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Regional Management Corp. Announces Second Quarter 2020 Results

Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the second quarter ended June 30, 2020.

“Our omni-channel capabilities and proactive credit initiatives have successfully supported our customers and enabled us to navigate through this challenging period,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “Our customers have accessed our borrower assistance programs as needed, and along with the government stimulus, these programs have enabled us to maintain a low 30+ day delinquency rate during the crisis. In addition, demand for loan originations continues to rebound steadily from the low point in April, and our new remote loan closing capabilities have provided our customers with a safe and effective way to access our responsible and affordable credit solutions.”

“Additionally, we continue to maintain a strong liquidity profile, buoyed by the work we accomplished over the past several years to strengthen our balance sheet,” added Mr. Beck. “As of July 31, 2020, we had $162 million of available liquidity and $486 million of unused capacity on our revolving credit facilities. Looking ahead, we expect to remain focused in the coming months on further enhancing our digital capabilities, gradually relaunching additional marketing initiatives as demand returns, and continuing to originate loans that meet our advanced and measured underwriting criteria. With a proven operating model, a strong balance sheet, and ample liquidity, we remain well positioned to manage through the current environment and are prepared to return to strong growth as the economy rebounds.”

Second Quarter 2020 Highlights

  • Net income for the second quarter of 2020 was $7.5 million and diluted earnings per share was $0.68, compared to net income of $8.4 million and diluted earnings per share of $0.70 in the prior-year period.
  • Net finance receivables as of June 30, 2020 were $1.0 billion, an increase of 2.8%, or $27.7 million, from the prior-year period.

- Total core small and large loan net finance receivables increased $46.7 million, or 4.9%, compared to the prior-year period.

- Large loan net finance receivables of $618.1 million increased $102.1 million, or 19.8%, from the prior-year period and represented 60.4% of the total loan portfolio. Small loan net finance receivables as of June 30, 2020 were $380.1 million, a decrease of 12.7% from the prior-year period.

  • Total revenue for the second quarter of 2020 was $89.9 million, a $5.6 million, or 6.6%, increase from the prior-year period.

- Interest and fee income increased 5.4%, primarily attributable to a 9.9% increase in average net finance receivables compared to the prior-year period.

- Insurance income, net increased $2.6 million, driven by an increase in premium revenue and a decrease in non-file insurance claims expense.

  • Provision for credit losses for the second quarter of 2020 was $27.5 million, an increase of $1.8 million, or 6.9%, from the prior-year period. The provision for credit losses includes an incremental build in the allowance for credit losses of $9.5 million related to the expected economic impact of the COVID-19 pandemic, offset by a $9.9 million base reserve release related to portfolio liquidation.
  • Annualized net credit losses as a percentage of average net finance receivables were 10.6%, a 20 basis point increase from 10.4% in the prior-year period.
  • 30+ day contractual delinquencies as of June 30, 2020 were 4.8%, compared to 6.3% in the prior-year period. 30+ day contractual delinquencies stood at 4.5% as of July 31, 2020, an additional improvement of 30 basis points from June 30, 2020. In June, 2.3% of customer accounts were renewed or deferred under internal borrower assistance programs, which is consistent with the average of 2.2% over the twelve months preceding the pandemic.
  • General and administrative expenses for the second quarter of 2020 were $41.5 million, an increase of $3.8 million, or 10.0%, from the prior-year period. The company deferred $2.0 million less in loan origination costs on reduced loan volume in the second quarter of 2020, which increased personnel expense from the prior-year period. The second quarter of 2020 included $0.9 million of incremental costs related to new branches that opened since the prior-year period and $0.6 million of COVID-19 expenses for customer communications and protective measures in our branches.
  • The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) was 15.8%, comparable with the prior-year period. Reduced deferred loan origination costs and direct COVID-19 expenses impacted the operating expense ratio by 100 basis points in the second quarter of 2020 compared to the prior-year period.
  • As of June 30, 2020, the company had total unused capacity on its revolving credit facilities of $493 million, subject to the borrowing base.
  • As of July 31, 2020, the company had available liquidity of $162 million, including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities.

2020 De Novo Outlook

As of June 30, 2020, the company’s branch network consisted of 368 locations. During the second half of 2020, subject to the changing economic environment, the company plans to open approximately three de novo branches where it sees clear expansion opportunities in its current footprint.

