- Net income of $7.4 million and diluted
earnings per share of $0.61 -
- Non-GAAP net income of $10.3 million and
non-GAAP diluted earnings per share of $0.85 excluding hurricane
impact -
Regional Management Corp. (NYSE: RM), a diversified consumer
finance company, today announced results for the third quarter
ended September 30, 2018.
Third Quarter 2018 Highlights
- Net income for the third quarter of
2018 was $7.4 million, an increase of 40.3% from the prior-year
period, while non-GAAP net income was $10.3 million, an increase of
50.8% from the prior-year period. Non-GAAP net income for the third
quarter of 2018 excludes an estimated $2.9 million of impact
related to Hurricane Florence, while non-GAAP net income for the
prior-year period excludes an estimated $2.2 million of impact
related to the 2017 hurricanes and $0.6 million of proceeds related
to the bulk sale of the Company’s previously charged-off bankrupt
accounts (“bulk sale”). Diluted earnings per share for the third
quarter of 2018 was $0.61, while non-GAAP diluted earnings per
share for the third quarter of 2018 was $0.85.
- Total finance receivables as of
September 30, 2018 were $888.1 million, an increase of 14.6%, or
$113.2 million, from the prior-year period.
- Fourteenth consecutive quarter of
year-over-year double-digit finance receivables growth.
- Total core small and large loan finance
receivables increased $153.3 million, or 22.8%, compared to the
prior-year period.
- Large loan finance receivables of
$410.8 million increased $102.2 million, or 33.1%, from the
prior-year period and represented 46.3% of the total loan
portfolio. Small loan finance receivables as of September 30, 2018
were $414.4 million, an increase of 14.1% over the prior-year
period.
- Total revenue for the third quarter of
2018 was $77.9 million, an $8.7 million, or 12.6%, increase from
the prior-year period.
- Ninth consecutive quarter of
year-over-year double-digit revenue growth.
- Interest and fee income increased
13.4%, driven by a 14.6% increase in finance receivables compared
to the prior-year period.
- Provision for credit losses for the
third quarter of 2018 was $23.6 million, an increase of 17.3% from
the prior-year period. The provision for credit losses for the
third quarter of 2018 included $3.9 million of incremental
hurricane allowance, while the provision for credit losses for the
third quarter of 2017 included $3.0 million of incremental
hurricane allowance and a $1.0 million benefit resulting from the
bulk sale.
- Annualized net credit losses as a
percentage of finance receivables were 7.7%, a 10 basis point
improvement from 7.8% in the prior-year period.
- 30+ day contractual delinquencies as of
September 30, 2018 were 7.1%, compared to 6.3% as of June 30, 2018
and 6.8% as of September 30, 2017.
- Expanded operations into Missouri, the
Company’s tenth U.S. state, during the quarter.
“We had a very strong third quarter and our performance drivers
continue to be robust,” said Peter R. Knitzer, President and Chief
Executive Officer of Regional Management. “We generated another
quarter of year-over-year double-digit growth on our top and bottom
lines as well as in our finance receivables. Credit performance
remains stable, with the slight uptick in September 30
delinquencies on a year-over-year basis returning to year-ago
levels as of the end of October.”
“In addition to another quarter of strong growth and stable
credit, we continued to keep a firm control on our overall
expenses, which should lead to additional margin expansion over
time,” continued Mr. Knitzer. “We also began implementing custom
scorecards in our branches, which we believe will further improve
our credit profile in the mid- to long-term. Moving forward, we
remain squarely focused on our hybrid growth strategy of increasing
our receivables per branch within our existing network, coupled
with de novo expansion in the Midwest. Overall, we remain
well-positioned to generate long-term shareholder value.”
Third Quarter 2018 Results
Finance receivables outstanding at September 30, 2018 were
$888.1 million, a 14.6% increase from $774.9 million in the prior
year. Finance receivables increased from continued strong growth in
both the core small and large loan portfolios.
For the third quarter ended September 30, 2018, the Company
reported total revenue of $77.9 million, a 12.6% increase from
$69.2 million in the prior-year period. Interest and fee income for
the third quarter of 2018 was $72.1 million, a 13.4% increase from
$63.6 million in the prior-year period, primarily due to increases
in the small and large loan portfolios compared to the prior-year
period.
