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Regional Management Corp. Announces Third Quarter 2022 Results

November 01, 2022

- Net income of $10.1 million and diluted earnings per share of $1.06 -

- 22.3% year-over-year net finance receivables growth and 17.9% year-over-year revenue growth -

- 30+ day contractual delinquencies of 7.2% as of September 30, 2022 -

GREENVILLE, S.C.--(BUSINESS WIRE)-- Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the third quarter ended September 30, 2022.

“We’re pleased with our third quarter results, as we continued to grow our account base and portfolio in a controlled and profitable manner, while also maintaining a tightened credit box,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “Demand for our loan products remained strong in the quarter. We expanded our operations to California and Louisiana, increased our account base by 16% from the prior year to more than 500,000 accounts, and grew our loan portfolio to an all-time high of $1.6 billion. For the sixth straight quarter, we logged double-digit year-over-year growth in our net finance receivables and quarterly revenue, which were up 22% and 18%, respectively, and we produced $10.1 million of net income and $1.06 of diluted EPS. Notably, we are achieving our growth principally through geographic expansion, not from credit box expansion. Our team has consistently demonstrated its ability to execute on our long-term strategic plans and deliver sustainable returns to our shareholders, despite the challenging macroeconomic environment.”

“We continue to take a cautious approach as we monitor the health of the consumer,” added Mr. Beck. “Our 30+ day delinquency rate rose to 7.2% at the end of the quarter, but our 1 to 29 day delinquency rate continues to perform 120 basis points better than 2019 pre-pandemic levels, an encouraging sign that our credit tightening actions and collections strategies are benefiting our more recent 2022 vintages. With a reserve rate of 11.2%, including $19 million of macro-related reserves, we feel very comfortable with our current credit posture. Our primary focus remains on maintaining the credit quality of our loan portfolio, supporting our customers, and controlling expenses, and we stand ready to adapt our underwriting models quickly whenever we observe either risks or opportunities in the market based on changing economic conditions. At the same time, we will continue to execute on our long-term strategies of geographic expansion and digital innovation that will drive controlled, sustainable growth and profitability.”

Third Quarter 2022 Highlights

  • Net income for the third quarter of 2022 was $10.1 million and diluted earnings per share was $1.06, decreases of 54.7% and 49.8%, respectively, compared to the prior-year period.

  • Net finance receivables as of September 30, 2022 hit an all-time high of $1.61 billion, an increase of $293.4 million, or 22.3%, from the prior-year period.

    • Large loan net finance receivables of $1.1 billion increased $232.2 million, or 26.3%, from the prior-year period and represented 69.4% of the total loan portfolio. Small loan net finance receivables were $480.2 million, an increase of 14.4% from the prior-year period.
    • Digitally sourced and direct mail loan originations were both at record levels for a third quarter.
    • Total loan originations of $418.7 million in the third quarter of 2022, a decrease of $2.0 million, or 0.5%, from the prior-year period.
    • Record digitally sourced loan originations of $56.3 million in the third quarter of 2022, an increase of $8.2 million, or 17.0%, from the prior-year period.

  • Total revenue for the third quarter of 2022 was a record $131.5 million, an increase of $20.0 million, or 17.9%, from the prior-year period.

    • Interest and fee income increased $16.7 million, or 16.8%, primarily due to higher average net finance receivables.
    • Insurance income, net increased $2.6 million, or 27.3%, driven by portfolio growth.

  • Provision for credit losses for the third quarter of 2022 was $48.1 million, an increase of $22.0 million, or 84.2%, from the prior-year period. The provision for credit losses for the third quarter of 2022 included incremental reserves of $8.2 million primarily for the $81.9 million in sequential portfolio growth and $4.1 million based on the macroeconomic model.

    • Allowance for credit losses was $179.8 million as of September 30, 2022, including a $19.0 million allowance for credit losses reserve associated with estimated future macroeconomic impacts on credit losses.

  • Annualized net credit losses as a percentage of average net finance receivables for the third quarter of 2022 were 9.1%, a 410 basis point increase compared to 5.0% in the prior-year period and a 100 basis point increase compared to pre-pandemic levels of 8.1% in the third quarter of 2019.

  • As of September 30, 2022, 30+ day contractual delinquencies totaled $116.0 million, or 7.2% of net finance receivables, an increase of 100 basis points compared to June 30, 2022, and a 70 basis point increase from pre-pandemic levels as of September 30, 2019. The 30+ day contractual delinquency compares favorably to the company’s $179.8 million allowance for credit losses as of September 30, 2022.