Liquidity and Capital Resources

As of June 30, 2020, the company had net finance receivables of $1.0 billion and outstanding long-term debt of $683.9 million ($682.0 million of outstanding debt and $1.8 million of interest payable), consisting of:

  • $246.3 million on its $640.0 million senior revolving credit facility,
  • $26.8 million on its $125.0 million revolving warehouse credit facility, and
  • $410.8 million through its asset-backed securitizations.

The company’s unused capacity on its revolving credit facilities (subject to the borrowing base) was $493 million, or 64.5%, as of June 30, 2020.

The company had a funded debt-to-equity ratio of 2.6 to 1.0 and a stockholders’ equity ratio of 26.0% as of June 30, 2020. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 2.7 to 1.0 as of June 30, 2020. 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 replay will be available following the end of the call through Wednesday, August 12, 2020, by telephone at (844) 512-2921 (toll-free) or (412) 317-6671 (international), passcode 10010118. 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” in 368 branch locations across 11 states in the Southeastern, Southwestern, Mid-Atlantic, and Midwestern United States, as of June 30, 2020. Most of its loan products are secured, and each is structured on a fixed rate, fixed term basis with fully amortizing equal monthly installment payments, repayable at any time without penalty. Regional Management sources loans through its multiple channel platform, which includes branches, centrally-managed direct mail campaigns, digital partners, retailers, and its consumer website. For more information, please visit www.RegionalManagement.com.

Forward-Looking Statements

This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact but instead represent Regional Management Corp.’s expectations or beliefs concerning future events. Forward-looking statements include, without limitation, statements concerning 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: changes in general economic conditions, including levels of unemployment and bankruptcies; the impact of the recent outbreak of a novel coronavirus (COVID-19), including on Regional Management’s access to liquidity and the credit risk of Regional Management’s finance receivable portfolio; risks associated with Regional Management’s ability to timely and effectively implement, transition to, and maintain the necessary information technology systems, infrastructure, processes, and controls to support its operations and initiatives; risks associated with Regional Management’s loan origination and servicing software system, including the risk of prolonged system outages; risks related to opening new branches, including the ability or inability to open new branches as planned; risks inherent in making loans, including credit risk, repayment risk, and value of collateral, which risks may increase in light of adverse or recessionary economic conditions; risks associated with the implementation of new underwriting models and processes, including as to the effectiveness of new custom scorecards; risks relating to Regional Management’s asset-backed securitization transactions; changes in interest rates; the risk that Regional Management’s existing sources of liquidity become insufficient to satisfy its needs or that its access to these sources becomes unexpectedly restricted; changes in federal, state, or local laws, regulations, or regulatory policies and practices, and risks associated with the manner in which laws and regulations are interpreted, implemented, and enforced; changes in accounting standards, rules, and interpretations, and the failure of related assumptions and estimates, including those associated with the implementation of current expected credit loss (CECL) accounting; the impact of changes in tax laws, guidance, and interpretations; the timing and amount of revenues that may be recognized by Regional Management; changes in current revenue and expense trends (including trends affecting delinquencies and credit losses); changes in Regional Management’s markets and general changes in the economy (particularly in the markets served by Regional Management); changes in the competitive environment in which Regional Management operates or a decrease in the demand for its products; risks related to acquisitions; changes in operating and administrative expenses; and the departure, transition, or replacement of key personnel. The COVID-19 pandemic may also magnify many of these risks and uncertainties.

The foregoing factors and others are discussed in greater detail in Regional Management’s filings with the Securities and Exchange Commission. Regional Management will not update or revise forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events or the non-occurrence of anticipated events, whether as a result of new information, future developments, or otherwise, except as required by law. Regional Management is not responsible for changes made to this document by wire services or Internet services.

Regional Management Corp. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

(in thousands, except per share amounts)

Better (Worse)

Better (Worse)

2Q 20

2Q 19

$

%

YTD 20

YTD 19

$

%

Revenue

Interest and fee income

$

80,067

$

75,974

$

4,093

5.4

%

$

167,064

$

150,296

$

16,768

11.2

%

Insurance income, net

7,650

5,066

2,584

51.0

%

13,599

9,179

4,420

48.2

%

Other income

2,133

3,234

(1,101

)

(34.0

) %

5,261

6,547

(1,286

)

(19.6

) %

Total revenue

89,850

84,274

5,576

6.6

%

185,924

166,022

19,902

12.0

%

Expenses

Provision for credit losses

27,499

25,714

(1,785

)

(6.9

) %

77,021

49,057

(27,964

)

(57.0

) %

 

Personnel

26,863

22,511

(4,352

)

