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Regional Management Corp. Announces Third Quarter 2023 Results

- Net income of $8.8 million and diluted earnings per share of $0.91 -

- 30+ day contractual delinquency rate of 7.3% as of September 30, 2023 -

- Third quarter ending net receivables of $1.8 billion -

Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the third quarter ended September 30, 2023.

“With a high-quality portfolio, prudent expense management, and solid execution of our core business, we delivered another set of strong results in the third quarter,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “We generated $8.8 million of net income and $0.91 of diluted EPS. Strong loan demand and our conservative underwriting criteria led to high-quality portfolio growth of $62 million, record revenue of $141 million, and a sequential increase in revenue yields of 80 basis points. We also continued to manage our expenses closely while furthering our strategic initiatives, driving a 50 basis point improvement in our operating expense ratio from the prior year. We are pleased with our team’s ability to deliver consistent, predictable, and superior results for our shareholders.”

“We remain well-positioned to operate effectively in the current economic cycle,” added Mr. Beck. “We ended the quarter with a 30+ day delinquency rate of 7.3%, up 40 basis points from the second quarter, consistent with normal seasonal trends. Our higher-quality originations from credit tightening have kept our first payment default and early-stage delinquency rates below 2019 levels. Recent data indicates a strong labor market, moderating inflation, and real wage growth, but we remain selective in making loans within our tightened credit box. However, with ample liquidity, significant borrowing capacity, and a large addressable market, we stand ready to lean back into growth when justified by the economic conditions and the overall performance of our loan portfolio.”

Third Quarter 2023 Highlights

  • Net income for the third quarter of 2023 was $8.8 million and diluted earnings per share was $0.91.
  • Net finance receivables as of September 30, 2023 were $1.8 billion, an increase of $143.4 million, or 8.9%, from the prior-year period.
    • Large loan net finance receivables of $1.3 billion increased $155.4 million, or 13.9%, from the prior-year period and represented 72.6% of the total loan portfolio, compared to 69.4% in the prior-year period.
    • Small loan net finance receivables were $474.2 million, a decrease of 1.3% from the prior-year period.
    • Total loan originations were $425.1 million in the third quarter of 2023, an increase of $6.4 million, or 1.5%, from the prior-year period.
  • Total revenue for the third quarter of 2023 was $140.9 million, an increase of $9.4 million, or 7.2%, from the prior-year period.
    • Interest and fee income increased $9.0 million, or 7.8%, primarily due to higher average net finance receivables.
    • Insurance income, net decreased $0.6 million, or 5.0%, due to lower premiums.
  • Provision for credit losses for the third quarter of 2023 was $50.9 million, an increase of $2.9 million, or 5.9%, from the prior-year period.
    • Annualized net credit losses as a percentage of average net finance receivables for the third quarter of 2023 were 11.0%, compared to 9.1% in the prior-year period.
    • The provision for credit losses for the third quarter of 2023 included a reserve increase of $3.5 million primarily due to portfolio growth during the quarter, partially offset by changes in estimated future macroeconomic impacts on credit losses.
    • Allowance for credit losses was $184.9 million as of September 30, 2023, or 10.6% of net finance receivables.
  • As of September 30, 2023, 30+ day contractual delinquencies totaled $128.4 million, or 7.3% of net finance receivables, an increase of 10 basis points compared to September 30, 2022. The 30+ day contractual delinquency compares favorably to the company’s $184.9 million allowance for credit losses as of September 30, 2023.
  • General and administrative expenses for the third quarter of 2023 were $62.1 million, an increase of $3.9 million, or 6.8%, from the prior-year period.
  • The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) for the third quarter of 2023 was 14.4%, a 50 basis point improvement compared to the prior-year period.

Fourth Quarter 2023 Dividend

The company’s Board of Directors has declared a dividend of $0.30 per common share for the fourth quarter of 2023. The dividend will be paid on December 13, 2023 to shareholders of record as of the close of business on November 22, 2023. The declaration and payment of any future dividend is subject to the discretion of the Board of Directors and will depend on a variety of factors, including the company’s financial condition and results of operations.

