Regional Management Corp. Announces First Quarter 2020 Results

- 17.5% year-over-year revenue growth and 18.9% average net finance receivables growth -

- Additional $23.9 million reserve build related to COVID-19 -

- Net loss of $6.3 million and diluted loss per share of $0.56 -

- Available liquidity of $110 million as of May 4, 2020 -

GREENVILLE, S.C.--()--Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the first quarter ended March 31, 2020.

“As we navigate through this unprecedented time, we are committed to supporting the overall health and well-being of our customers, employees, and communities,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “Our omni-channel capabilities are serving our customers well and providing them with multiple safe avenues to make payments. We’ve also proactively implemented several borrower assistance programs to help our customers with any challenges, including offering payment deferrals and waiving late fees on deferred payments. Building on our stable 30+ day delinquency position as of March 31st, these programs and the impact from the government stimulus have positioned us well as we closed out the month of April. As of April 30th, our 30+ day contractual delinquencies stood at 5.4%, a reduction of 120 basis points from the end of March.”

“Over the past several years, we have significantly strengthened our balance sheet, our underwriting using custom scorecards, and our credit infrastructure in anticipation of a reversion in the credit cycle,” added Mr. Beck. “As a result, as of May 4, 2020, we have $110 million of available liquidity, and we believe we have more than ample liquidity to operate through 2021 without needing to access the securitization market. As we focus in the near term on our liquidity, our credit, and serving our customers, we believe we are fundamentally well-positioned and comfortably capitalized to manage through the current economic environment and to expand volumes and operating leverage as the economy rebounds.”

First Quarter 2020 Highlights

  • Net loss for the first quarter of 2020 was $6.3 million and diluted loss per share was $0.56, compared to net income of $8.1 million and diluted earnings per share of $0.67 in the prior-year period. The net loss was due primarily to the build in the reserves related to the expected economic impact of the COVID-19 pandemic, including $23.9 million of allowance for credit losses and a $1.3 million reserve for unemployment insurance claims. Excluding the COVID-19 reserve build and $4.9 million of non-operating costs related to the executive transition and loan management system outage, the company generated non-GAAP net income of $12.8 million, or $1.14 per diluted share.
  • Net finance receivables as of March 31, 2020 were $1.1 billion, an increase of 18.4%, or $171.4 million, from the prior-year period.
    • Total core small and large loan net finance receivables increased $191.9 million, or 21.8%, compared to the prior-year period.
    • Large loan net finance receivables of $632.6 million increased $177.5 million, or 39.0%, from the prior-year period and represented 57.4% of the total loan portfolio. Small loan net finance receivables as of March 31, 2020 were $440.3 million, an increase of 3.4% over the prior-year period.
  • Total revenue for the first quarter of 2020 was $96.1 million, a $14.3 million, or 17.5%, increase from the prior-year period.
    • Interest and fee income increased 17.1%, driven by an 18.9% increase in average net finance receivables compared to the prior-year period.
    • Insurance income, net increased $1.8 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). Insurance income, net included a $1.3 million reserve for COVID-19 unemployment insurance claims.
  • Provision for credit losses for the first quarter of 2020 was $49.5 million, an increase of $26.2 million, or 112.1%, from the prior-year period. The increase was primarily due to a build in the allowance for credit losses of $23.9 million related to the expected economic impact of the COVID-19 pandemic. The company ran several macroeconomic stress scenarios, and its final forecast included a 34% peak-to-trough decrease in GDP in the second quarter of 2020 and unemployment increasing to 20% in the second quarter of 2020, with a decline to 7% by mid-2021.
  • Annualized net credit losses as a percentage of average net finance receivables were 10.5%, a 20 basis point improvement from 10.7% in the prior-year period.
  • 30+ day contractual delinquencies as of March 31, 2020 were 6.6%, compared to 6.9% in the prior-year period. The delinquency rate in the first quarter of 2020 included 0.1% from the system outage in January, and the rate in the first quarter of 2019 included 0.4% related to hurricane-affected branches. 30+ day contractual delinquencies stood at 5.4% as of April 30, 2020, a decrease of 120 basis points from March 31, 2020.
  • General and administrative expenses for the first quarter of 2020 were $46.2 million, an increase of $8.1 million, or 21.1%, from the prior-year period. The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) was 16.5%, an increase of 30 basis points from the prior-year period. General and administrative expenses for the first quarter of 2020 included non-operating costs of $3.1 million related to the executive transition and $0.7 million due to the system outage. The first quarter of 2020 also included $0.7 million of incremental costs related to new branches that opened since the prior-year period.
  • In March 2020, the company drew down $50 million on its senior revolving credit facility in a prudent measure to maintain additional cash on hand. As of March 31, 2020, the company had total unused capacity on its revolving credit facilities of approximately $400 million, subject to the borrowing base.
  • As of May 4, 2020, the company has available liquidity of $110 million, including approximately $50 million of cash on hand.