(19.3

) %

56,374

44,904

(11,470

)

(25.5

) %

Occupancy

6,253

6,210

(43

)

(0.7

) %

12,024

12,375

351

2.8

%

Marketing

1,438

2,261

823

36.4

%

3,124

3,912

788

20.1

%

Other

6,971

6,761

(210

)

(3.1

) %

16,246

14,735

(1,511

)

(10.3

) %

Total general and administrative

41,525

37,743

(3,782

)

(10.0

) %

87,768

75,926

(11,842

)

(15.6

) %

 

Interest expense

9,137

9,771

634

6.5

%

19,296

19,492

196

1.0

%

Income before income taxes

11,689

11,046

643

5.8

%

1,839

21,547

(19,708

)

(91.5

) %

Income taxes

4,219

2,677

(1,542

)

(57.6

) %

694

5,070

4,376

86.3

%

Net income

$

7,470

$

8,369

$

(899

)

(10.7

)%

$

1,145

$

16,477

$

(15,332

)

(93.1

) %

Net income per common share:

Basic

$

0.68

$

0.71

$

(0.03

)

(4.2

) %

$

0.10

$

1.41

$

(1.31

)

(92.9

) %

Diluted

$

0.68

$

0.70

$

(0.02

)

(2.9

) %

$

0.10

$

1.37

$

(1.27

)

(92.7

) %

Weighted-average shares outstanding:

Basic

10,962

11,706

744

6.4

%

10,929

11,709

780

6.7

%

Diluted

11,013

12,022

1,009

8.4

%

11,130

12,049

919

7.6

%

Return on average assets (annualized)

2.9

%

3.4

%

0.2

%

3.4

%

Return on average equity (annualized)

11.7

%

11.5

%

0.9

%

11.5

%

Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value amounts)

Increase (Decrease)

2Q 20

2Q 19

$

%

Assets

Cash

$

8,973

$

694

$

8,279

1,192.9

%

Net finance receivables

1,022,635

994,980

27,655

2.8

%

Unearned insurance premiums

(27,016

)

(21,546

)

(5,470

)

(25.4

) %

Allowance for credit losses

(142,000

)

(57,200

)

(84,800

)

(148.3

) %

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

853,619

916,234

(62,615

)

(6.8

) %

Restricted cash

54,423

41,803

12,620

30.2

%

Lease assets

27,177

25,575

1,602

6.3

%

Property and equipment

15,504

14,132

1,372

9.7

%

Intangible assets

8,824

9,953

(1,129

)

(11.3

) %

Deferred tax asset

20,682

437

20,245

4,632.7

%

Other assets

11,023

10,488

535

5.1

%

Total assets

$

1,000,225

$

1,019,316

$

(19,091

)

(1.9

) %

Liabilities and Stockholders’ Equity

Liabilities:

Long-term debt

$

683,865

$

689,310

$

(5,445

)

(0.8

) %

Unamortized debt issuance costs

(7,584

)

(7,357

)

(227

)

(3.1

) %

Net long-term debt

676,281

681,953

(5,672

)

(0.8

) %

Accounts payable and accrued expenses

34,843

19,690

15,153

77.0

%

Lease liabilities

29,220

27,454

1,766

6.4

%

Total liabilities

740,344

729,097

11,247

1.5

%

Stockholders’ equity:

Preferred stock ($0.10 par value, 100,000 shares authorized, no shares issued or outstanding)

Common stock ($0.10 par value, 1,000,000 shares authorized, 13,727 shares issued and 11,243 shares outstanding at June 30, 2020 and 13,494 shares issued and 11,663 shares outstanding at June 30, 2019)

1,373

1,349

24

1.8

%

Additional paid-in capital

104,530

100,486

4,044

4.0

%

Retained earnings

204,052

220,574

(16,522

)

(7.5

) %

Treasury stock (2,484 shares at June 30, 2020 and 1,831 shares at June 30, 2019)

(50,074

)

(32,190

)

(17,884

)

(55.6

) %

Total stockholders’ equity

259,881

290,219

(30,338

)

(10.5

) %

Total liabilities and stockholders’ equity

$

1,000,225

1,019,316

$

(19,091

)

(1.9

) %

Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(in thousands, except per share amounts)

Net Finance Receivables by Product

2Q 20

1Q 20

QoQ $

Inc (Dec)

QoQ %

Inc (Dec)

2Q 19

YoY $

Inc (Dec)

YoY %

Inc (Dec)