Liquidity and Capital Resources

As of September 30, 2023, the company had net finance receivables of $1.8 billion and debt of $1.4 billion. The debt consisted of:

  • $131.3 million on the company’s $420 million senior revolving credit facility,
  • $52.2 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 September 30, 2023, the company’s unused capacity to fund future growth on its revolving credit facilities (subject to the borrowing base) was $613 million, or 77.1%, and the company had available liquidity of $179.2 million, including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities. As of September 30, 2023, the company’s fixed-rate debt as a percentage of total debt was 87%, with a weighted-average coupon of 3.6% and a weighted-average revolving duration of 1.3 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 September 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 September 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)

 

 

 

3Q 23

 

 

3Q 22

 

 

$

 

 

%

 

 

YTD 23

 

 

YTD 22

 

 

$

 

 

%

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fee income

 

$

125,018

 

 

$

116,020

 

 

$

8,998

 

 

 

7.8

%

 

$

363,508

 

 

$

333,422

 

 

$

30,086

 

 

 

9.0

%

Insurance income, net

 

 

11,382

 

 

 

11,987

 

 

 

(605

)

 

 

(5.0

)%

 

 

33,544

 

 

 

32,751

 

 

 

793

 

 

 

2.4

%

Other income

 

 

4,478

 

 

 

3,445

 

 

 

1,033

 

 

 

30.0

%

 

 

12,688

 

 

 

8,998

 

 

 

3,690

 

 

 

41.0

%

Total revenue

 

 

140,878

 

 

 

131,452

 

 

 

9,426

 

 

 

7.2

%

 

 

409,740

 

 

 

375,171

 

 

 

34,569

 

 

 

9.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

50,930

 

 

 

48,071

 

 

 

(2,859

)

 

 

(5.9

)%

 

 

151,149

 

 

 

124,329

 

 

 

(26,820

)

 

 

(21.6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

 

39,832

 

 

 

36,979

 

 

 

(2,853

)

 

 

(7.7

)%

 

 

114,848

 

 

 

106,574

 

 

 

(8,274

)

 

 

(7.8

)%

Occupancy

 

 

6,315

 

 

 

5,848

 

 

 

(467

)

 

 

(8.0

)%

 

 

18,761

 

 

 

17,812

 

 

 

(949

)

 

 

(5.3

)%

Marketing

 

 

4,077

 

 

 

3,940

 

 

 

(137

)

 

 

(3.5

)%

 

 

11,300

 

 

 

11,139

 

 

 

(161

)

 

 

(1.4

)%

Other

 

 

11,880

 

 

 

11,397

 

 

 

(483

)

 

 

(4.2

)%

 

 

33,414

 

 

 

31,860

 

 

 

(1,554

)

 

 

(4.9

)%

Total general and administrative

 

 

62,104

 

 

 

58,164

 

 

 

(3,940

)

 

 

(6.8

)%

 

 

178,323

 

 

 

167,385

 

 

 

(10,938

)

 

 

(6.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

16,947

 

 

 

11,863

 

 

 

(5,084

)

 

 

(42.9

)%

 

 

49,953

 

 

 

19,368

 

 

 

(30,585

)

 

 

(157.9

)%

Income before income taxes

 

 

10,897

 

 

 

13,354

 

 

 

(2,457

)

 

 

(18.4

)%

 

 

30,315

 

 

 

64,089

 

 

 

(33,774

)

 

 

(52.7

)%

Income taxes

 

 

2,077

 

 

 

3,286

 

 

 

1,209

 

 

 

36.8

%

 

 

6,783

 

 

 

15,256

 

 

 

8,473

 

 

 

55.5

%

Net income

 

$

8,820

 

 

$

10,068

 

 

$

(1,248

)

 

 

(12.4

)%

 

$

23,532

 

 

$

48,833

 

 

$

(25,301

)

 

 

(51.8

)%

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.94

 

 

