Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Regional Management Corp. Announces Fourth Quarter 2022 Results By: Regional Management Corp. via Business Wire February 08, 2023 at 16:15 PM EST - Net income of $2.4 million and diluted earnings per share of $0.25 - - Adjusted net income of $5.0 million and adjusted diluted earnings per share of $0.54 - - 30+ day contractual delinquencies of 7.1% as of December 31, 2022 - - Early indications of improved credit performance in the fourth quarter - Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the fourth quarter ended December 31, 2022. “We closed 2022 with a solid fourth quarter, including financial results that were better than our expectations,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “While net income was $2.4 million and diluted EPS was $0.25 in the quarter, we produced adjusted net income of $5.0 million and adjusted diluted EPS of $0.54. We grew our portfolio by $92 million to $1.7 billion, but continued strong demand has allowed us to be selective about the borrowers to whom we make loans, particularly as we have tightened credit since fourth quarter 2021 and intentionally slowed our growth rate throughout 2022. We finished the quarter with a 30+ day delinquency rate of 7.1%, just 10 basis points higher than 2019 pre-pandemic levels, and our first payment default rate improved to 7.1% in December, 240 basis points better than September 2022 and 170 basis points better than December 2019.” “We also took several meaningful steps in the quarter to prepare us for the new year,” added Mr. Beck. “Late in the quarter, we disposed of a portfolio of non-performing loans at an attractive price. The sale enabled us to put some of our stressed segments behind us and re-focus more of our efforts on earlier-stage delinquent accounts, where we experienced improvements in roll rates and delinquency. We also continued to tighten credit in the quarter, particularly to new borrowers, completed the rollout of our next generation custom credit scorecard, expanded our collections capabilities, released an enhanced customer portal, and increased pricing in certain states and segments.” “Looking ahead, we believe that the actions we took in 2022 position us to address the challenging economic environment and will enable us to respond quickly when conditions improve,” continued Mr. Beck. “In 2023, we will continue our focus on our highest confidence originations, emphasizing quality over quantity. A greater percentage of our originations will be to present and former borrowers, with new borrower lending disproportionately skewed to our newer states. As a result, we expect receivables growth to slow in 2023. As always, we will tightly manage our expenses, and we will monitor our credit performance and the macroeconomic environment closely, making further adjustments to underwriting as necessary. Our business and our customers remain resilient, and we are well-positioned to drive controlled, sustainable growth and profitability on behalf of our shareholders.” Adjusted net income and adjusted diluted earnings per share are non-GAAP measures. Please refer to the reconciliations of non-GAAP measures to comparable GAAP measures included at the end of this press release. Fourth Quarter 2022 Highlights Net income for the fourth quarter of 2022 was $2.4 million and diluted earnings per share was $0.25, inclusive of a $2.7 million impact to net income from the sale of $27.1 million of non-performing loans. Excluding the impact of this loan sale, adjusted net income was $5.0 million and adjusted diluted earnings per share was $0.54. Net finance receivables as of December 31, 2022 were $1.70 billion, an increase of $273.1 million, or 19.2%, from the prior-year period. Large loan net finance receivables of $1.2 billion increased $237.5 million, or 24.5%, from the prior-year period and represented 71.1% of the total loan portfolio, compared to 68.1% in the prior-year period. Small loan net finance receivables were $481.6 million, an increase of 8.2% from the prior-year period. Total loan originations were $470.3 million in the fourth quarter of 2022, an increase of $36.0 million, or 8.3%, from the prior-year period. Total revenue for the fourth quarter of 2022 was $132.0 million, an increase of $12.5 million, or 10.5%, from the prior-year period. Interest and fee income increased $10.3 million, or 9.6%, primarily due to higher average net finance receivables. Insurance income, net increased $1.3 million, or 14.1%, driven by portfolio growth. Non-performing loan sale negatively impacted total revenue by $2.2 million. Provision for credit losses for the fourth quarter of 2022 was $60.8 million, an increase of $29.8 million, or 96.0%, from the prior-year period. The provision for credit losses for the fourth quarter of 2022 included a reserve reduction of $11.8 million related to the sale of late-stage, non-performing loans, partially offset by incremental reserves of $9.1 million related to $91.8 million in sequential portfolio growth and $1.7 million based on the macroeconomic model. Allowance for credit losses was $178.8 million as of December 31, 2022, including a $20.7 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 fourth quarter of 2022 were 15.0%, compared to 6.4% in the prior-year period. Approximately 320 basis points of the fourth quarter 2022 net credit loss rate was attributable to the sale of non-performing loans. As of December 31, 2022, 30+ day contractual delinquencies totaled $119.8 million, or 7.1% of net finance receivables, a decrease of 10 basis points compared to September 30, 2022, and a 10 basis point increase from pre-pandemic levels as of December 31, 2019. The 30+ day contractual delinquency compares favorably to the company’s $178.8 million allowance for credit losses as of December 31, 2022. General and administrative expenses for the fourth quarter of 2022 were $55.1 million, a decrease of $0.4 million, or 0.7%, from the prior-year period. The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) for the fourth quarter of 2022 was 13.4%, a 290 basis point improvement compared to the prior-year period. The company expanded its operations to the state of Idaho in December. The company expects to expand into one additional state in the first quarter of 2023. First Quarter 2023 Dividend The company’s Board of Directors has declared a dividend of $0.30 per common share for the first quarter of 2023. The dividend will be paid on March 15, 2023 to shareholders of record as of the close of business on February 22, 2023. 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 December 31, 2022, the company had net finance receivables of $1.7 billion and debt of $1.4 billion. The debt consisted of: $147.5 million on the company’s $420 million senior revolving credit facility, $18.6 million on the company’s aggregate $300 million revolving warehouse credit facilities, and $1.2 billion through the company’s asset-backed securitizations. As of December 31, 2022, the company’s unused capacity to fund future growth on its revolving credit facilities (subject to the borrowing base) was $555 million, or 77.1%, and the company had available liquidity of $101.4 million, including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities. As of December 31, 2022, the company’s fixed-rate debt as a percentage of total debt was 88%, with a weighted-average coupon of 3.6% and a weighted-average revolving duration of 2.1 years. The company had a funded debt-to-equity ratio of 4.4 to 1.0 and a stockholders’ equity ratio of 17.9%, each as of December 31, 2022. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 4.6 to 1.0, as of December 31, 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 18 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, 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) 4Q 22 4Q 21 $ % FY 22 FY 21 $ % Revenue Interest and fee income $ 117,432 $ 107,117 $ 10,315 9.6 % $ 450,854 $ 382,544 $ 68,310 17.9 % Insurance income, net 10,751 9,423 1,328 14.1 % 43,502 35,482 8,020 22.6 % Other income 3,833 2,944 889 30.2 % 12,831 10,325 2,506 24.3 % Total revenue 132,016 119,484 12,532 10.5 % 507,187 428,351 78,836 18.4 % Expenses Provision for credit losses 60,786 31,008 (29,778 ) (96.0 )% 185,115 89,015 (96,100 ) (108.0 )% Personnel 34,669 33,313 (1,356 ) (4.1 )% 141,243 119,833 (21,410 ) (17.9 )% Occupancy 5,997 6,511 514 7.9 % 23,809 24,126 317 1.3 % Marketing 4,239 4,431 192 4.3 % 15,378 14,405 (973 ) (6.8 )% Other 10,238 11,277 1,039 9.2 % 42,098 37,150 (4,948 ) (13.3 )% Total general and administrative 55,143 55,532 389 0.7 % 222,528 195,514 (27,014 ) (13.8 )% Interest expense 14,855 7,597 (7,258 ) (95.5 )% 34,223 31,349 (2,874 ) (9.2 )% Income before income taxes 1,232 25,347 (24,115 ) (95.1 )% 65,321 112,473 (47,152 ) (41.9 )% Income taxes (1,159 ) 4,569 5,728 125.4 % 14,097 23,786 9,689 40.7 % Net income $ 2,391 $ 20,778 $ (18,387 ) (88.5 )% $ 51,224 $ 88,687 $ (37,463 ) (42.2 )% Net income per common share: Basic $ 0.26 $ 2.18 $ (1.92 ) (88.1 )% $ 5.51 $ 8.84 $ (3.33 ) (37.7 )% Diluted $ 0.25 $ 2.04 $ (1.79 ) (87.7 )% $ 5.30 $ 8.33 $ (3.03 ) (36.4 )% Weighted-average common shares outstanding: Basic 9,199 9,545 346 3.6 % 9,296 10,034 738 7.4 % Diluted 9,411 10,177 766 7.5 % 9,656 10,643 987 9.3 % Return on average assets (annualized) 0.6 % 6.0 % 3.3 % 7.2 % Return on average equity (annualized) 3.1 % 29.5 % 17.0 % 31.6 % Regional Management Corp. and Subsidiaries Consolidated Balance Sheets (Unaudited) (dollars in thousands, except par value amounts) Increase (Decrease) 4Q 22 4Q 21 $ % Assets Cash $ 3,873 $ 10,507 $ (6,634 ) (63.1 )% Net finance receivables 1,699,393 1,426,257 273,136 19.2 % Unearned insurance premiums (51,008 ) (47,837 ) (3,171 ) (6.6 )% Allowance for credit losses (178,800 ) (159,300 ) (19,500 ) (12.2 )% Net finance receivables, less unearned insurance premiums and allowance for credit losses 1,469,585 1,219,120 250,465 20.5 % Restricted cash 127,926 138,682 (10,756 ) (7.8 )% Lease assets 34,521 28,721 5,800 20.2 % Restricted available-for-sale investments 20,416 - 20,416 100.0 % Deferred tax assets, net 13,810 18,420 (4,610 ) (25.0 )% Property and equipment 14,526 12,938 1,588 12.3 % Intangible assets 12,122 9,517 2,605 27.4 % Other assets 28,208 21,757 6,451 29.7 % Total assets $ 1,724,987 $ 1,459,662 $ 265,325 18.2 % Liabilities and Stockholders’ Equity Liabilities: Debt $ 1,355,359 $ 1,107,953 $ 247,406 22.3 % Unamortized debt issuance costs (9,512 ) (11,010 ) 1,498 13.6 % Net debt 1,345,847 1,096,943 248,904 22.7 % Lease liabilities 36,712 30,700 6,012 19.6 % Accounts payable and accrued expenses 33,795 49,283 (15,488 ) (31.4 )% Total liabilities 1,416,354 1,176,926 239,428 20.3 % 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, 14,330 shares issued and 9,523 shares outstanding at December 31, 2022 and 14,157 shares issued and 9,788 shares outstanding at December 31, 2021) 1,433 1,416 17 1.2 % Additional paid-in capital 112,384 104,745 7,639 7.3 % Retained earnings 345,545 306,105 39,440 12.9 % Accumulated other comprehensive loss (586 ) — (586 ) (100.0 )% Treasury stock (4,807 shares at December 31, 2022 and 4,370 shares at December 31, 2021) (150,143 ) (129,530 ) (20,613 ) (15.9 )% Total stockholders’ equity 308,633 282,736 25,897 9.2 % Total liabilities and stockholders’ equity $ 1,724,987 $ 1,459,662 $ 265,325 18.2 % Regional Management Corp. and Subsidiaries Selected Financial Data (Unaudited) (dollars in thousands, except per share amounts) Net Finance Receivables by Product 4Q 22 3Q 22 QoQ $ Inc (Dec) QoQ % Inc (Dec) 4Q 21 YoY $ Inc (Dec) YoY % Inc (Dec) Small loans $ 481,605 $ 480,199 $ 1,406 0.3 % $ 445,023 $ 36,582 8.2 % Large loans 1,208,185 1,116,455 91,730 8.2 % 970,694 237,491 24.5 % Retail loans 9,603 10,944 (1,341 ) (12.3 )% 10,540 (937 ) (8.9 )% Total net finance receivables $ 1,699,393 $ 1,607,598 $ 91,795 5.7 % $ 1,426,257 $ 273,136 19.2 % Number of branches at period end 345 338 7 2.1 % 350 (5 ) (1.4 )% Net finance receivables per branch $ 4,926 $ 4,756 $ 170 3.6 % $ 4,075 $ 851 20.9 % Averages and Yields 4Q 22 3Q 22 4Q 21 Average Net Finance Receivables Average Yield (1) Average Net Finance Receivables Average Yield (1) Average Net Finance Receivables Average Yield (1) Small loans $ 479,777 33.5 % $ 466,087 35.5 % $ 427,586 38.1 % Large loans 1,155,629 26.6 % 1,089,225 27.2 % 925,226 28.5 % Retail loans 10,563 16.3 % 10,935 18.5 % 10,435 18.7 % Total interest and fee yield $ 1,645,969 28.5 % $ 1,566,247 29.6 % $ 1,363,247 31.4 % Total revenue yield $ 1,645,969 32.1 % $ 1,566,247 33.6 % $ 1,363,247 35.1 % (1) Annualized interest and fee income as a percentage of average net finance receivables. Components of Increase in Interest and Fee Income 4Q 22 Compared to 4Q 21 Increase (Decrease) Volume Rate Volume & Rate Total Small loans $ 4,971 $ (4,875 ) $ (595 ) $ (499 ) Large loans 16,411 (4,436 ) (1,105 ) 10,870 Retail loans 6 (61 ) (1 ) (56 ) Product mix 827 (484 ) (343 ) — Total increase in interest and fee income $ 22,215 $ (9,856 ) $ (2,044 ) $ 10,315 Loans Originated (1) 4Q 22 3Q 22 QoQ $ Inc (Dec) QoQ % Inc (Dec) 4Q 21 YoY $ Inc (Dec) YoY % Inc (Dec) Small loans $ 171,511 $ 173,269 $ (1,758 ) (1.0 )% $ 175,898 $ (4,387 ) (2.5 )% Large loans 297,447 243,259 54,188 22.3 % 255,828 41,619 16.3 % Retail loans 1,390 2,145 (755 ) (35.2 )% 2,630 (1,240 ) (47.1 )% Total loans originated $ 470,348 $ 418,673 $ 51,675 12.3 % $ 434,356 $ 35,992 8.3 % (1) Represents the principal balance of loan originations and refinancings. Other Key Metrics 4Q 22 3Q 22 4Q 21 Net credit losses $ 61,786 $ 35,771 $ 21,808 Percentage of average net finance receivables (annualized) 15.0 % 9.1 % 6.4 % Provision for credit losses $ 60,786 $ 48,071 $ 31,008 Percentage of average net finance receivables (annualized) 14.8 % 12.3 % 9.1 % Percentage of total revenue 46.0 % 36.6 % 26.0 % General and administrative expenses $ 55,143 $ 58,164 $ 55,532 Percentage of average net finance receivables (annualized) 13.4 % 14.9 % 16.3 % Percentage of total revenue 41.8 % 44.2 % 46.5 % Same store results (1): Net finance receivables at period-end $ 1,625,008 $ 1,552,740 $ 1,400,817 Net finance receivable growth rate 14.8 % 19.2 % 23.3 % Number of branches in calculation 320 315 330 (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 4Q 22 3Q 22 4Q 21 Allowance for credit losses (1) $ 178,800 10.5 % $ 179,800 11.2 % $ 159,300 11.2 % Current 1,431,502 84.2 % 1,356,134 84.4 % 1,237,165 86.7 % 1 to 29 days past due 148,048 8.7 % 135,468 8.4 % 104,201 7.3 % Delinquent accounts: 30 to 59 days 36,208 2.2 % 32,295 2.0 % 25,283 1.9 % 60 to 89 days 31,352 1.8 % 25,375 1.6 % 20,395 1.4 % 90 to 119 days 24,293 1.4 % 21,720 1.3 % 15,962 1.0 % 120 to 149 days 16,257 1.0 % 17,503 1.1 % 12,466 0.9 % 150 to 179 days 11,733 0.7 % 19,103 1.2 % 10,785 0.8 % Total contractual delinquency $ 119,843 7.1 % $ 115,996 7.2 % $ 84,891 6.0 % Total net finance receivables $ 1,699,393 100.0 % $ 1,607,598 100.0 % $ 1,426,257 100.0 % 1 day and over past due $ 267,891 15.8 % $ 251,464 15.6 % $ 189,092 13.3 % Contractual Delinquency by Product 4Q 22 3Q 22 4Q 21 Small loans $ 43,703 9.1 % $ 49,906 10.4 % $ 39,794 8.9 % Large loans 75,349 6.2 % 64,922 5.8 % 44,348 4.6 % Retail loans 791 8.2 % 1,168 10.7 % 749 7.1 % Total contractual delinquency $ 119,843 7.1 % $ 115,996 7.2 % $ 84,891 6.0 % (1) Includes estimated macroeconomic allowance for credit losses of $20,700, $19,000, and $17,000 in 4Q 22, 3Q 22, and 4Q 21, respectively. Income Statement Quarterly Trend 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 QoQ $ B(W) YoY $ B(W) Revenue Interest and fee income $ 107,117 $ 107,631 $ 