer accounts were renewed or deferred under internal borrower assistance programs, which is consistent with the average of 2.2% over the twelve months preceding the pandemic.
  • General and administrative expenses for the second quarter of 2020 were $41.5 million, an increase of $3.8 million, or 10.0%, from the prior-year period. The company deferred $2.0 million less in loan origination costs on reduced loan volume in the second quarter of 2020, which increased personnel expense from the prior-year period. The second quarter of 2020 included $0.9 million of incremental costs related to new branches that opened since the prior-year period and $0.6 million of COVID-19 expenses for customer communications and protective measures in our branches.
  • The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) was 15.8%, comparable with the prior-year period. Reduced deferred loan origination costs and direct COVID-19 expenses impacted the operating expense ratio by 100 basis points in the second quarter of 2020 compared to the prior-year period.
  • As of June 30, 2020, the company had total unused capacity on its revolving credit facilities of $493 million, subject to the borrowing base.
  • As of July 31, 2020, the company had available liquidity of $162 million, including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities.

2020 De Novo Outlook

As of June 30, 2020, the company’s branch network consisted of 368 locations. During the second half of 2020, subject to the changing economic environment, the company plans to open approximately three de novo branches where it sees clear expansion opportunities in its current footprint.

Liquidity and Capital Resources

As of June 30, 2020, the company had net finance receivables of $1.0 billion and outstanding long-term debt of $683.9 million ($682.0 million of outstanding debt and $1.8 million of interest payable), consisting of:

  • $246.3 million on its $640.0 million senior revolving credit facility,
  • $26.8 million on its $125.0 million revolving warehouse credit facility, and
  • $410.8 million through its asset-backed securitizations.

The company’s unused capacity on its revolving credit facilities (subject to the borrowing base) was $493 million, or 64.5%, as of June 30, 2020.

The company had a funded debt-to-equity ratio of 2.6 to 1.0 and a stockholders’ equity ratio of 26.0% as of June 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 June 30, 2020. Please refer to the reconciliations of non-GAAP measures to comparable GAAP measures included at the end of this press release.

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 replay will be available following the end of the call through Wednesday, August 12, 2020, by telephone at (844) 512-2921 (toll-free) or (412) 317-6671 (international), passcode 10010118. 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 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.

Regional Management Corp. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Better (Worse)

 

 

 

 

 

Better (Worse)

 

 

2Q 20

 

2Q 19

 

$

 

%

 

YTD 20

 

YTD 19

 

$

 

%

Revenue

 

 

 

 

 

 

 

 

Interest and fee income

$

80,067

 

$

75,974

 

$

4,093

 

5.4

%

$

167,064

 

$

150,296

 

$

16,768

 

11.2

%

Insurance income, net

 

7,650

 

 

5,066

 

 

2,584

 

51.0

%

 

13,599

 

 

9,179

 

 

4,420

 

48.2

%

Other income

 

2,133

 

 

3,234

 

 

(1,101

)

(34.0

) %

 

5,261

 

 

6,547

 

 

(1,286

)

(19.6

) %

Total revenue

 

89,850

 

 

84,274

 

 

5,576

 

6.6

%

 

185,924

 

 

166,022

 

 

19,902

 

12.0

%

Expenses

 

 

 

 

 

 

 

 

Provision for credit losses

 

27,499

 

 

25,714

 

 

(1,785

)

(6.9

) %

 

77,021

 

 

49,057

 

 

(27,964

)

(57.0

) %

 

Personnel

 

26,863

 

 

22,511

 

 

(4,352

)

(19.3

) %

 

56,374

 

 

44,904

 

 

(11,470

)

(25.5

) %

Occupancy

 

6,253

 

 

6,210

 

 

(43

)

(0.7

) %

 

12,024

 

 

12,375

 

 

351

 

2.8

%

Marketing

 

1,438

 

 

2,261

 

 

823

 

36.4

%

 

3,124

 

 

3,912

 

 

788

 

20.1

%

Other

 

6,971

 

 

6,761

 

 

(210

)

(3.1

) %

 

16,246

 

 

14,735

 

 

(1,511

)

(10.3

) %

Total general and administrative

 