$

1.09

 

 

$

(0.15

)

 

 

(13.8

)%

 

$

2.51

 

 

$

5.23

 

 

$

(2.72

)

 

 

(52.0

)%

Diluted

 

$

0.91

 

 

$

1.06

 

 

$

(0.15

)

 

 

(14.2

)%

 

$

2.45

 

 

$

5.01

 

 

$

(2.56

)

 

 

(51.1

)%

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

9,429

 

 

 

9,195

 

 

 

(234

)

 

 

(2.5

)%

 

 

9,385

 

 

 

9,329

 

 

 

(56

)

 

 

(0.6

)%

Diluted

 

 

9,650

 

 

 

9,526

 

 

 

(124

)

 

 

(1.3

)%

 

 

9,613

 

 

 

9,738

 

 

 

125

 

 

 

1.3

%

Return on average assets (annualized)

 

 

2.0

%

 

 

2.5

%

 

 

 

 

 

 

 

 

1.8

%

 

 

4.3

%

 

 

 

 

 

 

Return on average equity (annualized)

 

 

10.8

%

 

 

13.1

%

 

 

 

 

 

 

 

 

9.8

%

 

 

21.7

%

 

 

 

 

 

 

 

Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(dollars in thousands, except par value amounts)

 

 

 

 

 

 

 

 

 

Increase (Decrease)

 

 

 

3Q 23

 

 

3Q 22

 

 

$

 

 

%

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

7,413

 

 

$

3,140

 

 

$

4,273

 

 

 

136.1

%

Net finance receivables

 

 

1,751,009

 

 

 

1,607,598

 

 

 

143,411

 

 

 

8.9

%

Unearned insurance premiums

 

 

(48,764

)

 

 

(49,789

)

 

 

1,025

 

 

 

2.1

%

Allowance for credit losses

 

 

(184,900

)

 

 

(179,800

)

 

 

(5,100

)

 

 

(2.8

)%

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

 

 

1,517,345

 

 

 

1,378,009

 

 

 

139,336

 

 

 

10.1

%

Restricted cash

 

 

117,029

 

 

 

113,865

 

 

 

3,164

 

 

 

2.8

%

Lease assets

 

 

34,864

 

 

 

30,153

 

 

 

4,711

 

 

 

15.6

%

Restricted available-for-sale investments

 

 

22,510

 

 

 

20,290

 

 

 

2,220

 

 

 

10.9

%

Intangible assets

 

 

15,048

 

 

 

11,305

 

 

 

3,743

 

 

 

33.1

%

Property and equipment

 

 

14,157

 

 

 

12,370

 

 

 

1,787

 

 

 

14.4

%

Deferred tax assets, net

 

 

14,140

 

 

 

16,836

 

 

 

(2,696

)

 

 

(16.0

)%

Other assets

 

 

22,834

 

 

 

20,582

 

 

 

2,252

 

 

 

10.9

%

Total assets

 

$

1,765,340

 

 

$

1,606,550

 

 

$

158,790

 

 

 

9.9

%

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Debt

 

$

1,372,748

 

 

$

1,241,039

 

 

$

131,709

 

 

 

10.6

%

Unamortized debt issuance costs

 

 

(5,647

)

 

 

(9,647

)

 

 

4,000

 

 

 

41.5

%

Net debt

 

 

1,367,101

 

 

 

1,231,392

 

 

 

135,709

 

 

 

11.0

%

Lease liabilities

 

 

37,095

 

 

 

32,468

 

 

 

4,627

 

 

 

14.3

%

Accounts payable and accrued expenses

 

 

30,559

 

 

 

34,237

 

 

 

(3,678

)

 

 

(10.7

)%

Total liabilities

 

 

1,434,755

 

 

 

1,298,097

 

 

 

136,658

 

 

 

10.5

%

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, 14,642 shares issued and 9,835 shares outstanding at September 30, 2023 and 14,391 shares issued and 9,584 shares outstanding at September 30, 2022)

 

 

1,464

 