The provision for credit losses in the third quarter of 2018 was
$23.6 million, a 17.3% increase compared to $20.2 million in the
prior-year period. The provision for credit losses for the third
quarter of 2018 included $3.9 million of incremental hurricane
allowance, while the provision for credit losses for the third
quarter of 2017 included $3.0 million of incremental hurricane
allowance and a $1.0 million benefit resulting from the bulk
sale.
Net credit losses were $16.8 million in the third quarter of
2018, an increase of $2.0 million over the prior-year period. The
increase over the prior-year period was primarily due to portfolio
growth. Annualized net credit losses as a percentage of average
finance receivables in the third quarter of 2018 were 7.7%, a 10
basis point improvement from 7.8% in the prior-year period.
General and administrative expenses for the third quarter of
2018 were $35.9 million, an increase of $2.0 million, or 6.0%, from
the prior-year period. Annualized general and administrative
expenses as a percentage of average finance receivables improved
150 basis points from the prior-year period to 16.5% for the third
quarter of 2018. General and administrative expenses for the third
quarter of 2018 included higher personnel costs related to staffing
increases in information technology, centralized collections, and
branches to support ongoing loan portfolio growth.
Interest expense was $8.7 million in the third quarter of 2018,
compared to $6.7 million in the prior-year period. The increase in
interest expense was due to larger long-term debt amounts
outstanding from growth in finance receivables, federal funds rate
increases, larger unused lines of credit, incremental debt issuance
costs associated with upsizing the senior revolving credit facility
and entering into the warehouse credit facility, and the Company’s
recently completed asset-based securitization. The Company’s
diversified sources of funding continue to position it for
long-term growth.
Net income for the third quarter of 2018 was $7.4 million, an
increase from $5.3 million in the prior-year period. Excluding the
aforementioned non-operating items, non-GAAP net income for the
third quarter of 2018 was $10.3 million, up from non-GAAP net
income of $6.9 million for the prior-year period. Diluted earnings
per share for the third quarter of 2018 was $0.61, an increase from
$0.45 in the prior-year period. Non-GAAP diluted earnings per share
for the third quarter of 2018 was $0.85, an increase from $0.58 in
the prior-year period. For a reconciliation of non-GAAP financial
measures to the comparable GAAP financial measure, please refer to
the reconciliation table accompanying this release.
2018 De Novo Outlook
As of September 30, 2018, the Company’s branch network consisted
of 346 locations. The Company opened six branches during the third
quarter of 2018. For the fourth quarter 2018, the Company now plans
to open an additional 15 to 18 de novo branches. Therefore, total
branch openings in 2018 are now expected to be between 22 and 25,
with the timing of the remaining branches that were initially
expected to open in the fourth quarter now shifted to the first
quarter of 2019.
Liquidity and Capital Resources
As of September 30, 2018, the Company had finance receivables of
$888.1 million and outstanding long-term debt of $611.6 million
(consisting of $352.7 million of long-term debt on its $638.0
million senior revolving credit facility, $82.0 million of
long-term debt on its $125.0 million revolving warehouse credit
facility, $26.7 million of long-term debt on its amortizing loan,
and $150.2 million through its asset-backed securitization). The
Company had a debt-to-equity ratio of 2.3 to 1.0 and a shareholder
equity ratio of 29.9% as of September 30, 2018.
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) 327-6838
(toll-free) or (604) 235-2082 (direct). Please dial the number 10
minutes prior to the scheduled start time.
*** A supplemental slide presentation will be made available
on Regional Management’s website prior to the earnings call at
www.RegionalManagement.com. ***
In addition, a live webcast of the conference call will also be
available on Regional Management’s website at
www.RegionalManagement.com.
A replay will be available following the end of the call through
Thursday, November 15, 2018, by telephone at (844) 512-2921
(toll-free) or (412) 317-6671 (international), passcode 10005748. A
webcast replay of the call will be available at
http://www.RegionalManagement.com for one year following the
call.
