Regional Management Corp. Announces Second Quarter 2015 Results

- Net income of $5.4 million; diluted earnings per share of $0.41 -

- $46.6 million in sequential growth of total finance receivables -

- 47.2% sequential and 116.8% year-over-year growth of large loan receivables -

GREENVILLE, S.C.--()--Regional Management Corp. (NYSE: RM), a diversified specialty consumer finance company, today announced results for the second quarter ended June 30, 2015.

Second Quarter 2015 Highlights

  • Net income for the second quarter of 2015 was $5.4 million, an increase of 22.5% from the prior-year period. Diluted earnings per share were $0.41 based on a diluted share count of 13.1 million.
  • Regional Management’s most important loan categories continue to grow:
    • Large loan finance receivables as of June 30, 2015 were $93.2 million, an increase of 47.2% sequentially and 116.8% compared to the prior-year period.
    • Branch small loan and convenience check finance receivables, collectively, as of June 30, 2015 were $314.9 million, an increase of 8.0% sequentially and 14.3% over the prior-year period.
  • Total finance receivables as of June 30, 2015 were $572.5 million, an increase of 10.5% from the prior-year period.
  • Total second quarter of 2015 revenue was $53.0 million, an 11.7% increase from the prior-year period.
  • Total delinquencies as a percentage of total finance receivables as of June 30, 2015 were 20.6%, compared to 23.6% as of June 30, 2014 and 19.2% as of March 31, 2015.
  • Net charge-offs were $12.9 million for the second quarter of 2015, or 9.4% of average finance receivables, improving from 10.5% in the prior-year period. The related provision for credit losses for the second quarter of 2015 was $12.1 million, or 22.8% of revenue, a decline from 28.7% in the prior-year period.
  • Regional Management opened 10 new branches in the second quarter of 2015. As of June 30, 2015, Regional Management’s branch network consisted of 316 locations.

“We are gratified that all of our efforts toward improving the operational performance of the business helped produce improved results in the second quarter,” said Michael R. Dunn, Chief Executive Officer of Regional Management Corp. “We had a strong quarter in receivable growth driven by improved marketing initiatives and in-branch activity. Large loans, which we continue to believe will be a strong driver of our future growth, increased 47% on a sequential basis and 117% from the prior-year period. Branch small loans and convenience checks, which have always been important to the company, also generated solid double-digit growth from the prior-year period. The strong receivable performance led to revenue growth of 11.7% compared to the prior-year period and 1.0% compared to the first quarter of 2015.”

“Total delinquency at the end of the quarter was 20.6%, down from 23.6% in the prior-year period, and up 1.4% from our record low first quarter of 2015,” continued Mr. Dunn. “This level of delinquency is a return to a more normalized profile for the business. We also continued to make progress on achieving operational efficiencies. Total expenses in our branches were $17.1 million, up $1.6 million compared to the prior-year period, but importantly down $2.3 million from the first quarter of 2015, driven primarily by a reduction in our existing branch staffing of 130 people since the end of 2014. Moving forward, our focus remains on growing our core small and large loan portfolios, while maintaining more normalized levels of delinquencies and continuing to focus on our expense structure. Overall, we believe we have solidly positioned ourselves for future consistent top and bottom line growth, and I am proud of the entire Regional Management team for their hard work and dedication in getting us back on track in a short period of time.”

Second Quarter 2015 Results

Finance receivables outstanding at June 30, 2015 were $572.5 million, a 10.5% increase from $518.0 million in the prior-year period. Finance receivables increased primarily due to enhanced efforts to increase originations of both small and large installment loans and the addition of 23 de novo branches since June 30, 2014.

For the second quarter ended June 30, 2015, Regional Management reported total revenue of $53.0 million, an 11.7% increase from $47.4 million in the prior-year period. Interest and fee income for the second quarter of 2015 was $47.7 million, an 11.0% increase from $43.0 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 for the second quarter of 2015 was $3.1 million, a 25.8% increase from the prior-year period.

Provision for credit losses in the second quarter of 2015 was $12.1 million versus $13.6 million in the prior-year period. Net charge-offs of $12.9 million in the second quarter of 2015 exceeded the provision by $0.8 million as the Company released a portion of the allowance recorded in 2014 for convenience checks. Annualized net charge-offs as a percentage of average finance receivables for the second quarter of 2015 were 9.4%, an improvement from 10.5% in the prior-year period.

