GREENVILLE, S.C.--(BUSINESS WIRE)--Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the third quarter ended September 30, 2018.
Third Quarter 2018 Highlights
- Net income for the third quarter of 2018 was $7.4 million, an increase of 40.3% from the prior-year period, while non-GAAP net income was $10.3 million, an increase of 50.8% from the prior-year period. Non-GAAP net income for the third quarter of 2018 excludes an estimated $2.9 million of impact related to Hurricane Florence, while non-GAAP net income for the prior-year period excludes an estimated $2.2 million of impact related to the 2017 hurricanes and $0.6 million of proceeds related to the bulk sale of the Company’s previously charged-off bankrupt accounts (“bulk sale”). Diluted earnings per share for the third quarter of 2018 was $0.61, while non-GAAP diluted earnings per share for the third quarter of 2018 was $0.85.
-
Total finance receivables as of September 30, 2018 were $888.1
million, an increase of 14.6%, or $113.2 million, from the prior-year
period.
- Fourteenth consecutive quarter of year-over-year double-digit finance receivables growth.
- Total core small and large loan finance receivables increased $153.3 million, or 22.8%, compared to the prior-year period.
- Large loan finance receivables of $410.8 million increased $102.2 million, or 33.1%, from the prior-year period and represented 46.3% of the total loan portfolio. Small loan finance receivables as of September 30, 2018 were $414.4 million, an increase of 14.1% over the prior-year period.
-
Total revenue for the third quarter of 2018 was $77.9 million, an $8.7
million, or 12.6%, increase from the prior-year period.
- Ninth consecutive quarter of year-over-year double-digit revenue growth.
- Interest and fee income increased 13.4%, driven by a 14.6% increase in finance receivables compared to the prior-year period.
- Provision for credit losses for the third quarter of 2018 was $23.6 million, an increase of 17.3% from the prior-year period. The provision for credit losses for the third quarter of 2018 included $3.9 million of incremental hurricane allowance, while the provision for credit losses for the third quarter of 2017 included $3.0 million of incremental hurricane allowance and a $1.0 million benefit resulting from the bulk sale.
- Annualized net credit losses as a percentage of finance receivables were 7.7%, a 10 basis point improvement from 7.8% in the prior-year period.
- 30+ day contractual delinquencies as of September 30, 2018 were 7.1%, compared to 6.3% as of June 30, 2018 and 6.8% as of September 30, 2017.
- Expanded operations into Missouri, the Company’s tenth U.S. state, during the quarter.
“We had a very strong third quarter and our performance drivers continue to be robust,” said Peter R. Knitzer, President and Chief Executive Officer of Regional Management. “We generated another quarter of year-over-year double-digit growth on our top and bottom lines as well as in our finance receivables. Credit performance remains stable, with the slight uptick in September 30 delinquencies on a year-over-year basis returning to year-ago levels as of the end of October.”
“In addition to another quarter of strong growth and stable credit, we continued to keep a firm control on our overall expenses, which should lead to additional margin expansion over time,” continued Mr. Knitzer. “We also began implementing custom scorecards in our branches, which we believe will further improve our credit profile in the mid- to long-term. Moving forward, we remain squarely focused on our hybrid growth strategy of increasing our receivables per branch within our existing network, coupled with de novo expansion in the Midwest. Overall, we remain well-positioned to generate long-term shareholder value.”
Third Quarter 2018 Results
Finance receivables outstanding at September 30, 2018 were $888.1 million, a 14.6% increase from $774.9 million in the prior year. Finance receivables increased from continued strong growth in both the core small and large loan portfolios.
For the third quarter ended September 30, 2018, the Company reported total revenue of $77.9 million, a 12.6% increase from $69.2 million in the prior-year period. Interest and fee income for the third quarter of 2018 was $72.1 million, a 13.4% increase from $63.6 million in the prior-year period, primarily due to increases in the small and large loan portfolios compared to the prior-year period.
The provision for credit losses in the third quarter of 2018 was $23.6 million, a 17.3% increase compared to $20.2 million in the prior-year period. The provision for credit losses for the third quarter of 2018 included $3.9 million of incremental hurricane allowance, while the provision for credit losses for the third quarter of 2017 included $3.0 million of incremental hurricane allowance and a $1.0 million benefit resulting from the bulk sale.
Net credit losses were $16.8 million in the third quarter of 2018, an increase of $2.0 million over the prior-year period. The increase over the prior-year period was primarily due to portfolio growth. Annualized net credit losses as a percentage of average finance receivables in the third quarter of 2018 were 7.7%, a 10 basis point improvement from 7.8% in the prior-year period.
