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 Second Quarter 2023 Results By: Regional Management Corp. via Business Wire August 02, 2023 at 16:15 PM EDT - Net income of $6.0 million and diluted earnings per share of $0.63 - - 30+ day contractual delinquencies of 6.9% as of June 30, 2023, an improvement of 30 basis points compared to March 31, 2023 - - Continued early indications of improved credit performance in the second quarter - Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the second quarter ended June 30, 2023. “We are pleased with our second quarter results, which exceeded our expectations on both the top and bottom lines,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “We produced $6.0 million of net income and $0.63 of diluted earnings per share. Loan demand remained strong in the quarter, allowing us to generate high-quality portfolio growth and near-record quarterly revenue while simultaneously maintaining a conservative credit posture. We also continued to closely manage our expenses while investing in our business, driving our annualized operating expense ratio down to 13.6% in the quarter. Our focus on portfolio quality, expense management, and strong execution of our core business has enabled us to deliver consistent, predictable, and superior results quarter after quarter.” “Our portfolio’s early-stage delinquencies continue to benefit from several quarters of tightened underwriting criteria,” added Mr. Beck. “Overall, we ended the quarter with a 30+ day delinquency rate of 6.9%, a sequential improvement of 30 basis points from the first quarter. Looking ahead, while we have been encouraged by recent economic data indicating a strong labor market, moderating inflation, and real wage growth, we continue to be comfortable prioritizing higher credit quality over more rapid portfolio growth. However, we remain prepared to lean back into growth when justified by the economic conditions and the overall performance of our portfolio. As always, we look forward to continuing our delivery of controlled growth and profitability, sustainable returns, and long-term value to our shareholders.” Second Quarter 2023 Highlights Net income for the second quarter of 2023 was $6.0 million and diluted earnings per share was $0.63. Net finance receivables as of June 30, 2023 were $1.7 billion, an increase of $163.3 million, or 10.7%, from the prior-year period. Large loan net finance receivables of $1.2 billion increased $178.5 million, or 16.8%, from the prior-year period and represented 73.3% of the total loan portfolio, compared to 69.4% in the prior-year period. Small loan net finance receivables were $444.6 million, a decrease of 2.3% from the prior-year period. Total loan originations were $399.0 million in the second quarter of 2023, a decrease of $27.3 million, or 6.4%, from the prior-year period. Total revenue for the second quarter of 2023 was $133.5 million, an increase of $10.6 million, or 8.6%, from the prior-year period. Interest and fee income increased $8.3 million, or 7.6%, primarily due to higher average net finance receivables. Insurance income, net increased $1.0 million, or 9.6%, driven by portfolio growth. Provision for credit losses for the second quarter of 2023 was $52.6 million, an increase of $7.2 million, or 15.8%, from the prior-year period. Annualized net credit losses as a percentage of average net finance receivables for the second quarter of 2023 were 13.1%, compared to 10.0% in the prior-year period. The provision for credit losses for the second quarter of 2023 included a reserve reduction of $2.4 million primarily due to changes in estimated future macroeconomic impacts on credit losses, partially offset by portfolio growth during the quarter. Allowance for credit losses was $181.4 million as of June 30, 2023, or 10.7% of net finance receivables. As of June 30, 2023, 30+ day contractual delinquencies totaled $116.3 million, or 6.9% of net finance receivables, an improvement of 30 basis points compared to March 31, 2023. The 30+ day contractual delinquency compares favorably to the company’s $181.4 million allowance for credit losses as of June 30, 2023. General and administrative expenses for the second quarter of 2023 were $56.9 million, an increase of $2.8 million, or 5.1%, from the prior-year period. The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) for the second quarter of 2023 was 13.6%, a 110 basis point improvement compared to the prior-year period. Third Quarter 2023 Dividend The company’s Board of Directors has declared a dividend of $0.30 per common share for the third quarter of 2023. The dividend will be paid on September 14, 2023 to shareholders of record as of the close of business on August 23, 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 June 30, 2023, the company had net finance receivables of $1.7 billion and debt of $1.3 billion. The debt consisted of: $105.4 million on the company’s $420 million senior revolving credit facility, $50.2 million on the company’s aggregate $375 million revolving warehouse credit facilities, and $1.2 billion through the company’s asset-backed securitizations. As of June 30, 2023, the company’s unused capacity to fund future growth on its revolving credit facilities (subject to the borrowing base) was $641 million, or 80.6%, and the company had available liquidity of [$147.2 million], including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities. As of June 30, 2023, 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 1.6 years. The company had a funded debt-to-equity ratio of 4.2 to 1.0 and a stockholders’ equity ratio of 18.7%, each as of June 30, 2023. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 4.4 to 1.0, as of June 30, 2023. 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 19 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 evolving underwriting models and processes, including as to the effectiveness of Regional Management's 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; any future public health crises (including the resurgence of COVID-19), including the impact of such crisis on our operations and financial condition; 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; the impact of changes in tax laws and guidance, 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 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) 2Q 23 2Q 22 $ % YTD 23 YTD 22 $ % Revenue Interest and fee income $ 118,083 $ 109,771 $ 8,312 7.6 % $ 238,490 $ 217,402 $ 21,088 9.7 % Insurance income, net 11,203 10,220 983 9.6 % 22,162 20,764 1,398 6.7 % Other income 4,198 2,880 1,318 45.8 % 8,210 5,553 2,657 47.8 % Total revenue 133,484 122,871 10,613 8.6 % 268,862 243,719 25,143 10.3 % Expenses Provision for credit losses 52,551 45,400 (7,151 ) (15.8 )% 100,219 76,258 (23,961 ) (31.4 )% Personnel 36,419 33,941 (2,478 ) (7.3 )% 