  • General and administrative expenses for the third quarter of 2022 were $58.2 million, an increase of $10.4 million, or 21.8%, from the prior-year period due to ongoing investment in personnel, marketing, and digital capabilities to support the company’s growth.

  • The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) for the third quarter of 2022 was 14.9%, a 50 basis point improvement compared to the prior-year period.

  • The company expanded its operations to the states of California and Louisiana in July and September, respectively. The company continues to plan expansion into one to two states over the next four months.

Fourth Quarter 2022 Dividend

The company’s Board of Directors has declared a dividend of $0.30 per common share for the fourth quarter of 2022. The dividend will be paid on December 14, 2022 to shareholders of record as of the close of business on November 23, 2022. The declaration and payment of any future dividend is subject to the discretion of the Board of Directors and will depend on a variety of factors, including the company’s financial condition and results of operations.

Liquidity and Capital Resources

As of September 30, 2022, the company had net finance receivables of $1.6 billion and debt of $1.2 billion. The debt consisted of:

  • $113.4 million on the company’s $500 million senior revolving credit facility,

  • $122.7 million on the company’s aggregate $300 million revolving warehouse credit facilities, and

  • $1.0 billion through the company’s asset-backed securitizations.

As of September 30, 2022, the company’s unused capacity to fund future growth on its revolving credit facilities (subject to the borrowing base) was $565 million, or 70.6%, and the company had available liquidity of $181.2 million, including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities. As of September 30, 2022, the company’s fixed-rate debt as a percentage of total debt was 81%, with a weighted-average coupon of 2.9% and a weighted-average revolving duration of 2.4 years.

In October 2022, the company closed a $200 million asset-backed securitization with a two-year revolving period. The class A notes received an “AAA” rating by Standard & Poor’s Ratings Services, the first time a senior class of notes in a Regional Management securitization has received S&P’s top rating. Following the transaction, the company’s fixed-rate debt as a percentage of total debt increased to nearly 100%, with a weighted-average coupon of 3.6% and a weighted-average revolving duration of 2.3 years.

During the third quarter, the company held interest rate caps to manage the risk associated with variable rate debt. The interest rate caps were based on one-month LIBOR and reimbursed the company for the difference when one-month LIBOR exceeded the strike rate. The company sold its remaining $100 million of interest rate caps in the third quarter, realizing $2.3 million in lifetime market value gains on the rate caps. As of September 30, 2022, the company no longer maintained interest rate cap protection.

The company had a funded debt-to-equity ratio of 4.0 to 1.0 and a stockholders’ equity ratio of 19.2%, each as of September 30, 2022. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 4.2 to 1.0, as of September 30, 2022. 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 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” online and in branch locations in 17 states across the 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.

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 financial outlooks or 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: managing growth effectively, implementing Regional Management’s growth strategy, and opening new branches as planned; Regional Management’s convenience check strategy; Regional Management’s policies and procedures for underwriting, processing, and servicing loans; Regional Management’s ability to collect on its loan portfolio; Regional Management’s insurance operations; exposure to credit risk and repayment risk, which risks may increase in light of adverse or recessionary economic conditions; the implementation of new underwriting models and processes, including as to the effectiveness of new custom scorecards; changes in the competitive environment in which Regional Management operates or a decrease in the demand for its products; the geographic concentration of Regional Management’s loan portfolio; the failure of third-party service providers, including those providing information technology products; changes in economic conditions in the markets Regional Management serves, including levels of unemployment and bankruptcies; the ability to achieve successful acquisitions and strategic alliances; the ability to make technological improvements as quickly as competitors; security breaches, cyber-attacks, failures in information systems, or fraudulent activity; the ability to originate loans; reliance on information technology resources and providers, including the risk of prolonged system outages; changes in current revenue and expense trends, including trends affecting delinquencies and credit losses; changes in operating and administrative expenses; the departure, transition, or replacement of key personnel; the ability to timely and effectively implement, transition to, and maintain the necessary information technology systems, infrastructure, processes, and controls to support Regional Management’s operations and initiatives; changes in interest rates; existing sources of liquidity may become insufficient or access to these sources may become unexpectedly restricted; exposure to financial risk due to asset-backed securitization transactions; risks related to regulation and legal proceedings, including changes in laws or regulations or in the interpretation or enforcement of laws or regulations; changes in accounting standards, rules, and interpretations and the failure of related assumptions and estimates, including those associated with CECL accounting; the impact of changes in tax laws, guidance, and interpretations, including the timing and amount of revenues that may be recognized; risks related to the ownership of Regional Management’s common stock, including volatility in the market price of shares of Regional Management’s common stock; the timing and amount of future cash dividend payments; and anti-takeover provisions in Regional Management’s charter documents and applicable state law. The COVID-19 pandemic may impact Regional Management’s operations and financial condition and may also magnify many of the existing 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)