General and administrative expenses for the third quarter of 2018 were $35.9 million, an increase of $2.0 million, or 6.0%, from the prior-year period. Annualized general and administrative expenses as a percentage of average finance receivables improved 150 basis points from the prior-year period to 16.5% for the third quarter of 2018. General and administrative expenses for the third quarter of 2018 included higher personnel costs related to staffing increases in information technology, centralized collections, and branches to support ongoing loan portfolio growth.
Interest expense was $8.7 million in the third quarter of 2018, compared to $6.7 million in the prior-year period. The increase in interest expense was due to larger long-term debt amounts outstanding from growth in finance receivables, federal funds rate increases, larger unused lines of credit, incremental debt issuance costs associated with upsizing the senior revolving credit facility and entering into the warehouse credit facility, and the Company’s recently completed asset-based securitization. The Company’s diversified sources of funding continue to position it for long-term growth.
Net income for the third quarter of 2018 was $7.4 million, an increase from $5.3 million in the prior-year period. Excluding the aforementioned non-operating items, non-GAAP net income for the third quarter of 2018 was $10.3 million, up from non-GAAP net income of $6.9 million for the prior-year period. Diluted earnings per share for the third quarter of 2018 was $0.61, an increase from $0.45 in the prior-year period. Non-GAAP diluted earnings per share for the third quarter of 2018 was $0.85, an increase from $0.58 in the prior-year period. For a reconciliation of non-GAAP financial measures to the comparable GAAP financial measure, please refer to the reconciliation table accompanying this release.
2018 De Novo Outlook
As of September 30, 2018, the Company’s branch network consisted of 346 locations. The Company opened six branches during the third quarter of 2018. For the fourth quarter 2018, the Company now plans to open an additional 15 to 18 de novo branches. Therefore, total branch openings in 2018 are now expected to be between 22 and 25, with the timing of the remaining branches that were initially expected to open in the fourth quarter now shifted to the first quarter of 2019.
Liquidity and Capital Resources
As of September 30, 2018, the Company had finance receivables of $888.1 million and outstanding long-term debt of $611.6 million (consisting of $352.7 million of long-term debt on its $638.0 million senior revolving credit facility, $82.0 million of long-term debt on its $125.0 million revolving warehouse credit facility, $26.7 million of long-term debt on its amortizing loan, and $150.2 million through its asset-backed securitization). The Company had a debt-to-equity ratio of 2.3 to 1.0 and a shareholder equity ratio of 29.9% as of September 30, 2018.
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) 327-6838 (toll-free) or (604) 235-2082 (direct). Please dial the number 10 minutes prior to the scheduled start time.
*** A supplemental slide presentation will be made available on Regional Management’s website prior to the earnings call at www.RegionalManagement.com. ***
In addition, a live webcast of the conference call will also be available on Regional Management’s website at www.RegionalManagement.com.
A replay will be available following the end of the call through Thursday, November 15, 2018, by telephone at (844) 512-2921 (toll-free) or (412) 317-6671 (international), passcode 10005748. 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: changes in general economic conditions, including levels of unemployment and bankruptcies; risks associated with Regional Management’s transition to a new loan origination and servicing software system; 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; risks relating to our first asset-backed securitization; 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; the impact of changes in tax laws, guidance, and interpretations, including related to certain provisions of the Tax Cuts and Jobs Act; 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 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. Such factors and others are discussed in greater detail in Regional Management’s filings with the Securities and Exchange Commission. Regional Management will not update the information contained in this press release beyond the publication date, except to the extent required by law, and is not responsible for changes made to this document by wire services or Internet services.
About Regional Management Corp.
Regional Management Corp. (NYSE: RM) is a diversified consumer finance company providing a broad array of loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other traditional lenders. Regional Management began operations in 1987 with four branches in South Carolina and has since expanded its branch network across South Carolina, Texas, North Carolina, Tennessee, Alabama, Oklahoma, New Mexico, Georgia, Virginia, and Missouri. 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, online credit application networks, retailers, and its consumer website. For more information, please visit www.RegionalManagement.com.