75,016 69,595 (5,421 ) (7.8 )% Occupancy 6,158 6,156 (2 ) 0.0 % 12,446 11,964 (482 ) (4.0 )% Marketing 3,844 4,108 264 6.4 % 7,223 7,199 (24 ) (0.3 )% Other 10,475 9,916 (559 ) (5.6 )% 21,534 20,463 (1,071 ) (5.2 )% Total general and administrative 56,896 54,121 (2,775 ) (5.1 )% 116,219 109,221 (6,998 ) (6.4 )% Interest expense 16,224 7,564 (8,660 ) (114.5 )% 33,006 7,505 (25,501 ) (339.8 )% Income before income taxes 7,813 15,786 (7,973 ) (50.5 )% 19,418 50,735 (31,317 ) (61.7 )% Income taxes 1,790 3,804 2,014 52.9 % 4,706 11,970 7,264 60.7 % Net income $ 6,023 $ 11,982 $ (5,959 ) (49.7 )% $ 14,712 $ 38,765 $ (24,053 ) (62.0 )% Net income per common share: Basic $ 0.64 $ 1.29 $ (0.65 ) (50.4 )% $ 1.57 $ 4.13 $ (2.56 ) (62.0 )% Diluted $ 0.63 $ 1.24 $ (0.61 ) (49.2 )% $ 1.53 $ 3.94 $ (2.41 ) (61.2 )% Weighted-average common shares outstanding: Basic 9,399 9,261 (138 ) (1.5 )% 9,363 9,396 33 0.4 % Diluted 9,566 9,669 103 1.1 % 9,595 9,845 250 2.5 % Return on average assets (annualized) 1.4 % 3.2 % 1.7 % 5.2 % Return on average equity (annualized) 7.6 % 16.0 % 9.3 % 26.3 % Regional Management Corp. and Subsidiaries Consolidated Balance Sheets (Unaudited) (dollars in thousands, except par value amounts) Increase (Decrease) 2Q 23 2Q 22 $ % Assets Cash $ 10,330 $ 7,928 $ 2,402 30.3 % Net finance receivables 1,688,937 1,525,659 163,278 10.7 % Unearned insurance premiums (49,059 ) (48,986 ) (73 ) (0.1 )% Allowance for credit losses (181,400 ) (167,500 ) (13,900 ) (8.3 )% Net finance receivables, less unearned insurance premiums and allowance for credit losses 1,458,478 1,309,173 149,305 11.4 % Restricted cash 131,132 144,802 (13,670 ) (9.4 )% Lease assets 34,996 28,555 6,441 22.6 % Restricted available-for-sale investments 20,298 — 20,298 100.0 % Deferred tax assets, net 15,278 19,798 (4,520 ) (22.8 )% Property and equipment 14,689 12,808 1,881 14.7 % Intangible assets 13,949 10,312 3,637 35.3 % Other assets 24,466 14,568 9,898 67.9 % Total assets $ 1,723,616 $ 1,547,944 $ 175,672 11.3 % Liabilities and Stockholders’ Equity Liabilities: Debt $ 1,344,855 $ 1,194,570 $ 150,285 12.6 % Unamortized debt issuance costs (6,923 ) (10,819 ) 3,896 36.0 % Net debt 1,337,932 1,183,751 154,181 13.0 % Lease liabilities 37,150 31,117 6,033 19.4 % Accounts payable and accrued expenses 27,032 34,492 (7,460 ) (21.6 )% Total liabilities 1,402,114 1,249,360 152,754 12.2 % 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, 14,636 shares issued and 9,829 shares outstanding at June 30, 2023 and 14,390 shares issued and 9,584 shares outstanding at June 30, 2022) 1,464 1,439 25 1.7 % Additional paid-in capital 116,202 108,345 7,857 7.3 % Retained earnings 354,346 338,943 15,403 4.5 % Accumulated other comprehensive loss (367 ) — (367 ) (100.0 )% Treasury stock (4,807 shares at June 30, 2023 and 4,807 shares at June 30, 2022) (150,143 ) (150,143 ) - — Total stockholders’ equity 321,502 298,584 22,918 7.7 % Total liabilities and stockholders’ equity $ 1,723,616 $ 1,547,944 $ 175,672 11.3 % Regional Management Corp. and Subsidiaries Selected Financial Data (Unaudited) (dollars in thousands, except per share amounts) Net Finance Receivables by Product 2Q 23 1Q 23 QoQ $ Inc (Dec) QoQ % Inc (Dec) 2Q 22 YoY $ Inc (Dec) YoY % Inc (Dec) Small loans $ 444,590 $ 456,313 $ (11,723 ) (2.6 )% $ 455,253 $ (10,663 ) (2.3 )% Large loans 1,238,031 1,211,836 26,195 2.2 % 1,059,523 178,508 16.8 % Retail loans 6,316 8,081 (1,765 ) (21.8 )% 10,883 (4,567 ) (42.0 )% Total net finance receivables $ 1,688,937 $ 1,676,230 $ 12,707 0.8 % $ 1,525,659 $ 163,278 10.7 % Number of branches at period end 347 344 3 0.9 % 334 13 3.9 % Net finance receivables per branch $ 4,867 $ 4,873 $ (6 ) (0.1 )% $ 4,568 $ 299 6.5 % Averages and Yields 2Q 23 1Q 23 2Q 22 Average Net Finance Receivables Average Yield (1) Average Net Finance Receivables Average Yield (1) Average Net Finance Receivables Average Yield (1) Small loans $ 443,601 34.5 % $ 467,851 35.0 % $ 437,226 35.8 % Large loans 1,223,339 26.0 % 1,215,547 26.0 % 1,023,546 27.4 % Retail loans 7,191 16.6 % 8,954 18.6 % 10,828 18.3 % Total interest and fee yield $ 1,674,131 28.2 % $ 1,692,352 28.5 % $ 1,471,600 29.8 % Total revenue yield $ 1,674,131 31.9 % $ 1,692,352 32.0 % $ 1,471,600 33.4 % (1) Annualized interest and fee income as a percentage of average net finance receivables. Components of Increase in Interest and Fee Income 2Q 23 Compared to 2Q 22 Increase (Decrease) Volume Rate Volume & Rate Total Small loans $ 571 $ (1,409 ) $ (21 ) $ (859 ) Large loans 13,691 (3,617 ) (706 ) 9,368 Retail loans (166 ) (46 ) 15 (197 ) Product mix 1,011 (901 ) (110 ) — Total increase in interest and fee income $ 15,107 $ (5,973 ) $ (822 ) $ 8,312 Loans Originated (1) 2Q 23 1Q 23 QoQ $ Inc (Dec) QoQ % Inc (Dec) 2Q 22 YoY $ Inc (Dec) YoY % Inc (Dec) Small loans $ 149,460 $ 109,484 $ 39,976 36.5 % $ 171,244 $ (21,784 ) (12.7 )% Large loans 249,514 193,571 55,943 28.9 % 252,572 (3,058 ) (1.2 )% Retail loans — 146 (146 ) (100.0 )% 2,471 (2,471 ) (100.0 )% Total loans originated $ 398,974 $ 303,201 $ 95,773 31.6 % $ 426,287 $ (27,313 ) (6.4 )% (1) Represents the principal balance of loan originations and refinancings. Other Key Metrics 2Q 23 1Q 23 2Q 22 Net credit losses $ 54,951 $ 42,668 $ 36,700 Percentage of average net finance receivables (annualized) 13.1 % 10.1 % 10.0 % Provision for credit losses $ 52,551 $ 47,668 $ 45,400 Percentage of average net finance receivables (annualized) 12.6 % 11.3 % 12.3 % Percentage of total revenue 39.4 % 35.2 % 36.9 % General and administrative expenses $ 56,896 $ 59,323 $ 54,121 Percentage of average net finance receivables (annualized) 13.6 % 14.0 % 14.7 % Percentage of total revenue 42.6 % 43.8 % 44.0 % Same store results (1): Net finance receivables at period-end $ 1,636,131 $ 1,619,407 $ 1,466,300 Net finance receivable growth rate 7.2 % 12.3 % 24.7 % Number of branches in calculation 329 325 310 (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 2Q 23 1Q 23 2Q 22 Allowance for credit losses $ 181,400 10.7 % $ 183,800 11.0 % $ 167,500 11.0 % Current 1,433,787 84.9 % 1,438,354 85.8 % 1,306,183 85.6 % 1 to 29 days past due 138,810 8.2 % 116,723 7.0 % 124,810 8.2 % Delinquent accounts: 30 to 59 days 33,676 2.0 % 27,428 1.6 % 26,785 1.8 % 60 to 89 days 24,931 1.5 % 25,178 1.5 % 24,420 1.6 % 90 to 119 days 20,041 1.1 % 23,148 1.4 % 18,557 1.2 % 120 to 149 days 18,087 1.1 % 22,263 1.3 % 12,528 0.8 % 150 to 179 days 19,605 1.2 % 23,136 1.4 % 12,376 0.8 % Total contractual delinquency $ 116,340 6.9 % $ 121,153 7.2 % $ 94,666 6.2 % Total net finance receivables $ 1,688,937 100.0 % $ 1,676,230 100.0 % $ 1,525,659 100.0 % 1 day and over past due $ 255,150 15.1 % $ 237,876 14.2 % $ 219,476 14.4 % Contractual Delinquency by Product 2Q 23 1Q 23 2Q 22 Small loans $ 40,894 9.2 % $ 45,600 10.0 % $ 41,984 9.2 % Large loans 74,637 6.0 % 74,606 6.2 % 51,763 4.9 % Retail loans 809 12.8 % 947 11.7 % 919 8.4 % Total contractual delinquency $ 116,340 6.9 % $ 121,153 7.2 % $ 94,666 6.2 % Income Statement Quarterly Trend 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 QoQ $ B(W) YoY $ B(W) Revenue Interest and fee income $ 109,771 $ 116,020 $ 117,432 $ 120,407 $ 118,083 $ (2,324 ) $ 8,312 Insurance income, net 10,220 11,987 10,751 10,959 11,203 244 983 Other income 2,880 3,445 3,833 4,012 4,198 186 1,318 Total revenue 122,871 131,452 132,016 135,378 133,484 (1,894 ) 10,613 Expenses Provision for credit losses 45,400 48,071 60,786 47,668 52,551 (4,883 ) (7,151 ) Personnel 33,941 36,979 34,669 38,597 36,419 2,178 (2,478 ) Occupancy 6,156 5,848 5,997 6,288 6,158 130 (2 ) Marketing 4,108 3,940 4,239 3,379 3,844 (465 ) 264 Other 9,916 11,397 10,238 11,059 10,475 584 (559 ) Total general and administrative 54,121 58,164 55,143 59,323 56,896 2,427 (2,775 ) Interest expense 7,564 11,863 14,855 16,782 16,224 558 (8,660 ) Income before income taxes 15,786 13,354 1,232 11,605 7,813 (3,792 ) (7,973 ) Income taxes 3,804 3,286 (1,159 ) 2,916 1,790 1,126 2,014 Net income $ 11,982 $ 10,068 $ 2,391 $ 8,689 $ 6,023 $ (2,666 ) $ (5,959 ) Net income per common share: Basic $ 1.29 $ 1.09 $ 0.26 $ 0.93 $ 0.64 $ (0.29 ) $ (0.65 ) Diluted $ 1.24 $ 1.06 $ 0.25 $ 0.90 $ 0.63 $ (0.27 ) $ (0.61 ) Weighted-average shares outstanding: Basic 9,261 9,195 9,199 9,325 9,399 (74 ) (138 ) Diluted 9,669 9,526 9,411 9,622 9,566 56 103 Balance Sheet Quarterly Trend 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 QoQ $ Inc (Dec) YoY $ Inc (Dec) Total assets $ 1,547,944 $ 1,606,550 $ 1,724,987 $ 1,701,114 $ 1,723,616 $ 22,502 $ 175,672 Net finance receivables $ 1,525,659 $ 1,607,598 $ 1,699,393 $ 1,676,230 $ 1,688,937 $ 12,707 $ 163,278 Allowance for credit losses $ 167,500 $ 179,800 $ 178,800 $ 183,800 $ 181,400 $ (2,400 ) $ 13,900 Debt $ 1,194,570 $ 1,241,039 $ 1,355,359 $ 1,329,677 $ 1,344,855 $ 15,178 $ 150,285 Other Key Metrics Quarterly Trend 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 QoQ Inc (Dec) YoY Inc (Dec) Interest and fee yield (annualized) 29.8 % 29.6 % 28.5 % 28.5 % 28.2 % (0.3 )% (1.6 )% Efficiency ratio (1) 44.0 % 44.2 % 41.8 % 43.8 % 42.6 % (1.2 )% (1.4 )% Operating expense ratio (2) 14.7 % 14.9 % 13.4 % 14.0 % 13.6 % (0.4 )% (1.1 )% 30+ contractual delinquency 6.2 % 7.2 % 7.1 % 7.2 % 6.9 % (0.3 )% 0.7 % Net credit loss ratio (3) 10.0 % 9.1 % 15.0 % 10.1 % 13.1 % 3.0 % 3.1 % Book value per share $ 31.15 $ 32.18 $ 32.41 $ 33.06 $ 32.71 $ (0.35 ) $ 1.56 (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 23 YTD 22 Average Net Finance Receivables Average Yield (Annualized) Average Net Finance Receivables Average Yield (Annualized) Small loans $ 455,659 34.8 % $ 439,070 35.9 % Large loans 1,219,464 26.0 % 1,003,326 27.4 % Retail loans 8,068 17.7 % 10,725 18.3 % Total interest and fee yield $ 1,683,191 28.3 % $ 1,453,121 29.9 % Total revenue yield $ 1,683,191 31.9 % $ 1,453,121 33.5 % (1) Annualized interest and fee income as a percentage of average net finance receivables. Components of Increase in Interest and Fee Income YTD 23 Compared to YTD 22 Increase (Decrease) Volume Rate Volume & Rate Total Small loans $ 2,977 $ (2,421 ) $ (92 ) $ 464 Large loans 29,648 (7,204 ) (1,552 ) 20,892 Retail loans (244 ) (33 ) 9 (268 ) Product mix 2,040 (1,852 ) (188 ) — Total increase in interest and fee income $ 34,421 $ (11,510 ) $ (1,823 ) $ 21,088 Loans Originated (1) YTD 23 YTD 22 YTD $ Inc (Dec) YTD % Inc (Dec) Small loans $ 258,944 $ 308,375 $ (49,431 ) (16.0 )% Large loans 443,085 438,851 4,234 1.0 % Retail loans 146 5,061 (4,915 ) (97.1 )% Total loans originated $ 702,175 $ 752,287 $ (50,112 ) (6.7 )% (1) Represents the principal balance of loan originations and refinancings. Other Key Metrics YTD 23 YTD 22 Net credit losses $ 97,619 $ 68,058 Percentage of average net finance receivables (annualized) 11.6 % 9.4 % Provision for credit losses $ 100,219 $ 76,258 Percentage of average net finance receivables (annualized) 11.9 % 10.5 % Percentage of total revenue 37.3 % 31.3 % General and administrative expenses $ 116,219 $ 109,221 Percentage of average net finance receivables (annualized) 13.8 % 15.0 % Percentage of total revenue 43.2 % 44.8 % 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. 2Q 23 Debt $ 1,344,855 Total stockholders' equity 321,502 Less: Intangible assets 13,949 Tangible equity (non-GAAP) $ 307,553 Funded debt-to-equity ratio 4.2 x Funded debt-to-tangible equity ratio (non-GAAP) 4.4 x View source version on businesswire.com: https://www.businesswire.com/news/home/20230802337574/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 Second Quarter 2023 Results By: Regional Management Corp. via Business Wire August 02, 2023 at 16:15 PM EDT - Net income of $6.0 million and diluted earnings per share of $0.63 - - 30+ day contractual delinquencies of 6.9% as of June 30, 2023, an improvement of 30 basis points compared to March 31, 2023 - - Continued early indications of improved credit performance in the second quarter - Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the second quarter ended June 30, 2023. “We are pleased with our second quarter results, which exceeded our expectations on both the top and bottom lines,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “We produced $6.0 million of net income and $0.63 of diluted earnings per share. Loan demand remained strong in the quarter, allowing us to generate high-quality portfolio growth and near-record quarterly revenue while simultaneously maintaining a conservative credit posture. We also continued to closely manage our expenses while investing in our business, driving our annualized operating expense ratio down to 13.6% in the quarter. Our focus on portfolio quality, expense management, and strong execution of our core business has enabled us to deliver consistent, predictable, and superior results quarter after quarter.” “Our portfolio’s early-stage delinquencies continue to benefit from several quarters of tightened underwriting criteria,” added Mr. Beck. “Overall, we ended the quarter with a 30+ day delinquency rate of 6.9%, a sequential improvement of 30 basis points from the first quarter. Looking ahead, while we have been encouraged by recent economic data indicating a strong labor market, moderating inflation, and real wage growth, we continue to be comfortable prioritizing higher credit quality over more rapid portfolio growth. However, we remain prepared to lean back into growth when justified by the economic conditions and the overall performance of our portfolio. As always, we look forward to continuing our delivery of controlled growth and profitability, sustainable returns, and long-term value to our shareholders.” Second Quarter 2023 Highlights Net income for the second quarter of 2023 was $6.0 million and diluted earnings per share was $0.63. Net finance receivables as of June 30, 2023 were $1.7 billion, an increase of $163.3 million, or 10.7%, from the prior-year period. Large loan net finance receivables of $1.2 billion increased $178.5 million, or 16.8%, from the prior-year period and represented 73.3% of the total loan portfolio, compared to 69.4% in the prior-year period. Small loan net finance receivables were $444.6 million, a decrease of 2.3% from the prior-year period. Total loan originations were $399.0 million in the second quarter of 2023, a decrease of $27.3 million, or 6.4%, from the prior-year period. Total revenue for the second quarter of 2023 was $133.5 million, an increase of $10.6 million, or 8.6%, from the prior-year period. Interest and fee income increased $8.3 million, or 7.6%, primarily due to higher average net finance receivables. Insurance income, net increased $1.0 million, or 9.6%, driven by portfolio growth. Provision for credit losses for the second quarter of 2023 was $52.6 million, an increase of $7.2 million, or 15.8%, from the prior-year period. Annualized net credit losses as a percentage of average net finance receivables for the second quarter of 2023 were 13.1%, compared to 10.0% in the prior-year period. The provision for credit losses for the second quarter of 2023 included a reserve reduction of $2.4 million primarily due to changes in estimated future macroeconomic impacts on credit losses, partially offset by portfolio growth during the quarter. Allowance for credit losses was $181.4 million as of June 30, 2023, or 10.7% of net finance receivables. As of June 30, 2023, 30+ day contractual delinquencies totaled $116.3 million, or 6.9% of net finance receivables, an improvement of 30 basis points compared to March 31, 2023. The 30+ day contractual delinquency compares favorably to the company’s $181.4 million allowance for credit losses as of June 30, 2023. General and administrative expenses for the second quarter of 2023 were $56.9 million, an increase of $2.8 million, or 5.1%, from the prior-year period. The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) for the second quarter of 2023 was 13.6%, a 110 basis point improvement compared to the prior-year period. Third Quarter 2023 Dividend The company’s Board of Directors has declared a dividend of $0.30 per common share for the third quarter of 2023. The dividend will be paid on September 14, 2023 to shareholders of record as of the close of business on August 23, 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 June 30, 2023, the company had net finance receivables of $1.7 billion and debt of $1.3 billion. The debt consisted of: $105.4 million on the company’s $420 million senior revolving credit facility, $50.2 million on the company’s aggregate $375 million revolving warehouse credit facilities, and $1.2 billion through the company’s asset-backed securitizations. As of June 30, 2023, the company’s unused capacity to fund future growth on its revolving credit facilities (subject to the borrowing base) was $641 million, or 80.6%, and the company had available liquidity of [$147.2 million], including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities. As of June 30, 2023, 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 1.6 years. The company had a funded debt-to-equity ratio of 4.2 to 1.0 and a stockholders’ equity ratio of 18.7%, each as of June 30, 2023. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 4.4 to 1.0, as of June 30, 2023. 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 19 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 evolving underwriting models and processes, including as to the effectiveness of Regional Management's 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; any future public health crises (including the resurgence of COVID-19), including the impact of such crisis on our operations and financial condition; 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; the impact of changes in tax laws and guidance, 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 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) 2Q 23 2Q 22 $ % YTD 23 YTD 22 $ % Revenue Interest and fee income $ 118,083 $ 109,771 $ 8,312 7.6 % $ 238,490 $ 217,402 $ 21,088 9.7 % Insurance income, net 11,203 10,220 983 9.6 % 22,162 20,764 1,398 6.7 % Other income 4,198 2,880 1,318 45.8 % 8,210 5,553 2,657 47.8 % Total revenue 133,484 122,871 10,613 8.6 % 268,862 243,719 25,143 10.3 % Expenses Provision for credit losses 52,551 45,400 (7,151 ) (15.8 )% 100,219 76,258 (23,961 ) (31.4 )% Personnel 36,419 33,941 (2,478 ) (7.3 )% 75,016 69,595 (5,421 ) (7.8 )% Occupancy 6,158 6,156 (2 ) 0.0 % 12,446 11,964 (482 ) (4.0 )% Marketing 3,844 4,108 264 6.4 % 7,223 7,199 (24 ) (0.3 )% Other 10,475 9,916 (559 ) (5.6 )% 21,534 20,463 (1,071 ) (5.2 )% Total general and administrative 56,896 54,121 (2,775 ) (5.1 )% 116,219 109,221 (6,998 ) (6.4 )% Interest expense 16,224 7,564 (8,660 ) (114.5 )% 33,006 7,505 (25,501 ) (339.8 )% Income before income taxes 7,813 15,786 (7,973 ) (50.5 )% 19,418 50,735 (31,317 ) (61.7 )% Income taxes 1,790 3,804 2,014 52.9 % 4,706 11,970 7,264 60.7 % Net income $ 6,023 $ 11,982 $ (5,959 ) (49.7 )% $ 14,712 $ 38,765 $ (24,053 ) (62.0 )% Net income per common share: Basic $ 0.64 $ 1.29 $ (0.65 ) (50.4 )% $ 1.57 $ 4.13 $ (2.56 ) (62.0 )% Diluted $ 0.63 $ 1.24 $ (0.61 ) (49.2 )% $ 1.53 $ 3.94 $ (2.41 ) (61.2 )% Weighted-average common shares outstanding: Basic 9,399 9,261 (138 ) (1.5 )% 9,363 9,396 33 0.4 % Diluted 9,566 9,669 103 1.1 % 9,595 9,845 250 2.5 % Return on average assets (annualized) 1.4 % 3.2 % 1.7 % 5.2 % Return on average equity (annualized) 7.6 % 16.0 % 9.3 % 26.3 % Regional Management Corp. and Subsidiaries Consolidated Balance Sheets (Unaudited) (dollars in thousands, except par value amounts) Increase (Decrease) 2Q 23 2Q 22 $ % Assets Cash $ 10,330 $ 7,928 $ 2,402 30.3 % Net finance receivables 1,688,937 1,525,659 163,278 10.7 % Unearned insurance premiums (49,059 ) (48,986 ) (73 ) (0.1 )% Allowance for credit losses (181,400 ) (167,500 ) (13,900 ) (8.3 )% Net finance receivables, less unearned insurance premiums and allowance for credit losses 1,458,478 1,309,173 149,305 11.4 % Restricted cash 131,132 144,802 (13,670 ) (9.4 )% Lease assets 34,996 28,555 6,441 22.6 % Restricted available-for-sale investments 20,298 — 20,298 100.0 % Deferred tax assets, net 15,278 19,798 (4,520 ) (22.8 )% Property and equipment 14,689 12,808 1,881 14.7 % Intangible assets 13,949 10,312 3,637 35.3 % Other assets 24,466 14,568 9,898 67.9 % Total assets $ 1,723,616 $ 1,547,944 $ 175,672 11.3 % Liabilities and Stockholders’ Equity Liabilities: Debt $ 1,344,855 $ 1,194,570 $ 150,285 12.6 % Unamortized debt issuance costs (6,923 ) (10,819 ) 3,896 36.0 % Net debt 1,337,932 1,183,751 154,181 13.0 % Lease liabilities 37,150 31,117 6,033 19.4 % Accounts payable