(dollars in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

Better (Worse)

 

 

 

 

 

 

 

 

 

 

Better (Worse)

 

 

 

3Q 22

 

 

3Q 21

 

 

$

 

 

%

 

 

YTD 22

 

 

YTD 21

 

 

$

 

 

%

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fee income

 

$

116,020

 

 

$

99,355

 

 

$

16,665

 

 

 

16.8

%

 

$

333,422

 

 

$

275,427

 

 

$

57,995

 

 

 

21.1

%

Insurance income, net

 

 

11,987

 

 

 

9,418

 

 

 

2,569

 

 

 

27.3

%

 

 

32,751

 

 

 

26,059

 

 

 

6,692

 

 

 

25.7

%

Other income

 

 

3,445

 

 

 

2,687

 

 

 

758

 

 

 

28.2

%

 

 

8,998

 

 

 

7,381

 

 

 

1,617

 

 

 

21.9

%

Total revenue

 

 

131,452

 

 

 

111,460

 

 

 

19,992

 

 

 

17.9

%

 

 

375,171

 

 

 

308,867

 

 

 

66,304

 

 

 

21.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

48,071

 

 

 

26,096

 

 

 

(21,975

)

 

 

(84.2

)%

 

 

124,329

 

 

 

58,007

 

 

 

(66,322

)

 

 

(114.3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

 

36,979

 

 

 

29,299

 

 

 

(7,680

)

 

 

(26.2

)%

 

 

106,574

 

 

 

86,520

 

 

 

(20,054

)

 

 

(23.2

)%

Occupancy

 

 

5,848

 

 

 

6,027

 

 

 

179

 

 

 

3.0

%

 

 

17,812

 

 

 

17,615

 

 

 

(197

)

 

 

(1.1

)%

Marketing

 

 

3,940

 

 

 

2,488

 

 

 

(1,452

)

 

 

(58.4

)%

 

 

11,139

 

 

 

9,974

 

 

 

(1,165

)

 

 

(11.7

)%

Other

 

 

11,397

 

 

 

9,936

 

 

 

(1,461

)

 

 

(14.7

)%

 

 

31,860

 

 

 

25,873

 

 

 

(5,987

)

 

 

(23.1

)%

Total general and administrative

 

 

58,164

 

 

 

47,750

 

 

 

(10,414

)

 

 

(21.8

)%

 

 

167,385

 

 

 

139,982

 

 

 

(27,403

)

 

 

(19.6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

11,863

 

 

 

8,816

 

 

 

(3,047

)

 

 

(34.6

)%

 

 

19,368

 

 

 

23,752

 

 

 

4,384

 

 

 

18.5

%

Income before income taxes

 

 

13,354

 

 

 

28,798

 

 

 

(15,444

)

 

 

(53.6

)%

 

 

64,089

 

 

 

87,126

 

 

 

(23,037

)

 

 

(26.4

)%

Income taxes

 

 

3,286

 

 

 

6,577

 

 

 

3,291

 

 

 

50.0

%

 

 

15,256

 

 

 

19,217

 

 

 

3,961

 

 

 

20.6

%

Net income

 

$

10,068

 

 

$

22,221

 

 

$

(12,153

)

 

 

(54.7

)%

 

$

48,833

 

 

$

67,909

 

 

$

(19,076

)

 

 

(28.1

)%

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.09

 

 

$

2.25

 

 

$

(1.16

)

 

 

(51.6

)%

 

$

5.23

 

 

$

6.66

 

 

$

(1.43

)

 

 

(21.5

)%

Diluted

 

$

1.06

 

 

$

2.11

 

 

$

(1.05

)

 

 

(49.8

)%

 

$

5.01

 

 

$

6.29

 

 

$

(1.28

)

 

 

(20.3

)%

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

9,195

 

 

 

9,861

 

 

 

666

 

 

 

6.8

%

 

 

9,329

 

 

 

10,199

 

 

 

870

 

 

 

8.5

%

Diluted

 

 

9,526

 

 

 

10,544

 

 

 

1,018

 

 

 

9.7

%

 

 

9,738

 

 

 

10,800

 

 

 

1,062

 

 

 

9.8

%

Return on average assets (annualized)

 

 

2.5

%

 

 

7.1

%

 

 

 

 

 

 

 

 

 

 

4.3

%

 

 

7.8

%

 

 

 

 

 

 

 

 

Return on average equity (annualized)

 

 

13.1

%

 