Forward-Looking Statements
This press release may contain various “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, which represent Regional Management Corp.’s
expectations or beliefs concerning future events. 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 are
about matters that are inherently subject to risks and
uncertainties, many of which are outside of the control of Regional
Management. Factors that could cause actual results or performance
to differ from the expectations expressed or implied in such
forward-looking statements include, but are not limited to, the
following: changes in general economic conditions, including levels
of unemployment and bankruptcies; risks associated with Regional
Management’s transition to a new loan origination and servicing
software system; risks related to opening new branches, including
the ability or inability to open new branches as planned; risks
inherent in making loans, including repayment risks and value of
collateral, which risks may increase in light of adverse or
recessionary economic conditions; risks relating to our first
asset-backed securitization; 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; the impact of changes
in tax laws, guidance, and interpretations, including related to
certain provisions of the Tax Cuts and Jobs Act; 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 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. Such
factors and others are discussed in greater detail in Regional
Management’s filings with the Securities and Exchange Commission.
Regional Management will not update the information contained in
this press release beyond the publication date, except to the
extent required by law, and is not responsible for changes made to
this document by wire services or Internet services.
About Regional Management Corp.
Regional Management Corp. (NYSE: RM) is a diversified consumer
finance company providing a broad array of loan products primarily
to customers with limited access to consumer credit from banks,
thrifts, credit card companies, and other traditional lenders.
Regional Management began operations in 1987 with four branches in
South Carolina and has since expanded its branch network across
South Carolina, Texas, North Carolina, Tennessee, Alabama,
Oklahoma, New Mexico, Georgia, Virginia, and Missouri. Each of its
loan products is structured on a fixed rate, fixed term basis with
fully amortizing equal monthly installment payments and is
repayable at any time without penalty. Regional Management’s loans
are sourced through its multiple channel platform, including in its
branches, through direct mail campaigns, online credit application
networks, retailers, and its consumer website. For more
information, please visit www.RegionalManagement.com.
Regional Management Corp. and Subsidiaries
Consolidated Statements of Income (Unaudited) (in
thousands, except per share amounts)
Better (Worse) Better (Worse)
3Q 18 3Q 17 $ % YTD 18
YTD 17 $ % Revenue
Interest and fee income
$ 72,128 $ 63,615 $ 8,513 13.4 % $ 205,108 $ 182,657 $ 22,451 12.3
% Insurance income, net 2,898 3,095 (197 ) (6.4
)%
9,169 9,985 (816 ) (8.2
)%
Other income 2,890 2,484 406
16.3 % 8,680 7,710 970
12.6 % Total revenue 77,916
69,194 8,722 12.6 % 222,957
200,352 22,605 11.3 % Expenses
Provision for credit losses 23,640 20,152 (3,488 ) (17.3
)%
63,358 57,875 (5,483 ) (9.5
)%
Personnel 21,376 19,534 (1,842 ) (9.4
)%
61,994 56,089 (5,905 ) (10.5
)%
Occupancy 5,490 5,480 (10 ) (0.2
)%
16,586 16,184 (402 ) (2.5
)%