41,525

 

 

37,743

 

 

(3,782

)

(10.0

) %

 

87,768

 

 

75,926

 

 

(11,842

)

(15.6

) %

 

Interest expense

 

9,137

 

 

9,771

 

 

634

 

6.5

%

 

19,296

 

 

19,492

 

 

196

 

1.0

%

Income before income taxes

 

11,689

 

 

11,046

 

 

643

 

5.8

%

 

1,839

 

 

21,547

 

 

(19,708

)

(91.5

) %

Income taxes

 

4,219

 

 

2,677

 

 

(1,542

)

(57.6

) %

 

694

 

 

5,070

 

 

4,376

 

86.3

%

Net income

$

7,470

 

$

8,369

 

$

(899

)

(10.7

)%

$

1,145

 

$

16,477

 

$

(15,332

)

(93.1

) %

Net income per common share:

 

 

 

 

 

 

 

 

Basic

$

0.68

 

$

0.71

 

$

(0.03

)

(4.2

) %

$

0.10

 

$

1.41

 

$

(1.31

)

(92.9

) %

Diluted

$

0.68

 

$

0.70

 

$

(0.02

)

(2.9

) %

$

0.10

 

$

1.37

 

$

(1.27

)

(92.7

) %

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

10,962

 

 

11,706

 

 

744

 

6.4

%

 

10,929

 

 

11,709

 

 

780

 

6.7

%

Diluted

 

11,013

 

 

12,022

 

 

1,009

 

8.4

%

 

11,130

 

 

12,049

 

 

919

 

7.6

%

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

2.9

%

 

3.4

%

 

 

 

0.2

%

 

3.4

%

 

 

Return on average equity (annualized)

 

11.7

%

 

11.5

%

 

 

 

0.9

%

 

11.5

%

 

 

 

 

 

 

 

 

 

 

 

Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease)

 

 

2Q 20

 

2Q 19

 

$

 

%

Assets

 

 

 

 

Cash

$

8,973

 

$

694

 

$

8,279

 

1,192.9

%

Net finance receivables

 

1,022,635

 

 

994,980

 

 

27,655

 

2.8

%

Unearned insurance premiums

 

(27,016

)

 

(21,546

)

 

(5,470

)

(25.4

) %

Allowance for credit losses

 

(142,000

)

 

(57,200

)

 

(84,800

)

(148.3

) %

Net finance receivables, less unearned insurance premiums and allowance for credit losses

 

853,619

 

 

916,234

 

 

(62,615

)

(6.8

) %

Restricted cash

 

54,423

 

 

41,803

 

 

12,620

 

30.2

%

Lease assets

 

27,177

 

 

25,575

 

 

1,602

 

6.3

%

Property and equipment

 

15,504

 

 

14,132

 

 

1,372

 

9.7

%

Intangible assets

 

8,824

 

 

9,953

 

 

(1,129

)

(11.3

) %

Deferred tax asset

 

20,682

 

 

437

 

 

20,245

 

4,632.7

%

Other assets

 

11,023

 

 

10,488

 

 

535

 

5.1

%

Total assets

$

1,000,225

 

$

1,019,316

$

(19,091

)

(1.9

) %

Liabilities and Stockholders’ Equity

 

 

 

 

Liabilities:

 

 

 

 

Long-term debt

$

683,865

 

$

689,310

 

$

(5,445

)

(0.8

) %

Unamortized debt issuance costs

 

(7,584

)

 

(7,357

)

 

(227

)

(3.1

) %

Net long-term debt

 

676,281

 

 

681,953

 

 

(5,672

)

(0.8

) %

Accounts payable and accrued expenses

 

34,843

 

 

19,690

 

 

15,153

 

77.0

%

Lease liabilities

 

29,220

 

 

27,454

 

 

1,766

 

6.4

%

Total liabilities

 

740,344

 

 

729,097

 

 

11,247

 

1.5

%

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, 13,727 shares issued and 11,243 shares outstanding at June 30, 2020 and 13,494 shares issued and 11,663 shares outstanding at June 30, 2019)

 

1,373

 

 

1,349

 

 

24

 