Small loans

$

380,083

$

440,282

$

(60,199

)

(13.7

) %

$

435,467

$

(55,384

)

(12.7

) %

Large loans

618,134

632,593

(14,459

)

(2.3

) %

516,019

102,115

19.8

%

Total core loans

998,217

1,072,875

(74,658

)

(7.0

) %

951,486

46,731

4.9

%

Automobile loans

6,059

7,532

(1,473

)

(19.6

) %

15,717

(9,658

)

(61.4

) %

Retail loans

18,359

21,878

(3,519

)

(16.1

) %

27,777

(9,418

)

(33.9

) %

Total net finance receivables

$

1,022,635

$

1,102,285

$

(79,650

)

(7.2

) %

$

994,980

$

27,655

2.8

%

Number of branches at period end

368

368

0.0

%

356

12

3.4

%

Average net finance receivables per branch

$

2,779

$

2,995

$

(216

)

(7.2

) %

$

2,795

$

(16

)

(0.6

) %

Averages and Yields

2Q 20

1Q 20

2Q 19

Average Net
Finance
Receivables

Average Yield

(Annualized)

Average Net
Finance
Receivables

Average Yield

(Annualized)

Average Net
Finance
Receivables

Average Yield

(Annualized)

Small loans

$

404,019

36.2

%

$

458,132

36.7

%

$

423,699

38.2

%

Large loans

618,860

27.3

%

633,510

27.5

%

484,483

27.7

%

Automobile loans

6,820

14.8

%

8,618

13.5

%

17,972

14.6

%

Retail loans

20,114

18.0

%

23,056

17.8

%

28,786

18.8

%

Total interest and fee yield

$

1,049,813

30.5

%

$

1,123,316

31.0

%

$

954,940

31.8

%

Total revenue yield

$

1,049,813

34.2

%

$

1,123,316

34.2

%

$

954,940

35.3

%

Components of Increase in Interest and Fee Income
2Q 20 Compared to 2Q 19
Increase (Decrease)

Volume

Rate

Volume & Rate

Net

Small loans

$

(1,879

)

$

(2,055

)

$

96

$

(3,838

)

Large loans

9,297

(403

)

(112

)

8,782

Automobile loans

(406

)

12

(8

)

(402

)

Retail loans

(409

)

(58

)

18

(449

)

Product mix

945

(639

)

(306

)

Total increase in interest and fee income

$

7,548

$

(3,143

)

$

(312

)

$

4,093

Net Loans Originated (1) (2)

2Q 20

1Q 20

QoQ $

Inc (Dec)

QoQ %

Inc (Dec)

2Q 19

YoY $

Inc (Dec)

YoY %

Inc (Dec

Small loans

$

79,265

$

120,024

$

(40,759

)

(34.0

) %

$

174,440

$

(95,175

)

(54.6

) %

Large loans

90,980

105,648

(14,668

)

(13.9

) %

169,373

(78,393

)

(46.3

) %

Retail loans

1,907

3,573

(1,666

)

(46.6

) %

5,179

(3,272

)

(63.2

) %

Total net loans originated

$

172,152

$

229,245

$

(57,093

)

(24.9

) %

$

348,992

$

(176,840

)

(50.7

) %

(1)

Represents the balance of loan origination and refinancing net of unearned finance charges.

(2)

The company ceased originating automobile loans in November 2017.

Other Key Metrics

2Q 20

1Q 20

2Q 19

Net credit losses

$

27,899

$

29,422

$

24,914

Percentage of average net finance receivables (annualized)

10.6

%

10.5

%

10.4

%

Provision for credit losses (1)

$

27,499

$

49,522

$

25,714

Percentage of average net finance receivables (annualized)

10.5

%

17.6

%

10.8

%

Percentage of total revenue

30.6

%

51.5

%

30.5

%

General and administrative expenses (2) (3)

$

41,525

$

46,243

$

37,743

Percentage of average net finance receivables (annualized)

15.8

%

16.5

%

15.8

%

Percentage of total revenue

46.2

%

48.1

%

44.8

%

Same store results (4):

Net finance receivables at period-end

$

1,016,776

$

1,093,701

$

977,175

Net finance receivable growth rate

2.2

%

17.6

%

13.0

%

Number of branches in calculation

349

351

333

(1)

Includes COVID-19 pandemic impacts to provision for credit losses of $9,500 and $23,900 for 2Q 20 and

1Q 20, respectively.

(2)

Includes non-operating executive transition costs of $3,066 for 1Q 20.