Marketing 2,132 2,303 171 7.4 % 5,843 5,287 (556 ) (10.5
)%
Other 6,863 6,523 (340 ) (5.2
)%
19,245 19,376 131 0.7 %
Total general and administrative 35,861 33,840 (2,021 ) (6.0
)%
103,668 96,936 (6,732 ) (6.9
)%
Interest expense 8,729 6,658
(2,071 ) (31.1
)%
23,821 17,092 (6,729 ) (39.4
)%
Income before income taxes 9,686 8,544 1,142 13.4 % 32,110
28,449 3,661 12.9 % Income taxes 2,237 3,235
998 30.9 % 7,535 9,371
1,836 19.6 % Net income $ 7,449
$ 5,309 $ 2,140 40.3 % $ 24,575 $ 19,078
$ 5,497 28.8 % Net income per common share:
Basic $ 0.64 $ 0.46 $ 0.18 39.1 % $ 2.11
$ 1.65 $ 0.46 27.9 % Diluted $ 0.61
$ 0.45 $ 0.16 35.6 % $ 2.03 $ 1.62
$ 0.41 25.3 % Weighted-average shares
outstanding: Basic 11,672 11,563
(109 ) (0.9
)%
11,649 11,537 (112 ) (1.0
)%
Diluted 12,133 11,812
(321 ) (2.7
)%
12,101 11,752 (349 ) (3.0
)%
Return on average assets (annualized) 3.3 %
2.8 % 3.8 % 3.5 % Return on average
equity (annualized) 11.3 % 9.4 % 12.9 %
11.7 %
Regional Management Corp. and
Subsidiaries Consolidated Balance Sheets
(Unaudited) (in thousands, except par value amounts)
Increase (Decrease) 3Q 18 3Q
17 $ % Assets Cash $ 517 $ 5,191 $
(4,674 ) (90.0
)%
Gross finance receivables 1,175,797 1,002,630 173,167 17.3 %
Unearned finance charges and insurance premiums (287,721 )
(227,774 ) (59,947 ) (26.3
)%
Finance receivables 888,076 774,856 113,220 14.6 % Allowance
for credit losses (55,300 ) (47,400 ) (7,900 )
(16.7
)%
Net finance receivables 832,776 727,456 105,320 14.5 %
Restricted cash 29,327 13,849 15,478 111.8 % Property and equipment
12,540 12,657 (117 ) (0.9
)%
Intangible assets 10,429 10,239 190 1.9 % Deferred tax asset —
5,121 (5,121 ) (100.0
)%
Other assets 7,690 5,337 2,353
44.1 %
Total assets $ 893,279 $ 779,850
$ 113,429 14.5 %
Liabilities and
Stockholders’ Equity Liabilities: Long-term debt $ 611,593 $
538,351 $ 73,242 13.6 % Unamortized debt issuance costs
(7,216 ) (5,266 ) (1,950 ) (37.0
)%
Net long-term debt 604,377 533,085 71,292 13.4 % Accounts
payable and accrued expenses 19,510 18,950 560 3.0 % Deferred tax
liability 1,963 — 1,963
100.0 % Total liabilities 625,850 552,035 73,815 13.4 %
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, 13,336 shares
issued and 11,790 shares outstanding at September 30, 2018 and
13,213 shares issued and 11,667 shares outstanding at September 30,
2017) 1,334 1,321 13 1.0 % Additional paid-in-capital 97,814 93,673
4,141 4.4 % Retained earnings 193,327 157,867 35,460 22.5 %
Treasury stock (1,546 shares at September
30, 2018 and 2017)
(25,046 ) (25,046 ) — 0.0 %
Total stockholders’ equity 267,429 227,815
39,614 17.4 %
Total liabilities and
stockholders’ equity $ 893,279 $ 779,850 $
113,429 14.5 %
Regional Management Corp.
and Subsidiaries Selected Financial Data
(Unaudited) (in thousands, except per share amounts)
Finance Receivables by Product 3Q 18
2Q 18
QoQ $
Inc (Dec)
QoQ %
Inc (Dec)
3Q 17
YoY $
Inc (Dec)
YoY %
Inc (Dec)
Small loans $ 414,441 $ 384,690 $ 29,751 7.7 % $ 363,262 $ 51,179
14.1 % Large loans 410,811 392,101 18,710
4.8 % 308,642 102,169 33.1 %
Total core loans 825,252 776,791 48,461 6.2 % 671,904 153,348 22.8
% Automobile loans 32,322 39,414 (7,092 ) (18.0
)%
71,666 (39,344 ) (54.9
)%
Retail loans 30,502 31,033 (531 ) (1.7
)%
31,286 (784 ) (2.5
)%
Total finance receivables $ 888,076 $ 847,238 $ 40,838
4.8 % $ 774,856 $ 113,220 14.6 % Number
of branches at period end 346 340 6 1.8 % 344 2 0.6 % Average
finance receivables per branch $ 2,567 $ 2,492 $ 75 3.0 % $
2,252 $ 315 14.0 %
Averages and Yields
3Q 18 2Q 18 3Q 17
Average
FinanceReceivables
Average