 

 

1,439

 

 

 

25

 

 

 

1.7

%

Additional paid-in capital

 

 

119,507

 

 

 

111,530

 

 

 

7,977

 

 

 

7.2

%

Retained earnings

 

 

360,155

 

 

 

346,083

 

 

 

14,072

 

 

 

4.1

%

Accumulated other comprehensive loss

 

 

(398

)

 

 

(456

)

 

 

58

 

 

 

12.7

%

Treasury stock (4,807 shares at September 30, 2023 and 4,807 shares at September 30, 2022)

 

 

(150,143

)

 

 

(150,143

)

 

 

 

 

 

 

Total stockholders’ equity

 

 

330,585

 

 

 

308,453

 

 

 

22,132

 

 

 

7.2

%

Total liabilities and stockholders’ equity

 

$

1,765,340

 

 

$

1,606,550

 

 

$

158,790

 

 

 

9.9

%

 

Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(dollars in thousands, except per share amounts)

 

 

 

Net Finance Receivables

 

 

 

3Q 23

 

 

2Q 23

 

 

QoQ $

Inc (Dec)

 

 

QoQ %

Inc (Dec)

 

 

3Q 22

 

 

YoY $

Inc (Dec)

 

 

YoY %

Inc (Dec)

 

Small loans

 

$

474,181

 

 

$

444,590

 

 

$

29,591

 

 

 

6.7

%

 

$

480,199

 

 

$

(6,018

)

 

 

(1.3

)%

Large loans

 

 

1,271,891

 

 

 

1,238,031

 

 

 

33,860

 

 

 

2.7

%

 

 

1,116,455

 

 

 

155,436

 

 

 

13.9

%

Retail loans

 

 

4,937

 

 

 

6,316

 

 

 

(1,379

)

 

 

(21.8

)%

 

 

10,944

 

 

 

(6,007

)

 

 

(54.9

)%

Total net finance receivables

 

$

1,751,009

 

 

$

1,688,937

 

 

$

62,072

 

 

 

3.7

%

 

$

1,607,598

 

 

$

143,411

 

 

 

8.9

%

Number of branches at period end

 

 

347

 

 

 

347

 

 

 

 

 

 

 

 

 

338

 

 

 

9

 

 

 

2.7

%

Net finance receivables per branch

 

$

5,046

 

 

$

4,867

 

 

$

179

 

 

 

3.7

%

 

$

4,756

 

 

$

290

 

 

 

6.1

%

 

 

 

Averages and Yields

 

 

 

3Q 23

 

 

2Q 23

 

 

3Q 22

 

 

 

Average Net

Finance

Receivables

 

 

Average

Yield (1)

 

 

Average Net

Finance

Receivables

 

 

Average

Yield (1)

 

 

Average Net

Finance

Receivables

 

 

Average

Yield (1)

 

Small loans

 

$

459,320

 

 

 

36.6

%

 

$

443,601

 

 

 

34.5

%

 

$

466,087

 

 

 

35.5

%

Large loans

 

 

1,257,168

 

 

 

26.3

%

 

 

1,223,339

 

 

 

26.0

%

 

 

1,089,225

 

 

 

27.2

%

Retail loans

 

 

5,647

 

 

 

16.9

%

 

 

7,191

 

 

 

16.6

%

 

 

10,935

 

 

 

18.5

%

Total interest and fee yield

 

$

1,722,135

 

 

 

29.0

%

 

$

1,674,131

 

 

 

28.2

%

 

$

1,566,247

 

 

 

29.6

%

Total revenue yield

 

$

1,722,135

 

 

 

32.7

%

 

$

1,674,131

 

 

 

31.9

%

 

$

1,566,247

 

 

 

33.6

%

(1)

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

 

 

 

Components of Increase in Interest and Fee Income

 

 

 

3Q 23 Compared to 3Q 22

 

 

 

Increase (Decrease)

 

 

 

Volume

 

 

Rate

 

 

Volume & Rate

 

 

Total

 

Small loans

 