2020 De Novo Outlook

As of March 31, 2020, the company’s branch network consisted of 368 locations. Due to the economic uncertainty related to the COVID-19 pandemic, the company has temporarily paused its plans to open additional de novo branches and will provide an update once there is more visibility.

Liquidity and Capital Resources

As of March 31, 2020, the company had finance receivables of $1.1 billion and outstanding long-term debt of $777.8 million ($775.6 million of outstanding debt and $2.3 million of interest payable), consisting of:

  • $312.1 million on its $640.0 million senior revolving credit facility,
  • $54.9 million on its $125.0 million revolving warehouse credit facility, and
  • $410.8 million through its asset-backed securitizations.

The company’s unused capacity on its revolving credit facilities (subject to the borrowing base) was $399.5 million, or 52.2%, as of March 31, 2020.

The company had a funded debt-to-equity ratio of 3.1 to 1.0 and a stockholders’ equity ratio of 23.3% as of March 31, 2020. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 3.2 to 1.0 as of March 31, 2020. Please refer to the reconciliations of non-GAAP measures to comparable GAAP measures included at the end of this press release.

Conference Call Information

Regional Management Corp. will host a conference call and webcast today at 5:00 PM ET to discuss these results.

The dial-in number for the conference call is (855) 327-6837 (toll-free) or (631) 891-4304 (direct). Please dial the number 10 minutes prior to the scheduled start time.

*** A supplemental slide presentation will be made available on Regional’s website prior to the earnings call at www.RegionalManagement.com. ***

In addition, a live webcast of the conference call will be available on Regional’s website at www.RegionalManagement.com.

A replay will be available following the end of the call through Wednesday, May 13, 2020, by telephone at (844) 512-2921 (toll-free) or (412) 317-6671 (international), passcode 10009289. A webcast replay of the call will be available at www.RegionalManagement.com for one year following the call.

About Regional Management Corp.

Regional Management Corp. (NYSE: RM) is a diversified consumer finance company that provides attractive, easy-to-understand installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders. Regional Management operates under the name “Regional Finance” in 368 branch locations across 11 states in the Southeastern, Southwestern, Mid-Atlantic, and Midwestern United States, as of March 31, 2020. Most of its loan products are secured, and each is structured on a fixed rate, fixed term basis with fully amortizing equal monthly installment payments, repayable at any time without penalty. Regional Management sources loans through its multiple channel platform, which includes branches, centrally-managed direct mail campaigns, digital partners, retailers, and its consumer website. For more information, please visit www.RegionalManagement.com.

Forward-Looking Statements

This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact but instead represent Regional Management Corp.’s expectations or beliefs concerning future events. Forward-looking statements include, without limitation, statements concerning future plans, objectives, goals, projections, strategies, events, or performance, and underlying assumptions and other statements related thereto. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “outlook,” and similar expressions may be used to identify these forward-looking statements. Such forward-looking statements speak only as of the date on which they were made and are about matters that are inherently subject to risks and uncertainties, many of which are outside of the control of Regional Management. As a result, actual performance and results may differ materially from those contemplated by these forward-looking statements. Therefore, investors should not place undue reliance on forward-looking statements.