Yield(Annualized)
Average
FinanceReceivables
Average
Yield(Annualized)
Average
FinanceReceivables
Average
Yield(Annualized)
Small loans $ 401,132 40.4 % $ 366,647 40.1 % $ 358,380 42.7 %
Large loans 401,212 28.6 % 375,836 28.6 % 288,684 29.0 % Automobile
loans 35,845 15.6 % 43,980 16.0 % 75,984 16.2 % Retail loans
30,861 19.3 % 31,530 18.8 % 30,788 17.8 %
Total interest and fee yield $ 869,050 33.2 % $ 817,993 32.7 % $
753,836 33.8 % Total revenue yield $ 869,050 35.9 % $
817,993 35.4 % $ 753,836 36.7 %
Components of
Increase in Interest and Fee Income
3Q 18 Compared to 3Q 17
Increase (Decrease)
Volume Rate Volume & Rate
Net Small loans $ 4,564 $ (2,048 ) $ (244 ) $ 2,272
Large loans 8,153 (263 ) (102 ) 7,788 Automobile loans (1,622 )
(101 ) 53 (1,670 ) Retail loans 3 119 1 123 Product mix
(1,375 ) 1,244 131 —
Total increase in interest and fee income $ 9,723 $
(1,049 ) $ (161 ) $ 8,513
Net Loans Originated (1) 3Q 18 2Q 18
QoQ $Inc (Dec)
QoQ %
Inc (Dec)
3Q 17
YoY $
Inc (Dec)
YoY %
Inc (Dec)
Small loans $ 162,644 $ 165,023 $ (2,379 ) (1.4
)%
$ 148,820 $ 13,824 9.3 % Large loans 95,410 109,186 (13,776 ) (12.6
)%
105,460 (10,050 ) (9.5
)%
Automobile loans (2) — — — 0.0 % 3,787 (3,787 ) (100.0
)%
Retail loans 5,971 6,713 (742 ) (11.1
)%
7,905 (1,934 ) (24.5
)%
Total net loans originated $ 264,025 $ 280,922 $ (16,897 )
(6.0
)%
$ 265,972 $ (1,947 ) (0.7
)%
(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 3Q 18 2Q 18
3Q 17 Net credit losses $ 16,790 $ 19,503 $ 14,752
Percentage of average finance receivables (annualized) 7.7 % 9.5 %
7.8 % Provision for credit losses (1) $ 23,640 $ 20,203 $
20,152 Percentage of average finance receivables (annualized) 10.9
% 9.9 % 10.7 % Percentage of total revenue 30.3 % 27.9 % 29.1 %
General and administrative expenses $ 35,861 $ 33,215 $
33,840 Percentage of average finance receivables (annualized) 16.5
% 16.2 % 18.0 % Percentage of total revenue 46.0 % 45.9 % 48.9 %
Same store results: Finance receivables at period-end $
886,104 $ 839,741 $ 768,794 Finance receivable growth rate 14.4 %
15.6 % 10.4 % Number of branches in calculation 338 334 333
(1) Includes incremental hurricane allowance for credit
losses of $3,900 and $3,000 for 3Q 18 and 3Q 17, respectively.
Contractual Delinquency by Aging 3Q 18
2Q 18 3Q 17 Allowance for credit losses
(1) $ 55,300 6.2 % $ 48,450 5.7 % $ 47,400 6.1
% Current 726,003 81.8 % 704,770 83.1 % 638,696 82.5 % 1 to
29 days past due 99,008 11.1 % 89,510 10.6 %
83,230 10.7 % Delinquent accounts: 30 to 59 days 22,215 2.5
% 18,886 2.3 % 18,621 2.4 % 60 to 89 days 15,360 1.7 % 12,103 1.4 %
11,631 1.5 % 90 to 119 days 10,183 1.1 % 8,373 1.0 % 9,653 1.2 %
120 to 149 days 8,476 1.0 % 6,857 0.8 % 6,799 0.9 % 150 to 179 days
6,831 0.8 % 6,739 0.8 % 6,226 0.8 %
Total contractual delinquency (2) $ 63,065 7.1 % $ 52,958 6.3 % $
52,930 6.8 % Total finance receivables $ 888,076 100.0 % $
847,238 100.0 % $ 774,856 100.0 % 1 day and over past
due $ 162,073 18.2 % $ 142,468 16.9 % $ 136,160 17.5 %
Contractual Delinquency by Product 3Q 18
2Q 18 3Q 17 Small loans $ 34,581
8.3
%
$ 28,347
7.4
%
$ 30,328
8.3
%
Large loans 23,406
5.7
%
19,600
5.0
%
15,578
5.0
%
Automobile loans 2,686
8.3
%
2,909
7.4
%
5,280
7.4
%
Retail loans 2,392
7.8
%
2,102
6.8
%
1,744
5.6
%
Total contractual delinquency (2) $ 63,065
7.1
%
$ 52,958
6.3
%
$ 52,930
6.8
%
(1) Includes incremental hurricane allowance for
credit losses of $3,900 and $3,000 for 3Q 18 and 3Q 17,
respectively. (2) Delinquency was impacted 0.2% by
hurricane-affected branches for both 3Q 18 and 3Q 17.