Regional Management Corp. and Subsidiaries | ||||||||||||||||||||||||||||||
Consolidated Statements of Income | ||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||||||||||||||||
Better (Worse) | Better (Worse) | |||||||||||||||||||||||||||||
3Q 18 | 3Q 17 | $ | % | YTD 18 | YTD 17 | $ | % | |||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||
Interest and fee income |
$ | 72,128 | $ | 63,615 | $ | 8,513 | 13.4 | % | $ | 205,108 | $ | 182,657 | $ | 22,451 | 12.3 | % | ||||||||||||||
Insurance income, net | 2,898 | 3,095 | (197 | ) | (6.4 |
)% |
9,169 | 9,985 | (816 | ) | (8.2 |
)% |
||||||||||||||||||
Other income | 2,890 | 2,484 | 406 | 16.3 | % | 8,680 | 7,710 | 970 | 12.6 | % | ||||||||||||||||||||
Total revenue | 77,916 | 69,194 | 8,722 | 12.6 | % | 222,957 | 200,352 | 22,605 | 11.3 | % | ||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||
Provision for credit losses | 23,640 | 20,152 | (3,488 | ) | (17.3 |
)% |
63,358 | 57,875 | (5,483 | ) | (9.5 |
)% |
||||||||||||||||||
Personnel | 21,376 | 19,534 | (1,842 | ) | (9.4 |
)% |
61,994 | 56,089 | (5,905 | ) | (10.5 |
)% |
||||||||||||||||||
Occupancy | 5,490 | 5,480 | (10 | ) | (0.2 |
)% |
16,586 | 16,184 | (402 | ) | (2.5 |
)% |
||||||||||||||||||
Marketing | 2,132 | 2,303 | 171 | 7.4 | % | 5,843 | 5,287 | (556 | ) | (10.5 |
)% |
|||||||||||||||||||
Other | 6,863 | 6,523 | (340 | ) | (5.2 |
)% |
19,245 | 19,376 | 131 | 0.7 | % | |||||||||||||||||||
Total general and administrative | 35,861 | 33,840 | (2,021 | ) | (6.0 |
)% |
103,668 | 96,936 | (6,732 | ) | (6.9 |
)% |
||||||||||||||||||
Interest expense | 8,729 | 6,658 | (2,071 | ) | (31.1 |
)% |
23,821 | 17,092 | (6,729 | ) | (39.4 |
)% |
||||||||||||||||||
Income before income taxes | 9,686 | 8,544 | 1,142 | 13.4 | % | 32,110 | 28,449 | 3,661 | 12.9 | % | ||||||||||||||||||||
Income taxes | 2,237 | 3,235 | 998 | 30.9 | % | 7,535 | 9,371 | 1,836 | 19.6 | % | ||||||||||||||||||||
Net income | $ | 7,449 | $ | 5,309 | $ | 2,140 | 40.3 | % | $ | 24,575 | $ | 19,078 | $ | 5,497 | 28.8 | % | ||||||||||||||
Net income per common share: | ||||||||||||||||||||||||||||||
Basic | $ | 0.64 | $ | 0.46 | $ | 0.18 | 39.1 | % | $ | 2.11 | $ | 1.65 | $ | 0.46 | 27.9 | % | ||||||||||||||
Diluted | $ | 0.61 | $ | 0.45 | $ | 0.16 | 35.6 | % | $ | 2.03 | $ | 1.62 | $ | 0.41 | 25.3 | % | ||||||||||||||
Weighted-average shares outstanding: | ||||||||||||||||||||||||||||||
Basic | 11,672 | 11,563 | (109 | ) | (0.9 |
)% |
11,649 | 11,537 | (112 | ) | (1.0 |
)% |
||||||||||||||||||
Diluted | 12,133 | 11,812 | (321 | ) | (2.7 |
)% |
12,101 | 11,752 | (349 | ) | (3.0 |
)% |
||||||||||||||||||
Return on average assets (annualized) | 3.3 | % | 2.8 | % | 3.8 | % | 3.5 | % | ||||||||||||||||||||||
Return on average equity (annualized) | 11.3 | % | 9.4 | % | 12.9 | % | 11.7 | % | ||||||||||||||||||||||
Regional Management Corp. and Subsidiaries | |||||||||||||||
Consolidated Balance Sheets | |||||||||||||||
(Unaudited) | |||||||||||||||
(in thousands, except par value amounts) | |||||||||||||||
Increase (Decrease) | |||||||||||||||
3Q 18 | 3Q 17 | $ | % | ||||||||||||
Assets | |||||||||||||||
Cash | $ | 517 | $ | 5,191 | $ | (4,674 | ) | (90.0 |
)% |
||||||
Gross finance receivables | 1,175,797 | 1,002,630 | 173,167 | 17.3 | % | ||||||||||
Unearned finance charges and insurance premiums | (287,721 | ) | (227,774 | ) | (59,947 | ) | (26.3 |