Factors that could cause actual results or performance to differ from the expectations expressed or implied in forward-looking statements include, but are not limited to, the following: changes in general economic conditions, including levels of unemployment and bankruptcies; the impact of the recent outbreak of a novel coronavirus (COVID-19), including on Regional Management’s access to liquidity and the credit risk of Regional Management’s finance receivable portfolio; risks associated with Regional Management’s ability to timely and effectively implement, transition to, and maintain the necessary information technology systems, infrastructure, processes, and controls to support its operations and initiatives; risks associated with Regional Management’s loan origination and servicing software system, including the risk of prolonged system outages; risks related to opening new branches, including the ability or inability to open new branches as planned; risks inherent in making loans, including credit risk, repayment risk, and value of collateral, which risks may increase in light of adverse or recessionary economic conditions; risks associated with the implementation of new underwriting models and processes, including as to the effectiveness of new custom scorecards; risks relating to Regional Management’s asset-backed securitization transactions; changes in interest rates; the risk that Regional Management’s existing sources of liquidity become insufficient to satisfy its needs or that its access to these sources becomes unexpectedly restricted; changes in federal, state, or local laws, regulations, or regulatory policies and practices, and risks associated with the manner in which laws and regulations are interpreted, implemented, and enforced; changes in accounting standards, rules, and interpretations, and the failure of related assumptions and estimates, including those associated with the implementation of current expected credit loss (CECL) accounting; the impact of changes in tax laws, guidance, and interpretations; the timing and amount of revenues that may be recognized by Regional Management; changes in current revenue and expense trends (including trends affecting delinquencies and credit losses); changes in Regional Management’s markets and general changes in the economy (particularly in the markets served by Regional Management); changes in the competitive environment in which Regional Management operates or a decrease in the demand for its products; risks related to acquisitions; changes in operating and administrative expenses; and the departure, transition, or replacement of key personnel. The COVID-19 pandemic may also magnify many of these risks and uncertainties.

The foregoing factors and others are discussed in greater detail in Regional Management’s filings with the Securities and Exchange Commission. Regional Management will not update or revise forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events or the non-occurrence of anticipated events, whether as a result of new information, future developments, or otherwise, except as required by law. Regional Management is not responsible for changes made to this document by wire services or Internet services.

Regional Management Corp. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

Better (Worse)

 

 

1Q 20

 

1Q 19

 

$

 

%

Revenue

 

 

 

 

Interest and fee income

$

86,997

 

$

74,322

 

$

12,675

 

17.1

%

Insurance income, net

 

5,949

 

 

4,113

 

 

1,836

 

44.6

%

Other income

 

3,128

 

 

3,313

 

 

(185

)

(5.6

) %

Total revenue

 

96,074

 

 

81,748

 

 

14,326

 

17.5

%

 

 

 

 

 

Expenses

 

 

 

 

Provision for credit losses

 

49,522

 

 

23,343

 

 

(26,179

)

(112.1

) %

 

 

 

 

 

Personnel

 

29,511

 

 

22,393

 

 

(7,118

)

(31.8

) %

Occupancy

 

5,771

 

 

6,165

 

 

394

 

6.4

%

Marketing

 

1,686

 

 

1,651

 

 

(35

)

(2.1

) %

Other

 

9,275

 

 

7,974

 

 

(1,301

)

(16.3

) %

Total general and administrative

 

46,243

 

 

38,183

 

 

(8,060

)

(21.1

) %

 

 

 

 

 

Interest expense

 

10,159

 

 

9,721

 

 

(438

)

(4.5

) %

Income (loss) before income taxes

 

(9,850

)

 

