Regional Management Corp. Announces Third Quarter 2019 Results

- Net income of $12.6 million and diluted earnings per share of $1.08 -

- 17.7% revenue growth, driven by 16.3% average finance receivables growth -

- Reached milestone of $1 billion in finance receivables -

- Completed $25 million stock repurchase program in October -

GREENVILLE, S.C.--()--Regional Management Corp. (NYSE: RM) (the “Company”), a diversified consumer finance company, today announced results for the third quarter ended September 30, 2019.

Third Quarter 2019 Highlights

  • Net income for the third quarter of 2019 was $12.6 million, a 68.8% increase from the prior-year period. Diluted earnings per share for the third quarter of 2019 was $1.08, compared to $0.61 in the prior-year period. Net income and diluted earnings per share for the prior-year period included hurricane-related impacts of $2.9 million and $0.24, respectively.
  • Total finance receivables as of September 30, 2019 were $1.0 billion, an increase of 17.4%, or $154.1 million, from the prior-year period.
    • 18th consecutive quarter of year-over-year double-digit finance receivables growth.
    • Total core small and large loan finance receivables increased $178.8 million, or 21.7%, compared to the prior-year period.
    • Large loan finance receivables of $554.7 million increased $143.9 million, or 35.0%, from the prior-year period and represented 53.2% of the total loan portfolio. Small loan finance receivables as of September 30, 2019 were $449.4 million, an increase of 8.4% over the prior-year period.
  • Total revenue for the third quarter of 2019 was $91.7 million, a $13.8 million, or 17.7%, increase from the prior-year period.
    • 13th consecutive quarter of year-over-year double-digit revenue growth.
    • Interest and fee income increased 15.2%, driven by a 17.4% increase in finance receivables compared to the prior-year period.
    • Insurance income, net increased $2.2 million, driven by an increase in premium revenue and a decrease in non-file insurance claims expense (due to the previously disclosed change in business practice to lower the utilization of non-file insurance).
  • Provision for credit losses for the third quarter of 2019 was $24.5 million, an increase of $0.9 million, or 3.7%, from the prior-year period. The increase was primarily due to $4.0 million of higher net credit losses, including $1.2 million related to the change in business practice to lower utilization of non-file insurance. The change in business practice had no impact on net income. The third quarter of 2018 included $3.9 million of hurricane-related provision for credit losses that did not recur in the third quarter of 2019.
  • Annualized net credit losses as a percentage of average finance receivables were 8.2%, a 50 basis point increase from 7.7% in the prior-year period. Approximately 40 basis points of the increase was due to incremental non-file insurance claims shifting from insurance income, net to credit losses as compared to the prior-year period.
  • 30+ day contractual delinquencies as of September 30, 2019 were 6.6%, compared to 7.1% as of September 30, 2018.
  • During the third quarter of 2019, the Company repurchased approximately 273,000 shares of its common stock at a weighted-average price of $26.74 per share under the Company’s $25.0 million stock repurchase program. In October 2019, the Company completed the stock repurchase program, having repurchased approximately 938,000 shares in total at a weighted-average price of $26.65 per share.
  • Subsequent to quarter-end, the Company completed a third asset-backed securitization, a $130 million note issuance (senior class rated “AA” by DBRS) with a weighted-average coupon of 3.17%.

“We are thrilled with our results for the third quarter, delivering very strong top and bottom line double-digit year-over-year growth,” said Peter R. Knitzer, President and Chief Executive Officer of Regional Management. “We had another record quarter of sequential receivable growth, and our core loan portfolio grew by 22% versus the prior year. In addition, we surpassed the $1 billion receivable milestone during the quarter. Our growth in receivables led to another quarter of strong revenue, further validating our hybrid growth strategy.”

“Importantly, our credit quality remained stable and our custom credit scorecards continue to perform as expected, with 30+ day delinquencies down 50 basis points compared to the prior-year period. We expect to receive the benefits from these advanced credit tools in 2020 and beyond,” added Mr. Knitzer. “While we continued to invest in areas like digital, operating expenses as a percentage of receivables improved 60 basis points versus the prior-year period, demonstrating strong control of expenses. We remain well positioned to achieve a second consecutive quarter of double-digit net income growth in the fourth quarter of 2019 and to deliver long-term shareholder value.”