 

31.6

%

 

 

 

 

 

 

 

 

 

 

21.7

%

 

 

32.4

%

 

 

 

 

 

 

 

 

Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(dollars in thousands, except par value amounts)

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease)

 

 

 

3Q 22

 

 

3Q 21

 

 

$

 

 

%

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

3,140

 

 

$

8,146

 

 

$

(5,006

)

 

 

(61.5

)%

Net finance receivables

 

 

1,607,598

 

 

 

1,314,233

 

 

 

293,365

 

 

 

22.3

%

Unearned insurance premiums

 

 

(49,789

)

 

 

(44,142

)

 

 

(5,647

)

 

 

(12.8

)%

Allowance for credit losses

 

 

(179,800

)

 

 

(150,100

)

 

 

(29,700

)

 

 

(19.8

)%

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

 

 

1,378,009

 

 

 

1,119,991

 

 

 

258,018

 

 

 

23.0

%

Restricted cash

 

 

113,865

 

 

 

103,999

 

 

 

9,866

 

 

 

9.5

%

Restricted available-for-sale investments

 

 

20,290

 

 

 

 

 

 

20,290

 

 

 

100.0

%

Lease assets

 

 

30,153

 

 

 

28,891

 

 

 

1,262

 

 

 

4.4

%

Deferred tax assets, net

 

 

16,836

 

 

 

12,535

 

 

 

4,301

 

 

 

34.3

%

Property and equipment

 

 

12,370

 

 

 

12,495

 

 

 

(125

)

 

 

(1.0

)%

Intangible assets

 

 

11,305

 

 

 

9,184

 

 

 

2,121

 

 

 

23.1

%

Other assets

 

 

20,582

 

 

 

18,317

 

 

 

2,265

 

 

 

12.4

%

Total assets

 

$

1,606,550

 

 

$

1,313,558

 

 

$

292,992

 

 

 

22.3

%

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt

 

$

1,241,039

 

 

$

978,803

 

 

$

262,236

 

 

 

26.8

%

Unamortized debt issuance costs

 

 

(9,647

)

 

 

(10,110

)

 

 

463

 

 

 

4.6

%

Net debt

 

 

1,231,392

 

 

 

968,693

 

 

 

262,699

 

 

 

27.1

%

Accounts payable and accrued expenses

 

 

34,237

 

 

 

36,114

 

 

 

(1,877

)

 

 

(5.2

)%

Lease liabilities

 

 

32,468

 

 

 

31,285

 

 

 

1,183

 

 

 

3.8

%

Total liabilities

 

 

1,298,097

 

 

 

1,036,092

 

 

 

262,005

 

 

 

25.3

%

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock ($0.10 par value, 100,000 shares authorized, none issued or outstanding)

 

 

 

 

 

 

 

 

 

 

 

 

Common stock ($0.10 par value, 1,000,000 shares authorized, 14,391 shares issued and 9,584 shares outstanding at September 30, 2022 and 14,177 shares issued and 10,007 shares outstanding at September 30, 2021)

 

 

1,439

 

 

 

1,418

 

 

 

21

 

 

 

1.5

%

Additional paid-in capital

 

 

111,530

 

 

 

106,319

 

 

 

5,211

 

 

 

4.9

%

Retained earnings

 

 

346,083

 

 

 

287,825

 

 

 

58,258

 

 

 

20.2

%

Accumulated other comprehensive loss

 

 

(456

)

 

 

 

 

 

(456

)

 

 

(100.0

)%

Treasury stock (4,807 shares at September 30, 2022 and 4,170 shares at September 30, 2021)

 

 

(150,143

)

 

 

(118,096

)

 

 

(32,047

)

 

 

(27.1

)%

Total stockholders’ equity

 

 

308,453

 

 

 

277,466

 

 

 

30,987

 

 

 

11.2

%

Total liabilities and stockholders’ equity

 

$

1,606,550

 

 

$

1,313,558

 

 

$

292,992

 

 

 

22.3

%

Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(dollars in thousands, except per share amounts)

 

 

 

Net Finance Receivables by Product

 

 

 

3Q 22

 

 

2Q 22

 

 

QoQ $
Inc (Dec)

 

 

QoQ %
Inc (Dec)

 

 

3Q 21

 

 

YoY $
Inc (Dec)

 

 

YoY %
Inc (Dec)

 

Small loans

 

$

480,199

 

 

$

455,253

 

 

$

24,946

 

 

 

5.5

%

 

$

419,602

 

 

$

60,597

 

 

 

14.4

%

Large loans

 

 

1,116,455

 

 

 

1,059,523

 