)% |
|||||||
Finance receivables | 888,076 | 774,856 | 113,220 | 14.6 | % | ||||||||||
Allowance for credit losses | (55,300 | ) | (47,400 | ) | (7,900 | ) | (16.7 |
)% |
|||||||
Net finance receivables | 832,776 | 727,456 | 105,320 | 14.5 | % | ||||||||||
Restricted cash | 29,327 | 13,849 | 15,478 | 111.8 | % | ||||||||||
Property and equipment | 12,540 | 12,657 | (117 | ) | (0.9 |
)% |
|||||||||
Intangible assets | 10,429 | 10,239 | 190 | 1.9 | % | ||||||||||
Deferred tax asset | — | 5,121 | (5,121 | ) | (100.0 |
)% |
|||||||||
Other assets | 7,690 | 5,337 | 2,353 | 44.1 | % | ||||||||||
Total assets | $ | 893,279 | $ | 779,850 | $ | 113,429 | 14.5 | % | |||||||
Liabilities and Stockholders’ Equity | |||||||||||||||
Liabilities: | |||||||||||||||
Long-term debt | $ | 611,593 | $ | 538,351 | $ | 73,242 | 13.6 | % | |||||||
Unamortized debt issuance costs | (7,216 | ) | (5,266 | ) | (1,950 | ) | (37.0 |
)% |
|||||||
Net long-term debt | 604,377 | 533,085 | 71,292 | 13.4 | % | ||||||||||
Accounts payable and accrued expenses | 19,510 | 18,950 | 560 | 3.0 | % | ||||||||||
Deferred tax liability | 1,963 | — | 1,963 | 100.0 | % | ||||||||||
Total liabilities | 625,850 | 552,035 | 73,815 | 13.4 | % | ||||||||||
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, 13,336 shares issued and 11,790 shares outstanding at September 30, 2018 and 13,213 shares issued and 11,667 shares outstanding at September 30, 2017) | 1,334 | 1,321 | 13 | 1.0 | % | ||||||||||
Additional paid-in-capital | 97,814 | 93,673 | 4,141 | 4.4 | % | ||||||||||
Retained earnings | 193,327 | 157,867 | 35,460 | 22.5 | % | ||||||||||
Treasury stock (1,546 shares at September 30, 2018 and 2017) |
(25,046 | ) | (25,046 | ) | — | 0.0 | % | ||||||||
Total stockholders’ equity | 267,429 | 227,815 | 39,614 | 17.4 | % | ||||||||||
Total liabilities and stockholders’ equity | $ | 893,279 | $ | 779,850 | $ | 113,429 | 14.5 | % | |||||||
Regional Management Corp. and Subsidiaries | |||||||||||||||||||||||
Selected Financial Data | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||||||
Finance Receivables by Product | |||||||||||||||||||||||
3Q 18 | 2Q 18 |
QoQ $ Inc (Dec) |
QoQ % Inc (Dec) |
3Q 17 |
YoY $ Inc (Dec) |
YoY % Inc (Dec) |
|||||||||||||||||
Small loans | $ | 414,441 | $ | 384,690 | $ | 29,751 | 7.7 | % | $ | 363,262 | $ | 51,179 | 14.1 | % | |||||||||
Large loans | 410,811 | 392,101 | 18,710 | 4.8 | % | 308,642 | 102,169 | 33.1 | % | ||||||||||||||
Total core loans | 825,252 | 776,791 | 48,461 | 6.2 | % | 671,904 | 153,348 | 22.8 | % | ||||||||||||||
Automobile loans | 32,322 | 39,414 | (7,092 | ) | (18.0 |
)% |
71,666 | (39,344 | ) | (54.9 |
)% |
||||||||||||
Retail loans | 30,502 | 31,033 | (531 | ) | (1.7 |
)% |
31,286 | (784 | ) | (2.5 |
)% |
||||||||||||
Total finance receivables | $ | 888,076 | $ | 847,238 | $ | 40,838 | 4.8 | % | $ | 774,856 | $ | 113,220 | 14.6 | % | |||||||||
Number of branches at period end | 346 | 340 | 6 | 1.8 | % | 344 | 2 | 0.6 | % | ||||||||||||||
Average finance receivables per branch | $ | 2,567 | $ | 2,492 | $ | 75 | 3.0 | % | $ | 2,252 | $ | 315 | 14.0 | % | |||||||||
Averages and Yields | ||||||||||||||||||
3Q 18 | 2Q 18 | 3Q 17 | ||||||||||||||||
Average Finance |
Average Yield |
Average Finance |
Average Yield |
Average Finance |
Average Yield |
|||||||||||||