On a sequential basis, provision for credit losses increased 24.6%, reflecting the significant increase in small and large loan originations during the second quarter of 2015.

General and administrative expenses for the second quarter of 2015 were $28.2 million, an increase of $5.0 million, or 21.7%, from $23.2 million in the prior-year period. The increase was driven primarily by $1.6 million of additional branch expenses and $3.2 million of additional home office expenses. Branch expenses include changes in staffing and incentive plans for all branches, as well as the expenses associated with 23 branches added since June 30, 2014. The increase in home office expenses includes additional personnel, incentive plan changes and consulting fees.

Net income for the second quarter of 2015 was $5.4 million, a 22.5% increase compared to net income of $4.4 million in the prior-year period. Diluted earnings per share for the second quarter of 2015 were $0.41, an increase from $0.34 in the prior-year period.

First Half 2015 Results

For the six months ended June 30, 2015, Regional Management reported total revenue of $105.5 million, an 8.8% increase from $97.0 million in the prior-year period. Interest and fee income for the six months ended June 30, 2015 was $94.7 million, an 8.8% increase from $87.0 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 for the six months ended June 30, 2015 was $6.0 million, a 4.7% increase from the prior-year period.

Provision for credit losses for the six months ended June 30, 2015 was $21.8 million versus $30.6 million in the prior-year period. Net charge-offs of $26.2 million in the six months ended June 30, 2015 exceeded the provision by $4.4 million as the Company released a portion of the allowance recorded in 2014 for convenience checks. Annualized net charge-offs as a percentage of average finance receivables for the six months ended June 30, 2015 was 9.6%, a decline from 10.1% in the prior-year period.

General and administrative expenses for the six months ended June 30, 2015 were $60.9 million, an increase of $17.8 million, or 41.2%, from $43.1 million in the prior-year period. Included in six months 2015 results were a total of $2.7 million in non-operating expenses, while six months 2014 results included a non-operating benefit of $1.4 million related to a change in the Company’s vacation pay policy. The balance of the expense increase of $13.7 million was driven primarily by $6.5 million of additional branch expenses, $5.5 million of additional home office expenses and $1.7 million of additional marketing costs. Branch expenses include changes in staffing and incentive plans for all branches as well as the expenses associated with 52 branches added since December 31, 2013. The increase in home office expenses includes additional personnel, incentive plan changes, the write-off of GoldPoint software costs and legal and consulting fees.

GAAP net income for the six months ended June 30, 2015 was $9.5 million, a 5.3% decrease compared to GAAP net income of $10.0 million in the prior-year period, and diluted earnings per share for the six months ended June 30, 2015 were $0.73 compared to $0.77 in the prior-year period. Excluding the aforementioned non-operating expenses, non-GAAP net income for the six months ended June 30, 2015 totaled $11.2 million and non-GAAP diluted earnings per share were $0.86. For a reconciliation of non-GAAP financial measures to the nearest comparable GAAP financial measure, please refer to the reconciliation table accompanying this release.

Peter Knitzer Appointed to Board of Directors

The Company announced today that Peter Knitzer has been appointed to the Board of Directors, effective immediately. The appointment increases the Company’s Board size from six directors to seven. Mr. Knitzer will serve on the Company’s Compensation Committee and Corporate Governance and Nominating Committee, and brings to the Board an extensive analytical and financial background with respect to optimizing and integrating digital and traditional consumer marketing, sales and service capabilities, as well as significant experience with public and private financial services companies.

Mr. Knitzer has been an advisor to financial services companies since 2013. Previously, Mr. Knitzer served as Executive Vice President and head of the Payments group at CIBC and President and Director at E*TRADE Bank. Prior to joining E*TRADE, Mr. Knitzer spent 14 years at Citigroup in various senior roles, including Chairman & Chief Executive Officer of Citibank North America — a top 10 retail and commercial bank with 1,000+ branches and 22,000+ employees — Business Head, Cross-Sell Customer Management for all Citigroup businesses and EVP/Managing Director of Citi Cards, Citigroup’s leading global credit card business. Mr. Knitzer has also previously held senior marketing positions at Chase Manhattan Bank, American Express and Nabisco Brands. He received his MBA in marketing and finance from Columbia University Graduate School of Business and his BA in political science from Brown University.