10,501

 

 

(20,351

)

(193.8

) %

Income taxes

 

(3,525

)

 

2,393

 

 

5,918

 

247.3

%

Net income (loss)

$

(6,325

)

$

8,108

 

$

(14,433

)

(178.0

) %

Net income (loss) per common share:

 

 

 

 

Basic

$

(0.58

)

$

0.69

 

$

(1.27

)

(184.1

) %

Diluted

$

(0.56

)

$

0.67

 

$

(1.23

)

(183.6

) %

Weighted-average shares outstanding:

 

 

 

 

Basic

 

10,897

 

 

11,712

 

 

815

 

7.0

%

Diluted

 

11,253

 

 

12,076

 

 

823

 

6.8

%

 

 

 

 

 

Return on average assets (annualized)

 

(2.3

) %

 

3.4

%

 

 

Return on average equity (annualized)

 

(9.4

) %

 

11.5

%

 

 

 

 

 

 

 

Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease)

 

 

1Q 20

 

1Q 19

 

$

 

%

Assets

 

 

 

 

Cash

$

14,668

 

$

2,331

 

$

12,337

 

529.3

%

Net finance receivables

 

1,102,285

 

 

930,844

 

 

171,441

 

18.4

%

Unearned insurance premiums

(28,183

)

(18,594

)

(9,589

)

(51.6

) %

Allowance for credit losses

(142,400

)

(56,400

)

(86,000

)

(152.5

) %

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

 

931,702

 

 

855,850

 

 

75,852

 

8.9

%

Restricted cash

 

54,649

 

 

38,917

 

 

15,732

 

40.4

%

Lease assets

 

26,729

 

 

24,831

 

 

1,898

 

7.6

%

Property and equipment

 

15,155

 

 

14,181

 

 

974

 

6.9

%

Intangible assets

 

9,144

 

 

9,722

 

 

(578

)

(5.9

) %

Deferred tax asset

 

20,025

 

 

20,025

 

100.0

%

Other assets

 

6,818

 

 

7,635

 

 

(817

)

(10.7

) %

Total assets

$

1,078,890

 

$

953,467

 

$

125,423

 

13.2

%

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

Liabilities:

 

 

 

 

Long-term debt

$

777,847

 

$

628,786

 

$

149,061

 

23.7

%

Unamortized debt issuance costs

 

(8,581

)

 

(8,338

)

 

(243

)

(2.9

) %

Net long-term debt

 

769,266

 

 

620,448

 

 

148,818

 

24.0

%

Accounts payable and accrued expenses

 

29,459

 

 

17,470

 

 

11,989

 

68.6

%

Lease liabilities

 

28,803

 

 

26,474

 

 

2,329

 

8.8

%

Deferred tax liability

 

1,259

 

 

(1,259

)

(100.0

) %

Total liabilities

 

827,528

 

 

665,651

 

 

161,877

 

24.3

%

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, 13,659 shares issued and 11,175 shares outstanding at March 31, 2020 and 13,465 shares issued and 11,919 shares outstanding at March 31, 2019)

 

1,366

 

 

1,347

 

 

19

 

1.4

%

Additional paid-in capital

 

103,488

 

 

99,310

 

 

4,178

 

4.2

%

Retained earnings

 

196,582

 

 

212,205

 

 

(15,623

)

(7.4

) %

Treasury stock (2,484 shares at March 31, 2020 and 1,546 shares at March 31, 2019)

 

(50,074

)

 

(25,046

)

 

(25,028

)

(99.9

) %

Total stockholders’ equity

 

251,362

 

 

287,816

 

 

(36,454

)

(12.7

) %

Total liabilities and stockholders’ equity

$

1,078,890

 

$

953,467

 

$

125,423

 

13.2

%

 

 

 

 

 

 

Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(in thousands, except per share amounts)

 

 

 

 

 

Net Finance Receivables by Product

 

1Q 20

4Q 19

QoQ $
Inc (Dec)