1.8

%

Additional paid-in capital

 

104,530

 

 

100,486

 

 

4,044

 

4.0

%

Retained earnings

 

204,052

 

 

220,574

 

 

(16,522

)

(7.5

) %

Treasury stock (2,484 shares at June 30, 2020 and 1,831 shares at June 30, 2019)

 

(50,074

)

 

(32,190

)

 

(17,884

)

(55.6

) %

Total stockholders’ equity

 

259,881

 

 

290,219

 

 

(30,338

)

(10.5

) %

Total liabilities and stockholders’ equity

$

1,000,225

1,019,316

 

$

(19,091

)

(1.9

) %

 

 

 

 

 

Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(in thousands, except per share amounts)

 

 

 

Net Finance Receivables by Product

 

2Q 20

 

1Q 20

 

QoQ $

Inc (Dec)

 

QoQ %

Inc (Dec)

 

2Q 19

 

YoY $

Inc (Dec)

 

YoY %

Inc (Dec)

Small loans

$

380,083

$

440,282

$

(60,199

)

(13.7

) %

$

435,467

$

(55,384

)

(12.7

) %

Large loans

 

618,134

 

632,593

 

(14,459

)

(2.3

) %

 

516,019

 

102,115

 

19.8

%

Total core loans

 

998,217

 

1,072,875

 

(74,658

)

(7.0

) %

 

951,486

 

46,731

 

4.9

%

Automobile loans

 

6,059

 

7,532

 

(1,473

)

(19.6

) %

 

15,717

 

(9,658

)

(61.4

) %

Retail loans

 

18,359

 

21,878

 

(3,519

)

(16.1

) %

 

27,777

 

(9,418

)

(33.9

) %

Total net finance receivables

$

1,022,635

$

1,102,285

$

(79,650

)

(7.2

) %

$

994,980

$

27,655

 

2.8

%

 

 

 

 

 

 

 

 

Number of branches at period end

 

368

 

368

 

 

0.0

%

 

356

 

12

 

3.4

%

Average net finance receivables per branch

$

2,779

$

2,995

$

(216

)

(7.2

) %

$

2,795

$

(16

)

(0.6

) %

 

 

 

 

 

 

 

 

 

Averages and Yields

 

2Q 20

 

1Q 20

 

2Q 19

Average Net Finance Receivables

 

Average Yield

(Annualized)

 

Average Net Finance Receivables

 

Average Yield

(Annualized)

 

Average Net Finance Receivables

 

Average Yield

(Annualized)

Small loans

$

404,019

36.2

%

$

458,132

36.7

%

$

423,699

38.2

%

Large loans

 

618,860

27.3

%

 

633,510

27.5

%

 

484,483

27.7

%

Automobile loans

 

6,820

14.8

%

 

8,618

13.5

%

 

17,972

14.6

%

Retail loans

 

20,114

18.0

%

 

23,056

17.8

%

 

28,786

18.8

%

Total interest and fee yield

$

1,049,813

30.5

%

$

1,123,316

31.0

%

$

954,940

31.8

%

Total revenue yield

$

1,049,813

34.2

%

$

1,123,316

34.2

%

$

954,940

35.3

%

 

Components of Increase in Interest and Fee Income 2Q 20 Compared to 2Q 19 Increase (Decrease)

Volume

Rate

Volume & Rate

Net

Small loans

$

(1,879

)

$

(2,055

)

$

96

 

$

(3,838

)

Large loans

 

9,297

 

 

(403

)

 

(112

)

 

8,782

 

Automobile loans

 

(406

)

 

12

 

 

(8

)

 

(402

)

Retail loans

 

(409

)

 

(58

)

 

18

 

 

(449

)

Product mix

 

945

 

 

(639

)

 

(306

)

 

 

Total increase in interest and fee income

$

7,548

 

$

(3,143

)

$

(312

)

$

4,093

 

 

 

Net Loans Originated (1) (2)

 

2Q 20

1Q 20

QoQ $

Inc (Dec)

QoQ %

Inc (Dec)

2Q 19

YoY $

Inc (Dec)

YoY %

Inc (Dec

Small loans

$

79,265

$

120,024

$

(40,759

)