Mr. Knitzer has also served as a Director for Habitat for Humanity from 2008–2014, including Board Chair from 2011–2013. He is currently on the Advisory Board of Columbia University Business School’s Lang Center for Entrepreneurship.

2015 De Novo Outlook

As of June 30, 2015, Regional Management’s branch network consisted of 316 locations. Regional Management opened 10 de novo branches in the second quarter of 2015 and, for the full year 2015, plans to open a minimum of 25 to 30 de novo branches.

Liquidity and Capital Resources

As of June 30, 2015, Regional Management had finance receivables of $572.5 million and outstanding debt of $359.5 million on its $500.0 million senior revolving credit facility.

Conference Call Information

Regional Management Corp. will host a conference call and webcast today at 4:30 PM ET to discuss these results.

The dial-in number for the conference call is (877) 415-3185 (toll-free) or (857) 244-7328 (direct), passcode 80833819. Please dial the number 10 minutes prior to the scheduled start time. 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, July 30, 2015, by telephone at (888) 286-8010 (toll-free) or (617) 801-6888 (direct), passcode 29160961. A webcast replay of the call will be available at http://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 and is not responsible for updating the information contained in this press release beyond the publication date, or for changes made to this document by wire services or Internet services.

About Regional Management Corp.

Regional Management Corp. (NYSE: RM) is a diversified specialty 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 and Georgia. 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 http://www.RegionalManagement.com.

           
Regional Management Corp. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
(in thousands, except per share amounts)
 
Better (Worse) Better (Worse)
2Q’15 2Q’14 $   % YTD’15 YTD’14 $   %
Revenue
Interest and fee income $ 47,668 $ 42,962 $ 4,706 11.0 % $ 94,733 $ 87,041 $ 7,692 8.8 %
Insurance income, net 3,120 2,481 639 25.8 % 6,049 5,776 273 4.7 %
Other income   2,213     1,994     219   11.0 %   4,743     4,201     542   12.9 %
 
Total revenue   53,001     47,437     5,564   11.7 %   105,525     97,018     8,507   8.8 %
 
Expenses
Provision for credit losses 12,102 13,620 1,518 11.1 % 21,814 30,564 8,750 28.6 %
 
Personnel 16,211 13,068 (3,143 ) -24.1 % 35,971 24,242 (11,729 ) -48.4 %
Occupancy 4,256 3,713 (543 ) -14.6 % 8,381 7,133 (1,248 ) -17.5 %
Marketing 2,009 1,750 (259 ) -14.8 % 4,480 2,732 (1,748 ) -64.0 %
Other   5,767     4,667     (1,100 ) -23.6 %   12,034     8,990     (3,044 ) -33.9 %
 
Total general and administrative expenses 28,243 23,198 (5,045 ) -21.7 % 60,866 43,097 (17,769 ) -41.2 %
 
Interest expense   3,932     3,556     (376 ) -10.6 %   7,536     7,319     (217 ) -3.0 %
 
Income before income taxes 8,724 7,063 1,661 23.5 % 15,309 16,038 (729 ) -4.5 %
Income taxes   3,316     2,649     (667 ) -25.2 %   5,818     6,014     196   3.3 %
 
Net income $ 5,408   $ 4,414   $ 994   22.5 % $ 9,491   $ 10,024   $ (533 ) -5.3 %
 
Net income per common share:
Basic $ 0.42   $ 0.35   $ 0.07   20.0 % $ 0.74   $ 0.79   $ (0.05 ) -6.3 %
 
Diluted $ 0.41   $ 0.34   $ 0.07   20.6 % $ 0.73   $ 0.77   $ (0.04 ) -5.2 %
 
Weighted-average shares outstanding:
Basic   12,845     12,691     (154 ) -1.2 %   12,812     12,673     (139 ) -1.1 %
 
Diluted   13,078     12,916     (162 ) -1.3 %   13,040     12,958     (82 ) -0.6 %
 
