Regional Management Corp 8-K/A, filed Feb 10, 2023
Regional Management Corp. (RM)
About this 8-K/A
Regional Management Corp filed this 8-K/A on February 10, 2023, reporting on events of February 2, 2023.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.02: Financial results
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Amendment No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Name of Each Exchange on Which Registered |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Explanatory Note
This Current Report on Form 8-K/A (this “Amendment”) amends the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 8, 2023 (the “Original Form 8-K”) to (i) correct the step-up margin denoted in the tabular summary of Item 1.01 and (ii) correct the non-GAAP tabular representation included within the attached Exhibit 99.1. Item 1.01 of the Original Form 8-K incorrectly cited the step-up margin as being 1.00% per annum during the revolving period, which has been corrected below to accurately present that there is no step-up margin during the revolving period (0.00% per annum). Exhibit 99.1 of the Original Form 8-K incorrectly increased provision for credit losses and decreased income taxes in the tabular summary of the 4Q 22 Non-GAAP Reconciliation found within the “Non-GAAP Financial Measures” section. The table has been corrected in Exhibit 99.1 to this Amendment.
Item 1.01. Entry into a Material Definitive Agreement.
On February 2, 2023 (the “Closing Date”), Regional Management Corp. (the “Company”) and its wholly-owned subsidiary, Regional Management Receivables VI, LLC (“RMR VI”), entered into a Credit Agreement, dated as of February 2, 2023 (the “RMR VI Credit Agreement”), by and among the Company, as servicer (the “Servicer”), RMR VI, as borrower (the “Borrower”), the lenders and agents from time to time parties thereto, Regions Bank, as administrative agent (the “Administrative Agent”), and Computershare Trust Company, N.A., as securities intermediary (the “Securities Intermediary”) and backup servicer (the “Backup Servicer”). The RMR VI Credit Agreement provides for a revolving $75 million warehouse facility (the “RMR VI Warehouse Facility”) and will be secured by large and small consumer loans and convenience checks, including loans originated electronically and online (collectively, the “Receivables”), that are originated by certain direct and indirect subsidiaries of the Company and a certificate that represents a beneficial interest in Receivables originated by another direct subsidiary of the Company (the “2023-1A SUBI Certificate”).
The following table summarizes certain aspects of the RMR VI Warehouse Facility (capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the RMR VI Credit Agreement):
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Facility Size |
$75 million |
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Advance Rate1 |
80.00% |
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Interest Rate |
The forward-looking term rate based on the secured overnight financing rate (“SOFR”) for a one-month tenor determined in the manner set forth in the RMR VI Credit Agreement plus (i) 0.10% per annum, plus (ii) the applicable Margin, plus (iii) the applicable Step-Up Margin. |
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Alternative Rate2 |
A rate per annum equal to the greatest of (i) the Administrative Agent’s most recently announced rate of interest as its prime commercial rate for U.S. dollar-denominated loans made in the United States (the “Prime Rate”), (ii) the federal funds rate determined in the manner set forth in the RMR VI Credit Agreement plus 0.50% per annum (the “Federal Funds Rate”), and (iii) term SOFR for a one-month tenor in effect on such day determined in the manner set forth in the RMR VI Credit Agreement plus 1.0% per annum (the highest of the foregoing being the “Base Rate”). |
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Margin |
2.50% per annum |
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Step-Up Margin |
(i)during the Revolving Period, 0.00% per annum; (ii)after the occurrence of a Facility Amortization Event other than a Servicer Termination Event or an Event of Default, 1.00% per annum; and (iii)after the occurrence of a Servicer Termination Event or an Event of Default, 2.00% per annum. |
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Unused Commitment Fee Rate |
0.50% per annum |
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Payment Date |
The 15th day of each calendar month, commencing with March 15, 2023, subject to the business day convention set forth in the RMR VI Credit Agreement. |
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Revolving Period |
The period from the Closing Date to the earlier to occur of (i) February 2, 2025 and (ii) the occurrence of a Facility Amortization Event. |
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Amortization Period |
The period from the termination of the Revolving Period to the payment in full of all amounts due under the RMR VI Warehouse Facility. |
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Maturity Date |
The Payment Date falling in the twelfth month following the month in which the Revolving Period terminates. |
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During the occurrence of a Level I Trigger Event, the Advance Rate will decrease to 75.00%. |
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The Base Rate will apply during any Benchmark Unavailability Period. |
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In connection with the transactions contemplated by the RMR VI Warehouse Facility, from time to time following the Closing Date, on each funding date (the “Funding Date”), certain wholly-owned direct and indirect subsidiaries of the Company (each, an “Originator” and collectively, the “Originators”) will sell and transfer Receivables and related assets (the “Transferred Assets”) originated by such Originators to the Company pursuant to the first tier master purchase agreement, dated as of the Closing Date (the “First Tier Master Purchase Agreement”), by and among such Originators, as sellers and the Company, as purchaser, and in turn the Company will sell and transfer the Transferred Assets to the Borrower pursuant to the second tier purchase agreement, dated as of the Closing Date (the “Second Tier Purchase Agreement”), by and between the Company, as seller and the Borrower, as purchaser, and such Transferred Assets will be pledged by the Borrower to the Administrative Agent pursuant to the RMR VI Credit Agreement to secure the obligations of the Borrower to the secured parties under the RMR VI Credit Agreement. Recourse to each of the Originators that is a party to the First Tier Master Purchase Agreement and to the Company pursuant to the Second Tier Purchase Agreement is limited to an obligation of the applicable seller to repurchase a Receivable if it is determined that there was a breach of any representation or warranty relating to such Receivable as of the relevant date specified in the First Tier Master Purchase Agreement or the Second Tier Purchase Agreement, as applicable. The Company is required to cure, repurchase from the Borrower or substitute any Receivable that was not an eligible Receivable as of the relevant date specified in the RMR VI Credit Agreement. Separately, the Company, in its capacity as the Servicer under the RMR VI Credit Agreement, is required to repurchase any Receivable that has been modified by the Servicer in excess of the concentration limits set forth in the RMR VI Credit Agreement. The Borrower granted a lien on and security interest in all of its right, title, and interest in, to, and under all of its assets and properties, including the Transferred Assets and related collateral, that are acquired by the Borrower on each Funding Date and the 2023-1A SUBI Certificate, to the Administrative Agent, as agent for the secured parties under the RMR VI Credit Agreement.