Third Quarter 2019 Results

Finance receivables outstanding at September 30, 2019 were $1.0 billion, a 17.4% increase from $888.1 million in the prior-year period. The finance receivables increase was primarily due to continued strong growth in both the core small and large loan portfolios.

For the third quarter ended September 30, 2019, the Company reported total revenue of $91.7 million, a 17.7% increase from $77.9 million in the prior-year period. Interest and fee income for the third quarter of 2019 was $83.1 million, a 15.2% increase from $72.1 million in the prior-year period, related to steady growth in the small and large loan portfolios.

The provision for credit losses in the third quarter of 2019 was $24.5 million, a $0.9 million, or 3.7%, increase compared to $23.6 million in the prior-year period. The increase was primarily due to $4.0 million of higher net credit losses, including $1.2 million related to the change in business practice to lower the utilization of non-file insurance. The third quarter of 2018 also included $3.9 million of hurricane-related provision for credit losses that did not recur in the third quarter of 2019.

Net credit losses were $20.8 million in the third quarter of 2019, an increase of $4.0 million over the prior-year period. Annualized net credit losses as a percentage of average finance receivables in the third quarter of 2019 were 8.2%, a 50 basis point increase from 7.7% in the prior-year period. Approximately 40 basis points of the increase was due to incremental non-file insurance claims shifting from insurance income, net to credit losses as compared to the prior-year period.

General and administrative expenses for the third quarter of 2019 were $40.2 million, an increase of $4.3 million, or 12.0%, from the prior-year period. The operating expense ratio (annualized general and administrative expenses as a percentage of average finance receivables) was 15.9%, a 60 basis point improvement from the prior-year period. General and administrative expenses for the third quarter of 2019 included $1.1 million of incremental costs related to 12 net new branches that opened since the prior-year period.

Interest expense was $10.3 million in the third quarter of 2019, compared to $8.7 million in the prior-year period. The increase in interest expense was primarily due to larger long-term debt amounts outstanding from the ongoing growth in finance receivables.

Net income for the third quarter of 2019 was $12.6 million, an increase from $7.4 million in the prior-year period. Diluted earnings per share for the third quarter of 2019 was $1.08, an increase from $0.61 in the prior-year period.

2019 De Novo Outlook

As of September 30, 2019, the Company’s branch network consisted of 358 locations. The Company continues to expect to open a total of 15 de novo branches for the full year 2019.

Liquidity and Capital Resources

As of September 30, 2019, the Company had finance receivables of $1.0 billion and outstanding long-term debt of $743.8 million, consisting of:

  • $363.7 million on its $640.0 million senior revolving credit facility,
  • $8.6 million on its amortizing loan,
  • $91.0 million on its $125.0 million revolving warehouse credit facility, and
  • $280.6 million through its asset-backed securitizations.

The Company had a funded debt-to-equity ratio of 2.5 to 1.0 and a shareholder equity ratio of 27.3%, as of September 30, 2019. On a non-GAAP basis, the Company had a funded debt-to-tangible equity ratio of 2.6 to 1.0, as of September 30, 2019.

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 Management’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 Management’s website at www.RegionalManagement.com.

A replay will be available following the end of the call through Wednesday, November 13, 2019, by telephone at (844) 512-2921 (toll-free) or (412) 317-6671 (international), passcode 10007901. A webcast replay of the call will be available at 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 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; 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 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. 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 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 358 branch locations across 11 states in the Southeastern, Southwestern, Mid-Atlantic, and Midwestern United States. 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.

 

Regional Management Corp. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

(in thousands, except per share amounts)

 

 

 

 

 

 

 

Better (Worse)

 

 

 

 

 

Better (Worse)

 

3Q 19

 

3Q 18 

 

$

 

%

 

YTD 19 

 

YTD 18

 

$

 

%

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fee income

$

83,089

 

 

$

72,128

 

 

$

10,961

 

 

15.2

%

 

$

233,385

 

 

$

205,108

 

 

$

28,277

 

 

13.8

%

Insurance income, net

 

5,087

 

 

 

2,898

 

 

 

2,189

 

 

75.5

%

 

 

14,266

 

 

 

9,169

 

 

 

5,097

 

 

55.6

%

Other income

 

3,531

 

 

 

2,890

 

 

 

641

 

 

22.2

%

 

 

10,078

 

 

 

8,680

 