 
Return on average assets (annualized)   4.0 %   3.6 %   3.6 %   4.0 %
 
Return on average equity (annualized)   11.5 %   10.4 %   10.3 %   12.0 %
 
     
Regional Management Corp. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(in thousands, except par value amounts)
 
Increase (Decrease)
2Q’15 2Q’14 $   %
Assets
Cash $ 4,793 $ 3,562 $ 1,231 34.6 %
Gross finance receivables 704,862 622,854 82,008 13.2 %
Less unearned finance charges, insurance premiums, and commissions   (132,337 )   (104,879 )   (27,458 ) -26.2 %
 
Finance receivables 572,525 517,975 54,550 10.5 %
Allowance for credit losses   (36,171 )   (34,584 )   (1,587 ) -4.6 %
 
Net finance receivables 536,354 483,391 52,963 11.0 %
Property and equipment, net of accumulated depreciation 8,646 7,929 717 9.0 %
Deferred tax asset, net 2,305 2,305 100.0 %
Repossessed assets at net realizable value 407 615 (208 ) -33.8 %
Goodwill 716 716 0.0 %
Intangible assets, net 655 1,068 (413 ) -38.7 %
Other assets   7,105     6,714     391   5.8 %
 
Total assets $ 560,981   $ 503,995   $ 56,986   11.3 %
 
Liabilities and Stockholders’ Equity
Liabilities:
Senior revolving credit facility $ 359,491 $ 324,570 $ 34,921 10.8 %
Accounts payable and accrued expenses 10,733 6,718 4,015 59.8 %
Deferred tax liability, net       847     (847 ) -100.0 %
 
Total liabilities 370,224 332,135 38,089 11.5 %
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, 12,889 and 12,702 shares issued and outstanding at June 30, 2015 and 2014, respectively

1,289 1,270 19 1.5 %
Additional paid-in-capital 88,584 83,975 4,609 5.5 %
Retained earnings   100,884     86,615     14,269   16.5 %
 
Total stockholders’ equity   190,757     171,860     18,897   11.0 %
 
Total liabilities and stockholders’ equity $ 560,981   $ 503,995   $ 56,986   11.3 %
 
 
Regional Management Corp. and Subsidiaries
Selected Financial Data
(Unaudited)
(in thousands, except per share amounts)
 
  Averages and Yields
2Q’15   1Q’15   2Q’14
Average Finance
Receivables
  Average Yield

(Annualized)

Average Finance
Receivables
  Average Yield

(Annualized)

Average Finance
Receivables
  Average Yield

(Annualized)

Branch small loans $ 130,806 45.3 % $ 124,350 46.2 % $ 103,595 48.5 %
Convenience checks 171,323 45.0 % 181,425 45.9 % 158,564 44.4 %
Large loans 79,756 27.7 % 52,738 26.7 % 42,380 27.3 %
Automobile loans 143,659 19.3 % 150,107 19.2 % 173,676 19.8 %
Retail loans   24,556 18.8 %   25,121 18.2 %   28,810 18.4 %
 
Total interest and fee yield $ 550,100 34.7 % $ 533,741 35.3 % $ 507,025 33.9 %
 
Total revenue yield $ 550,100 38.5 % $ 533,741 39.4 % $ 507,025 37.4 %
 
 

Components of Increase in Interest and Fee Income

2Q’15 Compared to 2Q’14
Increase (Decrease)
Volume   Rate   Net
Branch small loans $ 3,124 $ (884 ) $ 2,240
Convenience checks 1,432 230 1,662
Large loans 2,585 43 2,628
Automobile loans (1,516 ) (139 ) (1,655 )
Retail loans (191 ) 22 (169 )
Change in product mix   (1,718 )   1,718      
 
Total increase in interest and fee income $ 3,716   $ 990   $ 4,706  
 
Percentage of change in interest and fee income   79.0 %   21.0 %   100.0 %
 
 
Net Loans Originated (1)
2Q’15   1Q’15   2Q’14   QoQ $

Inc (Dec)

  QoQ %

Inc (Dec)

  YoY $

Inc (Dec)

  YoY %

Inc (Dec)