In connection with the closing of the RMR VI Warehouse Facility, the Borrower paid to Regions Bank, in its capacity as the Administrative Agent, an upfront fee. In addition, the Borrower is required to pay interest at the applicable Interest Rate on the applicable loan balance of the loans made by the lenders under the RMR VI Credit Agreement from the date of such loans following the Closing Date until the date such applicable loan balance has been paid in full. The applicable loan balance is payable on each Payment Date to the extent that the applicable loan balance exceeds the borrowing base calculated in the manner set forth in the RMR VI Credit Agreement on the related determination date during the Revolving Period and, following the Revolving Period, is payable on each Payment Date to the extent of available amounts for such payment until paid in full in accordance with the priority of payments for such Payment Date set forth in the RMR VI Credit Agreement. The Borrower has the right to prepay all or any portion of the loans without penalty, upon delivery of a prepayment notice to the Administrative Agent, the agents under the Credit Agreement, the Securities Intermediary and each hedge counterparty, if any, at least two business days prior to such prepayment. In connection with prepayment, the Borrower is required to pay to the lenders certain breakage costs that are attributable to any administrative loss, cost, or expense (but excluding lost profits) incurred by the secured parties on prepayments made on a date other than a Payment Date.
The RMR VI Credit Agreement permits the Servicer to delegate in the ordinary course of business any or all of its duties and obligations thereunder to the Originators in their separate capacities as the subservicers (each, a “Subservicer”), provided that (i) each Subservicer is responsible for servicing the Receivables in the state in which such Subservicer is located, and (ii) the Servicer remains at all times responsible for the performance of each Subservicer’s duties and obligations.
The RMR VI Credit Agreement contains covenants that require the Servicer with respect to any collection period commencing with the collection period in which the initial Funding Date occurs to maintain certain delinquency ratios, extension ratios, annualized charge-off ratios, and excess spread percentage ratios subject to certain holidays that follow a securitization as described in the RMR VI Credit Agreement. A failure to maintain such ratios may result in a Level I Trigger Event, Level II Trigger Event, or Level III Trigger Event as described in the RMR VI Credit Agreement.
The RMR VI Credit Agreement contains customary Servicer Termination Events (subject to certain materiality thresholds and cure periods), including among others, (a) the occurrence of a Level III Trigger Event, (b) failure by the Servicer to deliver any collections or make any payment, transfer, or deposit, (c) failure to deliver a monthly report or monthly loan tape, (d) a merger or consolidation of the Servicer in breach of the RMR VI Credit Agreement, (e) non-compliance with covenants, (f) breach of
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representations or warranties, (g) an insolvency event involving the Servicer, (h) an Event of Default shall have occurred and have not been waived, (i) a failure by the Servicer to comply with certain anti-corruption laws, or (j) a failure by any Subservicer to maintain all necessary licenses, and approvals in all jurisdictions in which the ownership or lease of its property and or the conduct of its business with respect to the servicing of consumer loans (including the Receivables) requires such qualifications, licenses or approvals. The remedies for such Servicer Termination Events include termination and replacement of the Servicer as servicer under the RMR VI Credit Agreement. At any time following the assumption of the duties of the Servicer by the Backup Servicer following the occurrence of a Servicer Termination Event or other circumstance pursuant to which the Backup Servicer is appointed as the successor Servicer, if requested by the Administrative Agent (acting at the direction of lenders holding the requisite percentage of the loan balance), the Servicer and the Backup Servicer must work with the Administrative Agent and the lenders to take certain actions to centralize servicing, including establishing a lockbox and directing the obligors to remit all future payments to such lockbox.
The RMR VI Credit Agreement also contains customary Events of Default (subject to certain materiality thresholds and cure periods), including among others, (a) non-payment, (b) the loans outstanding exceeding the borrowing base with an extended cure period if such excess is due solely to a decrease in the Advance Rate following a Level I Trigger Event, (c) non-compliance with covenants, (d) non-compliance with representations and warranties, (e) an insolvency event involving the Company, the Borrower, or the Originators, (f) the breach of certain financial covenants, (g) a Servicer Termination Event, (h) failure of the Administrative Agent to maintain a first prior perfected security interest in any material portion of the collateral, (i) a change in control of the Company or the Borrower, (j) an Event of Default under a material financing agreement of any Regional Management entity in excess of a specified monetary threshold, or (k) any of the Company, the Borrower, or the Originators have one or more final non-appealable judgements entered against it by a court of competent jurisdiction in excess of a specified monetary threshold. The remedies for such termination events are also customary for this type of transaction and include acceleration of the Borrower’s outstanding obligations under the RMR VI Credit Agreement.
Regions Bank in its capacity as the Administrative Agent and the initial lender and agent under the RMR VI Credit Agreement (and its affiliates) have in the past provided and/or may in the future provide investment banking, underwriting, lending, commercial banking, trust, and other advisory services to the Company and its subsidiaries and affiliates. These parties have received, and may in the future receive, customary compensation from the Company and its subsidiaries and affiliates for such services.