 

 

1,398

 

 

16.1

%

Total revenue

 

91,707

 

 

 

77,916

 

 

 

13,791

 

 

17.7

%

 

 

257,729

 

 

 

222,957

 

 

 

34,772

 

 

15.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

24,515

 

 

 

23,640

 

 

 

(875

)

 

(3.7

)%

 

 

73,572

 

 

 

63,358

 

 

 

(10,214

)

 

(16.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

23,791

 

 

 

21,376

 

 

 

(2,415

)

 

(11.3

)%

 

 

68,695

 

 

 

61,994

 

 

 

(6,701

)

 

(10.8

)%

Occupancy

 

6,367

 

 

 

5,490

 

 

 

(877

)

 

(16.0

)%

 

 

18,742

 

 

 

16,586

 

 

 

(2,156

)

 

(13.0

)%

Marketing

 

2,397

 

 

 

2,132

 

 

 

(265

)

 

(12.4

)%

 

 

6,309

 

 

 

5,843

 

 

 

(466

)

 

(8.0

)%

Other

 

7,612

 

 

 

6,863

 

 

 

(749

)

 

(10.9

)%

 

 

22,347

 

 

 

19,245

 

 

 

(3,102

)

 

(16.1

)%

Total general and administrative

 

40,167

 

 

 

35,861

 

 

 

(4,306

)

 

(12.0

)%

 

 

116,093

 

 

 

103,668

 

 

 

(12,425

)

 

(12.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

10,348

 

 

 

8,729

 

 

 

(1,619

)

 

(18.5

)%

 

 

29,840

 

 

 

23,821

 

 

 

(6,019

)

 

(25.3

)%

Income before income taxes

 

16,677

 

 

 

9,686

 

 

 

6,991

 

 

72.2

%

 

 

38,224

 

 

 

32,110

 

 

 

6,114

 

 

19.0

%

Income taxes

 

4,105

 

 

 

2,237

 

 

 

(1,868

)

 

(83.5

)%

 

 

9,175

 

 

 

7,535

 

 

 

(1,640

)

 

(21.8

)%

Net income

$

12,572

 

 

$

7,449

 

 

$

5,123

 

 

68.8

%

 

$

29,049

 

 

$

24,575

 

 

$

4,474

 

 

18.2

%

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.11

 

 

$

0.64

 

 

$

0.47

 

 

73.4

%

 

$

2.51

 

 

$

2.11

 

 

$

0.40

 

 

19.0

%

Diluted

$

1.08

 

 

$

0.61

 

 

$

0.47

 

 

77.0

%

 

$

2.44

 

 

$

2.03

 

 

$

0.41

 

 

20.2

%

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

11,302

 

 

 

11,672

 

 

 

370

 

 

3.2

%

 

 

11,572

 

 

 

11,649

 

 

 

77

 

 

0.7

%

Diluted

 

11,677

 

 

 

12,133

 

 

 

456

 

 

3.8

%

 

 

11,924

 

 

 

12,101

 

 

 

177

 

 

1.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

4.7

%

 

 

3.3

%

 

 

 

 

 

 

3.9

%

 

 

3.8

%

 

 

 

 

Return on average equity (annualized)

 

17.2

%

 

 

11.3

%

 

 

 

 

 

 

13.4

%

 

 

12.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value amounts)

 

 

 

 

   

 

   

Increase (Decrease)

 

 

3Q 19

   

3Q 18

   

$

 

%

Assets

 

 

   

 

   

 

   

 

 

Cash

 

$

2,044

 

 

$

517

 

 

$

1,527

 

 

295.4

%

Gross finance receivables

 

 

1,404,172

 

 

 

1,175,797

 

 

 

228,375

 

 

19.4

%

Unearned finance charges and insurance premiums

 

(361,986

)

 

(287,721

)

 

(74,265

)

 

(25.8

)%

Finance receivables

 

 

1,042,186

 

 

 

888,076

 

 

 

154,110

 

 

17.4

%

Allowance for credit losses

 

 

(60,900

)

 

 

(55,300

)

 

(5,600

)

 

(10.1

)%

Net finance receivables

 

 

981,286

 

 

 

832,776

 

 

 

148,510

 

 

17.8

%

Restricted cash

 

 

43,659

 

 

 

29,327

 

 

 

14,332

 

 