 

 

56,932

 

 

 

5.4

%

 

 

884,271

 

 

 

232,184

 

 

 

26.3

%

Retail loans

 

 

10,944

 

 

 

10,883

 

 

 

61

 

 

 

0.6

%

 

 

10,360

 

 

 

584

 

 

 

5.6

%

Total net finance receivables

 

$

1,607,598

 

 

$

1,525,659

 

 

$

81,939

 

 

 

5.4

%

 

$

1,314,233

 

 

$

293,365

 

 

 

22.3

%

Number of branches at period end

 

 

338

 

 

 

334

 

 

 

4

 

 

 

1.2

%

 

 

372

 

 

 

(34

)

 

 

(9.1

)%

Net finance receivables per branch

 

$

4,756

 

 

$

4,568

 

 

$

188

 

 

 

4.1

%

 

$

3,533

 

 

$

1,223

 

 

 

34.6

%

 

 

Averages and Yields

 

 

 

3Q 22

 

 

2Q 22

 

 

3Q 21

 

 

 

Average Net
Finance
Receivables

 

 

Average
Yield (1)

 

 

Average Net
Finance
Receivables

 

 

Average
Yield (1)

 

 

Average Net
Finance
Receivables

 

 

Average
Yield (1)

 

Small loans

 

$

466,087

 

 

 

35.5

%

 

$

437,226

 

 

 

35.8

%

 

$

394,888

 

 

 

38.9

%

Large loans

 

 

1,089,225

 

 

 

27.2

%

 

 

1,023,546

 

 

 

27.4

%

 

 

836,506

 

 

 

28.9

%

Retail loans

 

 

10,935

 

 

 

18.5

%

 

 

10,828

 

 

 

18.3

%

 

 

10,291

 

 

 

18.8

%

Total interest and fee yield

 

$

1,566,247

 

 

 

29.6

%

 

$

1,471,600

 

 

 

29.8

%

 

$

1,241,685

 

 

 

32.0

%

Total revenue yield

 

$

1,566,247

 

 

 

33.6

%

 

$

1,471,600

 

 

 

33.4

%

 

$

1,241,685

 

 

 

35.9

%

(1) Annualized interest and fee income as a percentage of average net finance receivables.

 

 

Components of Increase in Interest and Fee Income

 

 

 

3Q 22 Compared to 3Q 21

 

 

 

Increase (Decrease)

 

 

 

Volume

 

 

Rate

 

 

Volume & Rate

 

 

Total

 

Small loans

 

$

6,930

 

 

$

(3,360

)

 

$

(606

)

 

$

2,964

 

Large loans

 

 

18,259

 

 

 

(3,518

)

 

 

(1,063

)

 

 

13,678

 

Retail loans

 

 

30

 

 

 

(7

)

 

 

 

 

 

23

 

Product mix

 

 

751

 

 

 

(492

)

 

 

(259

)

 

 

 

Total increase in interest and fee income

 

$

25,970

 

 

$

(7,377

)

 

$

(1,928

)

 

$

16,665

 

 

 

Loans Originated (1)

 

 

 

3Q 22

 

 

2Q 22

 

 

QoQ $
Inc (Dec)

 

 

QoQ %
Inc (Dec)

 

 

3Q 21

 

 

YoY $
Inc (Dec)

 

 

YoY %
Inc (Dec)

 

Small loans

 

$

173,269

 

 

$

171,244

 

 

$

2,025

 

 

 

1.2

%

 

$

173,390

 

 

$

(121

)

 

 

(0.1

)%

Large loans

 

 

243,259

 

 

 

252,572

 

 

 

(9,313

)

 

 

(3.7

)%

 

 

245,062

 

 

 

(1,803

)

 

 

(0.7

)%

Retail loans

 

 

2,145

 

 

 

2,471

 

 

 

(326

)

 

 

(13.2

)%

 

 

2,206

 

 

 

(61

)

 

 

(2.8

)%

Total loans originated

 

$

418,673

 

 

$

426,287

 

 

$

(7,614

)

 

 

(1.8

)%

 

$

420,658

 

 

$

(1,985

)

 

 

(0.5

)%

(1) Represents the principal balance of loan originations and refinancings.

