Regional Management Corp. Announces Third Quarter 2018 Results

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Regional Management Corp. Announces Third Quarter 2018 Results

November 08, 2018

- Net income of $7.4 million and diluted earnings per share of $0.61 -

- Non-GAAP net income of $10.3 million and non-GAAP diluted earnings per share of $0.85 excluding hurricane impact -

GREENVILLE, S.C.--(BUSINESS WIRE)--Nov. 8, 2018-- 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 Receivables		Average Yield (Annualized)		Average Finance Receivables		Average Yield (Annualized)		Average Finance Receivables		Average Yield (Annualized)
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 $ Inc (Dec)			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 $ B(W)			YoY $ B(W)
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 $ Inc (Dec)			YoY $ Inc (Dec)
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 Receivables		Average Yield (Annualized)		Average Finance Receivables		Average Yield (Annualized)
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 $ Inc (Dec)			YTD % Inc (Dec)
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.