Quarterly Trend 3Q 17 4Q 17
1Q 18 2Q 18 3Q 18
QoQ $B(W)
YoY $B(W)
Revenue Interest and fee income $ 63,615 $ 66,377 $ 66,151 $ 66,829
$ 72,128 $ 5,299 $ 8,513 Insurance income, net 3,095 3,076 3,389
2,882 2,898 16
(197
)
Other income 2,484 2,654 3,085 2,705
2,890 185 406 Total
revenue 69,194 72,107 72,625 72,416
77,916 5,500 8,722
Expenses Provision for credit losses 20,152 19,464 19,515 20,203
23,640
(3,437
)
(3,488
)
Personnel 19,534 19,903 21,228 19,390 21,376
(1,986
)
(1,842
)
Occupancy 5,480 5,346 5,618 5,478 5,490
(12
)
(10
)
Marketing 2,303 1,841 1,453 2,258 2,132 126 171 Other 6,523
6,929 6,293 6,089 6,863
(774
)
(340
)
Total general and administrative 33,840 34,019 34,592 33,215
35,861
(2,646
)
(2,021
)
Interest expense 6,658 6,816 7,177
7,915 8,729
(814
)
(2,071
)
Income before income taxes 8,544 11,808 11,341 11,083 9,686
(1,397
)
1,142 Income taxes 3,235 923 2,697
2,601 2,237 364 998 Net
income $ 5,309 $ 10,885 $ 8,644 $ 8,482 $ 7,449
$
(1,033
)
$ 2,140 Net income per common share: Basic $ 0.46 $
0.94 $ 0.74 $ 0.73 $ 0.64
$
(0.09
)
$ 0.18 Diluted $ 0.45 $ 0.92 $ 0.72 $ 0.70 $ 0.61 $
(0.09
)
$ 0.16 Weighted-average shares outstanding: Basic
11,563 11,592 11,618 11,658
11,672
(14
)
(109
)
Diluted 11,812 11,875 12,030
12,138 12,133 5
(321
)
Net interest margin $ 62,536 $ 65,291 $ 65,448 $
64,501 $ 69,187 $ 4,686 $ 6,651 Net credit
margin $ 42,384 $ 45,827 $ 45,933 $ 44,298 $ 45,547 $ 1,249
$ 3,163
3Q 17 4Q 17 1Q 18
2Q 18 3Q 18
QoQ $Inc (Dec)
YoY $Inc (Dec)
Total assets $ 779,850 $ 829,483 $ 814,809 $ 868,220 $ 893,279 $
25,059 $ 113,429 Finance receivables $ 774,856
$ 817,463 $ 804,956 $ 847,238 $ 888,076 $ 40,838 $ 113,220
Allowance for credit losses $ 47,400 $ 48,910 $
47,750 $ 48,450 $ 55,300 $ 6,850 $ 7,900
Long-term debt $ 538,351 $ 571,496 $ 550,377 $ 595,765 $ 611,593 $
15,828 $ 73,242
Finance Receivables
by Product 3Q 18 2Q 18
QoQ $
Inc (Dec)
QoQ %
Inc (Dec)
3Q 17
YoY $
Inc (Dec)
YoY %
Inc (Dec)
Small loans $ 414,441 $ 384,690 $ 29,751
7.7
%
$ 363,262 $ 51,179
14.1
%
Large loans 410,811 392,101 18,710
4.8
%
308,642 102,169
33.1
%
Total core loans 825,252 776,791 48,461
6.2
%
671,904 153,348
22.8
%
Automobile loans 32,322 39,414
(7,092
)
(18.0
)%
71,666
(39,344
)
(54.9
)%
Retail loans 30,502 31,033
(531
)
(1.7
)%
31,286
(784
)
(2.5
)%
Total finance receivables $ 888,076 $ 847,238 $ 40,838
4.8
%
$ 774,856 $ 113,220
14.6
%
Number of branches at period end 346 340 6
1.8
%
344 2
0.6
%
Average finance receivables per branch $ 2,567 $ 2,492 $ 75
3.0
%
$ 2,252 $ 315
14.0
%
Averages and Yields YTD 18
YTD 17
Average
FinanceReceivables
Average
Yield(Annualized)
Average
FinanceReceivables
Average
Yield(Annualized)
Small loans $ 379,543
40.2
%
$ 351,204
42.4
%
Large loans 377,777
28.5
%
261,277
28.8
%
Automobile loans 45,041
15.7
%
82,313
16.4
%
Retail loans 31,676
18.9
%
31,389
18.4
%
Total interest and fee yield $ 834,037
32.8
%
$ 726,183
33.5
%
Total revenue yield $ 834,037
35.6
%
$ 726,183
36.8
%
Components of Increase in Interest and Fee
Income YTD 18 Compared to YTD 17 Increase
(Decrease) Volume Rate
Volume & Rate
Net Small loans $ 9,019
$
(5,876
)
$
(474
)
$ 2,669 Large loans 25,145
(457
)
(204
)
24,484 Automobile loans
(4,596
)
(460
)
208
(4,848
)
Retail loans 40 105 1 146 Product mix