 

 

Other Key Metrics

 

 

 

3Q 22

 

 

2Q 22

 

 

3Q 21

 

Net credit losses

 

$

35,771

 

 

$

36,700

 

 

$

15,396

 

Percentage of average net finance receivables (annualized)

 

 

9.1

%

 

 

10.0

%

 

 

5.0

%

Provision for credit losses

 

$

48,071

 

 

$

45,400

 

 

$

26,096

 

Percentage of average net finance receivables (annualized)

 

 

12.3

%

 

 

12.3

%

 

 

8.4

%

Percentage of total revenue

 

 

36.6

%

 

 

36.9

%

 

 

23.4

%

General and administrative expenses

 

$

58,164

 

 

$

54,121

 

 

$

47,750

 

Percentage of average net finance receivables (annualized)

 

 

14.9

%

 

 

14.7

%

 

 

15.4

%

Percentage of total revenue

 

 

44.2

%

 

 

44.0

%

 

 

42.8

%

Same store results (1):

 

 

 

 

 

 

 

 

 

 

 

 

Net finance receivables at period-end

 

$

1,552,740

 

 

$

1,466,300

 

 

$

1,296,746

 

Net finance receivable growth rate

 

 

19.2

%

 

 

24.7

%

 

 

22.7

%

Number of branches in calculation

 

 

315

 

 

 

310

 

 

 

359

 

(1)   

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 22

 

 

2Q 22

 

 

3Q 21

 

Allowance for credit losses (1)

 

$

179,800

 

 

 

11.2

%

 

$

167,500

 

 

 

11.0

%

 

$

150,100

 

 

 

11.4

%

 

Current

 

 

1,356,134

 

 

 

84.4

%

 

 

1,306,183

 

 

 

85.6

%

 

 

1,156,475

 

 

 

88.0

%

1 to 29 days past due

 

 

135,468

 

 

 

8.4

%

 

 

124,810

 

 

 

8.2

%

 

 

96,477

 

 

 

7.3

%

Delinquent accounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30 to 59 days

 

 

32,295

 

 

 

2.0

%

 

 

26,785

 

 

 

1.8

%

 

 

20,162

 

 

 

1.6

%

60 to 89 days

 

 

25,375

 

 

 

1.6

%

 

 

24,420

 

 

 

1.6

%

 

 

15,075

 

 

 

1.1

%

90 to 119 days

 

 

21,720

 

 

 

1.3

%

 

 

18,557

 

 

 

1.2

%

 

 

11,202

 

 

 

0.9

%

120 to 149 days

 

 

17,503

 

 

 

1.1

%

 

 

12,528

 

 

 

0.8

%

 

 

8,176

 

 

 

0.6

%

150 to 179 days

 

 

19,103

 

 

 

1.2

%

 

 

12,376

 

 

 

0.8

%

 

 

6,666

 

 

 

0.5

%

Total contractual delinquency

 

$

115,996

 

 

 

7.2

%

 

$

94,666

 

 

 

6.2

%

 

$

61,281

 

 

 

4.7

%

Total net finance receivables

 

$

1,607,598

 

 

 

100.0

%

 

$

1,525,659

 

 

 

100.0

%

 

$

1,314,233

 

 

 

100.0

%

1 day and over past due

 

$

251,464

 

 

 

15.6

%

 

$

219,476

 

 

 

14.4

%

 

$

157,758

 

 

 

12.0

%

 

 

Contractual Delinquency by Product

 

 

 

3Q 22

 

 

2Q 22

 

 

3Q 21

 

Small loans

 

$

49,906

 

 

 

10.4

%

 

$

41,984

 

 

 

9.2

%

 

$

27,928

 

 

 

6.7

%

Large loans

 

 

64,922

 

 

 

5.8

%

 

 

51,763

 

 

 

4.9

%

 

 

32,666

 

 

 

3.7

%

Retail loans

 

 

1,168

 

 

 

10.7

%

 

 

919

 

 

 

8.4

%

 

 

687

 

 

 

6.6

%

Total contractual delinquency

 

$

115,996

 

 

 

7.2

%

 

$

94,666

 

 

 

6.2

%

 

$

61,281

 

 

 

4.7

%

(1)   

Includes estimated macroeconomic allowance for credit losses of $19,000, $14,900, and $18,100 in 3Q 22, 2Q 22, and 3Q 21, respectively.