Small loans | $ | 401,132 | 40.4 | % | $ | 366,647 | 40.1 | % | $ | 358,380 | 42.7 | % | ||||||
Large loans | 401,212 | 28.6 | % | 375,836 | 28.6 | % | 288,684 | 29.0 | % | |||||||||
Automobile loans | 35,845 | 15.6 | % | 43,980 | 16.0 | % | 75,984 | 16.2 | % | |||||||||
Retail loans | 30,861 | 19.3 | % | 31,530 | 18.8 | % | 30,788 | 17.8 | % | |||||||||
Total interest and fee yield | $ | 869,050 | 33.2 | % | $ | 817,993 | 32.7 | % | $ | 753,836 | 33.8 | % | ||||||
Total revenue yield | $ | 869,050 | 35.9 | % | $ | 817,993 | 35.4 | % | $ | 753,836 | 36.7 | % | ||||||
Components of Increase in Interest and Fee Income
3Q 18 Compared to 3Q 17 Increase (Decrease) |
||||||||||||||||
Volume | Rate | Volume & Rate | Net | |||||||||||||
Small loans | $ | 4,564 | $ | (2,048 | ) | $ | (244 | ) | $ | 2,272 | ||||||
Large loans | 8,153 | (263 | ) | (102 | ) | 7,788 | ||||||||||
Automobile loans | (1,622 | ) | (101 | ) | 53 | (1,670 | ) | |||||||||
Retail loans | 3 | 119 | 1 | 123 | ||||||||||||
Product mix | (1,375 | ) | 1,244 | 131 | — | |||||||||||
Total increase in interest and fee income | $ | 9,723 | $ | (1,049 | ) | $ | (161 | ) | $ | 8,513 | ||||||
|
Net Loans Originated (1) | ||||||||||||||||||||||
3Q 18 | 2Q 18 |
QoQ $ |
QoQ % Inc (Dec) |
3Q 17 |
YoY $ Inc (Dec) |
YoY % Inc (Dec) |
|||||||||||||||||
Small loans | $ | 162,644 | $ | 165,023 | $ | (2,379 | ) | (1.4 |
)% |
$ | 148,820 | $ | 13,824 | 9.3 | % | ||||||||
Large loans | 95,410 | 109,186 | (13,776 | ) | (12.6 |
)% |
105,460 | (10,050 | ) | (9.5 |
)% |
||||||||||||
Automobile loans (2) | — | — | — | 0.0 | % | 3,787 | (3,787 | ) | (100.0 |
)% |
|||||||||||||
Retail loans | 5,971 | 6,713 | (742 | ) | (11.1 |
)% |
7,905 | (1,934 | ) | (24.5 |
)% |
||||||||||||
Total net loans originated | $ | 264,025 | $ | 280,922 | $ | (16,897 | ) | (6.0 |
)% |
$ | 265,972 | $ | (1,947 | ) | (0.7 |
)% |
|||||||
(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 18 | 2Q 18 | 3Q 17 | ||||||||||
Net credit losses | $ | 16,790 | $ | 19,503 | $ | 14,752 | ||||||
Percentage of average finance receivables (annualized) | 7.7 | % | 9.5 | % | 7.8 | % | ||||||
Provision for credit losses (1) | $ | 23,640 | $ | 20,203 | $ | 20,152 | ||||||
Percentage of average finance receivables (annualized) | 10.9 | % | 9.9 | % | 10.7 | % | ||||||
Percentage of total revenue | 30.3 | % | 27.9 | % | 29.1 | % | ||||||
General and administrative expenses | $ | 35,861 | $ | 33,215 | $ | 33,840 | ||||||
Percentage of average finance receivables (annualized) | 16.5 | % | 16.2 | % | 18.0 | % | ||||||
Percentage of total revenue | 46.0 | % | 45.9 | % | 48.9 | % | ||||||
Same store results: | ||||||||||||
Finance receivables at period-end | $ | 886,104 | $ | 839,741 | $ | 768,794 | ||||||
Finance receivable growth rate | 14.4 | % | 15.6 | % | 10.4 | % | ||||||
Number of branches in calculation | 338 | 334 | 333 | |||||||||
(1) | Includes incremental hurricane allowance for credit losses of $3,900 and $3,000 for 3Q 18 and 3Q 17, respectively. | |
Contractual Delinquency by Aging | ||||||||||||||||||
3Q 18 | 2Q 18 | 3Q 17 | ||||||||||||||||
Allowance for credit losses (1) | $ | 55,300 | 6.2 | % | $ | 48,450 | 5.7 | % | $ | 47,400 | 6.1 | % | ||||||
Current | 726,003 | 81.8 | % | 704,770 | 83.1 | % | 638,696 | 82.5 | % | |||||||||
1 to 29 days past due | 99,008 | 11.1 | % | 89,510 | 10.6 | % | 83,230 | 10.7 | % | |||||||||