(2,479
)
2,615
(136
)
— Total increase in interest and fee income $
27,129
$
(4,073
)
$
(605
)
$ 22,451
Net Loans Originated (1)
YTD 18 YTD 17
YTD $Inc (Dec)
YTD %Inc (Dec)
Small loans $ 451,423 $ 424,559 $ 26,864
6.3
%
Large loans 293,369 249,251 44,118
17.7
%
Automobile loans (2) — 18,404
(18,404
)
(100.0
)%
Retail loans 19,986 20,522
(536
)
(2.6
)%
Total net loans originated $ 764,778 $ 712,736 $ 52,042
7.3
%
(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 18 YTD 17 Net
credit losses $ 56,968 $ 51,725 Percentage of average finance
receivables (annualized) 9.1 % 9.5 % Provision for credit
losses (1) $ 63,358 $ 57,875 Percentage of average finance
receivables (annualized) 10.1 % 10.6 % Percentage of total revenue
28.4 % 28.9 % General and administrative expenses $ 103,668
$ 96,936 Percentage of average finance receivables (annualized)
16.6 % 17.8 % Percentage of total revenue 46.5 % 48.4 % (1)
Includes incremental hurricane allowance for credit losses
of $3,900 and $3,000 for YTD 18 and YTD 17, respectively.
We utilize certain non-GAAP measures as additional metrics to
aid in, and enhance, the understanding of our financial results and
related measures. We believe that these non-GAAP measures provide
useful information by excluding certain material items that may not
be indicative of our core operating results. We have presented
non-GAAP measures that adjust for the impact of the bulk sale of
previously charged-off bankrupt accounts (2017) and natural
disasters (2017 and 2018) because these types of events rarely
occurred prior to 2017 and, we believe, will occur infrequently in
the future. As a result, we believe that the non-GAAP measures that
we have presented will allow for a better evaluation of the
operating performance of the business and facilitate a meaningful
comparison of our results in the current period to those in prior
and future periods. The 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, our non-GAAP measures may not be comparable to
similarly titled non-GAAP measures of other companies. The
following table provides a reconciliation of GAAP measures to
non-GAAP measures for the periods which include non-GAAP
adjustments.
Non-GAAP Reconciliation 3Q 18
Adjustments (1) Non-GAAP Net income $ 7,449 $
2,884 $ 10,333 Diluted net income per common share $ 0.61 $ 0.24 $
0.85
Non-GAAP Reconciliation 3Q 17
Adjustments (1) Non-GAAP Net income $
5,309 $ 1,541 $ 6,850 Diluted net income per common share $ 0.45 $
0.13 $ 0.58 (1) Non-GAAP adjustment details are
listed below:
Non-GAAP Adjustments (2) 3Q 18
3Q 17 Estimated hurricane impact (3) $ 2,884 $ 2,173
Bulk sale of previously charged-off bankrupt accounts —
(632
)
Adjustment to net income $ 2,884 $ 1,541
Adjustment to diluted net income per common share $ 0.24 $ 0.13
(2) The effective tax rates were 25.0% and
38.3% for 3Q 18 and 3Q 17, respectively. (3) The estimated
hurricane impact relates to an incremental pre-tax allowance for
credit losses of $3.9 million (3Q 18) and $3.0 million (3Q 17),
along with minor impacts to revenue and expenses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181108005913/en/
Regional Management Corp.Investor RelationsGarrett Edson, (203)
682-8331
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