(3)

Includes non-operating loan management system outage costs of $720 for 1Q 20.

(4)

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 20

1Q 20

2Q 19

Allowance for credit losses (1)

$

142,000

13.9

%

$

142,400

12.9

%

$

57,200

5.7

%

Current

896,928

87.8

%

931,032

84.4

%

825,726

83.0

%

1 to 29 days past due

76,172

7.4

%

98,896

9.0

%

106,708

10.7

%

Delinquent accounts:

30 to 59 days

15,277

1.4

%

20,907

1.9

%

22,207

2.3

%

60 to 89 days

9,764

1.0

%

16,456

1.5

%

14,039

1.4

%

90 to 119 days

7,014

0.7

%

11,889

1.1

%

10,018

1.0

%

120 to 149 days

8,081

0.8

%

12,059

1.1

%

8,128

0.8

%

150 to 179 days

9,399

0.9

%

11,046

1.0

%

8,154

0.8

%

Total contractual delinquency (2)

$

49,535

4.8

%

$

72,357

6.6

%

$

62,546

6.3

%

Total net finance receivables

$

1,022,635

100.0

%

$

1,102,285

100.0

%

$

994,980

100.0

%

1 day and over past due

$

125,707

12.2

%

$

171,253

15.6

%

$

169,254

17.0

%

Contractual Delinquency by Product

2Q 20

1Q 20

2Q 19

Small loans

$

24,465

6.4

%

$

37,662

8.6

%

$

33,368

7.7

%

Large loans

23,660

3.8

%

32,201

5.1

%

25,699

5.0

%

Automobile loans

291

4.8

%

508

6.7

%

1,294

8.2

%

Retail loans

1,119

6.1

%

1,986

9.1

%

2,185

7.9

%

Total contractual delinquency (2)

$

49,535

4.8

%

$

72,357

6.6

%

$

62,546

6.3

%

(1)

Includes incremental COVID-19 allowance for credit losses of $33,400 and $23,900 in 2Q 20 and 1Q 20, respectively.

(2)

Includes 0.1% delinquency related to the loan management system outage in 1Q 20.

Income Statement Quarterly Trend

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

QoQ $
B(W)

YoY $
B(W)

Revenue

Interest and fee income

$

75,974

$

83,089

$

87,784

$

86,997

$

80,067

$

(6,930

)

$

4,093

Insurance income, net

5,066

5,087

6,551

5,949

7,650

1,701

2,584

Other income

3,234

3,531

3,649

3,128

2,133

(995

)

(1,101

)

Total revenue

84,274

91,707

97,984

96,074

89,850

(6,224

)

5,576

Expenses

Provision for credit losses

25,714

24,515

26,039

49,522

27,499

22,023

(1,785

)

Personnel

22,511

23,791

25,305

29,511

26,863

2,648

(4,352

)

Occupancy

6,210

6,367

5,876

5,771

6,253

(482

)

(43

)

Marketing

2,261

2,397

1,897

1,686

1,438

248

823

Other

6,761

7,612

7,813

9,275

6,971

2,304

(210

)

Total general and administrative

37,743

40,167

40,891

46,243

41,525

4,718

(3,782

)

Interest expense

9,771

10,348

10,285

10,159

9,137

1,022

634

Income (loss) before income taxes

11,046

16,677

20,769

(9,850

)

11,689

21,539

643

Income taxes

2,677

4,105

5,086

(3,525

)

4,219

(7,744

)

(1,542

)

Net income (loss)

$

8,369

$

12,572

$

15,683

$

(6,325

)

$

7,470

$

13,795

$

(899

)

Net income (loss) per common share:

Basic

$

0.71

$

1.11

$

1.44

$

(0.58

)

$

0.68

$

1.26

$

(0.03

)

Diluted

$

0.70

$

1.08

$

1.38

$

(0.56

)

$

0.68

$

1.24

$

(0.02

)

Weighted-average shares outstanding:

Basic

11,706

11,302

10,893

10,897

10,962

(65

)

744

Diluted

12,022

11,677

11,327

11,253

11,013

240

1,009

Net interest margin

$

74,503

$

81,359

$

87,699

$

85,915

$

80,713

$

(5,202

)

$

6,210

Net credit margin

$

48,789

$

56,844

$

61,660

$

36,393

$

53,214

$

16,821

$

4,425

Balance Sheet Quarterly Trend

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

QoQ $

Inc (Dec)

YoY $

Inc (Dec)