and accrued expenses 27,032 34,492 (7,460 ) (21.6 )% Total liabilities 1,402,114 1,249,360 152,754 12.2 % 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, 14,636 shares issued and 9,829 shares outstanding at June 30, 2023 and 14,390 shares issued and 9,584 shares outstanding at June 30, 2022) 1,464 1,439 25 1.7 % Additional paid-in capital 116,202 108,345 7,857 7.3 % Retained earnings 354,346 338,943 15,403 4.5 % Accumulated other comprehensive loss (367 ) — (367 ) (100.0 )% Treasury stock (4,807 shares at June 30, 2023 and 4,807 shares at June 30, 2022) (150,143 ) (150,143 ) - — Total stockholders’ equity 321,502 298,584 22,918 7.7 % Total liabilities and stockholders’ equity $ 1,723,616 $ 1,547,944 $ 175,672 11.3 % Regional Management Corp. and Subsidiaries Selected Financial Data (Unaudited) (dollars in thousands, except per share amounts) Net Finance Receivables by Product 2Q 23 1Q 23 QoQ $ Inc (Dec) QoQ % Inc (Dec) 2Q 22 YoY $ Inc (Dec) YoY % Inc (Dec) Small loans $ 444,590 $ 456,313 $ (11,723 ) (2.6 )% $ 455,253 $ (10,663 ) (2.3 )% Large loans 1,238,031 1,211,836 26,195 2.2 % 1,059,523 178,508 16.8 % Retail loans 6,316 8,081 (1,765 ) (21.8 )% 10,883 (4,567 ) (42.0 )% Total net finance receivables $ 1,688,937 $ 1,676,230 $ 12,707 0.8 % $ 1,525,659 $ 163,278 10.7 % Number of branches at period end 347 344 3 0.9 % 334 13 3.9 % Net finance receivables per branch $ 4,867 $ 4,873 $ (6 ) (0.1 )% $ 4,568 $ 299 6.5 % Averages and Yields 2Q 23 1Q 23 2Q 22 Average Net Finance Receivables Average Yield (1) Average Net Finance Receivables Average Yield (1) Average Net Finance Receivables Average Yield (1) Small loans $ 443,601 34.5 % $ 467,851 35.0 % $ 437,226 35.8 % Large loans 1,223,339 26.0 % 1,215,547 26.0 % 1,023,546 27.4 % Retail loans 7,191 16.6 % 8,954 18.6 % 10,828 18.3 % Total interest and fee yield $ 1,674,131 28.2 % $ 1,692,352 28.5 % $ 1,471,600 29.8 % Total revenue yield $ 1,674,131 31.9 % $ 1,692,352 32.0 % $ 1,471,600 33.4 % (1) Annualized interest and fee income as a percentage of average net finance receivables. Components of Increase in Interest and Fee Income 2Q 23 Compared to 2Q 22 Increase (Decrease) Volume Rate Volume & Rate Total Small loans $ 571 $ (1,409 ) $ (21 ) $ (859 ) Large loans 13,691 (3,617 ) (706 ) 9,368 Retail loans (166 ) (46 ) 15 (197 ) Product mix 1,011 (901 ) (110 ) — Total increase in interest and fee income $ 15,107 $ (5,973 ) $ (822 ) $ 8,312 Loans Originated (1) 2Q 23 1Q 23 QoQ $ Inc (Dec) QoQ % Inc (Dec) 2Q 22 YoY $ Inc (Dec) YoY % Inc (Dec) Small loans $ 149,460 $ 109,484 $ 39,976 36.5 % $ 171,244 $ (21,784 ) (12.7 )% Large loans 249,514 193,571 55,943 28.9 % 252,572 (3,058 ) (1.2 )% Retail loans — 146 (146 ) (100.0 )% 2,471 (2,471 ) (100.0 )% Total loans originated $ 398,974 $ 303,201 $ 95,773 31.6 % $ 426,287 $ (27,313 ) (6.4 )% (1) Represents the principal balance of loan originations and refinancings. Other Key Metrics 2Q 23 1Q 23 2Q 22 Net credit losses $ 54,951 $ 42,668 $ 36,700 Percentage of average net finance receivables (annualized) 13.1 % 10.1 % 10.0 % Provision for credit losses $ 52,551 $ 47,668 $ 45,400 Percentage of average net finance receivables (annualized) 12.6 % 11.3 % 12.3 % Percentage of total revenue 39.4 % 35.2 % 36.9 % General and administrative expenses $ 56,896 $ 59,323 $ 54,121 Percentage of average net finance receivables (annualized) 13.6 % 14.0 % 14.7 % Percentage of total revenue 42.6 % 43.8 % 44.0 % Same store results (1): Net finance receivables at period-end $ 1,636,131 $ 1,619,407 $ 1,466,300 Net finance receivable growth rate 7.2 % 12.3 % 24.7 % Number of branches in calculation 329 325 310 (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 2Q 23 1Q 23 2Q 22 Allowance for credit losses $ 181,400 10.7 % $ 183,800 11.0 % $ 167,500 11.0 % Current 1,433,787 84.9 % 1,438,354 85.8 % 1,306,183 85.6 % 1 to 29 days past due 138,810 8.2 % 116,723 7.0 % 124,810 8.2 % Delinquent accounts: 30 to 59 days 33,676 2.0 % 27,428 1.6 % 26,785 1.8 % 60 to 89 days 24,931 1.5 % 25,178 1.5 % 24,420 1.6 % 90 to 119 days 20,041 1.1 % 23,148 1.4 % 18,557 1.2 % 120 to 149 days 18,087 1.1 % 22,263 1.3 % 12,528 0.8 % 150 to 179 days 19,605 1.2 % 23,136 1.4 % 12,376 0.8 % Total contractual delinquency $ 116,340 6.9 % $ 121,153 7.2 % $ 94,666 6.2 % Total net finance receivables $ 1,688,937 100.0 % $ 1,676,230 100.0 % $ 1,525,659 100.0 % 1 day and over past due $ 255,150 15.1 % $ 237,876 14.2 % $ 219,476 14.4 % Contractual Delinquency by Product 2Q 23 1Q 23 2Q 22 Small loans $ 40,894 9.2 % $ 45,600 10.0 % $ 41,984 9.2 % Large loans 74,637 6.0 % 74,606 6.2 % 51,763 4.9 % Retail loans 809 12.8 % 947 11.7 % 919 8.4 % Total contractual delinquency $ 116,340 6.9 % $ 121,153 7.2 % $ 94,666 6.2 % Income Statement Quarterly Trend 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 QoQ $ B(W) YoY $ B(W) Revenue Interest and fee income $ 109,771 $ 116,020 $ 117,432 $ 120,407 $ 118,083 $ (2,324 ) $ 8,312 Insurance income, net 10,220 11,987 10,751 10,959 11,203 244 983 Other income 2,880 3,445 3,833 4,012 4,198 186 1,318 Total revenue 122,871 131,452 132,016 135,378 133,484 (1,894 ) 10,613 Expenses Provision for credit losses 45,400 48,071 60,786 47,668 52,551 (4,883 ) (7,151 ) Personnel 33,941 36,979 34,669 38,597 36,419 2,178 (2,478 ) Occupancy 6,156 5,848 5,997 6,288 6,158 130 (2 ) Marketing 4,108 3,940 4,239 3,379 3,844 (465 ) 264 Other 9,916 11,397 10,238 11,059 10,475 584 (559 ) Total general and administrative 54,121 58,164 55,143 59,323 56,896 2,427 (2,775 ) Interest expense 7,564 11,863 14,855 16,782 16,224 558 (8,660 ) Income before income taxes 15,786 13,354 1,232 11,605 7,813 (3,792 ) (7,973 ) Income taxes 3,804 3,286 (1,159 ) 2,916 1,790 1,126 2,014 Net income $ 11,982 $ 10,068 $ 2,391 $ 8,689 $ 6,023 $ (2,666 ) $ (5,959 ) Net income per common share: Basic $ 1.29 $ 1.09 $ 0.26 $ 0.93 $ 0.64 $ (0.29 ) $ (0.65 ) Diluted $ 1.24 $ 1.06 $ 0.25 $ 0.90 $ 0.63 $ (0.27 ) $ (0.61 ) Weighted-average shares outstanding: Basic 9,261 9,195 9,199 9,325 9,399 (74 ) (138 ) Diluted 9,669 9,526 9,411 9,622 9,566 56 103 Balance Sheet Quarterly Trend 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 QoQ $ Inc (Dec) YoY $ Inc (Dec) Total assets $ 1,547,944 $ 1,606,550 $ 1,724,987 $ 1,701,114 $ 1,723,616 $ 22,502 $ 175,672 Net finance receivables $ 1,525,659 $ 1,607,598 $ 1,699,393 $ 1,676,230 $ 1,688,937 $ 12,707 $ 163,278 Allowance for credit losses $ 167,500 $ 179,800 $ 178,800 $ 183,800 $ 181,400 $ (2,400 ) $ 13,900 Debt $ 1,194,570 $ 1,241,039 $ 1,355,359 $ 1,329,677 $ 1,344,855 $ 15,178 $ 150,285 Other Key Metrics Quarterly Trend 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 QoQ Inc (Dec) YoY Inc (Dec) Interest and fee yield (annualized) 29.8 % 29.6 % 28.5 % 28.5 % 28.2 % (0.3 )% (1.6 )% Efficiency ratio (1) 44.0 % 44.2 % 41.8 % 43.8 % 42.6 % (1.2 )% (1.4 )% Operating expense ratio (2) 14.7 % 14.9 % 13.4 % 14.0 % 13.6 % (0.4 )% (1.1 )% 30+ contractual delinquency 6.2 % 7.2 % 7.1 % 7.2 % 6.9 % (0.3 )% 0.7 % Net credit loss ratio (3) 10.0 % 9.1 % 15.0 % 10.1 % 13.1 % 3.0 % 3.1 % Book value per share $ 31.15 $ 32.18 $ 32.41 $ 33.06 $ 32.71 $ (0.35 ) $ 1.56 (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 23 YTD 22 Average Net Finance Receivables Average Yield (Annualized) Average Net Finance Receivables Average Yield (Annualized) Small loans $ 455,659 34.8 % $ 439,070 35.9 % Large loans 1,219,464 26.0 % 1,003,326 27.4 % Retail loans 8,068 17.7 % 10,725 18.3 % Total interest and fee yield $ 1,683,191 28.3 % $ 1,453,121 29.9 % Total revenue yield $ 1,683,191 31.9 % $ 1,453,121 33.5 % (1) Annualized interest and fee income as a percentage of average net finance receivables. Components of Increase in Interest and Fee Income YTD 23 Compared to YTD 22 Increase (Decrease) Volume Rate Volume & Rate Total Small loans $ 2,977 $ (2,421 ) $ (92 ) $ 464 Large loans 29,648 (7,204 ) (1,552 ) 20,892 Retail loans (244 ) (33 ) 9 (268 ) Product mix 2,040 (1,852 ) (188 ) — Total increase in interest and fee income $ 34,421 $ (11,510 ) $ (1,823 ) $ 21,088 Loans Originated (1) YTD 23 YTD 22 YTD $ Inc (Dec) YTD % Inc (Dec) Small loans $ 258,944 $ 308,375 $ (49,431 ) (16.0 )% Large loans 443,085 438,851 4,234 1.0 % Retail loans 146 5,061 (4,915 ) (97.1 )% Total loans originated $ 702,175 $ 752,287 $ (50,112 ) (6.7 )% (1) Represents the principal balance of loan originations and refinancings. Other Key Metrics YTD 23 YTD 22 Net credit losses $ 97,619 $ 68,058 Percentage of average net finance receivables (annualized) 11.6 % 9.4 % Provision for credit losses $ 100,219 $ 76,258 Percentage of average net finance receivables (annualized) 11.9 % 10.5 % Percentage of total revenue 37.3 % 31.3 % General and administrative expenses $ 116,219 $ 109,221 Percentage of average net finance receivables (annualized) 13.8 % 15.0 % Percentage of total revenue 43.2 % 44.8 % 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. 2Q 23 Debt $ 1,344,855 Total stockholders' equity 321,502 Less: Intangible assets 13,949 Tangible equity (non-GAAP) $ 307,553 Funded debt-to-equity ratio 4.2 x Funded debt-to-tangible equity ratio (non-GAAP) 4.4 x View source version on businesswire.com: https://www.businesswire.com/news/home/20230802337574/en/Contacts Investor Relations Garrett Edson, (203) 682-8331 investor.relations@regionalmanagement.com
- Net income of $6.0 million and diluted earnings per share of $0.63 - - 30+ day contractual delinquencies of 6.9% as of June 30, 2023, an improvement of 30 basis points compared to March 31, 2023 - - Continued early indications of improved credit performance in the second quarter -
Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the second quarter ended June 30, 2023. “We are pleased with our second quarter results, which exceeded our expectations on both the top and bottom lines,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “We produced $6.0 million of net income and $0.63 of diluted earnings per share. Loan demand remained strong in the quarter, allowing us to generate high-quality portfolio growth and near-record quarterly revenue while simultaneously maintaining a conservative credit posture. We also continued to closely manage our expenses while investing in our business, driving our annualized operating expense ratio down to 13.6% in the quarter. Our focus on portfolio quality, expense management, and strong execution of our core business has enabled us to deliver consistent, predictable, and superior results quarter after quarter.” “Our portfolio’s early-stage delinquencies continue to benefit from several quarters of tightened underwriting criteria,” added Mr. Beck. “Overall, we ended the quarter with a 30+ day delinquency rate of 6.9%, a sequential improvement of 30 basis points from the first quarter. Looking ahead, while we have been encouraged by recent economic data indicating a strong labor market, moderating inflation, and real wage growth, we continue to be comfortable prioritizing higher credit quality over more rapid portfolio growth. However, we remain prepared to lean back into growth when justified by the economic conditions and the overall performance of our portfolio. As always, we look forward to continuing our delivery of controlled growth and profitability, sustainable returns, and long-term value to our shareholders.” Second Quarter 2023 Highlights Net income for the second quarter of 2023 was $6.0 million and diluted earnings per share was $0.63. Net finance receivables as of June 30, 2023 were $1.7 billion, an increase of $163.3 million, or 10.7%, from the prior-year period. Large loan net finance receivables of $1.2 billion increased $178.5 million, or 16.8%, from the prior-year period and represented 73.3% of the total loan portfolio, compared to 69.4% in the prior-year period. Small loan net finance receivables were $444.6 million, a decrease of 2.3% from the prior-year period. Total loan originations were $399.0 million in the second quarter of 2023, a decrease of $27.3 million, or 6.4%, from the prior-year period. Total revenue for the second quarter of 2023 was $133.5 million, an increase of $10.6 million, or 8.6%, from the prior-year period. Interest and fee income increased $8.3 million, or 7.6%, primarily due to higher average net finance receivables. Insurance income, net increased $1.0 million, or 9.6%, driven by portfolio growth. Provision for credit losses for the second quarter of 2023 was $52.6 million, an increase of $7.2 million, or 15.8%, from the prior-year period. Annualized net credit losses as a percentage of average net finance receivables for the second quarter of 2023 were 13.1%, compared to 10.0% in the prior-year period. The provision for credit losses for the second quarter of 2023 included a reserve reduction of $2.4 million primarily due to changes in estimated future macroeconomic impacts on credit losses, partially offset by portfolio growth during the quarter. Allowance for credit losses was $181.4 million as of June 30, 2023, or 10.7% of net finance receivables. As of June 30, 2023, 30+ day contractual delinquencies totaled $116.3 million, or 6.9% of net finance receivables, an improvement of 30 basis points compared to March 31, 2023. The 30+ day contractual delinquency compares favorably to the company’s $181.4 million allowance for credit losses as of June 30, 2023. General and administrative expenses for the second quarter of 2023 were $56.9 million, an increase of $2.8 million, or 5.1%, from the prior-year period. The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) for the second quarter of 2023 was 13.6%, a 110 basis point improvement compared to the prior-year period. Third Quarter 2023 Dividend The company’s Board of Directors has declared a dividend of $0.30 per common share for