Delinquent accounts: | ||||||||||||||||||
30 to 59 days | 22,215 | 2.5 | % | 18,886 | 2.3 | % | 18,621 | 2.4 | % | |||||||||
60 to 89 days | 15,360 | 1.7 | % | 12,103 | 1.4 | % | 11,631 | 1.5 | % | |||||||||
90 to 119 days | 10,183 | 1.1 | % | 8,373 | 1.0 | % | 9,653 | 1.2 | % | |||||||||
120 to 149 days | 8,476 | 1.0 | % | 6,857 | 0.8 | % | 6,799 | 0.9 | % | |||||||||
150 to 179 days | 6,831 | 0.8 | % | 6,739 | 0.8 | % | 6,226 | 0.8 | % | |||||||||
Total contractual delinquency (2) | $ | 63,065 | 7.1 | % | $ | 52,958 | 6.3 | % | $ | 52,930 | 6.8 | % | ||||||
Total finance receivables | $ | 888,076 | 100.0 | % | $ | 847,238 | 100.0 | % | $ | 774,856 | 100.0 | % | ||||||
1 day and over past due | $ | 162,073 | 18.2 | % | $ | 142,468 | 16.9 | % | $ | 136,160 | 17.5 | % | ||||||
Contractual Delinquency by Product | |||||||||||||||
3Q 18 | 2Q 18 | 3Q 17 | |||||||||||||
Small loans | $ 34,581 |
8.3 |
% |
$ 28,347 |
7.4 |
% |
$ 30,328 |
8.3 |
% |
||||||
Large loans | 23,406 |
5.7 |
% |
19,600 |
5.0 |
% |
15,578 |
5.0 |
% |
||||||
Automobile loans | 2,686 |
8.3 |
% |
2,909 |
7.4 |
% |
5,280 |
7.4 |
% |
||||||
Retail loans | 2,392 |
7.8 |
% |
2,102 |
6.8 |
% |
1,744 |
5.6 |
% |
||||||
Total contractual delinquency (2) | $ 63,065 |
7.1 |
% |
$ 52,958 |
6.3 |
% |
$ 52,930 |
6.8 |
% |
||||||
(1) | Includes incremental hurricane allowance for credit losses of $3,900 and $3,000 for 3Q 18 and 3Q 17, respectively. | |
(2) | Delinquency was impacted 0.2% by hurricane-affected branches for both 3Q 18 and 3Q 17. | |
Quarterly Trend | |||||||||||||||||||||||
3Q 17 | 4Q 17 | 1Q 18 | 2Q 18 | 3Q 18 |
QoQ $ |
YoY $ |
|||||||||||||||||
Revenue | |||||||||||||||||||||||
Interest and fee income | $ | 63,615 | $ | 66,377 | $ | 66,151 | $ | 66,829 | $ | 72,128 | $ | 5,299 | $ | 8,513 | |||||||||
Insurance income, net | 3,095 | 3,076 | 3,389 | 2,882 | 2,898 | 16 |
(197 |
) |
|||||||||||||||
Other income | 2,484 | 2,654 | 3,085 | 2,705 | 2,890 | 185 | 406 | ||||||||||||||||
Total revenue | 69,194 | 72,107 | 72,625 | 72,416 | 77,916 | 5,500 | 8,722 | ||||||||||||||||
Expenses | |||||||||||||||||||||||
Provision for credit losses | 20,152 | 19,464 | 19,515 | 20,203 | 23,640 |
(3,437 |
) |
(3,488 |
) |
||||||||||||||
Personnel | 19,534 | 19,903 | 21,228 | 19,390 | 21,376 |
(1,986 |
) |
(1,842 |
) |
||||||||||||||
Occupancy | 5,480 | 5,346 | 5,618 | 5,478 | 5,490 |
(12 |
) |
(10 |
) |
||||||||||||||
Marketing | 2,303 | 1,841 | 1,453 | 2,258 | 2,132 | 126 | 171 | ||||||||||||||||
Other | 6,523 | 6,929 | 6,293 | 6,089 | 6,863 |
(774 |
) |
(340 |
) |
||||||||||||||
Total general and administrative | 33,840 | 34,019 | 34,592 | 33,215 | 35,861 |
(2,646 |
) |
(2,021 |
) |
||||||||||||||
Interest expense | 6,658 | 6,816 | 7,177 | 7,915 | 8,729 |
(814 |
) |
(2,071 |
) |
||||||||||||||
Income before income taxes | 8,544 | 11,808 | 11,341 | 11,083 | 9,686 |
(1,397 |
) |
1,142 | |||||||||||||||
Income taxes | 3,235 | 923 | 2,697 | 2,601 | 2,237 | 364 | 998 | ||||||||||||||||
Net income | $ | 5,309 | $ | 10,885 | $ | 8,644 | $ | 8,482 | $ | 7,449 |
$ |
(1,033 |
) |
$ | 2,140 | ||||||||
Net income per common share: | |||||||||||||||||||||||
Basic | $ | 0.46 | $ | 0.94 | $ | 0.74 | $ | 0.73 | $ | 0.64 |
$ |
(0.09 |
) |
$ | 0.18 | ||||||||
Diluted | $ | 0.45 | $ | 0.92 | $ | 0.72 | $ | 0.70 | $ | 0.61 | $ |
(0.09 |
) |
$ | 0.16 | ||||||||