109,771 $ 116,020 $ 117,432 $ 1,412 $ 10,315 Insurance income, net 9,423 10,544 10,220 11,987 10,751 (1,236 ) 1,328 Other income 2,944 2,673 2,880 3,445 3,833 388 889 Total revenue 119,484 120,848 122,871 131,452 132,016 564 12,532 Expenses Provision for credit losses 31,008 30,858 45,400 48,071 60,786 (12,715 ) (29,778 ) Personnel 33,313 35,654 33,941 36,979 34,669 2,310 (1,356 ) Occupancy 6,511 5,808 6,156 5,848 5,997 (149 ) 514 Marketing 4,431 3,091 4,108 3,940 4,239 (299 ) 192 Other 11,277 10,547 9,916 11,397 10,238 1,159 1,039 Total general and administrative 55,532 55,100 54,121 58,164 55,143 3,021 389 Interest expense 7,597 (59 ) 7,564 11,863 14,855 (2,992 ) (7,258 ) Income before income taxes 25,347 34,949 15,786 13,354 1,232 (12,122 ) (24,115 ) Income taxes 4,569 8,166 3,804 3,286 (1,159 ) 4,445 5,728 Net income $ 20,778 $ 26,783 $ 11,982 $ 10,068 $ 2,391 $ (7,677 ) $ (18,387 ) Net income per common share: Basic $ 2.18 $ 2.81 $ 1.29 $ 1.09 $ 0.26 $ (0.83 ) $ (1.92 ) Diluted $ 2.04 $ 2.67 $ 1.24 $ 1.06 $ 0.25 $ (0.81 ) $ (1.79 ) Weighted-average shares outstanding: Basic 9,545 9,533 9,261 9,195 9,199 (4 ) 346 Diluted 10,177 10,022 9,669 9,526 9,411 115 766 Balance Sheet Quarterly Trend 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 QoQ $ Inc (Dec) YoY $ Inc (Dec) Total assets $ 1,459,662 $ 1,497,671 $ 1,547,944 $ 1,606,550 $ 1,724,987 $ 118,437 $ 265,325 Net finance receivables $ 1,426,257 $ 1,446,071 $ 1,525,659 $ 1,607,598 $ 1,699,393 $ 91,795 $ 273,136 Allowance for credit losses $ 159,300 $ 158,800 $ 167,500 $ 179,800 $ 178,800 $ (1,000 ) $ 19,500 Debt $ 1,107,953 $ 1,134,377 $ 1,194,570 $ 1,241,039 $ 1,355,359 $ 114,320 $ 247,406 Other Key Metrics Quarterly Trend 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 QoQ Inc (Dec) YoY Inc (Dec) Interest and fee yield (annualized) 31.4 % 30.0 % 29.8 % 29.6 % 28.5 % (1.1 )% (2.9 )% Efficiency ratio (1) 46.5 % 45.6 % 44.0 % 44.2 % 41.8 % (2.4 )% (4.7 )% Operating expense ratio (2) 16.3 % 15.4 % 14.7 % 14.9 % 13.4 % (1.5 )% (2.9 )% 30+ contractual delinquency 6.0 % 5.7 % 6.2 % 7.2 % 7.1 % (0.1 )% 1.1 % Net credit loss ratio (3) 6.4 % 8.7 % 10.0 % 9.1 % 15.0 % 5.9 % 8.6 % Book value per share $ 28.89 $ 30.47 $ 31.15 $ 32.18 $ 32.41 $ 0.23 $ 3.52 (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 FY 22 FY 21 Average Net Finance Receivables Average Yield Average Net Finance Receivables Average Yield Small loans $ 456,141 35.2 % $ 394,394 38.2 % Large loans 1,063,365 27.1 % 808,230 28.4 % Retail loans 10,737 17.9 % 11,259 18.3 % Total interest and fee yield $ 1,530,243 29.5 % $ 1,213,883 31.5 % Total revenue yield $ 1,530,243 33.1 % $ 1,213,883 35.3 % Components of Increase in Interest and Fee Income FY 22 Compared to FY 21 Increase (Decrease) Volume Rate Volume & Rate Total Small loans $ 23,582 $ (11,923 ) $ (1,866 ) $ 9,793 Large loans 72,558 (10,560 ) (3,334 ) 58,664 Retail loans (96 ) (54 ) 3 (147 ) Product mix 3,654 (2,362 ) (1,292 ) — Total increase in interest and fee income $ 99,698 $ (24,899 ) $ (6,489 ) $ 68,310 Loans Originated (1) FY 22 FY 21 FY $ Inc (Dec) FY % Inc (Dec) Small loans $ 653,155 $ 602,613 $ 50,542 8.4 % Large loans 979,557 856,699 122,858 14.3 % Retail loans 8,596 8,275 321 3.9 % Total loans originated $ 1,641,308 $ 1,467,587 $ 173,721 11.8 % (1) Represents the principal balance of loan originations and refinancings. Other Key Metrics FY 22 FY 21 Net credit losses $ 165,615 $ 79,715 Percentage of average net finance receivables 10.8 % 6.6 % Provision for credit losses $ 185,115 $ 89,015 Percentage of average net finance receivables 12.1 % 7.3 % Percentage of total revenue 36.5 % 20.8 % General and administrative expenses $ 222,528 $ 195,514 Percentage of average net finance receivables 14.5 % 16.1 % Percentage of total revenue 43.9 % 45.6 % 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. Adjusted net income and adjusted diluted net income per common share are non-GAAP measures that adjust GAAP measures to exclude the impacts of the non-performing loan sale. Management uses these adjusted measures to evaluate and manage the company's performance by excluding certain material items that may not be representative of the company’s financial results. As a result, the company also believes that these adjusted measures will aid users of its financial statements in the evaluation of its operating performance. 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. 4Q 22 Debt $ 1,355,359 Total stockholders' equity 308,633 Less: Intangible assets 12,122 Tangible equity (non-GAAP) $ 296,511 Funded debt-to-equity ratio 4.4 x Funded debt-to-tangible equity ratio (non-GAAP) 4.6 x 4Q 22 Non-GAAP Reconciliation GAAP Adjustments Non-GAAP Total revenue (1) $ 132,016 $ 2,185 $ 134,201 Provision for credit losses (2) $ 60,786 $ 1,278 $ 62,064 Income taxes $ (1,159 ) $ (807 ) $ (1,966 ) Net income $ 2,391 $ 2,656 $ 5,047 Diluted net income per common share $ 0.25 $ 0.29 $ 0.54 (1) Total revenue adjustments include revenue reversals pertaining to the non-performing loan sale. (2) Provision for credit losses adjustment include impacts in 4Q 22 due to the non-performing loan sale. View source version on businesswire.com: https://www.businesswire.com/news/home/20230208005775/en/Contacts Investor Relations Garrett Edson, (203) 682-8331 investor.relations@regionalmanagement.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Regional Management Corp. Announces Fourth Quarter 2022 Results By: Regional Management Corp. via Business Wire February 08, 2023 at 16:15 PM EST - Net income of $2.4 million and diluted earnings per share of $0.25 - - Adjusted net income of $5.0 million and adjusted diluted earnings per share of $0.54 - - 30+ day contractual delinquencies of 7.1% as of December 31, 2022 - - Early indications of improved credit performance in the fourth quarter - Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the fourth quarter ended December 31, 2022. “We closed 2022 with a solid fourth quarter, including financial results that were better than our expectations,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “While net income was $2.4 million and diluted EPS was $0.25 in the quarter, we produced adjusted net income of $5.0 million and adjusted diluted EPS of $0.54. We grew our portfolio by $92 million to $1.7 billion, but continued strong demand has allowed us to be selective about the borrowers to whom we make loans, particularly as we have tightened credit since fourth quarter 2021 and intentionally slowed our growth rate throughout 2022. We finished the quarter with a 30+ day delinquency rate of 7.1%, just 10 basis points higher than 2019 pre-pandemic levels, and our first payment default rate improved to 7.1% in December, 240 basis points better than September 2022 and 170 basis points better than December 2019.” “We also took several meaningful steps in the quarter to prepare us for the new year,” added Mr. Beck. “Late in the quarter, we disposed of a portfolio of non-performing loans at an attractive price. The sale enabled us to put some of our stressed segments behind us and re-focus more of our efforts on earlier-stage delinquent accounts, where we experienced improvements in roll rates and delinquency. We also continued to tighten credit in the quarter, particularly to new borrowers, completed the rollout of our next generation custom credit scorecard, expanded our collections capabilities, released an enhanced customer portal, and increased pricing in certain states and segments.” “Looking ahead, we believe that the actions we took in 2022 position us to address the challenging economic environment and will enable us to respond quickly when conditions improve,” continued Mr. Beck. “In 2023, we will continue our focus on our highest confidence originations, emphasizing quality over quantity. A greater percentage of our originations