the third quarter of 2023. The dividend will be paid on September 14, 2023 to shareholders of record as of the close of business on August 23, 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 June 30, 2023, the company had net finance receivables of $1.7 billion and debt of $1.3 billion. The debt consisted of: $105.4 million on the company’s $420 million senior revolving credit facility, $50.2 million on the company’s aggregate $375 million revolving warehouse credit facilities, and $1.2 billion through the company’s asset-backed securitizations. As of June 30, 2023, the company’s unused capacity to fund future growth on its revolving credit facilities (subject to the borrowing base) was $641 million, or 80.6%, and the company had available liquidity of [$147.2 million], including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities. As of June 30, 2023, 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 1.6 years. The company had a funded debt-to-equity ratio of 4.2 to 1.0 and a stockholders’ equity ratio of 18.7%, each as of June 30, 2023. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 4.4 to 1.0, as of June 30, 2023. 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 19 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 evolving underwriting models and processes, including as to the effectiveness of Regional Management's 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; any future public health crises (including the resurgence of COVID-19), including the impact of such crisis on our operations and financial condition; 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; the impact of changes in tax laws and guidance, 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 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) 2Q 23 2Q 22 $ % YTD 23 YTD 22 $ % Revenue Interest and fee income $ 118,083 $ 109,771 $ 8,312 7.6 % $ 238,490 $ 217,402 $ 21,088 9.7 % Insurance income, net 11,203 10,220 983 9.6 % 22,162 20,764 1,398 6.7 % Other income 4,198 2,880 1,318 45.8 % 8,210 5,553 2,657 47.8 % Total revenue 133,484 122,871 10,613 8.6 % 268,862 243,719 25,143 10.3 % Expenses Provision for credit losses 52,551 45,400 (7,151 ) (15.8 )% 100,219 76,258 (23,961 ) (31.4 )% Personnel 36,419 33,941 (2,478 ) (7.3 )% 75,016 69,595 (5,421 ) (7.8 )% Occupancy 6,158 6,156 (2 ) 0.0 % 12,446 11,964 (482 ) (4.0 )% Marketing 3,844 4,108 264 6.4 % 7,223 7,199 (24 ) (0.3 )% Other 10,475 9,916 (559 ) (5.6 )% 21,534 20,463 (1,071 ) (5.2 )% Total general and administrative 56,896 54,121 (2,775 ) (5.1 )% 116,219 109,221 (6,998 ) (6.4 )% Interest expense 16,224 7,564 (8,660 ) (114.5 )% 33,006 7,505 (25,501 ) (339.8 )% Income before income taxes 7,813 15,786 (7,973 ) (50.5 )% 19,418 50,735 (31,317 ) (61.7 )% Income taxes 1,790 3,804 2,014 52.9 % 4,706 11,970 7,264 60.7 % Net income $ 6,023 $ 11,982 $ (5,959 ) (49.7 )% $ 14,712 $ 38,765 $ (24,053 ) (62.0 )% Net income per common share: Basic $ 0.64 $ 1.29 $ (0.65 ) (50.4 )% $ 1.57 $ 4.13 $ (2.56 ) (62.0 )% Diluted $ 0.63 $ 1.24 $ (0.61 ) (49.2 )% $ 1.53 $ 3.94 $ (2.41 ) (61.2 )% Weighted-average common shares outstanding: Basic 9,399 9,261 (138 ) (1.5 )% 9,363 9,396 33 0.4 % Diluted 9,566 9,669 103 1.1 % 9,595 9,845 250 2.5 % Return on average assets (annualized) 1.4 % 3.2 % 1.7 % 5.2 % Return on average equity (annualized) 7.6 % 16.0 % 9.3 % 26.3 % Regional Management Corp. and Subsidiaries Consolidated Balance Sheets (Unaudited) (dollars in thousands, except par value amounts) Increase (Decrease) 2Q 23 2Q 22 $ % Assets Cash $ 10,330 $ 7,928 $ 2,402 30.3 % Net finance receivables 1,688,937 1,525,659 163,278 10.7 % Unearned insurance premiums (49,059 ) (48,986 ) (73 ) (0.1 )% Allowance for credit losses (181,400 ) (167,500 ) (13,900 ) (8.3 )% Net finance receivables, less unearned insurance premiums and allowance for credit losses 1,458,478 1,309,173 149,305 11.4 % Restricted cash 131,132 144,802 (13,670 ) (9.4 )% Lease assets 34,996 28,555 6,441 22.6 % Restricted available-for-sale investments 20,298 — 20,298 100.0 % Deferred tax assets, net 15,278 19,798 (4,520 ) (22.8 )% Property and equipment 14,689 12,808 1,881 14.7 % Intangible assets 13,949 10,312 3,637 35.3 % Other assets 24,466 14,568 9,898 67.9 % Total assets $ 1,723,616 $ 1,547,944 $ 175,672 11.3 % Liabilities and Stockholders’ Equity Liabilities: Debt $ 1,344,855 $ 1,194,570 $ 150,285 12.6 % Unamortized debt issuance costs (6,923 ) (10,819 ) 3,896 36.0 % Net debt 1,337,932 1,183,751 154,181 13.0 % Lease liabilities 37,150 31,117 6,033 19.4 % Accounts payable and accrued expenses 27,032 34,492 (7,460 ) (21.6 )% Total liabilities 1,402,114 1,249,360 152,754 12.2 % 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, 14,636 shares issued and 9,829 shares outstanding at June 30, 2023 and 14,390 shares issued and 9,584 shares outstanding at June 30, 2022) 1,464 1,439 25 1.7 % Additional paid-in capital 116,202 108,345 7,857 7.3 % Retained earnings 354,346 338,943 15,403 4.5 % Accumulated other comprehensive loss (367 ) — (367 ) (100.0 )% Treasury stock (4,807 shares at June 30, 2023 and 4,807 shares at June 30, 2022) (150,143 ) (150,143 ) - — Total stockholders’ equity 321,502 298,584 22,918 7.7 % Total liabilities and stockholders’ equity $ 1,723,616 $ 1,547,944 $ 175,672 11.3 % Regional Management Corp. and Subsidiaries Selected Financial Data (Unaudited) (dollars in thousands, except per share amounts) Net Finance Receivables by Product 2Q 23 1Q 23 QoQ $ Inc (Dec) QoQ % Inc (Dec) 2Q 22 YoY $ Inc (Dec) YoY % Inc (Dec) Small loans $ 444,590 $ 456,313 $ (11,723 ) (2.6 )% $ 455,253 $ (10,663 ) (2.3 )% Large loans 1,238,031 1,211,836 26,195 2.2 % 1,059,523 178,508 16.8 % Retail loans 6,316 8,081 (1,765 ) (21.8 )% 10,883 (4,567 ) (42.0 )% Total net finance receivables $ 1,688,937 $ 1,676,230 $ 12,707 0.8 % $ 1,525,659 $ 163,278 10.7 % Number of branches at period end 347 344 3 0.9 % 334 13 3.9 % Net finance receivables per branch $ 4,867 $ 4,873 $ (6 ) (0.1 )% $ 4,568 $ 299 6.5 % Averages and Yields 2Q 23 1Q 23 2Q 22 Average Net Finance Receivables Average Yield (1) Average Net Finance Receivables Average Yield (1) Average Net Finance Receivables Average Yield (1) Small loans $ 443,601 34.5 % $ 467,851 35.0 % $ 437,226 35.8 % Large loans 1,223,339 26.0 % 1,215,547 26.0 % 1,023,546 27.4 % Retail loans 7,191 16.6 % 8,954 18.6 % 10,828 18.3 % Total interest and fee yield $ 1,674,131 28.2 % $ 1,692,352 28.5 % $ 1,471,600 29.8 % Total revenue yield $ 1,674,131 31.9 % $ 1,692,352 32.0 % $ 1,471,600 33.4 % (1) Annualized interest and fee income as a percentage of average net finance receivables. Components of Increase in Interest and Fee Income 2Q 23 Compared to 2Q 22 Increase (Decrease) Volume Rate Volume & Rate Total Small loans $ 571 $ (1,409 ) $ (21 ) $ (859 ) Large loans 13,691 (3,617 ) (706 ) 9,368 Retail loans (166 ) (46 ) 15 (197 ) Product mix 1,011 (901 ) (110 ) — Total increase in interest and fee income $ 15,107 $ (5,973 ) $ (822 ) $ 8,312 Loans Originated (1) 2Q 23 1Q 23 QoQ $ Inc (Dec) QoQ % Inc (Dec) 2Q 22 YoY $ Inc (Dec) YoY % Inc (Dec) Small loans $ 149,460 $ 109,484 $ 39,976 36.5 % $ 171,244 $ (21,784 ) (12.7 )% Large loans 249,514 193,571 55,943 28.9 % 252,572 (3,058 ) (1.2 )% Retail loans — 146 (146 ) (100.0 )% 2,471 (2,471 ) (100.0 )% Total loans originated $ 398,974 $ 303,201 $ 95,773 31.6 % $ 426,287 $ (27,313 ) (6.4 )% (1) Represents the principal balance of loan originations and refinancings. Other Key Metrics 2Q 23 1Q 23 2Q 22 Net credit losses $ 54,951 $ 42,668 $ 36,700 Percentage of average net finance receivables (annualized) 13.1 % 10.1 % 10.0 % Provision for credit losses $ 52,551 $ 47,668 $ 45,400 Percentage of average net finance receivables (annualized) 12.6 % 11.3 % 12.3 % Percentage of total revenue 39.4 % 35.2 % 36.9 % General and administrative expenses $ 56,896 $ 59,323 $ 54,121 Percentage of average net finance receivables (annualized) 13.6 % 14.0 % 14.7 % Percentage of total revenue 42.6 % 43.8 % 44.0 % Same store results (1): Net finance receivables at period-end $ 1,636,131 $ 1,619,407 $ 1,466,300 Net finance receivable growth rate 7.2 % 12.3 % 24.7 % Number of branches in calculation 329 325 310 (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 2Q 23 1Q 23 2Q 22 Allowance for credit losses $ 181,400 10.7 % $ 183,800 11.0 % $ 167,500 11.0 % Current 1,433,787 84.9 % 1,438,354 85.8 % 1,306,183 85.6 % 1 to 29 days past due 138,810 8.2 % 116,723 7.0 % 124,810 8.2 % Delinquent accounts: 30 to 59 days 33,676 2.0 % 27,428 1.6 % 26,785 1.8 % 60 to 89 days 24,931 1.5 % 25,178 1.5 % 24,420 1.6 % 90 to 119 days 20,041 1.1 % 23,148 1.4 % 18,557 1.2 % 120 to 149 days 18,087 1.1 % 22,263 1.3 % 12,528 0.8 % 150 to 179 days 19,605 1.2 % 23,136 1.4 % 12,376 0.8 % Total contractual delinquency $ 116,340 6.9 % $ 121,153 7.2 % $ 94,666 6.2 % Total net finance receivables $ 1,688,937 100.0 % $ 1,676,230 100.0 % $ 1,525,659 100.0 % 1 day and over past due $ 255,150 15.1 % $ 237,876 14.2 % $ 219,476 14.4 % Contractual Delinquency by Product 2Q 23 1Q 23 2Q 22 Small loans $ 40,894 9.2 % $ 45,600 10.0 % $ 41,984 9.2 % Large loans 74,637 6.0 % 74,606 6.2 % 51,763 4.9 % Retail loans 809 12.8 % 947 11.7 % 919 8.4 % Total contractual delinquency $ 116,340 6.9 % $ 121,153 7.2 % $ 94,666 6.2 % Income Statement Quarterly Trend 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 QoQ $ B(W) YoY $ B(W) Revenue Interest and fee income $ 109,771 $ 116,020 $ 117,432 $ 120,407 $ 118,083 $ (2,324 ) $ 8,312 Insurance income, net 10,220 11,987 10,751 10,959 11,203 244 983 Other income 2,880 3,445 3,833 4,012 4,198 186 1,318 Total revenue 122,871 131,452 132,016 135,378 133,484 (1,894 ) 10,613 Expenses Provision for credit losses 45,400 48,071 60,786 47,668 52,551 (4,883 ) (7,151 ) Personnel 33,941 36,979 34,669 38,597 36,419 2,178 (2,478 ) Occupancy 6,156 5,848 5,997 6,288 6,158 130 (2 ) Marketing 4,108 3,940 4,239 3,379 3,844 (465 ) 264 Other 9,916 11,397 10,238 11,059 10,475 584 (559 ) Total general and administrative 54,121 58,164 55,143 59,323 56,896 2,427 (2,775 ) Interest expense 7,564 11,863 14,855 16,782 16,224 558 (8,660 ) Income before income taxes 15,786 13,354 1,232 11,605 7,813 (3,792 ) (7,973 ) Income taxes 3,804 3,286 (1,159 ) 2,916 1,790 1,126 2,014 Net income $ 11,982 $ 10,068 $ 2,391 $ 8,689 $ 6,023 $ (2,666 ) $ (5,959 ) Net income per common share: Basic $ 1.29 $ 1.09 $ 0.26 $ 0.93 $ 0.64 $ (0.29 ) $ (0.65 ) Diluted $ 1.24 $ 1.06 $ 0.25 $ 0.90 $ 0.63 $ (0.27 ) $ (0.61 ) Weighted-average shares outstanding: Basic 9,261 9,195 9,199 9,325 9,399 (74 ) (138 ) Diluted 9,669 9,526 9,411 9,622 9,566 56 103 Balance Sheet Quarterly Trend 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 QoQ $ Inc (Dec) YoY $ Inc (Dec) Total assets $ 1,547,944 $ 1,606,550 $ 1,724,987 $ 1,701,114 $ 1,723,616 $ 22,502 $ 175,672 Net finance receivables $ 1,525,659 $ 1,607,598 $ 1,699,393 $ 1,676,230 $ 1,688,937 $ 12,707 $ 163,278 Allowance for credit losses $ 167,500 $ 179,800 $ 178,800 $ 183,800 $ 181,400 $ (2,400 ) $ 13,900 Debt $ 1,194,570 $ 1,241,039 $ 1,355,359 $ 1,329,677 $ 1,344,855 $ 15,178 $ 150,285 Other Key Metrics Quarterly Trend 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 QoQ Inc (Dec) YoY Inc (Dec) Interest and fee yield (annualized) 29.8 % 29.6 % 28.5 % 28.5 % 28.2 % (0.3 )% (1.6 )% Efficiency ratio (1) 44.0 % 44.2 % 41.8 % 43.8 % 42.6 % (1.2 )% (1.4 )% Operating expense ratio (2) 14.7 % 14.9 % 13.4 % 14.0 % 13.6 % (0.4 )% (1.1 )% 30+ contractual delinquency 6.2 % 7.2 % 7.1 % 7.2 % 6.9 % (0.3 )% 0.7 % Net credit loss ratio (3) 10.0 % 9.1 % 15.0 % 10.1 % 13.1 % 3.0 % 3.1 % Book value per share $ 31.15 $ 32.18 $ 32.41 $ 33.06 $ 32.71 $ (0.35 ) $ 1.56 (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 23 YTD 22 Average Net Finance Receivables Average Yield (Annualized) Average Net Finance Receivables Average Yield (Annualized) Small loans $ 455,659 34.8 % $ 439,070 35.9 % Large loans 1,219,464 26.0 % 1,003,326 27.4 % Retail loans 8,068 17.7 % 10,725 18.3 % Total interest and fee yield $ 1,683,191 28.3 % $ 1,453,121 29.9 % Total revenue yield $ 1,683,191 31.9 % $ 1,453,121 33.5 % (1) Annualized interest and fee income as a percentage of average net finance receivables. Components of Increase in Interest and Fee Income YTD 23 Compared to YTD 22 Increase (Decrease) Volume Rate Volume & Rate Total Small loans $ 2,977 $ (2,421 ) $ (92 ) $ 464 Large loans 29,648 (7,204 ) (1,552 ) 20,892 Retail loans (244 ) (33 ) 9 (268 ) Product mix 2,040 (1,852 ) (188 ) — Total increase in interest and fee income $ 34,421 $ (11,510 ) $ (1,823 ) $ 21,088 Loans Originated (1) YTD 23 YTD 22 YTD $ Inc (Dec) YTD % Inc (Dec) Small loans $ 258,944 $ 308,375 $ (49,431 ) (16.0 )% Large loans 443,085 438,851 4,234 1.0 % Retail loans 146 5,061 (4,915 ) (97.1 )% Total loans originated $ 702,175 $ 752,287 $ (50,112 ) (6.7 )% (1) Represents the principal balance of loan originations and refinancings. Other Key Metrics YTD 23 YTD 22 Net credit losses $ 97,619 $ 68,058 Percentage of average net finance receivables (annualized) 11.6 % 9.4 % Provision for credit losses $ 100,219 $ 76,258 Percentage of average net finance receivables (annualized) 11.9 % 10.5 % Percentage of total revenue 37.3 % 31.3 % General and administrative expenses $ 116,219 $ 109,221 Percentage of average net finance receivables (annualized) 13.8 % 15.0 % Percentage of total revenue 43.2 % 44.8 % 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. 2Q 23 Debt $ 1,344,855 Total stockholders' equity 321,502 Less: Intangible assets 13,949 Tangible equity (non-GAAP) $ 307,553 Funded debt-to-equity ratio 4.2 x Funded debt-to-tangible equity ratio (non-GAAP) 4.4 x View source version on businesswire.com: https://www.businesswire.com/news/home/20230802337574/en/