(34.0

) %

$

174,440

$

(95,175

)

(54.6

) %

Large loans

 

90,980

 

105,648

 

(14,668

)

(13.9

) %

 

169,373

 

(78,393

)

(46.3

) %

Retail loans

 

1,907

 

3,573

 

(1,666

)

(46.6

) %

 

5,179

 

(3,272

)

(63.2

) %

Total net loans originated

$

172,152

$

229,245

$

(57,093

)

(24.9

) %

$

348,992

$

(176,840

)

(50.7

) %

(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

2Q 20

1Q 20

2Q 19

Net credit losses

$

27,899

 

$

29,422

 

$

24,914

 

Percentage of average net finance receivables (annualized)

 

10.6

%

 

10.5

%

 

10.4

%

 

 

 

 

Provision for credit losses (1)

$

27,499

 

$

49,522

 

$

25,714

 

Percentage of average net finance receivables (annualized)

 

10.5

%

 

17.6

%

 

10.8

%

Percentage of total revenue

 

30.6

%

 

51.5

%

 

30.5

%

 

 

 

 

General and administrative expenses (2) (3)

$

41,525

 

$

46,243

 

$

37,743

 

Percentage of average net finance receivables (annualized)

 

15.8

%

 

16.5

%

 

15.8

%

Percentage of total revenue

 

46.2

%

 

48.1

%

 

44.8

%

 

 

 

 

Same store results (4):

 

 

 

Net finance receivables at period-end

$

1,016,776

 

$

1,093,701

 

$

977,175

 

Net finance receivable growth rate

 

2.2

%

 

17.6

%

 

13.0

%

Number of branches in calculation

 

349

 

 

351

 

 

333

 

(1)

Includes COVID-19 pandemic impacts to provision for credit losses of $9,500 and $23,900 for 2Q 20 and

1Q 20, respectively.

(2)

Includes non-operating executive transition costs of $3,066 for 1Q 20.

(3)

Includes non-operating loan management system outage costs of $720 for 1Q 20.

(4)

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

 

2Q 20

1Q 20

2Q 19

Allowance for credit losses (1)

$

142,000

13.9

%

$

142,400

12.9

%

$

57,200

5.7

%

 

 

 

 

 

 

 

Current

 

896,928

87.8

%

 

931,032

84.4

%

 

825,726

83.0

%

1 to 29 days past due

 

76,172

7.4

%

 

98,896

9.0

%

 

106,708

10.7

%

Delinquent accounts:

 

 

 

 

 

 

30 to 59 days

 

15,277

1.4

%

 

20,907

1.9

%

 

22,207

2.3

%

60 to 89 days

 

9,764

1.0

%

 

16,456

1.5

%

 

14,039

1.4

%

90 to 119 days

 

7,014

0.7

%

 

11,889

1.1

%

 

10,018

1.0

%

120 to 149 days

 

8,081

0.8

%

 

12,059

1.1

%

 

8,128

0.8

%

150 to 179 days

 

9,399

0.9

%

 

11,046

1.0

%

 

8,154

0.8

%

Total contractual delinquency (2)

$

49,535

4.8

%

$

72,357

6.6

%

$

62,546

6.3

%

Total net finance receivables

$

1,022,635

100.0

%

$

1,102,285

100.0

%

$

994,980

100.0

%

 

 

 

 

 

 

 

1 day and over past due

$

125,707

12.2

%

$

171,253

15.6

%

$

169,254

17.0

%

 

Contractual Delinquency by Product

2Q 20

1Q 20

2Q 19

Small loans

$

24,465

6.4

%

$

37,662

8.6

%

$

33,368

7.7

%

Large loans

 

23,660

3.8

%

 

32,201

5.1

%

 

25,699

5.0

%

Automobile loans

 

291

4.8

%

 

508

6.7

%

 

1,294

8.2

%

Retail loans

 

1,119

6.1

%

 

1,986

9.1

%

 

2,185

7.9

%

Total contractual delinquency (2)

$

49,535

4.8

%

$

72,357

6.6

%

$

62,546

6.3

%

(1)

Includes incremental COVID-19 allowance for credit losses of $33,400 and $23,900 in 2Q 20 and 1Q 20, respectively.