48.9

%

Lease assets

 

 

25,688

 

 

   

 

25,688

 

 

100.0

%

Property and equipment

 

 

14,512

 

 

 

12,540

 

 

 

1,972

 

 

15.7

%

Intangible assets

 

 

9,574

 

 

 

10,429

 

 

 

(855

)

 

(8.2

)%

Deferred tax asset

 

 

1,445

 

 

   

 

1,445

 

 

100.0

%

Other assets

 

 

7,964

 

 

 

7,690

 

 

 

274

 

 

3.6

%

Total assets

 

$

1,086,172

 

 

$

893,279

 

 

$

12,893

 

 

21.6

%

 

 

 

   

 

   

 

   

 

 

Liabilities and Stockholders’ Equity

 

 

   

 

   

 

   

 

 

Liabilities:

 

 

   

 

   

 

   

 

 

Long-term debt

 

$

743,835

 

 

$

611,593

 

 

$

12,242

 

 

21.6

%

Unamortized debt issuance costs

 

 

(7,828

)

 

 

(7,216

)

 

 

(612

)

 

(8.5

)%

Net long-term debt

 

 

736,007

 

 

 

604,377

 

 

 

131,630

 

 

21.8

%

Lease liabilities

 

 

27,714

 

 

   

 

27,714

 

 

100.0

%

Accounts payable and accrued expenses

 

 

25,764

 

 

 

19,510

 

 

 

6,254

 

 

32.1

%

Deferred tax liability

 

   

 

1,963

 

 

 

(1,963

)

 

(100.0

)%

Total liabilities

 

 

789,485

 

 

 

625,850

 

 

 

163,635

 

 

26.1

%

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, 13,513 shares issued and 11,409 shares outstanding at September 30, 2019 and 13,336 shares issued and 11,790 shares outstanding at September 30, 2018)

 

 

1,351

 

 

 

1,334

 

 

 

17

 

 

1.3

%

Additional paid-in-capital

 

 

101,682

 

 

 

97,814

 

 

 

3,868

 

 

4.0

%

Retained earnings

 

 

233,146

 

 

 

193,327

 

 

 

39,819

 

 

20.6

%

Treasury stock (2,104 shares at September 30, 2019 and 1,546 shares at September 30, 2018)

 

 

(39,492

)

 

 

(25,046

)

 

 

(14,446

)

 

(57.7

)%

Total stockholders’ equity

 

 

296,687

 

 

 

267,429

 

 

 

29,258

 

 

10.9

%

Total liabilities and stockholders’ equity

 

$

1,086,172

 

 

$

893,279

 

 

$

192,893

 

 

21.6

%

 

 

 

   

 

   

 

   

 

 
 

Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(in thousands, except per share amounts)

 

 

     

Finance Receivables by Product 

 

     

3Q 19 

 

2Q 19

 

QoQ $

Inc (Dec)

 

QoQ %

Inc (Dec)

 

3Q 18

 

YoY $

Inc (Dec)

 

YoY %

Inc (Dec)

Small loans

     

$

449,416

 

$

431,214

 

$

18,202

 

 

4.2

%

 

$

414,441

 

$

34,975

 

 

8.4

%

Large loans

     

 

554,664

 

 

498,757

 

 

55,907

 

 

11.2

%

 

 

410,811

 

 

143,853

 

 

35.0

%

Total core loans

     

 

1,004,080

 

 

929,971

 

 

74,109

 

 

8.0

%

 

 

825,252

 

 

178,828

 

 

21.7

%

Automobile loans

     

 

12,121

 

 

15,686

 

 

(3,565

)

 

(22.7

)%

 

 

32,322

 

 

(20,201

)

 

(62.5

)%

Retail loans

     

 

25,985

 

 

27,777

 

 

(1,792

)

 

(6.5

) %

 

 

30,502

 

 

(4,517

)

 

(14.8

)%

Total finance receivables

     

$

1,042,186

 

$

973,434

 

$

68,752

 

 

7.1

%

 

$

888,076

 

$

154,110

 

 

17.4

%

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of branches at period end.