will be to present and former borrowers, with new borrower lending disproportionately skewed to our newer states. As a result, we expect receivables growth to slow in 2023. As always, we will tightly manage our expenses, and we will monitor our credit performance and the macroeconomic environment closely, making further adjustments to underwriting as necessary. Our business and our customers remain resilient, and we are well-positioned to drive controlled, sustainable growth and profitability on behalf of our shareholders.” Adjusted net income and adjusted diluted earnings per share are non-GAAP measures. Please refer to the reconciliations of non-GAAP measures to comparable GAAP measures included at the end of this press release. Fourth Quarter 2022 Highlights Net income for the fourth quarter of 2022 was $2.4 million and diluted earnings per share was $0.25, inclusive of a $2.7 million impact to net income from the sale of $27.1 million of non-performing loans. Excluding the impact of this loan sale, adjusted net income was $5.0 million and adjusted diluted earnings per share was $0.54. Net finance receivables as of December 31, 2022 were $1.70 billion, an increase of $273.1 million, or 19.2%, from the prior-year period. Large loan net finance receivables of $1.2 billion increased $237.5 million, or 24.5%, from the prior-year period and represented 71.1% of the total loan portfolio, compared to 68.1% in the prior-year period. Small loan net finance receivables were $481.6 million, an increase of 8.2% from the prior-year period. Total loan originations were $470.3 million in the fourth quarter of 2022, an increase of $36.0 million, or 8.3%, from the prior-year period. Total revenue for the fourth quarter of 2022 was $132.0 million, an increase of $12.5 million, or 10.5%, from the prior-year period. Interest and fee income increased $10.3 million, or 9.6%, primarily due to higher average net finance receivables. Insurance income, net increased $1.3 million, or 14.1%, driven by portfolio growth. Non-performing loan sale negatively impacted total revenue by $2.2 million. Provision for credit losses for the fourth quarter of 2022 was $60.8 million, an increase of $29.8 million, or 96.0%, from the prior-year period. The provision for credit losses for the fourth quarter of 2022 included a reserve reduction of $11.8 million related to the sale of late-stage, non-performing loans, partially offset by incremental reserves of $9.1 million related to $91.8 million in sequential portfolio growth and $1.7 million based on the macroeconomic model. Allowance for credit losses was $178.8 million as of December 31, 2022, including a $20.7 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 fourth quarter of 2022 were 15.0%, compared to 6.4% in the prior-year period. Approximately 320 basis points of the fourth quarter 2022 net credit loss rate was attributable to the sale of non-performing loans. As of December 31, 2022, 30+ day contractual delinquencies totaled $119.8 million, or 7.1% of net finance receivables, a decrease of 10 basis points compared to September 30, 2022, and a 10 basis point increase from pre-pandemic levels as of December 31, 2019. The 30+ day contractual delinquency compares favorably to the company’s $178.8 million allowance for credit losses as of December 31, 2022. General and administrative expenses for the fourth quarter of 2022 were $55.1 million, a decrease of $0.4 million, or 0.7%, from the prior-year period. The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) for the fourth quarter of 2022 was 13.4%, a 290 basis point improvement compared to the prior-year period. The company expanded its operations to the state of Idaho in December. The company expects to expand into one additional state in the first quarter of 2023. First Quarter 2023 Dividend The company’s Board of Directors has declared a dividend of $0.30 per common share for the first quarter of 2023. The dividend will be paid on March 15, 2023 to shareholders of record as of the close of business on February 22, 2023. 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 December 31, 2022, the company had net finance receivables of $1.7 billion and debt of $1.4 billion. The debt consisted of: $147.5 million on the company’s $420 million senior revolving credit facility, $18.6 million on the company’s aggregate $300 million revolving warehouse credit facilities, and $1.2 billion through the company’s asset-backed securitizations. As of December 31, 2022, the company’s unused capacity to fund future growth on its revolving credit facilities (subject to the borrowing base) was $555 million, or 77.1%, and the company had available liquidity of $101.4 million, including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities. As of December 31, 2022, the company’s fixed-rate debt as a percentage of total debt was 88%, with a weighted-average coupon of 3.6% and a weighted-average revolving duration of 2.1 years. The company had a funded debt-to-equity ratio of 4.4 to 1.0 and a stockholders’ equity ratio of 17.9%, each as of December 31, 2022. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 4.6 to 1.0, as of December 31, 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 18 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, 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) 4Q 22 4Q 21 $ % FY 22 FY 21 $ % Revenue Interest and fee income $ 117,432 $ 107,117 $ 10,315 9.6 % $ 450,854 $ 382,544 $ 68,310 17.9 % Insurance income, net 10,751 9,423 1,328 14.1 % 43,502 35,482 8,020 22.6 % Other income 3,833 2,944 889 30.2 % 12,831 10,325 2,506 24.3 % Total revenue 132,016 119,484 12,532 10.5 % 507,187 428,351 78,836 18.4 % Expenses Provision for credit losses 60,786 31,008 (29,778 ) (96.0 )% 185,115 89,015 (96,100 ) (108.0 )% Personnel 34,669 33,313 (1,356 ) (4.1 )% 141,243 119,833 (21,410 ) (17.9 )% Occupancy 5,997 6,511 514 7.9 % 23,809 24,126 317 1.3 % Marketing 4,239 4,431 192 4.3 % 15,378 14,405 (973 ) (6.8 )% Other 10,238 11,277 1,039 9.2 % 42,098 37,150 (4,948 ) (13.3 )% Total general and administrative 55,143 55,532 389 0.7 % 222,528 195,514 (27,014 ) (13.8 )% Interest expense 14,855 7,597 (7,258 ) (95.5 )% 34,223 31,349 (2,874 ) (9.2 )% Income before income taxes 1,232 25,347 (24,115 ) (95.1 )% 65,321 112,473 (47,152 ) (41.9 )% Income taxes (1,159 ) 4,569 5,728 125.4 % 14,097 23,786 9,689 40.7 % Net income $ 2,391 $ 20,778 $ (18,387 ) (88.5 )% $ 51,224 $ 88,687 $ (37,463 ) (42.2 )% Net income per common share: Basic $ 0.26 $ 2.18 $ (1.92 ) (88.1 )% $ 5.51 $ 8.84 $ (3.33 ) (37.7 )% Diluted $ 0.25 $ 2.04 $ (1.79 ) (87.7 )% $ 5.30 $ 8.33 $ (3.03 ) (36.4 )% Weighted-average common shares outstanding: Basic 9,199 9,545 346 3.6 % 9,296 10,034 738 7.4 % Diluted 9,411 10,177 766 7.5 % 9,656 10,643 987 9.3 % Return on average assets (annualized) 0.6 % 6.0 % 3.3 % 7.2 % Return on average equity (annualized) 3.1 % 29.5 % 17.0 % 31.6 % Regional Management Corp. and Subsidiaries Consolidated Balance Sheets (Unaudited) (dollars in thousands, except par value amounts) Increase (Decrease) 4Q 22 4Q 21 $ % Assets Cash $ 3,873 $ 10,507 $ (6,634 ) (63.1 )% Net finance receivables 1,699,393 1,426,257 273,136 19.2 % Unearned insurance premiums (51,008 ) (47,837 ) (3,171 ) (6.6 )% Allowance for credit losses (178,800 ) (159,300 ) (19,500 ) (12.2 )% Net finance receivables, less unearned insurance premiums and allowance for credit losses 1,469,585 1,219,120 250,465 20.5 % Restricted cash 127,926 138,682 (10,756 ) (7.8 )% Lease assets 34,521 28,721 5,800 20.2 % Restricted available-for-sale investments 20,416 - 20,416 100.0 % Deferred tax assets, net 13,810 18,420 (4,610 ) (25.0 )% Property and equipment 14,526 12,938 1,588 12.3 % Intangible assets 12,122 9,517 2,605 27.4 % Other assets 28,208 21,757 6,451 29.7 % Total assets $ 1,724,987 $ 1,459,662 $ 265,325 18.2 % Liabilities and Stockholders’ Equity Liabilities: Debt $ 1,355,359 $ 1,107,953 $ 247,406 22.3 % Unamortized debt issuance costs (9,512 ) (11,010 ) 1,498 13.6 % Net debt 1,345,847 1,096,943 248,904 22.7 % Lease liabilities 36,712 30,700 6,012 19.6 % Accounts payable and accrued expenses 33,795 49,283 (15,488 ) (31.4 )% Total liabilities 1,416,354 1,176,926 239,428 20.3 % 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, 14,330 shares issued and 9,523 shares outstanding at December 31, 2022 and 14,157 shares issued and 9,788 shares outstanding at December 31, 2021) 1,433 1,416 17 1.2 % Additional paid-in capital 112,384 104,745 7,639 7.3 % Retained earnings 345,545 306,105 39,440 12.9 % Accumulated other comprehensive loss (586 ) — (586 ) (100.0 )% Treasury stock (4,807 shares at December 31, 2022 and 4,370 shares at December 31, 2021) (150,143 ) (129,530 ) (20,613 ) (15.9 )% Total stockholders’ equity 308,633 282,736 25,897 9.2 % Total liabilities and stockholders’ equity $ 1,724,987 $ 1,459,662 $ 265,325 18.2 % Regional Management Corp. and Subsidiaries Selected Financial Data (Unaudited) (dollars in thousands, except per share amounts) Net Finance Receivables by Product 4Q 22 3Q 22 QoQ $ Inc (Dec) QoQ % Inc (Dec) 4Q 21 YoY $ Inc (Dec) YoY % Inc (Dec) Small loans $ 481,605 $ 480,199 $ 1,406 0.3 % $ 445,023 $ 36,582 8.2 % Large loans 1,208,185 1,116,455 91,730 8.2 % 970,694 237,491 24.5 % Retail loans 9,603 10,944 (1,341 ) (12.3 )% 10,540 (937 ) (8.9 )% Total net finance receivables $ 1,699,393 $ 1,607,598 $ 91,795 5.7 % $ 1,426,257 $ 273,136 19.2 % Number of branches at period end 345 338 7 2.1 % 350 (5 ) (1.4 )% Net finance receivables per branch $ 4,926 $ 4,756 $ 170 3.6 % $ 4,075 $ 851 20.9 % Averages and Yields 4Q 22 3Q 22 4Q 21 Average Net Finance Receivables Average Yield (1) Average Net Finance Receivables Average Yield (1) Average Net Finance Receivables Average Yield (1) Small loans $ 479,777 33.5 % $ 466,087 35.5 % $ 427,586 38.1 % Large loans 1,155,629 26.6 % 1,089,225 27.2 % 925,226 28.5 % Retail loans 10,563 16.3 % 10,935 18.5 % 10,435 18.7 % Total interest and fee yield $ 1,645,969 28.5 % $ 1,566,247 29.6 % $ 1,363,247 31.4 % Total revenue yield $ 1,645,969 32.1 % $ 1,566,247 33.6 % $ 1,363,247 35.1 % (1) Annualized interest and fee income as a percentage of average net finance receivables. Components of Increase in Interest and Fee Income 4Q 22 Compared to 4Q 21 Increase (Decrease) Volume Rate Volume & Rate Total Small loans $ 4,971 $ (4,875 ) $ (595 ) $ (499 ) Large loans 16,411 (4,436 ) (1,105 ) 10,870 Retail loans 6 (61 ) (1 ) (56 ) Product mix 827 (484 ) (343 ) — Total increase in interest and fee income $ 22,215 $ (9,856 ) $ (2,044 ) $ 10,315 Loans Originated (1) 4Q 22 3Q 22 QoQ $ Inc (Dec) QoQ % Inc (Dec) 4Q 21 YoY $ Inc (Dec) YoY % Inc (Dec) Small loans $ 171,511 $ 173,269 $ (1,758 ) (1.0 )% $ 175,898 $ (4,387 ) (2.5 )% Large loans 297,447 243,259 54,188 22.3 % 255,828 41,619 16.3 % Retail loans 1,390 2,145 (755 ) (35.2 )% 2,630 (1,240 ) (47.1 )% Total loans originated $ 470,348 $ 418,673 $ 51,675 12.3 % $ 434,356 $ 35,992 8.3 % (1) Represents the principal balance of loan originations and refinancings. Other Key Metrics 4Q 22 3Q 22 4Q 21 Net credit losses $ 61,786 $ 35,771 $ 21,808 Percentage of average net finance receivables (annualized) 15.0 % 9.1 % 6.4 % Provision for credit losses $ 60,786 $ 48,071 $ 31,008 Percentage of average net finance receivables (annualized) 14.8 % 12.3 % 9.1 % Percentage of total revenue 46.0 % 36.6 % 26.0 % General and administrative expenses $ 55,143 $ 58,164 $ 55,532 Percentage of average net finance receivables (annualized) 13.4 % 14.9 % 16.3 % Percentage of total revenue 41.8 % 44.2 % 46.5 % Same store results (1): Net finance receivables at period-end $ 1,625,008 $ 1,552,740 $ 1,400,817 Net finance receivable growth rate 14.8 % 19.2 % 23.3 % Number of branches in calculation 320 315 330 (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 4Q 22 3Q 22 4Q 21 Allowance for credit losses (1) $ 178,800 10.5 % $ 179,800 11.2 % $ 159,300 11.2 % Current 1,431,502 84.2 % 1,356,134 84.4 % 1,237,165 86.7 % 1 to 29 days past due 148,048 8.7 % 135,468 8.4 % 104,201 7.3 % Delinquent accounts: 30 to 59 days 36,208 2.2 % 32,295 2.0 % 25,283 1.9 % 60 to 89 days 31,352 1.8 % 25,375 1.6 % 20,395 1.4 % 90 to 119 days 24,293 1.4 % 21,720 1.3 % 15,962 1.0 % 120 to 149 days 16,257 1.0 % 17,503 1.1 % 12,466 0.9 % 150 to 179 days 11,733 0.7 % 19,103 1.2 % 10,785 0.8 % Total contractual delinquency $ 119,843 7.1 % $ 115,996 7.2 % $ 84,891 6.0 % Total net finance receivables $ 1,699,393 100.0 % $ 1,607,598 100.0 % $ 1,426,257 100.0 % 1 day and over past due $ 267,891 15.8 % $ 251,464 15.6 % $ 189,092 13.3 % Contractual Delinquency by Product 4Q 22 3Q 22 4Q 21 Small loans $ 43,703 9.1 % $ 49,906 10.4 % $ 39,794 8.9 % Large loans 75,349 6.2 % 64,922 5.8 % 44,348 4.6 % Retail loans 791 8.2 % 1,168 10.7 % 749 7.1 % Total contractual delinquency $ 119,843 7.1 % $ 115,996 7.2 % $ 84,891 6.0 % (1) Includes estimated macroeconomic allowance for credit losses of $20,700, $19,000, and $17,000 in 4Q 22, 3Q 22, and 4Q 21, respectively. Income Statement Quarterly Trend 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 QoQ $ B(W) YoY $ B(W) Revenue Interest and fee income $ 107,117 $ 107,631 $ 109,771 $ 116,020 $ 117,432 $ 1,412 $ 10,315 Insurance income, net 9,423 10,544 10,220 11,987 10,751 (1,236 ) 1,328 Other income 2,944 2,673 2,880 3,445 3,833 388 889 Total revenue 119,484 120,848 122,871 131,452 132,016 564 12,532 Expenses Provision for credit losses 31,008 30,858 45,400 48,071 60,786 (12,715 ) (29,778 ) Personnel 33,313 35,654 33,941 36,979 34,669 2,310 (1,356 ) Occupancy 6,511 5,808 6,156 5,848 5,997 (149 ) 514 Marketing 4,431 3,091 4,108 3,940 4,239 (299 ) 192 Other 11,277 10,547 9,916 11,397 10,238 1,159 1,039 Total general and administrative 55,532 55,100 54,121 58,164 55,143 3,021 389 Interest expense 7,597 (59 ) 7,564 11,863 14,855 (2,992 ) (7,258 ) Income before income taxes 25,347 34,949 15,786 13,354 1,232 (12,122 ) (24,115 ) Income taxes 4,569 8,166 3,804 3,286 (1,159 ) 4,445 5,728 Net income $ 20,778 $ 26,783 $ 11,982 $ 10,068 $ 2,391 $ (7,677 ) $ (18,387 ) Net income per common share: Basic $ 2.18 $ 2.81 $ 1.29 $ 1.09 $ 0.26 $ (0.83 ) $ (1.92 ) Diluted $ 2.04 $ 2.67 $ 1.24 $ 1.06 $ 0.25 $ (0.81 ) $ (1.79 ) Weighted-average shares outstanding: Basic 9,545 9,533 9,261 9,195 9,199 (4 ) 346 Diluted 10,177 10,022 9,669 9,526 9,411 115 766 Balance Sheet Quarterly Trend 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 QoQ $ Inc (Dec) YoY $ Inc (Dec) Total assets $ 1,459,662 $ 1,497,671 $ 1,547,944 $ 1,606,550 $ 1,724,987 $ 118,437 $ 265,325 Net finance receivables $ 1,426,257 $ 1,446,071 $ 1,525,659 $ 1,607,598 $ 1,699,393 $ 91,795 $ 273,136 Allowance for credit losses $ 159,300 $ 158,800 $ 167,500 $ 179,800 $ 178,800 $ (1,000 ) $ 19,500 Debt $ 1,107,953 $ 1,134,377 $ 1,194,570 $ 1,241,039 $ 1,355,359 $ 114,320 $ 247,406 Other Key Metrics Quarterly Trend 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 QoQ Inc (Dec) YoY Inc (Dec) Interest and fee yield (annualized) 31.4 % 30.0 % 29.8 % 29.6 % 28.5 % (1.1 )% (2.9 )% Efficiency ratio (1) 46.5 % 45.6 % 44.0 % 44.2 % 41.8 % (2.4 )% (4.7 )% Operating expense ratio (2) 16.3 % 15.4 % 14.7 % 14.9 % 13.4 % (1.5 )% (2.9 )% 30+ contractual delinquency 6.0 % 5.7 % 6.2 % 7.2 % 7.1 % (0.1 )% 1.1 % Net credit loss ratio (3) 6.4 % 8.7 % 10.0 % 9.1 % 15.0 % 5.9 % 8.6 % Book value per share $ 28.89 $ 30.47 $ 31.15 $ 32.18 $ 32.41 $ 0.23 $ 3.52 (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 FY 22 FY 21 Average Net Finance Receivables Average Yield Average Net Finance Receivables Average Yield Small loans $ 456,141 35.2 % $ 394,394 38.2 % Large loans 1,063,365 27.1 % 808,230 28.4 % Retail loans 10,737 17.9 % 