For a complete description of the terms of the RMR VI Credit Agreement, see Exhibit 10.1 hereto. The foregoing description of the RMR VI Credit Agreement is only a summary, does not purport to be complete, and is qualified in its entirety by reference to the full text of the RMR VI Credit Agreement, which is incorporated by reference herein.
Item 2.02. Results of Operations and Financial Condition.
On February 8, 2023, the Company issued a press release announcing financial results for the three and twelve months ended December 31, 2022. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. On February 8, 2023, the Company will host a conference call to discuss financial results for the three and twelve months ended December 31, 2022. A copy of the presentation to be used during the conference call is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
All information in the press release and the presentation is furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition,” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 8.01. Other Events.
On February 8, 2023, the Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.30 per share of outstanding common stock, payable on March 15, 2023 to stockholders of record as of the close of business on February 22, 2023.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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99.1 |
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99.2 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Regional Management Corp. |
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Date: February 10, 2023 |
By: |
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/s/ Harpreet Rana |
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Name: |
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Harpreet Rana |
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Title: |
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Executive Vice President and Chief Financial Officer |
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Exhibit 99.1
Regional Management Corp. Announces Fourth Quarter 2022 Results
- Net income of $2.4 million and diluted earnings per share of $0.25 -
- Adjusted net income of $5.0 million and adjusted diluted earnings per share of $0.54 -
- 30+ day contractual delinquencies of 7.1% as of December 31, 2022 -
- Early indications of improved credit performance in the fourth quarter -
Greenville, South Carolina – February 8, 2023 – Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the fourth quarter ended December 31, 2022.
“We closed 2022 with a solid fourth quarter, including financial results that were better than our expectations,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “While net income was $2.4 million and diluted EPS was $0.25 in the quarter, we produced adjusted net income of $5.0 million and adjusted diluted EPS of $0.54. We grew our portfolio by $92 million to $1.7 billion, but continued strong demand has allowed us to be selective about the borrowers to whom we make loans, particularly as we have tightened credit since fourth quarter 2021 and intentionally slowed our growth rate throughout 2022. We finished the quarter with a 30+ day delinquency rate of 7.1%, just 10 basis points higher than 2019 pre-pandemic levels, and our first payment default rate improved to 7.1% in December, 240 basis points better than September 2022 and 170 basis points better than December 2019.”
“We also took several meaningful steps in the quarter to prepare us for the new year,” added Mr. Beck. “Late in the quarter, we disposed of a portfolio of non-performing loans at an attractive price. The sale enabled us to put some of our stressed segments behind us and re-focus more of our efforts on earlier-stage delinquent accounts, where we experienced improvements in roll rates and delinquency. We also continued to tighten credit in the quarter, particularly to new borrowers, completed the rollout of our next generation custom credit scorecard, expanded our collections capabilities, released an enhanced customer portal, and increased pricing in certain states and segments.”
“Looking ahead, we believe that the actions we took in 2022 position us to address the challenging economic environment and will enable us to respond quickly when conditions improve,” continued Mr. Beck. “In 2023, we will continue our focus on our highest confidence originations, emphasizing quality over quantity. A greater percentage of our originations will be
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to present and former borrowers, with new borrower lending disproportionately skewed to our newer states. As a result, we expect receivables growth to slow in 2023. As always, we will tightly manage our expenses, and we will monitor our credit performance and the macroeconomic environment closely, making further adjustments to underwriting as necessary. Our business and our customers remain resilient, and we are well-positioned to drive controlled, sustainable growth and profitability on behalf of our shareholders.”
Adjusted net income and adjusted diluted earnings per share are non-GAAP measures. Please refer to the reconciliations of non-GAAP measures to comparable GAAP measures included at the end of this press release.
Fourth Quarter 2022 Highlights
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Net income for the fourth quarter of 2022 was $2.4 million and diluted earnings per share was $0.25, inclusive of a $2.7 million impact to net income from the sale of $27.1 million of non-performing loans. Excluding the impact of this loan sale, adjusted net income was $5.0 million and adjusted diluted earnings per share was $0.54. |
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Net finance receivables as of December 31, 2022 were $1.70 billion, an increase of $273.1 million, or 19.2%, from the prior-year period. |
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Large loan net finance receivables of $1.2 billion increased $237.5 million, or 24.5%, from the prior-year period and represented 71.1% of the total loan portfolio, compared to 68.1% in the prior-year period. |
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Small loan net finance receivables were $481.6 million, an increase of 8.2% from the prior-year period. |
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Total loan originations were $470.3 million in the fourth quarter of 2022, an increase of $36.0 million, or 8.3%, from the prior-year period. |
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Total revenue for the fourth quarter of 2022 was $132.0 million, an increase of $12.5 million, or 10.5%, from the prior-year period. |
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Interest and fee income increased $10.3 million, or 9.6%, primarily due to higher average net finance receivables. |
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Insurance income, net increased $1.3 million, or 14.1%, driven by portfolio growth. |
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Non-performing loan sale negatively impacted total revenue by $2.2 million. |
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Provision for credit losses for the fourth quarter of 2022 was $60.8 million, an increase of $29.8 million, or 96.0%, from the prior-year period. The provision for credit losses for the |
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fourth quarter of 2022 included a reserve reduction of $11.8 million related to the sale of late-stage, non-performing loans, partially offset by incremental reserves of $9.1 million related to $91.8 million in sequential portfolio growth and $1.7 million based on the macroeconomic model. |
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Allowance for credit losses was $178.8 million as of December 31, 2022, including a $20.7 million allowance for credit losses reserve associated with estimated future macroeconomic impacts on credit losses. |
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Annualized net credit losses as a percentage of average net finance receivables for the fourth quarter of 2022 were 15.0%, compared to 6.4% in the prior-year period. Approximately 320 basis points of the fourth quarter 2022 net credit loss rate was attributable to the sale of non-performing loans. |
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General and administrative expenses for the fourth quarter of 2022 were $55.1 million, a decrease of $0.4 million, or 0.7%, from the prior-year period. |
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The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) for the fourth quarter of 2022 was 13.4%, a 290 basis point improvement compared to the prior-year period. |
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The company expanded its operations to the state of Idaho in December. The company expects to expand into one additional state in the first quarter of 2023. |
First Quarter 2023 Dividend
The company’s Board of Directors has declared a dividend of $0.30 per common share for the first quarter of 2023. The dividend will be paid on March 15, 2023 to shareholders of record as of the close of business on February 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 December 31, 2022, the company had net finance receivables of $1.7 billion and debt of $1.4 billion. The debt consisted of:
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$147.5 million on the company’s $420 million senior revolving credit facility, |
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$18.6 million on the company’s aggregate $300 million revolving warehouse |
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$1.2 billion through the company’s asset-backed securitizations. |
As of December 31, 2022, the company’s unused capacity to fund future growth on its revolving credit facilities (subject to the borrowing base) was $555 million, or 77.1%, and the company had available liquidity of $101.4 million, including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities. As of December 31, 2022, the company’s fixed-rate debt as a percentage of total debt was 88%, with a weighted-average coupon of 3.6% and a weighted-average revolving duration of 2.1 years.