Total assets

$

1,019,316

$

1,086,172

$

1,158,540

$

1,078,890

$

1,000,225

$

(78,665

)

$

(19,091

)

Net finance receivables

$

994,980

$

1,067,086

$

1,133,404

$

1,102,285

$

1,022,635

$

(79,650

)

$

27,655

Allowance for credit losses

$

57,200

$

60,900

$

62,200

$

142,400

$

142,000

$

(400

)

$

84,800

Long-term debt

$

689,310

$

743,835

$

808,218

$

777,847

$

683,865

$

(93,982

)

$

(5,445

)

Other Key Metrics Quarterly Trend

2Q 19

3Q 19

4Q 19

1Q 20

2Q 20

QoQ

Inc (Dec)

YoY

Inc (Dec)

Interest and fee yield (annualized)

31.8

%

32.1

%

32.0

%

31.0

%

30.5

%

(0.5

) %

(1.3

) %

Efficiency ratio (1)

44.8

%

43.8

%

41.7

%

48.1

%

46.2

%

(1.9

) %

1.4

%

Operating expense ratio (2)

15.8

%

15.5

%

14.9

%

16.5

%

15.8

%

(0.7

) %

0.0

%

30+ contractual delinquency

6.3

%

6.5

%

7.0

%

6.6

%

4.8

%

(1.8

) %

(1.5

) %

Net credit loss ratio (3)

10.4

%

8.1

%

9.0

%

10.5

%

10.6

%

0.1

%

0.2

%

Book value per share

$

24.88

$

26.00

$

27.49

$

22.49

$

23.11

$

0.62

$

(1.77

)

(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 20

YTD 19

Average Net
Finance
Receivables

Average Yield
(Annualized)

Average Net
Finance
Receivables

Average Yield
(Annualized)

Small loans

$

431,076

36.5

%

$

431,253

38.0

%

Large loans

626,185

27.4

%

468,600

27.4

%

Automobile loans

7,719

14.1

%

20,611

14.7

%

Retail loans

21,585

17.9

%

29,415

18.7

%

Total interest and fee yield

$

1,086,565

30.8

%

$

949,879

31.6

%

Total revenue yield

$

1,086,565

34.2

%

$

949,879

35.0

%

Components of Increase in Interest and Fee Income
YTD 20 Compared to YTD 19
Increase (Decrease)

Volume

Rate

Volume & Rate

Net

Small loans

$

(34

)

$

(3,163

)

$

2

$

(3,195

)

Large loans

21,580

129

43

21,752

Automobile loans

(949

)

(64

)

40

(973

)

Retail loans

(733

)

(114

)

31

(816

)

Product mix

1,763

(1,036

)

(727

)

Total increase in interest and fee income

$

21,627

$

(4,248

)

$

(611

)

$

16,768

Net Loans Originated (1) (2)

YTD 20

YTD 19

YTD $

Inc (Dec)

YTD %

Inc (Dec)

Small loans

$ 199,289

$ 303,685

$ (104,396 )

(34.4) %

Large loans

196,628

253,441

(56,813 )

(22.4) %

Retail loans

5,480

11,376

(5,896 )

(51.8) %

Total net loans originated

$ 401,397

$ 568,502

$ (167,105 )

(29.4) %

(1)

Represents the balance of loan origination and refinancing net of unearned finance charges.

(2)

The company ceased originating automobile loans in November 2017.

Other Key Metrics

YTD 20

YTD 19

Net credit losses

$

57,321

$

50,157

Percentage of average net finance receivables (annualized)

10.6

%

10.6

%

Provision for credit losses (1)

$

77,021

$

49,057

Percentage of average net finance receivables (annualized)

14.2

%

10.3

%

Percentage of total revenue

41.4

%

29.5

%

General and administrative expenses (2) (3)

$

87,768

$

75,926

Percentage of average net finance receivables (annualized)

16.2

%

16.0

%

Percentage of total revenue

47.2

%

45.7

%

(1)

Includes COVID-19 pandemic impacts to provision for credit losses of $33,400 for YTD 20.

(2)

Includes non-operating executive transition costs of $3,066 for YTD 20.

(3)

Includes non-operating loan management system outage costs of $720 for YTD 20.

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 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 20

Long-term debt

$

683,865

Total stockholders’ equity

259,881

Less: Intangible assets

8,824

Tangible equity (non-GAAP)

$

251,057

Funded debt-to-equity ratio

2.6x

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

2.7x

Contacts:

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

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