     

 

358

 

 

356

 

 

2

 

 

0.6

%

 

 

346

 

 

12

 

 

3.5

%

Average finance receivables per branch

     

$

2,911

 

$

2,734

 

$

177

 

 

6.5

%

 

$

2,567

 

$

344

 

 

13.4

%

 

Averages and Yields

 

3Q 19

 

2Q 19

 

3Q 18 

Average Finance
Receivables

 

Average Yield

(Annualized)

 

Average Finance
Receivables

 

Average Yield

(Annualized)

 

Average Finance
Receivables

 

Average Yield

(Annualized) 

Small loans

$

442,137

 

38.8

%

 

$

419,349

 

38.6

%

 

$

401,132

 

40.4

%

Large loans

 

527,670

 

29.1

%

 

 

468,305

 

28.6

%

 

 

401,212

 

28.6

%

Automobile loans

 

13,806

 

15.0

%

 

 

17,933

 

14.6

%

 

 

35,845

 

15.6

%

Retail loans

 

26,902

 

19.1

%

 

 

28,786

 

18.8

%

 

 

30,861

 

19.3

%

Total interest and fee yield

$

1,010,515

 

32.9

%

 

$

934,373

 

32.5

%

 

$

869,050

 

33.2

%

Total revenue yield

$

1,010,515

 

36.3

%

 

$

934,373

 

36.1

%

 

$

869,050

 

35.9

%

 

Components of Increase in Interest and Fee Income

3Q 19 Compared to 3Q 18

Increase (Decrease)

Volume

 

Rate

 

Volume & Rate 

 

Net

Small loans

$

4,143

 

 

$

(1,635

)

 

$

(167

)

 

$

2,341

 

Large loans

 

9,048

 

 

 

504

 

 

 

159

 

 

 

9,711

 

Automobile loans

 

(861

)

 

 

(59

)

 

 

36

 

 

 

(884

)

Retail loans

 

(191

)

 

 

(18

)

 

 

2

 

 

 

(207

)

Product mix

 

(398

)

 

 

537

 

 

 

(139

)

 

 

Total increase in interest and fee income

$

11,741

 

 

$

(671

)

 

$

(109

)

 

$

10,961

 

 

Net Loans Originated (1) (2)

 

     

3Q 19

 

2Q 19 

 

QoQ $

Inc (Dec)

 

QoQ %

Inc (Dec)

 

3Q 18

 

YoY $

Inc (Dec)

 

YoY %

Inc (Dec)

Small loans

     

$

177,629

 

$

174,440

 

$

3,189

 

 

1.8

%

 

$

162,644

 

$

14,985

 

 

9.2

%

Large loans

     

 

166,835

 

 

169,373

 

 

(2,538

)

 

(1.5

)%

 

 

95,410

 

 

71,425

 

 

74.9

%

Retail loans

     

 

4,421

 

 

5,179

 

 

(758

)

 

(14.6

)%

 

 

5,971

 

 

(1,550

)

 

(26.0

)%

Total net loans originated

     

$

348,885

 

$

348,992

 

$

(107

)

 

(0.0

)%

 

$

264,025

 

$

84,860

 

 

32.1

%

(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 19

 

2Q 19

 

3Q 18

Net credit losses (1) (2)

$

20,815

 

 

$

24,914

 

 

$

16,790

 

Percentage of average finance receivables (annualized)

 

8.2

%

 

 

10.7

%

 

 

7.7

%

 

 

 

 

 

 

Provision for credit losses (3)

$

24,515

 

 

$

25,714

 

 

$

23,640

 

Percentage of average finance receivables (annualized)

 

9.7

%

 

 

11.0

%

 

 

10.9

%

Percentage of total revenue

 

26.7

%

 

 

30.5

%

 

 

30.3

%

 

 

 

 

 

 

General and administrative expenses

$

40,167

 

 

$

37,743

 

 

$

35,861

 

Percentage of average finance receivables (annualized)

 

15.9

%

 

 

16.2

%

 

 

16.5

%

Percentage of total revenue

 

43.8

%

 

 

44.8

%

 

 

46.0

%

 

 

 

 

 

 

Same store results (4):

 

 

 

 

 

Finance receivables at period-end

$

1,021,291

 

 

$

956,277

 

 

$

886,104

 

Finance receivable growth rate

 

15.9

%

 

 

12.9

%

 

 

14.4

%

Number of branches in calculation

 

332

 

 

 

333

 

 

 

338

 (1)

Includes hurricane-related net credit losses of $1,429 for 2Q 19.