$

(601

)

 

$

1,260

 

 

$

(18

)

 

$

641

 

Large loans

 

 

11,428

 

 

 

(2,428

)

 

 

(375

)

 

 

8,625

 

Retail loans

 

 

(245

)

 

 

(45

)

 

 

22

 

 

 

(268

)

Product mix

 

 

965

 

 

 

(1,106

)

 

 

141

 

 

 

 

Total increase in interest and fee income

 

$

11,547

 

 

$

(2,319

)

 

$

(230

)

 

$

8,998

 

 

 

 

Loans Originated (1)

 

 

 

3Q 23

 

 

2Q 23

 

 

QoQ $

Inc (Dec)

 

 

QoQ %

Inc (Dec)

 

 

3Q 22

 

 

YoY $

Inc (Dec)

 

 

YoY %

Inc (Dec)

 

Small loans

 

$

173,074

 

 

$

149,460

 

 

$

23,614

 

 

 

15.8

%

 

$

173,269

 

 

$

(195

)

 

 

(0.1

)%

Large loans

 

 

251,999

 

 

 

249,514

 

 

 

2,485

 

 

 

1.0

%

 

 

243,259

 

 

 

8,740

 

 

 

3.6

%

Retail loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,145

 

 

 

(2,145

)

 

 

(100.0

)%

Total loans originated

 

$

425,073

 

 

$

398,974

 

 

$

26,099

 

 

 

6.5

%

 

$

418,673

 

 

$

6,400

 

 

 

1.5

%

(1)

Represents the principal balance of loan originations and refinancings.

 

 

Other Key Metrics

 

 

 

3Q 23

 

 

2Q 23

 

 

3Q 22

 

Net credit losses

 

$

47,430

 

 

$

54,951

 

 

$

35,771

 

Percentage of average net finance receivables (annualized)

 

 

11.0

%

 

 

13.1

%

 

 

9.1

%

Provision for credit losses

 

$

50,930

 

 

$

52,551

 

 

$

48,071

 

Percentage of average net finance receivables (annualized)

 

 

11.8

%

 

 

12.6

%

 

 

12.3

%

Percentage of total revenue

 

 

36.2

%

 

 

39.4

%

 

 

36.6

%

General and administrative expenses

 

$

62,104

 

 

$

56,896

 

 

$

58,164

 

Percentage of average net finance receivables (annualized)

 

 

14.4

%

 

 

13.6

%

 

 

14.9

%

Percentage of total revenue

 

 

44.1

%

 

 

42.6

%

 

 

44.2

%

Same store results (1):

 

 

 

 

 

 

 

 

 

Net finance receivables at period-end

 

$

1,684,757

 

 

$

1,636,131

 

 

$

1,552,740

 

Net finance receivable growth rate

 

 

4.9

%

 

 

7.2

%

 

 

19.2

%

Number of branches in calculation

 

 

330

 

 

 

329

 

 

 

315

 

(1)

Same store sales reflect the change in year-over-year sales for the comparable branch base. The comparable branch base includes those branches open for at least one year.

 

 

 

Contractual Delinquency by Aging

 

 

 

3Q 23

 

 

2Q 23

 

 

3Q 22

 

Allowance for credit losses

 

$

184,900

 

 

 

10.6

%

 

$

181,400

 

 

 

10.7

%

 

$

179,800

 

 

 

11.2

%

 

Current

 

 

1,472,931

 

 

 

84.2

%

 

 

1,433,787

 

 

 

84.9

%

 

 

1,356,134

 

 

 

84.4

%

1 to 29 days past due

 

 

149,648

 

 

 

8.5

%

 

 

138,810

 

 

 

8.2

%

 

 

135,468

 

 

 

8.4

%

Delinquent accounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30 to 59 days

 

 

36,502

 

 

 

2.1

%

 

 

33,676

 

 

 

2.0

%

 

 

32,295

 

 

 

2.0

%

60 to 89 days

 

 

28,130

 

 

 

1.6

%

 