Weighted-average shares outstanding: | |||||||||||||||||||||||
Basic | 11,563 | 11,592 | 11,618 | 11,658 | 11,672 |
(14 |
) |
(109 |
) |
||||||||||||||
Diluted | 11,812 | 11,875 | 12,030 | 12,138 | 12,133 | 5 |
(321 |
) |
|||||||||||||||
Net interest margin | $ | 62,536 | $ | 65,291 | $ | 65,448 | $ | 64,501 | $ | 69,187 | $ | 4,686 | $ | 6,651 | |||||||||
Net credit margin | $ | 42,384 | $ | 45,827 | $ | 45,933 | $ | 44,298 | $ | 45,547 | $ | 1,249 | $ | 3,163 | |||||||||
3Q 17 | 4Q 17 | 1Q 18 | 2Q 18 | 3Q 18 |
QoQ $ |
YoY $ |
|||||||||||||||||
Total assets | $ | 779,850 | $ | 829,483 | $ | 814,809 | $ | 868,220 | $ | 893,279 | $ | 25,059 | $ | 113,429 | |||||||||
Finance receivables | $ | 774,856 | $ | 817,463 | $ | 804,956 | $ | 847,238 | $ | 888,076 | $ | 40,838 | $ | 113,220 | |||||||||
Allowance for credit losses | $ | 47,400 | $ | 48,910 | $ | 47,750 | $ | 48,450 | $ | 55,300 | $ | 6,850 | $ | 7,900 | |||||||||
Long-term debt | $ | 538,351 | $ | 571,496 | $ | 550,377 | $ | 595,765 | $ | 611,593 | $ | 15,828 | $ | 73,242 | |||||||||
Finance Receivables by Product | |||||||||||||||||||||||
3Q 18 | 2Q 18 |
QoQ $ Inc (Dec) |
QoQ % Inc (Dec) |
3Q 17 |
YoY $ Inc (Dec) |
YoY % Inc (Dec) |
|||||||||||||||||
Small loans | $ | 414,441 | $ | 384,690 | $ | 29,751 |
7.7 |
% |
$ | 363,262 | $ | 51,179 |
14.1 |
% |
|||||||||
Large loans | 410,811 | 392,101 | 18,710 |
4.8 |
% |
308,642 | 102,169 |
33.1 |
% |
||||||||||||||
Total core loans | 825,252 | 776,791 | 48,461 |
6.2 |
% |
671,904 | 153,348 |
22.8 |
% |
||||||||||||||
Automobile loans | 32,322 | 39,414 |
(7,092 |
) |
(18.0 |
)% |
71,666 |
(39,344 |
) |
(54.9 |
)% |
||||||||||||
Retail loans | 30,502 | 31,033 |
(531 |
) |
(1.7 |
)% |
31,286 |
(784 |
) |
(2.5 |
)% |
||||||||||||
Total finance receivables | $ | 888,076 | $ | 847,238 | $ | 40,838 |
4.8 |
% |
$ | 774,856 | $ | 113,220 |
14.6 |
% |
|||||||||
Number of branches at period end | 346 | 340 | 6 |
1.8 |
% |
344 | 2 |
0.6 |
% |
||||||||||||||
Average finance receivables per branch | $ | 2,567 | $ | 2,492 | $ | 75 |
3.0 |
% |
$ | 2,252 | $ | 315 |
14.0 |
% |
|||||||||
Averages and Yields | ||||||||||||
YTD 18 | YTD 17 | |||||||||||
Average Finance |
Average Yield |
Average Finance |
Average Yield |
|||||||||
Small loans | $ | 379,543 |
40.2 |
% |
$ | 351,204 |
42.4 |
% |
||||
Large loans | 377,777 |
28.5 |
% |
261,277 |
28.8 |
% |
||||||
Automobile loans | 45,041 |
15.7 |
% |
82,313 |
16.4 |
% |
||||||
Retail loans | 31,676 |
18.9 |
% |
31,389 |
18.4 |
% |
||||||
Total interest and fee yield | $ | 834,037 |
32.8 |
% |
$ | 726,183 |
33.5 |
% |
||||
Total revenue yield | $ | 834,037 |
35.6 |
% |
$ | 726,183 |
36.8 |
% |
||||
Components of Increase in Interest and Fee Income | ||||||||||||||||
YTD 18 Compared to YTD 17 | ||||||||||||||||
Increase (Decrease) | ||||||||||||||||
Volume | Rate |
Volume & Rate |
Net | |||||||||||||
Small loans | $ | 9,019 |
$ |
(5,876 |
) |
$ |
(474 |
) |
$ | 2,669 | ||||||
Large loans | 25,145 |
(457 |
) |
(204 |
) |
24,484 | ||||||||||
Automobile loans |
(4,596 |
) |
(460 |
) |
208 |
(4,848 |
) |
|||||||||
Retail loans | 40 | 105 | 1 | 146 | ||||||||||||
Product mix |
(2,479 |
) |
2,615 |
(136 |
) |
— | ||||||||||
Total increase in interest and fee income | $ | 27,129 |
$ |
(4,073 |
) |
$ |
(605 |
) |
$ | 22,451 | ||||||
Net Loans Originated (1) | |||||||||||||