The company had a funded debt-to-equity ratio of 4.4 to 1.0 and a stockholders’ equity ratio of 17.9%, each as of December 31, 2022. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 4.6 to 1.0, as of December 31, 2022. 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 18 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
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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 new underwriting models and processes, including as to the effectiveness of new 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; 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
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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, including those associated with CECL accounting; the impact of changes in tax laws, guidance, and interpretations, 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 COVID-19 pandemic may impact Regional Management’s operations and financial condition and may also magnify many of the existing 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.
Contact
Investor Relations
Garrett Edson, (203) 682-8331
investor.relations@regionalmanagement.com
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Regional Management Corp. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
(dollars in thousands, except per share amounts)
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Better (Worse) |
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Better (Worse) |
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4Q 22 |
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4Q 21 |
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$ |
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% |
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FY 22 |
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FY 21 |
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$ |
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% |
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Revenue |
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Interest and fee income |
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$ |
117,432 |
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$ |
107,117 |
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$ |
10,315 |
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9.6 |
% |
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$ |
450,854 |
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$ |
382,544 |
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$ |
68,310 |
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17.9 |
% |
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Insurance income, net |
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10,751 |
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9,423 |
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|
|
1,328 |
|
|
|
14.1 |
% |
|
|
43,502 |
|
|
|
35,482 |
|
|
|
8,020 |
|
|
|
22.6 |
% |
|
Other income |
|
|
3,833 |
|
|
|
2,944 |
|
|
|
889 |
|
|
|
30.2 |
% |
|
|
12,831 |
|
|
|
10,325 |
|
|
|
2,506 |
|
|
|
24.3 |
% |
|
Total revenue |
|
|
132,016 |
|
|
|
119,484 |
|
|
|
12,532 |
|
|
|
10.5 |
% |
|
|
507,187 |
|
|
|
428,351 |
|
|
|
78,836 |
|
|
|
18.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for credit losses |
|
|
60,786 |
|
|
|
31,008 |
|
|
|
(29,778 |
) |
|
|
(96.0 |
)% |
|
|
185,115 |
|
|
|
89,015 |
|
|
|
(96,100 |
) |
|
|
(108.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel |
|
|
34,669 |
|
|
|
33,313 |
|
|
|
(1,356 |
) |
|
|
(4.1 |
)% |
|
|
141,243 |
|
|
|
119,833 |
|
|
|