 

24,931

 

 

 

1.5

%

 

 

25,375

 

 

 

1.6

%

90 to 119 days

 

 

23,420

 

 

 

1.3

%

 

 

20,041

 

 

 

1.1

%

 

 

21,720

 

 

 

1.3

%

120 to 149 days

 

 

21,309

 

 

 

1.2

%

 

 

18,087

 

 

 

1.1

%

 

 

17,503

 

 

 

1.1

%

150 to 179 days

 

 

19,069

 

 

 

1.1

%

 

 

19,605

 

 

 

1.2

%

 

 

19,103

 

 

 

1.2

%

Total contractual delinquency

 

$

128,430

 

 

 

7.3

%

 

$

116,340

 

 

 

6.9

%

 

$

115,996

 

 

 

7.2

%

Total net finance receivables

 

$

1,751,009

 

 

 

100.0

%

 

$

1,688,937

 

 

 

100.0

%

 

$

1,607,598

 

 

 

100.0

%

1 day and over past due

 

$

278,078

 

 

 

15.8

%

 

$

255,150

 

 

 

15.1

%

 

$

251,464

 

 

 

15.6

%

 

 

Contractual Delinquency by Product

 

 

 

3Q 23

 

 

2Q 23

 

 

3Q 22

 

Small loans

 

$

45,438

 

 

 

9.6

%

 

$

40,894

 

 

 

9.2

%

 

$

49,906

 

 

 

10.4

%

Large loans

 

 

82,256

 

 

 

6.5

%

 

 

74,637

 

 

 

6.0

%

 

 

64,922

 

 

 

5.8

%

Retail loans

 

 

736

 

 

 

14.9

%

 

 

809

 

 

 

12.8

%

 

 

1,168

 

 

 

10.7

%

Total contractual delinquency

 

$

128,430

 

 

 

7.3

%

 

$

116,340

 

 

 

6.9

%

 

$

115,996

 

 

 

7.2

%

 

 

 

Income Statement Quarterly Trend

 

 

 

3Q 22

 

 

4Q 22

 

 

1Q 23

 

 

2Q 23

 

 

3Q 23

 

 

QoQ $

B(W)

 

 

YoY $

B(W)

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fee income

 

$

116,020

 

 

$

117,432

 

 

$

120,407

 

 

$

118,083

 

 

$

125,018

 

 

$

6,935

 

 

$

8,998

 

Insurance income, net

 

 

11,987

 

 

 

10,751

 

 

 

10,959

 

 

 

11,203

 

 

 

11,382

 

 

 

179

 

 

 

(605

)

Other income

 

 

3,445

 

 

 

3,833

 

 

 

4,012

 

 

 

4,198

 

 

 

4,478

 

 

 

280

 

 

 

1,033

 

Total revenue

 

 

131,452

 

 

 

132,016

 

 

 

135,378

 

 

 

133,484

 

 

 

140,878

 

 

 

7,394

 

 

 

9,426

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

48,071

 

 

 

60,786

 

 

 

47,668

 

 

 

52,551

 

 

 

50,930

 

 

 

1,621

 

 

 

(2,859

)

 

Personnel

 

 

36,979

 

 

 

34,669

 

 

 

38,597

 

 

 

36,419

 

 

 

39,832

 

 

 

(3,413

)

 

 

(2,853

)

Occupancy

 

 

5,848

 

 

 

5,997

 

 

 

6,288

 

 

 

6,158

 

 

 

6,315

 

 

 

(157

)

 

 

(467

)

Marketing

 

 

3,940

 

 

 

4,239

 

 

 

3,379

 

 

 

3,844

 

 

 

4,077

 

 

 

(233

)

 

 

(137

)

Other

 

 

11,397

 

 

 

10,238

 

 

 

11,059

 

 

 

10,475

 

 

 

11,880

 

 

 

(1,405

)

 

 

(483

)

Total general and administrative

 

 

58,164

 

 

 

55,143

 

 

 

59,323

 

 

 

56,896

 