 

 

Income Statement Quarterly Trend

 

 

 

3Q 21

 

 

4Q 21

 

 

1Q 22

 

 

2Q 22

 

 

3Q 22

 

 

QoQ $
B(W)

 

 

YoY $
B(W)

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fee income

 

$

99,355

 

 

$

107,117

 

 

$

107,631

 

 

$

109,771

 

 

$

116,020

 

 

$

6,249

 

 

$

16,665

 

Insurance income, net

 

 

9,418

 

 

 

9,423

 

 

 

10,544

 

 

 

10,220

 

 

 

11,987

 

 

 

1,767

 

 

 

2,569

 

Other income

 

 

2,687

 

 

 

2,944

 

 

 

2,673

 

 

 

2,880

 

 

 

3,445

 

 

 

565

 

 

 

758

 

Total revenue

 

 

111,460

 

 

 

119,484

 

 

 

120,848

 

 

 

122,871

 

 

 

131,452

 

 

 

8,581

 

 

 

19,992

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

26,096

 

 

 

31,008

 

 

 

30,858

 

 

 

45,400

 

 

 

48,071

 

 

 

(2,671

)

 

 

(21,975

)

 

Personnel

 

 

29,299

 

 

 

33,313

 

 

 

35,654

 

 

 

33,941

 

 

 

36,979

 

 

 

(3,038

)

 

 

(7,680

)

Occupancy

 

 

6,027

 

 

 

6,511

 

 

 

5,808

 

 

 

6,156

 

 

 

5,848

 

 

 

308

 

 

 

179

 

Marketing

 

 

2,488

 

 

 

4,431

 

 

 

3,091

 

 

 

4,108

 

 

 

3,940

 

 

 

168

 

 

 

(1,452

)

Other

 

 

9,936

 

 

 

11,277

 

 

 

10,547

 

 

 

9,916

 

 

 

11,397

 

 

 

(1,481

)

 

 

(1,461

)

Total general and administrative

 

 

47,750

 

 

 

55,532

 

 

 

55,100

 

 

 

54,121

 

 

 

58,164

 

 

 

(4,043

)

 

 

(10,414

)

 

Interest expense

 

 

8,816

 

 

 

7,597

 

 

 

(59

)

 

 

7,564

 

 

 

11,863

 

 

 

(4,299

)

 

 

(3,047

)

Income before income taxes

 

 

28,798

 

 

 

25,347

 

 

 

34,949

 

 

 

15,786

 

 

 

13,354

 

 

 

(2,432

)

 

 

(15,444

)

Income taxes

 

 

6,577

 

 

 

4,569

 

 

 

8,166

 

 

 

3,804

 

 

 

3,286

 

 

 

518

 

 

 

3,291

 

Net income

 

$

22,221

 

 

$

20,778

 

 

$

26,783

 

 

$

11,982

 

 

$

10,068

 

 

$

(1,914

)

 

$

(12,153

)

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.25

 

 

$

2.18

 

 

$

2.81

 

 

$

1.29

 

 

$

1.09

 

 

$

(0.20

)

 

$

(1.16

)

Diluted

 

$

2.11

 

 

$

2.04

 

 

$

2.67

 

 

$

1.24

 

 

$

1.06

 

 

$

(0.18

)

 

$

(1.05

)

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

9,861

 

 

 

9,545

 

 

 

9,533

 

 

 

9,261

 

 

 

9,195

 

 

 

66

 

 

 

666

 

Diluted

 

 

10,544

 

 

 

10,177

 

 

 

10,022

 

 

 

9,669

 

 

 

9,526

 

 

 

143

 

 

 

1,018

 

 

 

Balance Sheet Quarterly Trend

 

 

 

3Q 21

 

 

4Q 21

 

 

1Q 22

 

 

2Q 22

 

 

3Q 22

 

 

QoQ $
Inc (Dec)

 

 

YoY $
Inc (Dec)

 

Total assets

 

$

1,313,558

 

 

$

1,459,662

 

 

$

1,497,671

 

 

$

1,547,944

 

 

$

1,606,550

 

 

$

58,606

 

 

$

292,992

 

Net finance receivables

 

$

1,314,233

 

 

$

1,426,257

 

 

$

1,446,071

 

 

$

1,525,659

 

 

$

1,607,598

 

 

$

81,939

 

 

$

293,365

 

Allowance for credit losses

 

$

150,100

 

 

$

159,300

 

 

$

158,800

 

 

$

167,500

 

 

$

179,800

 

 

$

12,300

 

 

$

29,700

 

Debt

 

$

978,803

 

 

$

1,107,953

 

 

$

1,134,377

 

 

$

1,194,570

 

 

$

1,241,039

 

 

$

46,469

 

 

$

262,236

 

 

 

Other Key Metrics Quarterly Trend

 

 

 

3Q 21

 

 

4Q 21

 

 

1Q 22

 

 

2Q 22

 

 

3Q 22

 

 

QoQ
Inc (Dec)

 

 

YoY
Inc (Dec)

 

Interest and fee yield (annualized)

 

 

32.0

%

 

 

31.4

%

 

 

30.0

%

 

 

29.8

%

 

 

29.6

%

 

 

(0.2

)%

 

 

(2.4

)%

Efficiency ratio (1)