(21,410 |
) |
|
|
(17.9 |
)% |
|
Occupancy |
|
|
5,997 |
|
|
|
6,511 |
|
|
|
514 |
|
|
|
7.9 |
% |
|
|
23,809 |
|
|
|
24,126 |
|
|
|
317 |
|
|
|
1.3 |
% |
|
Marketing |
|
|
4,239 |
|
|
|
4,431 |
|
|
|
192 |
|
|
|
4.3 |
% |
|
|
15,378 |
|
|
|
14,405 |
|
|
|
(973 |
) |
|
|
(6.8 |
)% |
|
Other |
|
|
10,238 |
|
|
|
11,277 |
|
|
|
1,039 |
|
|
|
9.2 |
% |
|
|
42,098 |
|
|
|
37,150 |
|
|
|
(4,948 |
) |
|
|
(13.3 |
)% |
|
Total general and administrative |
|
|
55,143 |
|
|
|
55,532 |
|
|
|
389 |
|
|
|
0.7 |
% |
|
|
222,528 |
|
|
|
195,514 |
|
|
|
(27,014 |
) |
|
|
(13.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
14,855 |
|
|
|
7,597 |
|
|
|
(7,258 |
) |
|
|
(95.5 |
)% |
|
|
34,223 |
|
|
|
31,349 |
|
|
|
(2,874 |
) |
|
|
(9.2 |
)% |
|
Income before income taxes |
|
|
1,232 |
|
|
|
25,347 |
|
|
|
(24,115 |
) |
|
|
(95.1 |
)% |
|
|
65,321 |
|
|
|
112,473 |
|
|
|
(47,152 |
) |
|
|
(41.9 |
)% |
|
Income taxes |
|
|
(1,159 |
) |
|
|
4,569 |
|
|
|
5,728 |
|
|
|
125.4 |
% |
|
|
14,097 |
|
|
|
23,786 |
|
|
|
9,689 |
|
|
|
40.7 |
% |
|
Net income |
|
$ |
2,391 |
|
|
$ |
20,778 |
|
|
$ |
(18,387 |
) |
|
|
(88.5 |
)% |
|
$ |
51,224 |
|
|
$ |
88,687 |
|
|
$ |
(37,463 |
) |
|
|
(42.2 |
)% |
|
Net income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.26 |
|
|
$ |
2.18 |
|
|
$ |
(1.92 |
) |
|
|
(88.1 |
)% |
|
$ |
5.51 |
|
|
$ |
8.84 |
|
|
$ |
(3.33 |
) |
|
|
(37.7 |
)% |
|
Diluted |
|
$ |
0.25 |
|
|
$ |
2.04 |
|
|
$ |
(1.79 |
) |
|
|
(87.7 |
)% |
|
$ |
5.30 |
|
|
$ |
8.33 |
|
|
$ |
(3.03 |
) |
|
|
(36.4 |
)% |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
9,199 |
|
|
|
9,545 |
|
|
|
346 |
|
|
|
3.6 |
% |
|
|
9,296 |
|
|
|
10,034 |
|
|
|
738 |
|
|
|
7.4 |
% |
|
Diluted |
|
|
9,411 |
|
|
|
10,177 |
|
|
|
766 |
|
|
|
7.5 |
% |
|
|
9,656 |
|
|
|
10,643 |
|
|
|
987 |
|
|
|
9.3 |
% |
|
Return on average assets (annualized) |
|
|
0.6 |
% |
|
|
6.0 |
% |
|
|
|
|
|
|
|
|
|
|
3.3 |
% |
|
|
7.2 |
% |
|
|
|
|
|
|
|
|
|
Return on average equity (annualized) |
|
|
3.1 |
% |
|
|
29.5 |
% |
|
|
|
|
|
|
|
|
|
|
17.0 |
% |
|
|
31.6 |
% |
|
|
|
|
|
|
|
|
7
Regional Management Corp. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(dollars in thousands, except par value amounts)
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) |
|
|||||
|
|
|
4Q 22 |
|
|
4Q 21 |
|
|
$ |
|
|
% |
|
||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
3,873 |
|
|
$ |
10,507 |
|
|
$ |
(6,634 |
) |
|
|
(63.1 |
)% |
|
Net finance receivables |
|
|
1,699,393 |
|
|
|
1,426,257 |
|
|
|
273,136 |
|
|
|
19.2 |
% |
|
Unearned insurance premiums |
|
|
(51,008 |
) |
|
|
(47,837 |
) |
|
|
(3,171 |
) |
|
|
(6.6 |
)% |
|
Allowance for credit losses |
|
|
(178,800 |
) |
|
|
(159,300 |
) |
|
|
(19,500 |
) |
|
|
(12.2 |
)% |
|
Net finance receivables, less unearned insurance premiums and allowance for credit losses |
|
|
1,469,585 |
|
|
|
1,219,120 |
|
|
|
250,465 |
|
|
|
20.5 |
% |
|
Restricted cash |
|
|
127,926 |
|
|
|
138,682 |
|
|
|
(10,756 |
) |
|
|
(7.8 |
)% |
|
Lease assets |
|
|
34,521 |
|
|
|
28,721 |
|
|
|
5,800 |
|
|
|
20.2 |
% |
|
Restricted available-for-sale investments |
|
|
20,416 |
|
|
|
- |
|
|
|
20,416 |
|
|
|
100.0 |
% |
|
Deferred tax assets, net |
|
|
13,810 |
|
|
|
18,420 |
|
|
|
(4,610 |
) |
|
|
(25.0 |
)% |
|
Property and equipment |
|
|
14,526 |
|
|
|
12,938 |
|
|
|
1,588 |
|
|
|
12.3 |
% |
|
Intangible assets |
|
|
12,122 |
|
|
|
9,517 |
|
|
|
2,605 |
|
|
|
27.4 |
% |
|
Other assets |
|
|
28,208 |
|
|
|
21,757 |
|
|
|
6,451 |
|
|
|
29.7 |
% |
|
Total assets |
|
$ |
1,724,987 |
|
|
$ |
1,459,662 |
|
|
$ |
265,325 |
|
|
|
18.2 |
% |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt |
|
$ |
1,355,359 |
|
|
$ |
1,107,953 |
|
|
$ |
247,406 |
|
|
|
22.3 |
% |
|
Unamortized debt issuance costs |
|
|
(9,512 |
) |
|
|
(11,010 |
) |
|
|
1,498 |
|
|
|
13.6 |
% |
|
Net debt |
|
|
1,345,847 |
|
|
|
1,096,943 |
|
|
|
248,904 |
|
|
|
22.7 |
% |
|
Lease liabilities |
|
|
36,712 |
|
|
|
30,700 |
|
|
|
6,012 |
|
|
|
19.6 |
% |
|
Accounts payable and accrued expenses |
|
|
33,795 |
|
|
|
49,283 |
|
|
|
(15,488 |
) |
|
|
(31.4 |
)% |
|
Total liabilities |
|
|
1,416,354 |
|
|
|
1,176,926 |
|
|
|
239,428 |
|
|
|
20.3 |
% |
|
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, 14,330 shares issued and 9,523 shares outstanding at December 31, 2022 and 14,157 shares issued and 9,788 shares outstanding at December 31, 2021) |
|
|
1,433 |
|
|
|
1,416 |
|
|
|
17 |
|
|
|
1.2 |
% |
|
Additional paid-in capital |
|
|
112,384 |
|
|
|
104,745 |
|
|
|
7,639 |
|
|
|
7.3 |
% |
|
Retained earnings |
|
|
345,545 |
|
|
|
306,105 |
|
|
|
39,440 |
|
|
|
12.9 |
% |
|
Accumulated other comprehensive loss |
|
|
(586 |
) |
|
|
— |
|
|
|
(586 |
) |
|
|
(100.0 |
)% |
|
Treasury stock (4,807 shares at December 31, 2022 and 4,370 shares at December 31, 2021) |
|
|
(150,143 |
) |
|
|
(129,530 |
) |
|
|
(20,613 |
) |
|
|
(15.9 |
)% |
|
Total stockholders’ equity |
|
|
308,633 |
|
|
|
282,736 |
|
|
|
25,897 |
|
|
|
9.2 |
% |
|
Total liabilities and stockholders’ equity |
|
$ |
1,724,987 |
|
|
$ |
1,459,662 |
|
|
$ |
265,325 |
|
|
|
18.2 |
% |
8
Regional Management Corp. and Subsidiaries
Selected Financial Data
(Unaudited)
(dollars in thousands, except per share amounts)
|
|
|
Net Finance Receivables by Product |
|
|||||||||||||||||||||||||
|
|
4Q 22 |
|
|
3Q 22 |
|
|
QoQ $ Inc (Dec) |
|
|
QoQ % Inc (Dec) |
|
|
4Q 21 |
|
|
YoY $ Inc (Dec) |
|
|
YoY % Inc (Dec) |
|
||||||||
|
Small loans |
|
$ |
481,605 |
|
|
$ |
480,199 |
|
|
$ |
1,406 |
|
|
|
0.3 |
% |
|
$ |
445,023 |
|
|
$ |
36,582 |
|
|
|
8.2 |
% |
|
Large loans |
|
|
1,208,185 |
|
|
|
1,116,455 |
|
|
|
91,730 |
|
|
|
8.2 |
% |
|
|
970,694 |
|
|
|
237,491 |
|
|
|
24.5 |
% |
|
Retail loans |
|
|
9,603 |
|
|
|
10,944 |
|
|
|
(1,341 |
) |
|
|
(12.3 |
)% |
|
|
10,540 |
|
|
|
(937 |
) |
|
|
(8.9 |
)% |
|
Total net finance receivables |
|
$ |
1,699,393 |
|
|
$ |
1,607,598 |
|
|
$ |
91,795 |
|
|
|
5.7 |
% |
|
$ |
1,426,257 |
|
|
$ |
273,136 |
|
|
|
19.2 |
% |
|
Number of branches at period end |
|
|
345 |
|
|
|
338 |
|
|
|
7 |
|
|
|
2.1 |
% |
|
|
350 |
|
|
|
(5 |
) |
|
|
(1.4 |
)% |
|
Net finance receivables per branch |
|
$ |
4,926 |
|
|
$ |
4,756 |
|
|
$ |
170 |
|
|
|
3.6 |
% |
|
$ |
4,075 |
|
|
$ |
851 |
|
|
|
20.9 |
% |
|
|
|
Averages and Yields |
|
|||||||||||||||||||||
|
|
4Q 22 |
|
|
3Q 22 |
|
|
4Q 21 |
|
||||||||||||||||
|
|
|
Average Net Finance Receivables |
|
|
Average Yield (1) |
|
|
Average Net Finance Receivables |
|
|
Average Yield (1) |
|
|
Average Net Finance Receivables |
|
|
Average Yield (1) |
|
||||||
|
Small loans |
|
$ |
479,777 |
|
|
|
33.5 |
% |
|
$ |
466,087 |
|
|
|
35.5 |
% |
|
$ |
427,586 |
|
|
|
38.1 |
% |
|
Large loans |
|
|
1,155,629 |
|
|
|
26.6 |
% |
|
|
1,089,225 |
|
|
|
27.2 |
% |
|
|
925,226 |
|
|
|
28.5 |
% |
|
Retail loans |
|
|
10,563 |
|
|
|
16.3 |
% |
|
|
10,935 |
|
|
|
18.5 |
% |
|
|
10,435 |
|
|
|
18.7 |
% |
|
Total interest and fee yield |
|
$ |
1,645,969 |
|
|
|
28.5 |
% |
|
$ |
1,566,247 |
|
|
|
29.6 |
% |
|
$ |
1,363,247 |
|
|
|
31.4 |
% |
|
Total revenue yield |
|
$ |
1,645,969 |
|
|
|
32.1 |
% |
|
$ |
1,566,247 |
|
|
|
33.6 |
% |
|
$ |
1,363,247 |
|
|
|
35.1 |
% |
(1) Annualized interest and fee income as a percentage of average net finance receivables.