Branch small loans $ 80,818 $ 51,371 $ 62,751 $ 29,447 57.3 % $ 18,067 28.8 %
Convenience checks 90,745 60,653 84,576 30,092 49.6 % 6,169 7.3 %
Large loans 46,134 29,829 13,020 16,305 54.7 % 33,114 254.3 %
Automobile loans 11,802 14,590 18,786 (2,788 ) -19.1 % (6,984 ) -37.2 %
Retail loans   8,136   6,727   7,345   1,409   20.9 %   791   10.8 %
 
Total net loans originated $ 237,635 $ 163,170 $ 186,478 $ 74,465   45.6 % $ 51,157   27.4 %
 

(1) Represents the balance of loan origination and refinancing net of unearned finance charges

 
 
Other Key Metrics
2Q’15   1Q’15   2Q’14
Net charge-offs $ 12,881 $ 13,273 $ 13,361
Percentage of average finance receivables (annualized) 9.4 % 9.9 % 10.5 %
 
Provision for credit losses $ 12,102 $ 9,712 $ 13,620
Percentage of average finance receivables (annualized) 8.8 % 7.3 % 10.7 %
Percentage of total revenue 22.8 % 18.5 % 28.7 %
 
General and administrative expenses $ 28,243 $ 32,623 $ 23,198
Percentage of average finance receivables (annualized) 20.5 % 24.4 % 18.3 %
Percentage of total revenue 53.3 % 62.1 % 48.9 %
 
Same store results:
Finance receivables at period-end $ 545,928 $ 501,393 $ 484,048
Finance receivable growth rate 8.0 % 1.1 % 6.6 %
Number of branches in calculation 281 264 232
 
       
Finance Receivables by Product
2Q’15   1Q’15   QoQ $

Inc (Dec)

  QoQ %

Inc (Dec)

2Q’14 YoY $

Inc (Dec)

YoY %

Inc (Dec)

Branch small loans $ 140,161 $ 121,649 $ 18,512 15.2 % $ 107,598 $ 32,563 30.3 %
Convenience checks 174,786 170,013 4,773 2.8 % 167,858 6,928 4.1 %
Large loans 93,203 63,338 29,865 47.2 % 42,996 50,207 116.8 %
Automobile loans 139,593 146,724 (7,131 ) -4.9 % 171,777 (32,184 ) -18.7 %
Retail loans   24,782   24,183   599   2.5 %   27,746   (2,964 ) -10.7 %
 
Total finance receivables $ 572,525 $ 525,907 $ 46,618   8.9 % $ 517,975 $ 54,550   10.5 %
 
 
2Q’14 1Q’14 QoQ $

Inc (Dec)

QoQ %

Inc (Dec)

Total finance receivables $ 517,975 $ 501,734 $ 16,241   3.2 %
 
           
Contractual Delinquency by Aging
2Q’15 1Q’15 2Q’14
Amount Percentage of
Total Finance
Receivables
Amount Percentage of
Total Finance
Receivables
Amount Percentage of
Total Finance
Receivables
Allowance for credit losses $ 36,171 6.3 % $ 36,950 7.0 % $ 34,584 6.7 %
 
Current 454,424 79.4 % 425,088 80.8 % 395,791 76.4 %
1 to 29 days past due   81,275 14.2 %   67,653 12.9 %   87,799 17.0 %
 
Delinquent accounts:
30 to 59 days 14,665 2.5 % 11,596 2.2 % 14,984 2.9 %
60 to 89 days 8,113 1.4 % 6,824 1.3 % 6,772 1.3 %
90 to 119 days 5,633 1.0 % 4,844 0.9 % 4,435 0.9 %
120 to 149 days 4,597 0.8 % 4,881 0.9 % 3,206 0.6 %
150 to 179 days 3,818 0.7 % 5,021 1.0 % 2,155 0.4 %
180 days and over   0.0 %   0.0 %   2,833 0.5 %
 
Total contractual delinquency $ 36,826 6.4 % $ 33,166 6.3 % $ 34,385 6.6 %
 
Total finance receivables $ 572,525 100.0 % $ 525,907 100.0 % $ 517,975 100.0 %
 
 
1 day and over past due $ 118,101 20.6 % $ 100,819 19.2 % $ 122,184 23.6 %
 
             
Contractual Delinquency by Product
2Q’15   1Q’15   2Q’14
Amount   Percentage of
Product Finance
Receivables
Amount   Percentage of
Product Finance
Receivables
Amount   Percentage of
Product Finance
Receivables
Branch small loans $ 10,804 7.7 % $ 8,890 7.3 % $ 8,525 7.9 %
Convenience checks 13,561 7.8 % 14,681 8.6 % 11,197 6.7 %
Large loans 2,748 2.9 % 1,704 2.7 % 2,437 5.7 %
Automobile loans 8,619 6.2 % 6,854 4.7 % 10,981 6.4 %
Retail loans   1,094 4.4 % 1,037 4.3 % 1,245 4.5 %
 