 

 

62,104

 

 

 

(5,208

)

 

 

(3,940

)

 

Interest expense

 

 

11,863

 

 

 

14,855

 

 

 

16,782

 

 

 

16,224

 

 

 

16,947

 

 

 

(723

)

 

 

(5,084

)

Income before income taxes

 

 

13,354

 

 

 

1,232

 

 

 

11,605

 

 

 

7,813

 

 

 

10,897

 

 

 

3,084

 

 

 

(2,457

)

Income taxes

 

 

3,286

 

 

 

(1,159

)

 

 

2,916

 

 

 

1,790

 

 

 

2,077

 

 

 

(287

)

 

 

1,209

 

Net income

 

$

10,068

 

 

$

2,391

 

 

$

8,689

 

 

$

6,023

 

 

$

8,820

 

 

$

2,797

 

 

$

(1,248

)

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.09

 

 

$

0.26

 

 

$

0.93

 

 

$

0.64

 

 

$

0.94

 

 

$

0.30

 

 

$

(0.15

)

Diluted

 

$

1.06

 

 

$

0.25

 

 

$

0.90

 

 

$

0.63

 

 

$

0.91

 

 

$

0.28

 

 

$

(0.15

)

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

9,195

 

 

 

9,199

 

 

 

9,325

 

 

 

9,399

 

 

 

9,429

 

 

 

(30

)

 

 

(234

)

Diluted

 

 

9,526

 

 

 

9,411

 

 

 

9,622

 

 

 

9,566

 

 

 

9,650

 

 

 

(84

)

 

 

(124

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Quarterly Trend

 

 

 

3Q 22

 

 

4Q 22

 

 

1Q 23

 

 

2Q 23

 

 

3Q 23

 

 

QoQ $

Inc (Dec)

 

 

YoY $

Inc (Dec)

 

Total assets

 

$

1,606,550

 

 

$

1,724,987

 

 

$

1,701,114

 

 

$

1,723,616

 

 

$

1,765,340

 

 

$

41,724

 

 

$

158,790

 

Net finance receivables

 

$

1,607,598

 

 

$

1,699,393

 

 

$

1,676,230

 

 

$

1,688,937

 

 

$

1,751,009

 

 

$

62,072

 

 

$

143,411

 

Allowance for credit losses

 

$

179,800

 

 

$

178,800

 

 

$

183,800

 

 

$

181,400

 

 

$

184,900

 

 

$

3,500

 

 

$

5,100

 

Debt

 

$

1,241,039

 

 

$

1,355,359

 

 

$

1,329,677

 

 

$

1,344,855

 

 

$

1,372,748

 

 

$

27,893

 

 

$

131,709

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Key Metrics Quarterly Trend

 

 

 

3Q 22

 

 

4Q 22

 

 

1Q 23

 

 

2Q 23

 

 

3Q 23

 

 

QoQ

Inc (Dec)

 

 

YoY

Inc (Dec)

 

Interest and fee yield (annualized)

 

 

29.6

%

 

 

28.5

%

 

 

28.5

%

 

 

28.2

%

 

 

29.0

%

 

 

0.8

%

 

 

(0.6

)%

Efficiency ratio (1)

 

 

44.2

%

 

 

41.8

%

 

 

43.8

%

 

 

42.6

%

 

 

44.1

%

 

 

1.5

%

 

 

(0.1

)%

Operating expense ratio (2)

 

 

14.9

%

 

 

13.4

%

 

 

14.0

%

 

 

13.6

%

 

 

14.4

%

 

 

0.8

%

 

 

(0.5

)%

30+ contractual delinquency

 

 

7.2

%

 

 

7.1

%

 

 

7.2

%

 

 

6.9

%

 

 

7.3

%

 

 

0.4

%

 

 

0.1

%

Net credit loss ratio (3)

 

 

9.1

%

 

 

15.0

%

 

 

10.1

%

 

 

13.1

%

 

 

11.0

%

 

 

(2.1

)%

 

 