QoQ %
Inc (Dec)

1Q 19

YoY $
Inc (Dec)

YoY %
Inc (Dec)

Small loans

$

440,286

$

467,614

$

(27,328

)

(5.8

) %

$

425,849

$

14,437

 

3.4

%

Large loans

 

632,589

 

632,067

 

522

 

0.1

%

 

455,119

 

177,470

 

39.0

%

Total core loans

 

1,072,875

 

1,099,681

 

(26,806

)

(2.4

) %

 

880,968

 

191,907

 

21.8

%

Automobile loans

 

7,532

 

9,640

 

(2,108

)

(21.9

) %

 

20,556

 

(13,024

)

(63.4

) %

Retail loans

 

21,878

 

24,083

 

(2,205

)

(9.2

) %

 

29,320

 

(7,442

)

(25.4

) %

Total net finance receivables

$

1,102,285

$

1,133,404

$

(31,119

)

(2.7

) %

$

930,844

$

171,441

 

18.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of branches at period end

 

368

 

366

 

2

 

0.5

%

 

360

 

8

 

2.2

%

Average net finance receivables per branch

$

2,995

$

3,097

$

(102

)

(3.3

) %

$

2,586

$

409

 

15.8

%

 

 

 

 

 

 

 

 

 

Averages and Yields

 

1Q 20

4Q 19

1Q 19

Average Net
Finance
Receivables

Average Yield
(Annualized)

Average Net
Finance
Receivables

Average Yield
(Annualized)

Average Net
Finance
Receivables

Average Yield
(Annualized)

Small loans

$

458,132

36.7

%

$

458,391

38.1

%

$

438,891

37.7

%

Large loans

 

633,510

27.5

%

 

604,137

28.2

%

 

452,541

27.1

%

Automobile loans

 

8,618

13.5

%

 

10,754

14.7

%

 

23,279

14.8

%

Retail loans

 

23,056

17.8

%

 

25,128

19.4

%

 

30,052

18.6

%

Total interest and fee yield

$

1,123,316

31.0

%

$

1,098,410

32.0

%

$

944,763

31.5

%

Total revenue yield

$

1,123,316

34.2

%

$

1,098,410

35.7

%

$

944,763

34.6

%

 

 

 

 

 

 

 

 

Components of Increase in Interest and Fee Income
1Q 20 Compared to 1Q 19
Increase (Decrease)

Volume

Rate

Volume & Rate

Net

Small loans

$

1,816

 

$

(1,122

)

$

(50

)

$

644

 

Large loans

 

12,258

 

 

509

 

 

203

 

 

12,970

 

Automobile loans

 

(543

)

 

(76

)

 

48

 

 

(571

)

Retail loans

 

(325

)

 

(56

)

 

13

 

 

(368

)

Product mix

 

840

 

 

(408

)

 

(432

)

Total increase in interest and fee income

$

14,046

 

$

(1,153

)

$

(218

)

$

12,675

 

 

 

 

 

 

 

 

Net Loans Originated (1) (2)

 

1Q 20

4Q 19

QoQ $
Inc (Dec)

QoQ %
Inc (Dec)

1Q 19

YoY $
Inc (Dec)

YoY %
Inc (Dec)

Small loans

$

120,024

$

180,967

$

(60,943

)

(33.7

) %

$

129,245

$

(9,221

)

(7.1

) %

Large loans

 

105,648

 

174,341

 

(68,693

)

(39.4

) %

 

84,068

 

21,580

 

25.7

%

Retail loans

 

3,573

 

3,833

 

(260

)

(6.8

) %

 

6,197

 

(2,624

)

(42.3

) %

Total net loans originated

$

229,245

$

359,141

$

(129,896

)

(36.2

) %

$

219,510

$

9,735

 

4.4

%

 

 

 

 

 

 

 

 

(1)

Represents the balance of loan origination and refinancing net of unearned finance charges.