|
|
|
Components of Increase in Interest and Fee Income |
|
|||||||||||||
|
|
|
4Q 22 Compared to 4Q 21 |
|
|||||||||||||
|
|
|
Increase (Decrease) |
|
|||||||||||||
|
|
|
Volume |
|
|
Rate |
|
|
Volume & Rate |
|
|
Total |
|
||||
|
Small loans |
|
$ |
4,971 |
|
|
$ |
(4,875 |
) |
|
$ |
(595 |
) |
|
$ |
(499 |
) |
|
Large loans |
|
|
16,411 |
|
|
|
(4,436 |
) |
|
|
(1,105 |
) |
|
|
10,870 |
|
|
Retail loans |
|
|
6 |
|
|
|
(61 |
) |
|
|
(1 |
) |
|
|
(56 |
) |
|
Product mix |
|
|
827 |
|
|
|
(484 |
) |
|
|
(343 |
) |
|
|
— |
|
|
Total increase in interest and fee income |
|
$ |
22,215 |
|
|
$ |
(9,856 |
) |
|
$ |
(2,044 |
) |
|
$ |
10,315 |
|
|
|
|
Loans Originated (1) |
|
|||||||||||||||||||||||||
|
|
|
4Q 22 |
|
|
3Q 22 |
|
|
QoQ $ Inc (Dec) |
|
|
QoQ % Inc (Dec) |
|
|
4Q 21 |
|
|
YoY $ Inc (Dec) |
|
|
YoY % Inc (Dec) |
|
|||||||
|
Small loans |
|
$ |
171,511 |
|
|
$ |
173,269 |
|
|
$ |
(1,758 |
) |
|
|
(1.0 |
)% |
|
$ |
175,898 |
|
|
$ |
(4,387 |
) |
|
|
(2.5 |
)% |
|
Large loans |
|
|
297,447 |
|
|
|
243,259 |
|
|
|
54,188 |
|
|
|
22.3 |
% |
|
|
255,828 |
|
|
|
41,619 |
|
|
|
16.3 |
% |
|
Retail loans |
|
|
1,390 |
|
|
|
2,145 |
|
|
|
(755 |
) |
|
|
(35.2 |
)% |
|
|
2,630 |
|
|
|
(1,240 |
) |
|
|
(47.1 |
)% |
|
Total loans originated |
|
$ |
470,348 |
|
|
$ |
418,673 |
|
|
$ |
51,675 |
|
|
|
12.3 |
% |
|
$ |
434,356 |
|
|
$ |
35,992 |
|
|
|
8.3 |
% |
|
(1) |
Represents the principal balance of loan originations and refinancings. |
9
|
|
|
Other Key Metrics |
|
|||||||||
|
|
|
4Q 22 |
|
|
3Q 22 |
|
|
4Q 21 |
|
|||
|
Net credit losses |
|
$ |
61,786 |
|
|
$ |
35,771 |
|
|
$ |
21,808 |
|
|
Percentage of average net finance receivables (annualized) |
|
|
15.0 |
% |
|
|
9.1 |
% |
|
|
6.4 |
% |
|
Provision for credit losses |
|
$ |
60,786 |
|
|
$ |
48,071 |
|
|
$ |
31,008 |
|
|
Percentage of average net finance receivables (annualized) |
|
|
14.8 |
% |
|
|
12.3 |
% |
|
|
9.1 |
% |
|
Percentage of total revenue |
|
|
46.0 |
% |
|
|
36.6 |
% |
|
|
26.0 |
% |
|
General and administrative expenses |
|
$ |
55,143 |
|
|
$ |
58,164 |
|
|
$ |
55,532 |
|
|
Percentage of average net finance receivables (annualized) |
|
|
13.4 |
% |
|
|
14.9 |
% |
|
|
16.3 |
% |
|
Percentage of total revenue |
|
|
41.8 |
% |
|
|
44.2 |
% |
|
|
46.5 |
% |
|
Same store results (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net finance receivables at period-end |
|
$ |
1,625,008 |
|
|
$ |
1,552,740 |
|
|
$ |
1,400,817 |
|
|
Net finance receivable growth rate |
|
|
14.8 |
% |
|
|
19.2 |
% |
|
|
23.3 |
% |
|
Number of branches in calculation |
|
|
320 |
|
|
|
315 |
|
|
|
330 |
|
|
(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 |
|
|||||||||||||||||||||
|
|
4Q 22 |
|
|
3Q 22 |
|
|
4Q 21 |
|
||||||||||||||||
|
Allowance for credit losses (1) |
|
$ |
178,800 |
|
|
|
10.5 |
% |
|
$ |
179,800 |
|
|
|
11.2 |
% |
|
$ |
159,300 |
|
|
|
11.2 |
% |
|
Current |
|
|
1,431,502 |
|
|
|
84.2 |
% |
|
|
1,356,134 |
|
|
|
84.4 |
% |
|
|
1,237,165 |
|
|
|
86.7 |
% |
|
1 to 29 days past due |
|
|
148,048 |
|
|
|
8.7 |
% |
|
|
135,468 |
|
|
|
8.4 |
% |
|
|
104,201 |
|
|
|
7.3 |
% |
|
Delinquent accounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 to 59 days |
|
|
36,208 |
|
|
|
2.2 |
% |
|
|
32,295 |
|
|
|
2.0 |
% |
|
|
25,283 |
|
|
|
1.9 |
% |
|
60 to 89 days |
|
|
31,352 |
|
|
|
1.8 |
% |
|
|
25,375 |
|
|
|
1.6 |
% |
|
|
20,395 |
|
|
|
1.4 |
% |
|
90 to 119 days |
|
|
24,293 |
|
|
|
1.4 |
% |
|
|
21,720 |
|
|
|
1.3 |
% |
|
|
15,962 |
|
|
|
1.0 |
% |
|
120 to 149 days |
|
|
16,257 |
|
|
|
1.0 |
% |
|
|
17,503 |
|
|
|
1.1 |
% |
|
|
12,466 |
|
|
|
0.9 |
% |
|
150 to 179 days |
|
|
11,733 |
|
|
|
0.7 |
% |
|
|
19,103 |
|
|
|
1.2 |
% |
