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Regional Management Corp. Announces Second Quarter 2023 Results

- 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

 

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