(2)

The company ceased originating automobile loans in November 2017.

 

 

Other Key Metrics

1Q 20

4Q 19

1Q 19

Net credit losses

$

29,422

 

$

24,739

 

$

25,243

 

Percentage of average net finance receivables (annualized)

 

10.5

%

 

9.0

%

 

10.7

%

 

 

 

 

Provision for credit losses (1)

$

49,522

 

$

26,039

 

$

23,343

 

Percentage of average net finance receivables (annualized)

 

17.6

%

 

9.5

%

 

9.9

%

Percentage of total revenue

 

51.5

%

 

26.6

%

 

28.6

%

 

 

 

 

General and administrative expenses (2) (3)

$

46,243

 

$

40,891

 

$

38,183

 

Percentage of average net finance receivables (annualized)

 

16.5

%

 

14.9

%

 

16.2

%

Percentage of total revenue

 

48.1

%

 

41.7

%

 

46.7

%

 

 

 

 

Same store results (4):

 

 

 

Net finance receivables at period-end

$

1,093,701

 

$

1,109,488

 

$

920,287

 

Net finance receivable growth rate

 

17.6

%

 

17.2

%

 

12.0

%

Number of branches in calculation

 

351

 

 

337

 

 

337

 

(1)

Includes COVID-19 pandemic impacts to provision for credit losses of $23,900 for 1Q 20.

(2)

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

(3)

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

(4)

Same store sales reflect the change in year-over-year sales for the comparable branch base. The comparable branch base includes those branches open for at least one year.

 

Contractual Delinquency by Aging

 

1Q 20

4Q 19

1Q 19

Allowance for credit losses (1)

$

142,400

12.9

%

$

62,200

5.5

%

$

56,400

6.1

%

 

 

 

 

 

 

 

Current

 

931,032

84.4

%

 

949,204

83.8

%

 

780,439

83.8

%

1 to 29 days past due

 

98,896

9.0

%

 

104,690

9.2

%

 

86,497

9.3

%

 

Delinquent accounts:

 

 

 

 

 

 

30 to 59 days

 

20,907

1.9

%

 

25,276

2.2

%

 

18,172

2.0

%

60 to 89 days

 

16,456

1.5

%

 

18,781

1.7

%

 

13,924

1.5

%

90 to 119 days

 

11,889

1.1

%

 

13,916

1.2

%

 

11,808

1.2

%

120 to 149 days

 

12,059

1.1

%

 

11,656

1.0

%

 

9,955

1.1

%

150 to 179 days

 

11,046

1.0

%

 

9,881

0.9

%

 

10,049

1.1

%

Total contractual delinquency (2) (3)

$

72,357

6.6

%

$

79,510

7.0

%

$

63,908

6.9

%

Total net finance receivables

$

1,102,285

100.0

%

$

1,133,404

100.0

%

$

930,844

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 day and over past due

$

171,253

15.6

%

$

184,200

16.2

%

$

150,405

16.2

%

 

 

 

 

 

 

 

 

Contractual Delinquency by Product

1Q 20

4Q 19

1Q 19

Small loans

$

37,662

8.6

%

$

42,375

9.1

%

$

35,086

8.2

%

Large loans

 

32,201

5.1

%

 

33,921

5.4

%

 

25,145

5.5

%

Automobile loans

 

508

6.7

%

 

755

7.8

%

 

1,535

7.5

%

Retail loans

 

1,986

9.1

%

 

2,459

10.2

%

 

2,142

7.3

%

Total contractual delinquency (2) (3)

$

72,357

6.6

%

$

79,510

7.0

%

$

63,908

6.9

%

 

 

 

 

 

 

 

(1)

Includes incremental COVID-19 allowance for credit losses of $23,900 in 1Q 20.

(2)

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

(3)

Includes 0.4% delinquency related to hurricane-affected branches in 1Q 19.