(2)

Includes 0.1% delinquency related to the loan management system outage in 1Q 20.

 

Income Statement Quarterly Trend

 

2Q 19

 

3Q 19

 

4Q 19

 

1Q 20

 

2Q 20

 

QoQ $ B(W)

 

YoY $ B(W)

Revenue

 

 

 

 

 

 

 

Interest and fee income

$

75,974

$

83,089

$

87,784

$

86,997

 

$

80,067

$

(6,930

)

$

4,093

 

Insurance income, net

 

5,066

 

5,087

 

6,551

 

5,949

 

 

7,650

 

1,701

 

 

2,584

 

Other income

 

3,234

 

3,531

 

3,649

 

3,128

 

 

2,133

 

(995

)

 

(1,101

)

Total revenue

 

84,274

 

91,707

 

97,984

 

96,074

 

 

89,850

 

(6,224

)

 

5,576

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Provision for credit losses

 

25,714

 

24,515

 

26,039

 

49,522

 

 

27,499

 

22,023

 

 

(1,785

)

 

 

 

 

 

 

 

 

Personnel

 

22,511

 

23,791

 

25,305

 

29,511

 

 

26,863

 

2,648

 

 

(4,352

)

Occupancy

 

6,210

 

6,367

 

5,876

 

5,771

 

 

6,253

 

(482

)

 

(43

)

Marketing

 

2,261

 

2,397

 

1,897

 

1,686

 

 

1,438

 

248

 

 

823

 

Other

 

6,761

 

7,612

 

7,813

 

9,275

 

 

6,971

 

2,304

 

 

(210

)

Total general and administrative

 

37,743

 

40,167

 

40,891

 

46,243

 

 

41,525

 

4,718

 

 

(3,782

)

 

 

 

 

 

 

 

 

Interest expense

 

9,771

 

10,348

 

10,285

 

10,159

 

 

9,137

 

1,022

 

 

634

 

Income (loss) before income taxes

 

11,046

 

16,677

 

20,769

 

(9,850

)

 

11,689

 

21,539

 

 

643

 

Income taxes

 

2,677

 

4,105

 

5,086

 

(3,525

)

 

4,219

 

(7,744

)

 

(1,542

)

Net income (loss)

$

8,369

$

12,572

$

15,683

$

(6,325

)

$

7,470

$

13,795

 

$

(899

)

Net income (loss) per common share:

 

 

 

 

 

 

 

Basic

$

0.71

$

1.11

$

1.44

$

(0.58

)

$

0.68

$

1.26

 

$

(0.03

)

Diluted

$

0.70

$

1.08

$

1.38

$

(0.56

)

$

0.68

$

1.24

 

$

(0.02

)

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

 

11,706

 

11,302

 

10,893

 

10,897

 

 

10,962

 

(65

)

 

744

 

Diluted

 

12,022

 

11,677

 

11,327

 

11,253

 

 

11,013

 

240

 

 

1,009

 

 

 

 

 

 

 

 

 

Net interest margin

$

74,503

$

81,359

$

87,699

$

85,915

 

$

80,713

$

(5,202

)

$

6,210

 

Net credit margin

$

48,789

$

56,844

$

61,660

$

36,393

 

$

53,214

$

16,821

 

$

4,425

 

 

Balance Sheet Quarterly Trend

 

2Q 19

 

3Q 19

 

4Q 19

 

1Q 20

 

2Q 20

 

QoQ $

Inc (Dec)

 

YoY $

Inc (Dec)

Total assets

$

1,019,316

$

1,086,172

$

1,158,540

$

1,078,890

$

1,000,225

$

(78,665

)

$

(19,091

)

Net finance receivables

$

994,980

$

1,067,086

$

1,133,404

$

1,102,285

$

1,022,635

$

(79,650

)

$

27,655

 

Allowance for credit losses

$

57,200

$

60,900

$

62,200

$

142,400

$

142,000

$

(400

)

$

84,800

 

Long-term debt

$

689,310

$

743,835

$

808,218

$

777,847

$

683,865

$

(93,982

)