11,259 18.3 % Total interest and fee yield $ 1,530,243 29.5 % $ 1,213,883 31.5 % Total revenue yield $ 1,530,243 33.1 % $ 1,213,883 35.3 % Components of Increase in Interest and Fee Income FY 22 Compared to FY 21 Increase (Decrease) Volume Rate Volume & Rate Total Small loans $ 23,582 $ (11,923 ) $ (1,866 ) $ 9,793 Large loans 72,558 (10,560 ) (3,334 ) 58,664 Retail loans (96 ) (54 ) 3 (147 ) Product mix 3,654 (2,362 ) (1,292 ) — Total increase in interest and fee income $ 99,698 $ (24,899 ) $ (6,489 ) $ 68,310 Loans Originated (1) FY 22 FY 21 FY $ Inc (Dec) FY % Inc (Dec) Small loans $ 653,155 $ 602,613 $ 50,542 8.4 % Large loans 979,557 856,699 122,858 14.3 % Retail loans 8,596 8,275 321 3.9 % Total loans originated $ 1,641,308 $ 1,467,587 $ 173,721 11.8 % (1) Represents the principal balance of loan originations and refinancings. Other Key Metrics FY 22 FY 21 Net credit losses $ 165,615 $ 79,715 Percentage of average net finance receivables 10.8 % 6.6 % Provision for credit losses $ 185,115 $ 89,015 Percentage of average net finance receivables 12.1 % 7.3 % Percentage of total revenue 36.5 % 20.8 % General and administrative expenses $ 222,528 $ 195,514 Percentage of average net finance receivables 14.5 % 16.1 % Percentage of total revenue 43.9 % 45.6 % 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. Adjusted net income and adjusted diluted net income per common share are non-GAAP measures that adjust GAAP measures to exclude the impacts of the non-performing loan sale. Management uses these adjusted measures to evaluate and manage the company's performance by excluding certain material items that may not be representative of the company’s financial results. As a result, the company also believes that these adjusted measures will aid users of its financial statements in the evaluation of its operating performance. 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. 4Q 22 Debt $ 1,355,359 Total stockholders' equity 308,633 Less: Intangible assets 12,122 Tangible equity (non-GAAP) $ 296,511 Funded debt-to-equity ratio 4.4 x Funded debt-to-tangible equity ratio (non-GAAP) 4.6 x 4Q 22 Non-GAAP Reconciliation GAAP Adjustments Non-GAAP Total revenue (1) $ 132,016 $ 2,185 $ 134,201 Provision for credit losses (2) $ 60,786 $ 1,278 $ 62,064 Income taxes $ (1,159 ) $ (807 ) $ (1,966 ) Net income $ 2,391 $ 2,656 $ 5,047 Diluted net income per common share $ 0.25 $ 0.29 $ 0.54 (1) Total revenue adjustments include revenue reversals pertaining to the non-performing loan sale. (2) Provision for credit losses adjustment include impacts in 4Q 22 due to the non-performing loan sale. View source version on businesswire.com: https://www.businesswire.com/news/home/20230208005775/en/Contacts Investor Relations Garrett Edson, (203) 682-8331 investor.relations@regionalmanagement.com
- Net income of $2.4 million and diluted earnings per share of $0.25 - - Adjusted net income of $5.0 million and adjusted diluted earnings per share of $0.54 - - 30+ day contractual delinquencies of 7.1% as of December 31, 2022 - - Early indications of improved credit performance in the fourth quarter -
Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the fourth quarter ended December 31, 2022. “We closed 2022 with a solid fourth quarter, including financial results that were better than our expectations,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “While net income was $2.4 million and diluted EPS was $0.25 in the quarter, we produced adjusted net income of $5.0 million and adjusted diluted EPS of $0.54. We grew our portfolio by $92 million to $1.7 billion, but continued strong demand has allowed us to be selective about the borrowers to whom we make loans, particularly as we have tightened credit since fourth quarter 2021 and intentionally slowed our growth rate throughout 2022. We finished the quarter with a 30+ day delinquency rate of 7.1%, just 10 basis points higher than 2019 pre-pandemic levels, and our first payment default rate improved to 7.1% in December, 240 basis points better than September 2022 and 170 basis points better than December 2019.” “We also took several meaningful steps in the quarter to prepare us for the new year,” added Mr. Beck. “Late in the quarter, we disposed of a portfolio of non-performing loans at an attractive price. The sale enabled us to put some of our stressed segments behind us and re-focus more of our efforts on earlier-stage delinquent accounts, where we experienced improvements in roll rates and delinquency. We also continued to tighten credit in the quarter, particularly to new borrowers, completed the rollout of our next generation custom credit scorecard, expanded our collections capabilities, released an enhanced customer portal, and increased pricing in certain states and segments.” “Looking ahead, we believe that the actions we took in 2022 position us to address the challenging economic environment and will enable us to respond quickly when conditions improve,” continued Mr. Beck. “In 2023, we will continue our focus on our highest confidence originations, emphasizing quality over quantity. A greater percentage of our originations will be to present and former borrowers, with new borrower lending disproportionately skewed to our newer states. As a result, we expect receivables growth to slow in 2023. As always, we will tightly manage our expenses, and we will monitor our credit performance and the macroeconomic environment closely, making further adjustments to underwriting as necessary. Our business and our customers remain resilient, and we are well-positioned to drive controlled, sustainable growth and profitability on behalf of our shareholders.” Adjusted net income and adjusted diluted earnings per share are non-GAAP measures. Please refer to the reconciliations of non-GAAP measures to comparable GAAP measures included at the end of this press release. Fourth Quarter 2022 Highlights Net income for the fourth quarter of 2022 was $2.4 million and diluted earnings per share was $0.25, inclusive of a $2.7 million impact to net income from the sale of $27.1 million of non-performing loans. Excluding the impact of this loan sale, adjusted net income was $5.0 million and adjusted diluted earnings per share was $0.54. Net finance receivables as of December 31, 2022 were $1.70 billion, an increase of $273.1 million, or 19.2%, from the prior-year period. Large loan net finance receivables of $1.2 billion increased $237.5 million, or 24.5%, from the prior-year period and represented 71.1% of the total loan portfolio, compared to 68.1% in the prior-year period. Small loan net finance receivables were $481.6 million, an increase of 8.2% from the prior-year period. Total loan originations were $470.3 million in the fourth quarter of 2022, an increase of $36.0 million, or 8.3%, from the prior-year period. Total revenue for the fourth quarter of 2022 was $132.0 million, an increase of $12.5 million, or 10.5%, from the prior-year period. Interest and fee income increased $10.3 million, or 9.6%, primarily due to higher average net finance receivables. Insurance income, net increased $1.3 million, or 14.1%, driven by portfolio growth. Non-performing loan sale negatively impacted total revenue by $2.2 million. Provision for credit losses for the fourth quarter of 2022 was $60.8 million, an increase of $29.8 million, or 96.0%, from the prior-year period. The provision for credit losses for the fourth quarter of 2022 included a reserve reduction of $11.8 million related to the sale of late-stage, non-performing loans, partially offset by incremental reserves of $9.1 million related to $91.8 million in sequential portfolio growth and $1.7 million based on the macroeconomic model. Allowance for credit losses was $178.8 million as of December 31, 2022, including a $20.7 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 