 (2)

Includes net credit losses related to lower utilization of non-file insurance of $1,791, $1,745, and $632 for 3Q 19, 2Q 19, and 3Q 18, respectively.

 (3)

Includes hurricane-related provision for credit losses of $(571) and $3,900 for 2Q 19 and 3Q 18, respectively.

 (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

 

 

3Q 19 

 

2Q 19 

 

3Q 18 

Allowance for credit losses (1)

 

$

60,900

 

5.8

%

 

$

57,200

 

5.9

%

 

$

55,300

 

6.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

872,246

 

83.7

%

 

 

805,215

 

82.7

%

 

 

726,003

 

81.8

%

1 to 29 days past due

 

 

101,412

 

9.7

%

 

 

106,017

 

10.9

%

 

 

99,008

 

11.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Delinquent accounts:

 

 

 

 

 

 

 

 

 

 

 

 

30 to 59 days

 

 

22,919

 

2.3

%

 

 

22,082

 

2.3

%

 

 

22,215

 

2.5

%

60 to 89 days.

 

 

16,148

 

1.5

%

 

 

13,961

 

1.4

%

 

 

15,360

 

1.7

%

90 to 119 days

 

 

11,736

 

1.1

%

 

 

9,962

 

1.1

%

 

 

10,183

 

1.1

%

120 to 149 days

 

 

9,676

 

0.9

%

 

 

8,089

 

0.8

%

 

 

8,476

 

1.0

%

150 to 179 days

 

 

8,049

 

0.8

%

 

 

8,108

 

0.8

%

 

 

6,831

 

0.8

%

Total contractual delinquency (2)

 

$

68,528

 

6.6

%

 

$

62,202

 

6.4

%

 

$

63,065

 

7.1

%

Total finance receivables

 

$

1,042,186

 

100.0

%

 

$

973,434

 

100.0

%

 

$

888,076

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

1 day and over past due

 

$

169,940

 

16.3

%

 

$

168,219

 

17.3

%

 

$

162,073

 

18.2

%

 

   

Contractual Delinquency by Product

   

3Q 19

 

2Q 19

 

3Q 18

Small loans

   

$

36,620

 

8.1

%

 

$

33,276

 

7.7

%

 

$

34,581

 

8.3

%

Large loans

   

 

28,563

 

5.1

%

 

 

25,447

 

5.1

%

 

 

23,406

 

5.7

%

Automobile loans

   

 

1,153

 

9.5

%

 

 

1,294

 

8.2

%

 

 

2,686

 

8.3

%

Retail loans

   

 

2,192

 

8.4

%

 

 

2,185

 

7.9

%

 

 

2,392

 

7.8

%

Total contractual delinquency (2)

   

$

68,528

 

6.6

%

 

$

62,202

 

6.4

%

 

$

63,065

 

7.1

%

(1)

Includes incremental hurricane allowance for credit losses of $3,900 in 3Q 18.

(2)

Includes a 0.2% delinquency benefit related to hurricane payment deferrals in 3Q 18.

 

Income Statement Quarterly Trend

 

3Q 18

 

4Q 18

 

1Q 19

 

2Q 19

 

3Q 19

 

QoQ $
B(W)

 

YoY $
B(W)

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fee income

$

72,128

 

$

75,013

 

$

74,322

 

$

75,974

 

$

83,089

 

$

7,115

 

 

$

10,961

 

Insurance income, net

 

2,898

 

 

5,624

 

 

4,113

 

 

5,066

 

 

5,087

 

 

21

 

 

 

2,189

 

Other income

 

2,890

 

 

3,112

 

 

3,313

 

 

3,234

 

 

3,531

 

 

297

 

 

 

641

 

Total revenue

 

77,916

 

 

83,749

 

 

81,748

 

 

84,274

 

 

91,707

 

 

7,433

 

 

 

13,791

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

23,640

 

 

23,698

 

 

23,343

 

 

25,714

 

 

24,515

 

 

1,199

 

 

 

(875

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

21,376

 

 

22,074

 

 

22,393

 

 

22,511

 

 

23,791

 

 

(1,280

)

 

 

(2,415

)

Occupancy

 

5,490

 

 

5,933

 

 

6,165

 

 

6,210

 

 

6,367

 

 

(157

)

 

 

(877

)

Marketing

 

2,132

 

 

1,902

 

 

1,651

 

 