 

Income Statement Quarterly Trend

 

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

QoQ $
B(W)

YoY $
B(W)

Revenue

 

 

 

 

 

 

 

Interest and fee income

$

74,322

$

75,974

$

83,089

$

87,784

$

86,997

 

$

(787

)

$

12,675

 

Insurance income, net

 

4,113

 

5,066

 

5,087

 

6,551

 

5,949

 

 

(602

)

 

1,836

 

Other income

 

3,313

 

3,234

 

3,531

 

3,649

 

3,128

 

 

(521

)

 

(185

)

Total revenue

 

81,748

 

84,274

 

91,707

 

97,984

 

96,074

 

 

(1,910

)

 

14,326

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Provision for credit losses

 

23,343

 

25,714

 

24,515

 

26,039

 

49,522

 

 

(23,483

)

 

(26,179

)

 

 

 

 

 

 

 

 

Personnel

 

22,393

 

22,511

 

23,791

 

25,305

 

29,511

 

 

(4,206

)

 

(7,118

)

Occupancy

 

6,165

 

6,210

 

6,367

 

5,876

 

5,771

 

 

105

 

 

394

 

Marketing

 

1,651

 

2,261

 

2,397

 

1,897

 

1,686

 

 

211

 

 

(35

)

Other

 

7,974

 

6,761

 

7,612

 

7,813

 

9,275

 

 

(1,462

)

 

(1,301

)

Total general and administrative

 

38,183

 

37,743

 

40,167

 

40,891

 

46,243

 

 

(5,352

)

 

(8,060

)

 

 

 

 

 

 

 

 

Interest expense

 

9,721

 

9,771

 

10,348

 

10,285

 

10,159

 

 

126

 

 

(438

)

Income (loss) before income taxes

 

10,501

 

11,046

 

16,677

 

20,769

 

(9,850

)

 

(30,619

)

 

(20,351

)

Income taxes

 

2,393

 

2,677

 

4,105

 

5,086

 

(3,525

)

 

8,611

 

 

5,918

 

Net income (loss)

$

8,108

$

8,369

$

12,572

$

15,683

$

(6,325

)

$

(22,008

)

$

(14,433

)

Net income (loss) per common share:

 

 

 

 

 

 

 

Basic

$

0.69

$

0.71

$

1.11

$

1.44

$

(0.58

)

$

(2.02

)

$

(1.27

)

Diluted

$

0.67

$

0.70

$

1.08

$

1.38

$

(0.56

)

$

(1.94

)

$

(1.23

)

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

 

11,712

 

11,706

 

11,302

 

10,893

 

10,897

 

 

(4

)

 

815

 

Diluted

 

12,076

 

12,022

 

11,677

 

11,327

 

11,253

 

 

74

 

 

823

 

 

 

 

 

 

 

 

 

Net interest margin

$

72,027

$

74,503

$

81,359

$

87,699

$

85,915

 

$

(1,784

)

$

13,888

 

Net credit margin

$

48,684

$

48,789

$

56,844

$

61,660

$

36,393

 

$

(25,267

)

$

(12,291

)

 

 

 

 

 

 

 

 

 

Balance Sheet Quarterly Trend

 

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

QoQ $
Inc (Dec)

YoY $
Inc (Dec)

Total assets

$

953,467

$

1,019,316

$

1,086,172

$

1,158,540

$

1,078,890

$

(79,650

)

$

125,423

Net finance receivables

$

930,844

$

994,980

$

1,067,086

$

1,133,404

$

1,102,285

$

(31,119

)

$

171,441

Allowance for credit losses

$

56,400

$

57,200

$

60,900

$

62,200

$

142,400

$

80,200

 

$

86,000

Long-term debt

$

628,786

$

689,310

$

743,835

$

808,218

$

777,847

$

(30,371

)

$

149,061

 

 

 

 

 

 

 

 

 

Other Key Metrics Quarterly Trend

 