Total contractual delinquency   36,826 6.4 % 33,166 6.3 % 34,385 6.6 %
 
 
Quarterly Trend
2Q’14   3Q’14   4Q’14   1Q’15   2Q’15   QoQ $

B(W)

  YoY $

B(W)

Revenue
Interest and fee income $ 42,962 $ 48,792 $ 48,964 $ 47,065 $ 47,668 $ 603 $ 4,706
Insurance income, net 2,481 2,636 2,261 2,929 3,120 191 639
Other income   1,994   2,481   2,567   2,530   2,213   (317 )   219  
 
Total revenue   47,437   53,909   53,792   52,524   53,001   477     5,564  
 
Expenses
Provision for credit losses 13,620 22,542 15,950 9,712 12,102 (2,390 ) 1,518
 
Personnel 13,068 14,042 17,099 19,760 16,211 3,549 (3,143 )
Occupancy 3,713 4,179 4,115 4,125 4,256 (131 ) (543 )
Marketing 1,750 1,756 1,842 2,471 2,009 462 (259 )
Other   4,667   5,307   5,340   6,267   5,767   500     (1,100 )
 
Total general and administrative 23,198 25,284 28,396 32,623 28,243 4,380 (5,045 )
 
Interest expense   3,556   3,848   3,780   3,604   3,932   (328 )   (376 )
 
Income before income taxes 7,063 2,235 5,666 6,585 8,724 2,139 1,661
Income taxes   2,649   838   2,285   2,502   3,316   (814 )   (667 )
 
Net income $ 4,414 $ 1,397 $ 3,381 $ 4,083 $ 5,408 $ 1,325   $ 994  
 
Net income per common share:
Basic $ 0.35 $ 0.11 $ 0.27 $ 0.32 $ 0.42 $ 0.10   $ 0.07  
 
Diluted $ 0.34 $ 0.11 $ 0.26 $ 0.31 $ 0.41 $ 0.10   $ 0.07  
 
Weighted-average shares outstanding:
Basic   12,691   12,714   12,744   12,838   12,845   (7 )   (154 )
 
Diluted   12,916   12,934   12,955   13,061   13,078   (17 )   (162 )
 
 
 
2Q’14 3Q’14 4Q’14 1Q’15 2Q’15 QoQ $

Inc (Dec)

YoY $

Inc (Dec)

Total assets   503,995   522,820   530,270   507,742   560,981   53,239     56,986  
 
Finance receivables   517,975   543,353   546,192   525,907   572,525   46,618     54,550  
 
Allowance for credit losses   34,584   43,301   40,511   36,950   36,171   779     (1,587 )
 
Senior revolving credit facility   324,570   339,323   341,419   312,538   359,491   46,953     34,921  
 
 
Headcount Trend
2Q’14   3Q’14   4Q’14   1Q’15   2Q’15   QoQ

Inc (Dec)

  YoY

Inc (Dec)

Branch headcount 1,176 1,313 1,335 1,273 1,205 (68 ) 29
2015 new branches       15 40 25   40
 
Total branch headcount 1,176 1,313 1,335 1,288 1,245 (43 ) 69
Home office headcount 88 92 105 125 120 (5 ) 32
 
Total headcount 1,264 1,405 1,440 1,413 1,365 (48 ) 101
 
 
Number of branches 293 296 300 306 316 10   23
 
 
General & Administrative Expenses Trend
2Q’14   3Q’14   4Q’14   1Q’15   2Q’15   QoQ $

B(W)

  YoY $

B(W)

Branch G&A expenses $ 15,525 $ 16,866 $ 18,020 $ 19,284 $ 16,596 $ 2,688 $ (1,071 )
2015 new branches         86   498   (412 )   (498 )
 