2,261

 

 

2,397

 

 

(136

)

 

 

(265

)

Other

 

6,863

 

 

6,707

 

 

7,974

 

 

6,761

 

 

7,612

 

 

(851

)

 

 

(749

)

Total general and administrative

 

35,861

 

 

36,616

 

 

38,183

 

 

37,743

 

 

40,167

 

 

(2,424

)

 

 

(4,306

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

8,729

 

 

9,643

 

 

9,721

 

 

9,771

 

 

10,348

 

 

(577

)

 

 

(1,619

)

Income before income taxes

 

9,686

 

 

13,792

 

 

10,501

 

 

11,046

 

 

16,677

 

 

5,631

 

 

 

6,991

 

Income taxes

 

2,237

 

 

3,022

 

 

2,393

 

 

2,677

 

 

4,105

 

 

(1,428

)

 

 

(1,868

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

7,449

 

$

10,770

 

$

8,108

 

$

8,369

 

$

12,572

 

$

4,203

 

 

$

5,123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.64

 

$

0.92

 

$

0.69

 

$

0.71

 

$

1.11

 

$

0.40

 

 

$

0.47

 

Diluted

$

0.61

 

$

0.90

 

$

0.67

 

$

0.70

 

$

1.08

 

$

0.38

 

 

$

0.47

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

11,672

 

 

11,672

 

 

11,712

 

 

11,706

 

 

11,302

 

 

404

 

 

 

370

 

Diluted

 

12,133

 

 

12,010

 

 

12,076

 

 

12,022

 

 

11,677

 

 

345

 

 

 

456

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

$

69,187

 

$

74,106

 

$

72,027

 

$

74,503

 

$

81,359

 

$

6,856

 

 

$

12,172

 

Net credit margin

$

45,547

 

$

50,408

 

$

48,684

 

$

48,789

 

$

56,844

 

$

8,055

 

 

$

11,297

 

 

Balance Sheet Quarterly Trend

 

3Q 18

 

4Q 18

 

1Q 19

 

2Q 19

 

3Q 19 

 

QoQ $

Inc (Dec)

 

YoY $

Inc (Dec)

Total assets

$

893,279

 

$

956,395

 

$

953,467

 

$

1,019,316

 

$

1,086,172

 

$

66,856

 

$

192,893

Finance receivables

$

888,076

 

$

932,243

 

$

912,250

 

$

973,434

 

$

1,042,186

 

$

68,752

 

$

154,110

Allowance for credit losses

$

55,300

 

$

58,300

 

$

56,400

 

$

57,200

 

$

60,900

 

$

3,700

 

$

5,600

Long-term debt

$

611,593

 

$

660,507

 

$

628,786

 

$

689,310

 

$

743,835

 

$

54,525

 

$

132,242

 

Other Key Metrics Quarterly Trend

 

3Q 18

 

4Q 18

 

1Q 19

 

2Q 19

 

3Q 19

 

QoQ

Inc (Dec)

 

YoY

Inc (Dec)

Interest and fee yield (annualized)

 

33.2

%

 

 

32.9

%

 

 

32.1

%

 

 

32.5

%

 

 

32.9

%

 

 

0.4

%

 

 

(0.3

)%

Efficiency ratio (1)

 

46.0

%

 

 

43.7

%

 

 

46.7

%

 

 

44.8

%

 

 

43.8

%

 

 

(1.0

)%

 

 

(2.2

)%

Operating expense ratio (2)

 

16.5

%

 

 

16.1

%

 

 

16.5

%

 

 

16.2

%

 

 

15.9

%

 

 

(0.3

)%

 

 

(0.6

)%

30+ contractual delinquency

 

7.1

%

 

 

7.7

%

 

 

7.0

%

 

 

6.4

%

 

 

6.6

%

 

 

0.2

%

 

 

(0.5

)%

Net credit loss (3)

 

7.7

%

 

 

9.1

%

 

 

10.9

%

 

 

10.7

%

 

 

8.2

%

 

 

(2.5

)%

 

 

0.5

%

Book value per share

$

22.68

 

$

23.70

 

$

24.15

 

$

24.88

 

$

26.00

 

$

1.12

 

$

3.32

(1)

General and administrative expenses as a percentage of total revenue.

(2)

Annualized general and administrative expenses as a percentage of average finance receivables.