 

 

42.8

%

 

 

46.5

%

 

 

45.6

%

 

 

44.0

%

 

 

44.2

%

 

 

0.2

%

 

 

1.4

%

Operating expense ratio (2)

 

 

15.4

%

 

 

16.3

%

 

 

15.4

%

 

 

14.7

%

 

 

14.9

%

 

 

0.2

%

 

 

(0.5

)%

30+ contractual delinquency

 

 

4.7

%

 

 

6.0

%

 

 

5.7

%

 

 

6.2

%

 

 

7.2

%

 

 

1.0

%

 

 

2.5

%

Net credit loss ratio (3)

 

 

5.0

%

 

 

6.4

%

 

 

8.7

%

 

 

10.0

%

 

 

9.1

%

 

 

(0.9

)%

 

 

4.1

%

Book value per share

 

$

27.73

 

 

$

28.89

 

 

$

30.47

 

 

$

31.15

 

 

$

32.18

 

 

$

1.03

 

 

$

4.45

 

(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.

 

 

Averages and Yields

 

 

 

YTD 22

 

 

YTD 21

 

 

 

Average Net Finance
Receivables

 

 

Average Yield
(Annualized)

 

 

Average Net Finance
Receivables

 

 

Average Yield
(Annualized)

 

Small loans

 

$

448,175

 

 

 

35.8

%

 

$

383,208

 

 

 

38.2

%

Large loans

 

 

1,032,273

 

 

 

27.4

%

 

 

768,803

 

 

 

28.4

%

Retail loans

 

 

10,796

 

 

 

18.4

%

 

 

11,537

 

 

 

18.2

%

Total interest and fee yield

 

$

1,491,244

 

 

 

29.8

%

 

$

1,163,548

 

 

 

31.6

%

Total revenue yield

 

$

1,491,244

 

 

 

33.5

%

 

$

1,163,548

 

 

 

35.4

%

 

 

Components of Increase in Interest and Fee Income

 

 

 

YTD 22 Compared to YTD 21

 

 

 

Increase (Decrease)

 

 

 

Volume

 

 

Rate

 

 

Volume & Rate

 

 

Total

 

Small loans

 

$

18,632

 

 

$

(7,131

)

 

$

(1,210

)

 

$

10,291

 

Large loans

 

 

56,186

 

 

 

(6,250

)

 

 

(2,142

)

 

 

47,794

 

Retail loans

 

 

(101

)

 

 

12

 

 

 

(1

)

 

 

(90

)

Product mix

 

 

2,853

 

 

 

(1,904

)

 

 

(949

)

 

 

 

Total increase in interest and fee income

 

$

77,570

 

 

$

(15,273

)

 

$

(4,302

)

 

$

57,995

 

 

 

Loans Originated (1)

 

 

 

YTD 22

 

 

YTD 21

 

 

YTD $
Inc (Dec)

 

 

YTD %
Inc (Dec)

 

Small loans

 

$

481,644

 

 

$

426,715

 

 

$

54,929

 

 

 

12.9

%

Large loans

 

 

682,110

 

 

 

600,871

 

 

 

81,239

 

 

 

13.5

%

Retail loans

 

 

7,206

 

 

 

5,645

 

 

 

1,561

 

 

 

27.7

%

Total loans originated

 

$

1,170,960

 

 

$

1,033,231

 

 

$

137,729

 

 

 

13.3

%

(1) Represents the principal balance of loan originations and refinancings.

 

 

Other Key Metrics

 

 

 

YTD 22

 

 

YTD 21

 

Net credit losses

 

$

103,829

 

 

$

57,907

 

Percentage of average net finance receivables (annualized)

 

 

9.3

%

 

 

6.6

%

Provision for credit losses

 

$

124,329

 

 

$

58,007

 

Percentage of average net finance receivables (annualized)

 

 

11.1

%

 

 

6.6

%

Percentage of total revenue

 

 

33.1

%

 

 

18.8

%

General and administrative expenses

 

$

167,385

 

 

$

139,982

 

Percentage of average net finance receivables (annualized)

 

 

15.0

%

 

 

16.0

%

Percentage of total revenue

 

 

44.6

%

 

 

45.3

%

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 the 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.

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.

 

 

3Q 22

 

Debt

 

$

1,241,039

 

 

Total stockholders' equity

 

 

308,453

 

Less: Intangible assets

 

 

11,305

 

Tangible equity (non-GAAP)

 

$

297,148

 

 

Funded debt-to-equity ratio

 

 

4.0

x

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

 

 

4.2

x

 

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

Source: Regional Management Corp.

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