1.9

%

Book value per share

 

$

32.18

 

 

$

32.41

 

 

$

33.06

 

 

$

32.71

 

 

$

33.61

 

 

$

0.90

 

 

$

1.43

 

(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 (1)

 

 

Average Net Finance

Receivables

 

 

Average

Yield (1)

 

Small loans

 

$

456,893

 

 

 

35.4

%

 

$

448,175

 

 

 

35.8

%

Large loans

 

 

1,232,170

 

 

 

26.1

%

 

 

1,032,273

 

 

 

27.4

%

Retail loans

 

 

7,252

 

 

 

17.5

%

 

 

10,796

 

 

 

18.4

%

Total interest and fee yield

 

$

1,696,315

 

 

 

28.6

%

 

$

1,491,244

 

 

 

29.8

%

Total revenue yield

 

$

1,696,315

 

 

 

32.2

%

 

$

1,491,244

 

 

 

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

 

$

2,338

 

 

$

(1,208

)

 

$

(24

)

 

$

1,106

 

Large loans

 

 

41,004

 

 

 

(9,624

)

 

 

(1,864

)

 

 

29,516

 

Retail loans

 

 

(488

)

 

 

(71

)

 

 

23

 

 

 

(536

)

Product mix

 

 

2,997

 

 

 

(2,956

)

 

 

(41

)

 

 

 

Total increase in interest and fee income

 

$

45,851

 

 

$

(13,859

)

 

$

(1,906

)

 

$

30,086

 

 

 

Loans Originated (1)

 

 

 

YTD 23

 

 

YTD 22

 

 

YTD $

Inc (Dec)

 

 

YTD %

Inc (Dec)

 

Small loans

 

$

432,018

 

 

$

481,644

 

 

$

(49,626

)

 

 

(10.3

)%

Large loans

 

 

695,084

 

 

 

682,110

 

 

 

12,974

 

 

 

1.9

%

Retail loans

 

 

146

 

 

 

7,206

 

 

 

(7,060

)

 

 

(98.0

)%

Total loans originated

 

$

1,127,248

 

 

$

1,170,960

 

 

$

(43,712

)

 

 

(3.7

)%

(1)

Represents the principal balance of loan originations and refinancings.

 

 

Other Key Metrics

 

 

 

YTD 23

 

 

YTD 22

 

Net credit losses

 

$

145,049

 

 

$

103,829

 

Percentage of average net finance receivables (annualized)

 

 

11.4

%

 

 

9.3

%

Provision for credit losses

 

$

151,149

 

 

$

124,329

 

Percentage of average net finance receivables (annualized)

 

 

11.9

%

 

 

11.1

%

Percentage of total revenue

 

 

36.9

%

 

 

33.1

%

General and administrative expenses

 

$

178,323

 

 

$

167,385

 

Percentage of average net finance receivables (annualized)

 

 

14.0

%

 

 

15.0

%

Percentage of total revenue

 

 

43.5

%

 

 

44.6

%

Non-GAAP Financial Measures

In addition to financial measures presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures. The company’s management utilizes non-GAAP measures as additional metrics to aid in, and enhance, its understanding of the company’s financial results. Tangible equity and the funded debt-to-tangible equity ratio are non-GAAP measures that adjust GAAP measures to exclude intangible assets. Management uses these equity measures to evaluate and manage the company’s capital and leverage position. The company also believes that these equity measures are commonly used in the financial services industry and provide useful information to users of the company’s financial statements in the evaluation of its capital and leverage position.

This non-GAAP financial information should be considered in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. In addition, the company’s non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies. The following tables provide a reconciliation of GAAP measures to non-GAAP measures.

 

 

3Q 23

 

Debt

 

$

1,372,748

 

 

Total stockholders' equity

 

 

330,585

 

Less: Intangible assets

 

 

15,048

 

Tangible equity (non-GAAP)

 

$

315,537

 

 

Funded debt-to-equity ratio

 

 

4.2

x

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

 

 

4.4

x

 

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