(3)

Annualized net credit losses as a percentage of average finance receivables.

 

Averages and Yields

 

YTD 19

 

YTD 18 

 

Average Finance
Receivables

 

Average Yield

(Annualized)

 

Average Finance
Receivables
 

 

Average Yield

(Annualized) 

Small loans

$

431,923

 

38.5

%

 

$

379,543

 

40.2

%

Large loans

 

478,147

 

28.6

%

 

 

377,777

 

28.5

%

Automobile loans

 

18,287

 

14.8

%

 

 

45,041

 

15.7

%

Retail loans

 

28,568

 

18.8

%

 

 

31,676

 

18.9

%

Total interest and fee yield

$

956,925

 

32.5

%

 

$

834,037

 

32.8

%

Total revenue yield

$

956,925

 

35.9

%

 

$

834,037

 

35.6

%

 

Components of Increase in Interest and Fee Income

YTD 19 Compared to YTD 18

Increase (Decrease)

 

Volume 

 

Rate 

 

Volume & Rate

 

Net

Small loans

$

15,793

 

 

$

(4,836

)

 

$

(667

)

 

$

10,290

 

Large loans

 

21,488

 

 

 

174

 

 

 

47

 

 

 

21,709

 

Automobile loans

 

(3,150

)

 

 

(293

)

 

 

174

 

 

 

(3,269

)

Retail loans

 

(440

)

 

 

(14

)

 

 

1

 

 

 

(453

)

Product mix

 

(3,470

)

 

 

3,275

 

 

 

195

 

 

 

Total increase in interest and fee income

$

30,221

 

 

$

(1,694

)

 

$

(250

)

 

$

28,277

 

 

Net Loans Originated (1) (2)

 

YTD 19

 

YTD 18

 

YTD $

Inc (Dec)

 

YTD %

Inc (Dec)

Small loans

$

481,314

 

$

451,423

 

$

29,891

 

 

6.6

%

Large loans

 

420,276

 

 

293,369

 

 

126,907

 

 

43.3

%

Retail loans

 

15,797

 

 

19,986

 

 

(4,189

)

 

(21.0

)%

Total net loans originated

$

917,387

 

$

764,778

 

$

152,609

 

 

20.0

%

(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 19

 

YTD 18

Net credit losses (1) (2)

 

$

70,972

 

 

$

56,968

 

Percentage of average finance receivables (annualized)

 

 

9.9

%

 

 

9.1

%

 

 

 

 

 

Provision for credit losses (3)

 

$

73,572

 

 

$

63,358

 

Percentage of average finance receivables (annualized)

 

 

10.3

%

 

 

10.1

%

Percentage of total revenue

 

 

28.5

%

 

 

28.4

%

 

 

 

 

 

General and administrative expenses

 

$

116,093

 

 

$

103,668

 

Percentage of average finance receivables (annualized)

 

 

16.2

%

 

 

16.6

%

Percentage of total revenue

 

 

45.0

%

 

 

46.5

%

(1)

Includes hurricane-related net credit losses of $2,325 and $1,819 for YTD 19 and YTD 18, respectively.

(2)

Includes net credit losses related to lower utilization of non-file insurance of $5,204 and $1,581 for YTD 19 and YTD 18, respectively.

(3)

Includes hurricane-related provision for credit losses of $(1,275) and $2,919 for YTD 19 and YTD 18, respectively.

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. We utilize non-GAAP measures as additional metrics to aid in, and enhance, the understanding of our financial results. Tangible equity and funded debt-to-tangible equity ratio are non-GAAP measures that adjust GAAP measures to exclude intangible assets. We use these non-GAAP measures to evaluate and manage our capital and leverage position. We also believe that these non-GAAP measures are commonly used in the financial services industry and provide useful information to users of our financial statements in the evaluation of our 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, 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.

   

 

   

3Q 19

   

Long-term debt

   

$

743,835

   

 

   

 

   

Total stockholders’ equity

   

 

296,687

   

Less: Intangible assets

   

 

9,574

   

Tangible equity (non-GAAP)

   

$

287,113

   

 

   

 

   

Funded debt-to-equity ratio

   

2.51x

   

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

   

2.59x

 

Contacts

Investor Relations
Garrett Edson, (203) 682-8331

Contacts

Investor Relations
Garrett Edson, (203) 682-8331