1Q 19

2Q 19

3Q 19

4Q 19

1Q 20

QoQ
Inc (Dec)

YoY
Inc (Dec)

Interest and fee yield (annualized)

 

31.5

%

 

31.8

%

 

32.1

%

 

32.0

%

 

31.0

%

 

(1.0

) %

 

(0.5

) %

Efficiency ratio (1)

 

46.7

%

 

44.8

%

 

43.8

%

 

41.7

%

 

48.1

%

 

6.4

%

 

1.4

%

Operating expense ratio (2)

 

16.2

%

 

15.8

%

 

15.5

%

 

14.9

%

 

16.5

%

 

1.6

%

 

0.3

%

30+ contractual delinquency

 

6.9

%

 

6.3

%

 

6.5

%

 

7.0

%

 

6.6

%

 

(0.4

) %

 

(0.3

) %

Net credit loss ratio (3)

 

10.7

%

 

10.4

%

 

8.1

%

 

9.0

%

 

10.5

%

 

1.5

%

 

(0.2

) %

Book value per share

$

24.15

 

$

24.88

 

$

26.00

 

$

27.49

 

$

22.49

 

$

(5.00

)

$

(1.66

)

 

 

 

 

 

 

 

 

(1)

General and administrative expenses as a percentage of total revenue.

(2)

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

(3)

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

Non-GAAP Financial Measures

In addition to financial measures presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures. The company’s management utilizes non-GAAP measures as additional metrics to aid in, and enhance, its understanding of the company’s financial results. Tangible equity and funded debt-to-tangible equity ratio are non-GAAP measures that adjust GAAP measures to exclude intangible assets. Management uses these equity measures to evaluate and manage the company’s capital and leverage position. The company also believes that these equity measures are commonly used in the financial services industry and provide useful information to users of the company’s financial statements in the evaluation of its capital and leverage position. In addition, the company has presented non-GAAP measures that adjust for the impacts of the COVID-19 pandemic, the executive transition, and the loan management system outage. The company believes that these non-GAAP measures provide useful information by excluding certain material items that may not be indicative of our core operating results. As a result, the company believes that the non-GAAP measures that it has presented will allow for a better evaluation of the operating performance of the business.

This non-GAAP financial information should be considered in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. In addition, the company’s non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies. The following tables provide a reconciliation of GAAP measures to non-GAAP measures.

 

1Q 20

Long-term debt

$

777,847

 

 

Total stockholders’ equity

 

251,362

Less: Intangible assets

 

9,144

Tangible equity (non-GAAP)

$

242,218

 

 

Funded debt-to-equity ratio

3.1x

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

3.2x

 

Non-GAAP Reconciliation

 

1Q 20

GAAP
Results

COVID-19
Impact (1)

Non-Operating
Items (2)

Non-GAAP
Results

Total revenue

$

96,074

 

$

1,326

 

$

419

 

$

97,819

Provision for credit losses

 

49,522

 

 

(23,900

)

 

(674

)

 

24,948

Total general and administrative expense

 

46,243

 

 

(3,786

)

 

42,457

Interest expense

 

10,159

 

 

23

 

 

10,182

Income (loss) before income taxes

 

(9,850

)

 

25,226

 

 

4,856

 

 

20,232

Income taxes

 

(3,525

)

 

9,157

 

 

1,763

 

 

7,395

Net income (loss)

$

(6,325

)

$

16,069

 

$

3,093

 

$

12,837

 

Diluted earnings (losses) per share

$

(0.56

)

$

1.43

 

$

0.27

 

$

1.14

Diluted share count

 

11,253

 

 

11,253

 

 

11,253

 

 

11,253

 

 

 

 

 

(1)

COVID-19 impact includes $23,900 for allowance for credit losses and a $1,326 reserve for unemployment insurance claims.

(2)

Non-operating items include costs of $3,066 related to the executive transition and $1,790 related to the loan management system outage.

 

Contacts

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

Contacts

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