$

(5,445

)

 

Other Key Metrics Quarterly Trend

 

2Q 19

 

3Q 19

 

4Q 19

 

1Q 20

 

2Q 20

 

QoQ

Inc (Dec)

 

YoY

Inc (Dec)

Interest and fee yield (annualized)

 

31.8

%

 

32.1

%

 

32.0

%

 

31.0

%

 

30.5

%

 

(0.5

) %

 

(1.3

) %

Efficiency ratio (1)

 

44.8

%

 

43.8

%

 

41.7

%

 

48.1

%

 

46.2

%

 

(1.9

) %

 

1.4

%

Operating expense ratio (2)

 

15.8

%

 

15.5

%

 

14.9

%

 

16.5

%

 

15.8

%

 

(0.7

) %

 

0.0

%

30+ contractual delinquency

 

6.3

%

 

6.5

%

 

7.0

%

 

6.6

%

 

4.8

%

 

(1.8

) %

 

(1.5

) %

Net credit loss ratio (3)

 

10.4

%

 

8.1

%

 

9.0

%

 

10.5

%

 

10.6

%

 

0.1

%

 

0.2

%

Book value per share

$

24.88

 

$

26.00

 

$

27.49

 

$

22.49

 

$

23.11

 

$

0.62

 

$

(1.77

)

(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

$

431,076

36.5

%

$

431,253

38.0

%

Large loans

 

626,185

27.4

%

 

468,600

27.4

%

Automobile loans

 

7,719

14.1

%

 

20,611

14.7

%

Retail loans

 

21,585

17.9

%

 

29,415

18.7

%

Total interest and fee yield

$

1,086,565

30.8

%

$

949,879

31.6

%

Total revenue yield

$

1,086,565

34.2

%

$

949,879

35.0

%

 

Components of Increase in Interest and Fee Income YTD 20 Compared to YTD 19 Increase (Decrease)

 

Volume

 

Rate

 

Volume & Rate

 

Net

Small loans

$

(34

)

$

(3,163

)

$

2

 

$

(3,195

)

Large loans

 

21,580

 

 

129

 

 

43

 

 

21,752

 

Automobile loans

 

(949

)

 

(64

)

 

40

 

 

(973

)

Retail loans

 

(733

)

 

(114

)

 

31

 

 

(816

)

Product mix

 

1,763

 

 

(1,036

)

 

(727

)

 

 

Total increase in interest and fee income

$

21,627

 

$

(4,248

)

$

(611

)

$

16,768

 

 

Net Loans Originated (1) (2)

 

YTD 20

YTD 19

YTD $

Inc (Dec)

YTD %

Inc (Dec)

Small loans

$ 199,289

$ 303,685

$ (104,396 )

(34.4) %

Large loans

196,628

253,441

(56,813 )

(22.4) %

Retail loans

5,480

11,376

(5,896 )

(51.8) %

Total net loans originated

$ 401,397

$ 568,502

$ (167,105 )

(29.4) %

(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

$

57,321

 

$

50,157

 

Percentage of average net finance receivables (annualized)

 

10.6

%

 

10.6

%

 

 

 

Provision for credit losses (1)

$

77,021

 

$

49,057

 

Percentage of average net finance receivables (annualized)

 

14.2

%

 

10.3

%

Percentage of total revenue

 

41.4

%

 

29.5

%

 

 

 

General and administrative expenses (2) (3)

$

87,768

 

$

75,926

 

Percentage of average net finance receivables (annualized)

 

16.2

%

 

16.0

%

Percentage of total revenue

 

47.2

%

 

45.7

%

(1)

Includes COVID-19 pandemic impacts to provision for credit losses of $33,400 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.

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.

 

2Q 20

Long-term debt

$

683,865

 

 

Total stockholders’ equity

 

259,881

Less: Intangible assets

 

8,824

Tangible equity (non-GAAP)

$

251,057

 

 

Funded debt-to-equity ratio

2.6x

Funded debt-to-tangible equity ratio (non-GAAP)

2.7x

 

Investor Relations Garrett Edson, (203) 682-8331 investor.relations@regionalmanagement.com

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