Total branch G&A expenses 15,525 16,866 18,020 19,370 17,094 2,276 (1,569 )
Marketing 1,750 1,756 1,842 2,471 2,009 462 (259 )
Home office G&A expenses   5,923   6,662   8,534   10,782   9,140   1,642     (3,217 )
 
Total G&A expenses $ 23,198 $ 25,284 $ 28,396 $ 32,623 $ 28,243 $ 4,380   $ (5,045 )
 
 
Averages and Yields
YTD’15   YTD’14
Average Finance
Receivables
  Average Yield

(Annualized)

Average Finance
Receivables
  Average Yield

(Annualized)

Branch small loans $ 128,425 45.4 % $ 105,096 48.0 %
Convenience checks 177,283 45.2 % 165,293 43.6 %
Large loans 66,663 27.1 % 42,583 26.9 %
Automobile loans 146,905 19.3 % 175,915 19.7 %
Retail loans   24,932 18.5 %   29,635 18.1 %
 
Total interest and fee yield $ 544,208 34.8 % $ 518,522 33.6 %
 
Total revenue yield $ 544,208 38.8 % $ 518,522 37.4 %
 
 

 

Components of Increase in Interest and Fee Income

YTD’15 Compared to YTD’14
Increase (Decrease)
Volume   Rate   Net
Branch small loans $ 5,359 $ (1,417 ) $ 3,942
Convenience checks 2,678 1,351 4,029
Large loans 3,266 46 3,312
Automobile loans (2,920 ) (285 ) (3,205 )
Retail loans (419 ) 33 (386 )
Change in product mix   (3,561 )   3,561      
 
Total increase in interest and fee income $ 4,403   $ 3,289   $ 7,692  
 
Percentage of change in interest and fee income   57.2 %   42.8 %   100.0 %
 
 
Net Loans Originated (1)
YTD’15   YTD’14   YTD $

Inc (Dec)

  YTD %

Inc (Dec)

Branch small loans $ 132,189 $ 105,597 $ 26,592 25.2 %
Convenience checks 151,398 137,233 14,165 10.3 %
Large loans 75,963 23,378 52,585 224.9 %
Automobile loans 26,392 37,684 (11,292 ) -30.0 %
Retail loans   14,863   15,862   (999 ) -6.3 %
 
Total net loans originated $ 400,805 $ 319,754 $ 81,051   25.3 %
 

(1) Represents the balance of loan origination and refinancing net of unearned finance charges

 
 
Other Key Metrics
YTD’15   YTD’14
Net charge-offs $ 26,154 $ 26,069
Percentage of average finance receivables (annualized) 9.6 % 10.1 %
 
Provision for credit losses $ 21,814 $ 30,564
Percentage of average finance receivables (annualized) 8.0 % 11.8 %
Percentage of total revenue 20.7 % 31.5 %
 
General and administrative expenses $ 60,866 $ 43,097
Percentage of average finance receivables (annualized) 22.4 % 16.6 %
Percentage of total revenue 57.7 % 44.4 %
 

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
YTD’15 Adjustments Non-GAAP
General and administrative expenses $ 60,866 $ (2,676 )(1)(2)(3) $ 58,190
Income taxes $ 5,818 $

1,017

(5)

$ 6,835
Net income $ 9,491 $ 1,659 $ 11,150
Diluted net income per common share $ 0.73 $ 0.13 $ 0.86
 
     
Non-GAAP Reconciliation
YTD’14 Adjustments Non-GAAP
General and administrative expenses $ 43,097 $

566

(2)(4)

$ 43,663
Income taxes $ 6,014 $ (212 )(5) $ 5,802
Net income $ 10,024 $ (354 ) $ 9,670
Diluted net income per common share $ 0.77 $ (0.02 ) $ 0.75
 
(1)   Exclude executive retirement agreement costs of $533
(2) Exclude loan system conversion costs of $613 and $822 for YTD’15 and YTD’14
(3) Exclude CEO equity award costs of $1,530
(4) Benefit related to vacation policy change of $1,388
(5) Tax effect of the adjustments
 

Contacts

Investor Relations
Garrett Edson, 203-682-8331

Contacts

Investor Relations
Garrett Edson, 203-682-8331