YTD 18 | YTD 17 |
YTD $ |
YTD % |
||||||||||
Small loans | $ | 451,423 | $ | 424,559 | $ | 26,864 |
6.3 |
% |
|||||
Large loans | 293,369 | 249,251 | 44,118 |
17.7 |
% |
||||||||
Automobile loans (2) | — | 18,404 |
(18,404 |
) |
(100.0 |
)% |
|||||||
Retail loans | 19,986 | 20,522 |
(536 |
) |
(2.6 |
)% |
|||||||
Total net loans originated | $ | 764,778 | $ | 712,736 | $ | 52,042 |
7.3 |
% |
|||||
(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 18 | YTD 17 | |||||||
Net credit losses | $ | 56,968 | $ | 51,725 | ||||
Percentage of average finance receivables (annualized) | 9.1 | % | 9.5 | % | ||||
Provision for credit losses (1) | $ | 63,358 | $ | 57,875 | ||||
Percentage of average finance receivables (annualized) | 10.1 | % | 10.6 | % | ||||
Percentage of total revenue | 28.4 | % | 28.9 | % | ||||
General and administrative expenses | $ | 103,668 | $ | 96,936 | ||||
Percentage of average finance receivables (annualized) | 16.6 | % | 17.8 | % | ||||
Percentage of total revenue | 46.5 | % | 48.4 | % | ||||
(1) | Includes incremental hurricane allowance for credit losses of $3,900 and $3,000 for YTD 18 and YTD 17, respectively. | |
We utilize certain non-GAAP measures as additional metrics to aid in, and enhance, the understanding of our financial results and related measures. We believe that these non-GAAP measures provide useful information by excluding certain material items that may not be indicative of our core operating results. We have presented non-GAAP measures that adjust for the impact of the bulk sale of previously charged-off bankrupt accounts (2017) and natural disasters (2017 and 2018) because these types of events rarely occurred prior to 2017 and, we believe, will occur infrequently in the future. As a result, we believe that the non-GAAP measures that we have presented will allow for a better evaluation of the operating performance of the business and facilitate a meaningful comparison of our results in the current period to those in prior and future periods. The 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, our non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies. The following table provides a reconciliation of GAAP measures to non-GAAP measures for the periods which include non-GAAP adjustments.
Non-GAAP Reconciliation | |||||||||
3Q 18 | Adjustments (1) | Non-GAAP | |||||||
Net income | $ | 7,449 | $ | 2,884 | $ | 10,333 | |||
Diluted net income per common share | $ | 0.61 | $ | 0.24 | $ | 0.85 | |||
Non-GAAP Reconciliation | |||||||||
3Q 17 | Adjustments (1) | Non-GAAP | |||||||
Net income | $ | 5,309 | $ | 1,541 | $ | 6,850 | |||
Diluted net income per common share | $ | 0.45 | $ | 0.13 | $ | 0.58 | |||
(1) | Non-GAAP adjustment details are listed below: |
Non-GAAP Adjustments (2) | |||||||
3Q 18 | 3Q 17 | ||||||
Estimated hurricane impact (3) | $ | 2,884 | $ | 2,173 | |||
Bulk sale of previously charged-off bankrupt accounts | — |
(632 |
) |
||||
Adjustment to net income | $ | 2,884 | $ | 1,541 | |||
Adjustment to diluted net income per common share | $ | 0.24 | $ | 0.13 | |||
(2) | The effective tax rates were 25.0% and 38.3% for 3Q 18 and 3Q 17, respectively. | |
(3) | The estimated hurricane impact relates to an incremental pre-tax allowance for credit losses of $3.9 million (3Q 18) and $3.0 million (3Q 17), along with minor impacts to revenue and expenses. |