fourth quarter of 2022 were 15.0%, compared to 6.4% in the prior-year period. Approximately 320 basis points of the fourth quarter 2022 net credit loss rate was attributable to the sale of non-performing loans. As of December 31, 2022, 30+ day contractual delinquencies totaled $119.8 million, or 7.1% of net finance receivables, a decrease of 10 basis points compared to September 30, 2022, and a 10 basis point increase from pre-pandemic levels as of December 31, 2019. The 30+ day contractual delinquency compares favorably to the company’s $178.8 million allowance for credit losses as of December 31, 2022. General and administrative expenses for the fourth quarter of 2022 were $55.1 million, a decrease of $0.4 million, or 0.7%, from the prior-year period. The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) for the fourth quarter of 2022 was 13.4%, a 290 basis point improvement compared to the prior-year period. The company expanded its operations to the state of Idaho in December. The company expects to expand into one additional state in the first quarter of 2023. First Quarter 2023 Dividend The company’s Board of Directors has declared a dividend of $0.30 per common share for the first quarter of 2023. The dividend will be paid on March 15, 2023 to shareholders of record as of the close of business on February 22, 2023. 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 December 31, 2022, the company had net finance receivables of $1.7 billion and debt of $1.4 billion. The debt consisted of: $147.5 million on the company’s $420 million senior revolving credit facility, $18.6 million on the company’s aggregate $300 million revolving warehouse credit facilities, and $1.2 billion through the company’s asset-backed securitizations. As of December 31, 2022, the company’s unused capacity to fund future growth on its revolving credit facilities (subject to the borrowing base) was $555 million, or 77.1%, and the company had available liquidity of $101.4 million, including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities. As of December 31, 2022, the company’s fixed-rate debt as a percentage of total debt was 88%, with a weighted-average coupon of 3.6% and a weighted-average revolving duration of 2.1 years. The company had a funded debt-to-equity ratio of 4.4 to 1.0 and a stockholders’ equity ratio of 17.9%, each as of December 31, 2022. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 4.6 to 1.0, as of December 31, 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 18 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, 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) 4Q 22 4Q 21 $ % FY 22 FY 21 $ % Revenue Interest and fee income $ 117,432 $ 107,117 $ 10,315 9.6 % $ 450,854 $ 382,544 $ 68,310 17.9 % Insurance income, net 10,751 9,423 1,328 14.1 % 43,502 35,482 8,020 22.6 % Other income 3,833 2,944 889 30.2 % 12,831 10,325 2,506 24.3 % Total revenue 132,016 119,484 12,532 10.5 % 507,187 428,351 78,836 18.4 % Expenses Provision for credit losses 60,786 31,008 (29,778 ) (96.0 )% 185,115 89,015 (96,100 ) (108.0 )% Personnel 34,669 33,313 (1,356 ) (4.1 )% 141,243 119,833 (21,410 ) (17.9 )% Occupancy 5,997 6,511 514 7.9 % 23,809 24,126 317 1.3 % Marketing 4,239 4,431 192 4.3 % 15,378 14,405 (973 ) (6.8 )% Other 10,238 11,277 1,039 9.2 % 42,098 37,150 (4,948 ) (13.3 )% Total general and administrative 55,143 55,532 389 0.7 % 222,528 195,514 (27,014 ) (13.8 )% Interest expense 14,855 7,597 (7,258 ) (95.5 )% 34,223 31,349 (2,874 ) (9.2 )% Income before income taxes 1,232 25,347 (24,115 ) (95.1 )% 65,321 112,473 (47,152 ) (41.9 )% Income taxes (1,159 ) 4,569 5,728 125.4 % 14,097 23,786 9,689 40.7 % Net income $ 2,391 $ 20,778 $ (18,387 ) (88.5 )% $ 51,224 $ 88,687 $ (37,463 ) (42.2 )% Net income per common share: Basic $ 0.26 $ 2.18 $ (1.92 ) (88.1 )% $ 5.51 $ 8.84 $ (3.33 ) (37.7 )% Diluted $ 0.25 $ 2.04 $ (1.79 ) (87.7 )% $ 5.30 $ 8.33 $ (3.03 ) (36.4 )% Weighted-average common shares outstanding: Basic 9,199 9,545 346 3.6 % 9,296 10,034 738 7.4 % Diluted 9,411 10,177 766 7.5 % 9,656 10,643 987 9.3 % Return on average assets (annualized) 0.6 % 6.0 % 3.3 % 7.2 % Return on average equity (annualized) 3.1 % 29.5 % 17.0 % 31.6 % Regional Management Corp. and Subsidiaries Consolidated Balance Sheets (Unaudited) (dollars in thousands, except par value amounts) Increase (Decrease) 4Q 22 4Q 21 $ % Assets Cash $ 3,873 $ 10,507 $ (6,634 ) (63.1 )% Net finance receivables 1,699,393 1,426,257 273,136 19.2 % Unearned insurance premiums (51,008 ) (47,837 ) (3,171 ) (6.6 )% Allowance for credit losses (178,800 ) (159,300 ) (19,500 ) (12.2 )% Net finance receivables, less unearned insurance premiums and allowance for credit losses 1,469,585 1,219,120 250,465 20.5 % Restricted cash 127,926 138,682 (10,756 ) (7.8 )% Lease assets 34,521 28,721 5,800 20.2 % Restricted available-for-sale investments 20,416 - 20,416 100.0 % Deferred tax assets, net 13,810 18,420 (4,610 ) (25.0 )% Property and equipment 14,526 12,938 1,588 12.3 % Intangible assets 12,122 9,517 2,605 27.4 % Other assets 28,208 21,757 6,451 29.7 % Total assets $ 1,724,987 $ 1,459,662 $ 265,325 18.2 % Liabilities and Stockholders’ Equity Liabilities: Debt $ 1,355,359 $ 1,107,953 $ 247,406 22.3 % Unamortized debt issuance costs (9,512 ) (11,010 ) 1,498 13.6 % Net debt 1,345,847 1,096,943 248,904 22.7 % Lease liabilities 36,712 30,700 6,012 19.6 % Accounts payable and accrued expenses 33,795 49,283 (15,488 ) (31.4 )% Total liabilities 1,416,354 1,176,926 239,428 20.3 % 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, 14,330 shares issued and 9,523 shares outstanding at December 31, 2022 and 14,157 shares issued and 9,788 shares outstanding at December 31, 2021) 1,433 1,416 17 1.2 % Additional paid-in capital 112,384 104,745 7,639 7.3 % Retained earnings 345,545 306,105 39,440 12.9 % Accumulated other comprehensive loss (586 ) — (586 ) (100.0 )% Treasury stock (4,807 shares at December 31, 2022 and 4,370 shares at December 31, 2021) (150,143 ) (129,530 ) (20,613 ) (15.9 )% Total stockholders’ equity 308,633 282,736 25,897 9.2 % Total liabilities and stockholders’ equity $ 1,724,987 $ 1,459,662 $ 265,325 18.2 % Regional Management Corp. and Subsidiaries Selected Financial Data (Unaudited) (dollars in thousands, except per share amounts) Net Finance Receivables by Product 4Q 22 3Q 22 QoQ $ Inc (Dec) QoQ % Inc (Dec) 4Q 21 YoY $ Inc (Dec) YoY % Inc (Dec) Small loans $ 481,605 $ 480,199 $ 1,406 0.3 % $ 445,023 $ 36,582 8.2 % Large loans 1,208,185 1,116,455 91,730 8.2 % 970,694 237,491 24.5 % Retail loans 9,603 10,944 (1,341 ) (12.3 )% 10,540 (937 ) (8.9 )% Total net finance receivables $ 1,699,393 $ 1,607,598 $ 91,795 5.7 % $ 1,426,257 $ 273,136 19.2 % Number of branches at period end 345 338 7 2.1 % 350 (5 ) (1.4 )% Net finance receivables per branch $ 4,926 $ 4,756 $ 170 3.6 % $ 4,075 $ 851 20.9 % Averages and Yields 4Q 22 3Q 22 4Q 21 Average Net Finance Receivables Average Yield (1) Average Net Finance Receivables Average Yield (1) Average Net Finance Receivables Average Yield (1) Small loans $ 479,777 33.5 % $ 466,087 35.5 % $ 427,586 38.1 % Large loans 1,155,629 26.6 % 1,089,225 27.2 % 925,226 28.5 % Retail loans 10,563 16.3 % 10,935 18.5 % 10,435 18.7 % Total interest and fee yield $ 1,645,969 28.5 % $ 1,566,247 29.6 % $ 1,363,247 31.4 % Total revenue yield $ 1,645,969 32.1 % $ 1,566,247 33.6 % $ 1,363,247 35.1 % (1) Annualized interest and fee income as a percentage of average net finance receivables. Components of Increase in Interest and Fee Income 4Q 22 Compared to 4Q 21 Increase (Decrease) Volume Rate Volume & Rate Total Small loans $ 4,971 $ (4,875 ) $ (595 ) $ (499 ) Large loans 16,411 (4,436 ) (1,105 ) 10,870 Retail loans 6 (61 ) (1 ) (56 ) Product mix 827 (484 ) (343 ) — Total increase in interest and fee income $ 22,215 $ (9,856 ) $ (2,044 ) $ 10,315 Loans Originated (1) 4Q 22 3Q 22 QoQ $ Inc (Dec) QoQ % Inc (Dec) 4Q 21 YoY $ Inc (Dec) YoY % Inc (Dec) Small loans $ 171,511 $ 173,269 $ (1,758 ) (1.0 )% $ 175,898 $ (4,387 ) (2.5 )% Large loans 297,447 243,259 54,188 22.3 % 255,828 41,619 16.3 % Retail loans 1,390 2,145 (755 ) (35.2 )% 2,630 (1,240 ) (47.1 )% Total loans originated $ 470,348 $ 418,673 $ 51,675 12.3 % $ 434,356 $ 35,992 8.3 % (1) Represents the principal balance of loan originations and refinancings. Other Key Metrics 4Q 22 3Q 22 4Q 21 Net credit losses $ 61,786 $ 35,771 $ 21,808 Percentage of average net finance receivables (annualized) 15.0 % 9.1 % 6.4 % Provision for credit losses $ 60,786 $ 48,071 $ 31,008 Percentage of average net finance receivables (annualized) 14.8 % 12.3 % 9.1 % Percentage of total revenue 46.0 % 36.6 % 26.0 % General and administrative expenses $ 55,143 $ 58,164 $ 55,532 Percentage of average net finance receivables (annualized) 13.4 % 14.9 % 16.3 % Percentage of total revenue 41.8 % 44.2 % 46.5 % Same store results (1): Net finance receivables at period-end $ 1,625,008 $ 1,552,740 $ 1,400,817 Net finance receivable growth rate 14.8 % 19.2 % 23.3 % Number of branches in calculation 320 315 330 (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 4Q 22 3Q 22 4Q 21 Allowance for credit losses (1) $ 178,800 10.5 % $ 179,800 11.2 % $ 159,300 11.2 % Current 1,431,502 84.2 % 1,356,134 84.4 % 1,237,165 86.7 % 1 to 29 days past due 148,048 8.7 % 135,468 8.4 % 104,201 7.3 % Delinquent accounts: 30 to 59 days 36,208 2.2 % 32,295 2.0 % 25,283 1.9 % 60 to 89 days 31,352 1.8 % 25,375 1.6 % 20,395 1.4 % 90 to 119 days 24,293 1.4 % 21,720 1.3 % 15,962 1.0 % 120 to 149 days 16,257 1.0 % 17,503 1.1 % 12,466 0.9 % 150 to 179 days 11,733 0.7 % 19,103 1.2 % 10,785 0.8 % Total contractual delinquency $ 119,843 7.1 % $ 115,996 7.2 % $ 84,891 6.0 % Total net finance receivables $ 1,699,393 100.0 % $ 1,607,598 100.0 % $ 1,426,257 100.0 % 1 day and over past due $ 267,891 15.8 % $ 251,464 15.6 % $ 189,092 13.3 % Contractual Delinquency by Product 4Q 22 3Q 22 4Q 21 Small loans $ 43,703 9.1 % $ 49,906 10.4 % $ 39,794 8.9 % Large loans 75,349 6.2 % 64,922 5.8 % 44,348 4.6 % Retail loans 791 8.2 % 1,168 10.7 % 749 7.1 % Total contractual delinquency $ 119,843 7.1 % $ 115,996 7.2 % $ 84,891 6.0 % (1) Includes estimated macroeconomic allowance for credit losses of $20,700, $19,000, and $17,000 in 4Q 22, 3Q 22, and 4Q 21, respectively. Income Statement Quarterly Trend 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 QoQ $ B(W) YoY $ B(W) Revenue Interest and fee income $ 107,117 $ 107,631 $ 109,771 $ 116,020 $ 117,432 $ 1,412 $ 10,315 Insurance income, net 9,423 10,544 10,220 11,987 10,751 (1,236 ) 1,328 Other income 2,944 2,673 2,880 3,445 3,833 388 889 Total revenue 119,484 120,848 122,871 131,452 132,016 564 12,532 Expenses Provision for credit losses 31,008 30,858 45,400 48,071 60,786 (12,715 ) (29,778 ) Personnel 33,313 35,654 33,941 36,979 34,669 2,310 (1,356 ) Occupancy 6,511 5,808 6,156 5,848 5,997 (149 ) 514 Marketing 4,431 3,091 4,108 3,940 4,239 (299 ) 192 Other 11,277 10,547 9,916 11,397 10,238 1,159 1,039 Total general and administrative 55,532 55,100 54,121 58,164 55,143 3,021 389 Interest expense 7,597 (59 ) 7,564 11,863 14,855 (2,992 ) (7,258 ) Income before income taxes 25,347 34,949 15,786 13,354 1,232 (12,122 ) (24,115 ) Income taxes 4,569 8,166 3,804 3,286 (1,159 ) 4,445 5,728 Net income $ 20,778 $ 26,783 $ 11,982 $ 10,068 $ 2,391 $ (7,677 ) $ (18,387 ) Net income per common share: Basic $ 2.18 $ 2.81 $ 1.29 $ 1.09 $ 0.26 $ (0.83 ) $ (1.92 ) Diluted $ 2.04 $ 2.67 $ 1.24 $ 1.06 $ 0.25 $ (0.81 ) $ (1.79 ) Weighted-average shares outstanding: Basic 9,545 9,533 9,261 9,195 9,199 (4 ) 346 Diluted 10,177 10,022 9,669 9,526 9,411 115 766 Balance Sheet Quarterly Trend 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 QoQ $ Inc (Dec) YoY $ Inc (Dec) Total assets $ 1,459,662 $ 1,497,671 $ 1,547,944 $ 1,606,550 $ 1,724,987 $ 118,437 $ 265,325 Net finance receivables $ 1,426,257 $ 1,446,071 $ 1,525,659 $ 1,607,598 $ 1,699,393 $ 91,795 $ 273,136 Allowance for credit losses $ 159,300 $ 158,800 $ 167,500 $ 179,800 $ 178,800 $ (1,000 ) $ 19,500 Debt $ 1,107,953 $ 1,134,377 $ 1,194,570 $ 1,241,039 $ 1,355,359 $ 114,320 $ 247,406 Other Key Metrics Quarterly Trend 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 QoQ Inc (Dec) YoY Inc (Dec) Interest and fee yield (annualized) 31.4 % 30.0 % 29.8 % 29.6 % 28.5 % (1.1 )% (2.9 )% Efficiency ratio (1) 46.5 % 45.6 % 44.0 % 44.2 % 41.8 % (2.4 )% (4.7 )% Operating expense ratio (2) 16.3 % 15.4 % 14.7 % 14.9 % 13.4 % (1.5 )% (2.9 )% 30+ contractual delinquency 6.0 % 5.7 % 6.2 % 7.2 % 7.1 % (0.1 )% 1.1 % Net credit loss ratio (3) 6.4 % 8.7 % 10.0 % 9.1 % 15.0 % 5.9 % 8.6 % Book value per share $ 28.89 $ 30.47 $ 31.15 $ 32.18 $ 32.41 $ 0.23 $ 3.52 (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 FY 22 FY 21 Average Net Finance Receivables Average Yield Average Net Finance Receivables Average Yield Small loans $ 456,141 35.2 % $ 394,394 38.2 % Large loans 1,063,365 27.1 % 808,230 28.4 % Retail loans 10,737 17.9 % 11,259 18.3 % Total interest and fee yield $ 1,530,243 29.5 % $ 1,213,883 31.5 % Total revenue yield $ 1,530,243 33.1 % $ 1,213,883 35.3 % Components of Increase in Interest and Fee Income FY 22 Compared to FY 21 Increase (Decrease) Volume Rate Volume & Rate Total Small loans $ 23,582 $ (11,923 ) $ (1,866 ) $ 9,793 Large loans 72,558 (10,560 ) (3,334 ) 58,664 Retail loans (96 ) (54 ) 3 (147 ) Product mix 3,654 (2,362 ) (1,292 ) — Total increase in interest and fee income $ 99,698 $ (24,899 ) $ (6,489 ) $ 68,310 Loans Originated (1) FY 22 FY 21 FY $ Inc (Dec) FY % Inc (Dec) Small loans $ 653,155 $ 602,613 $ 50,542 8.4 % Large loans 979,557 856,699 122,858 14.3 % Retail loans 8,596 8,275 321 3.9 % Total loans originated $ 1,641,308 $ 1,467,587 $ 173,721 11.8 % (1) Represents the principal balance of loan originations and refinancings. Other Key Metrics FY 22 FY 21 Net credit losses $ 165,615 $ 79,715 Percentage of average net finance receivables 10.8 % 6.6 % Provision for credit losses $ 185,115 $ 89,015 Percentage of average net finance receivables 12.1 % 7.3 % Percentage of total revenue 36.5 % 20.8 % General and administrative expenses $ 222,528 $ 195,514 Percentage of average net finance receivables 14.5 % 16.1 % Percentage of total revenue 43.9 % 45.6 % 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. Adjusted net income and adjusted diluted net income per common share are non-GAAP measures that adjust GAAP measures to exclude the impacts of the non-performing loan sale. Management uses these adjusted measures to evaluate and manage the company's performance by excluding certain material items that may not be representative of the company’s financial results. As a result, the company also believes that these adjusted measures will aid users of its financial statements in the evaluation of its operating performance. 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. 4Q 22 Debt $ 1,355,359 Total stockholders' equity 308,633 Less: Intangible assets 12,122 Tangible equity (non-GAAP) $ 296,511 Funded debt-to-equity ratio 4.4 x Funded debt-to-tangible equity ratio (non-GAAP) 4.6 x 4Q 22 Non-GAAP Reconciliation GAAP Adjustments Non-GAAP Total revenue (1) $ 132,016 $ 2,185 $ 134,201 Provision for credit losses (2) $ 60,786 $ 1,278 $ 62,064 Income taxes $ (1,159 ) $ (807 ) $ (1,966 ) Net income $ 2,391 $ 2,656 $ 5,047 Diluted net income per common share $ 0.25 $ 0.29 $ 0.54 (1) Total revenue adjustments include revenue reversals pertaining to the non-performing loan sale. (2) Provision for credit losses adjustment include impacts in 4Q 22 due to the non-performing loan sale. View source version on businesswire.com: https://www.businesswire.com/news/home/20230208005775/en/