|
|
10,785 |
|
|
|
0.8 |
% |
|
Total contractual delinquency |
|
$ |
119,843 |
|
|
|
7.1 |
% |
|
$ |
115,996 |
|
|
|
7.2 |
% |
|
$ |
84,891 |
|
|
|
6.0 |
% |
|
Total net finance receivables |
|
$ |
1,699,393 |
|
|
|
100.0 |
% |
|
$ |
1,607,598 |
|
|
|
100.0 |
% |
|
$ |
1,426,257 |
|
|
|
100.0 |
% |
|
1 day and over past due |
|
$ |
267,891 |
|
|
|
15.8 |
% |
|
$ |
251,464 |
|
|
|
15.6 |
% |
|
$ |
189,092 |
|
|
|
13.3 |
% |
|
|
|
Contractual Delinquency by Product |
|
|||||||||||||||||||||
|
|
4Q 22 |
|
|
3Q 22 |
|
|
4Q 21 |
|
||||||||||||||||
|
Small loans |
|
$ |
43,703 |
|
|
|
9.1 |
% |
|
$ |
49,906 |
|
|
|
10.4 |
% |
|
$ |
39,794 |
|
|
|
8.9 |
% |
|
Large loans |
|
|
75,349 |
|
|
|
6.2 |
% |
|
|
64,922 |
|
|
|
5.8 |
% |
|
|
44,348 |
|
|
|
4.6 |
% |
|
Retail loans |
|
|
791 |
|
|
|
8.2 |
% |
|
|
1,168 |
|
|
|
10.7 |
% |
|
|
749 |
|
|
|
7.1 |
% |
|
Total contractual delinquency |
|
$ |
119,843 |
|
|
|
7.1 |
% |
|
$ |
115,996 |
|
|
|
7.2 |
% |
|
$ |
84,891 |
|
|
|
6.0 |
% |
|
(1) |
Includes estimated macroeconomic allowance for credit losses of $20,700, $19,000, and $17,000 in 4Q 22, 3Q 22, and 4Q 21, respectively. |
10
|
|
|
Income Statement Quarterly Trend |
|
|||||||||||||||||||||||||
|
|
|
4Q 21 |
|
|
1Q 22 |
|
|
2Q 22 |
|
|
3Q 22 |
|
|
4Q 22 |
|
|
QoQ $ B(W) |
|
|
YoY $ B(W) |
|
|||||||
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fee income |
|
$ |
107,117 |
|
|
$ |
107,631 |
|
|
$ |
109,771 |
|
|
$ |
116,020 |
|
|
$ |
117,432 |
|
|
$ |
1,412 |
|
|
$ |
10,315 |
|
|
Insurance income, net |
|
|
9,423 |
|
|
|
10,544 |
|
|
|
10,220 |
|
|
|
11,987 |
|
|
|
10,751 |
|
|
|
(1,236 |
) |
|
|
1,328 |
|
|
Other income |
|
|
2,944 |
|
|
|
2,673 |
|
|
|
2,880 |
|
|
|
3,445 |
|
|
|
3,833 |
|
|
|
388 |
|
|
|
889 |
|
|
Total revenue |
|
|
119,484 |
|
|
|
120,848 |
|
|
|
122,871 |
|
|
|
131,452 |
|
|
|
132,016 |
|
|
|
564 |
|
|
|
12,532 |
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for credit losses |
|
|
31,008 |
|
|
|
30,858 |
|
|
|
45,400 |
|
|
|
48,071 |
|
|
|
60,786 |
|
|
|
(12,715 |
) |
|
|
(29,778 |
) |
|
Personnel |
|
|
33,313 |
|
|
|
35,654 |
|
|
|
33,941 |
|
|
|
36,979 |
|
|
|
34,669 |
|
|
|
2,310 |
|
|
|
(1,356 |
) |
|
Occupancy |
|
|
6,511 |
|
|
|
5,808 |
|
|
|
6,156 |
|
|
|
5,848 |
|
|
|
5,997 |
|
|
|
(149 |
) |
|
|
514 |
|
|
Marketing |
|
|
4,431 |
|
|
|
3,091 |
|
|
|
4,108 |
|
|
|
3,940 |
|
|
|
4,239 |
|
|
|
(299 |
) |
|
|
192 |
|
|
Other |
|
|
11,277 |
|
|
|
10,547 |
|
|
|
9,916 |
|
|
|
11,397 |
|
|
|
10,238 |
|
|
|
1,159 |
|
|
|
1,039 |
|
|
Total general and administrative |
|
|
55,532 |
|
|
|
55,100 |
|
|
|
54,121 |
|
|
|
58,164 |
|
|
|
55,143 |
|
|
|
3,021 |
|
|
|
389 |
|
|
Interest expense |
|
|
7,597 |
|
|
|
(59 |
) |
|
|
7,564 |
|
|
|
11,863 |
|
|
|
14,855 |
|
|
|
(2,992 |
) |
|
|
(7,258 |
) |
|
Income before income taxes |
|
|
25,347 |
|
|
|
34,949 |
|
|
|
15,786 |
|
|
|
13,354 |
|
|
|
1,232 |
|
|
|
(12,122 |
) |
|
|
(24,115 |
) |
|
Income taxes |
|
|
4,569 |
|
|
|
8,166 |
|
|
|
3,804 |
|
|
|
3,286 |
|
|
|
(1,159 |
) |
|
|
4,445 |
|
|
|
5,728 |
|
|
Net income |
|
$ |
20,778 |
|
|
$ |
26,783 |
|
|
$ |
11,982 |
|
|
$ |
10,068 |
|
|
$ |
2,391 |
|
|
$ |
(7,677 |
) |
|
$ |
(18,387 |
) |
|
Net income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
2.18 |
|
|
$ |
2.81 |
|
|
$ |
1.29 |
|
|
$ |
1.09 |
|
|
$ |
0.26 |
|
|
$ |
(0.83 |
) |
|
$ |
(1.92 |
) |
|
Diluted |
|
$ |
2.04 |
|
|
$ |
2.67 |
|
|
$ |
1.24 |
|
|
$ |
1.06 |
|
|
$ |
0.25 |
|
|
$ |
(0.81 |
) |
|
$ |
(1.79 |
) |
|
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
9,545 |
|
|
|
9,533 |
|
|
|
9,261 |
|
|
|
9,195 |
|
|
|
9,199 |
|
|
|
(4 |
) |
|
|
346 |
|
|
Diluted |
|
|
10,177 |
|
|
|
10,022 |
|
|
|
9,669 |
|
|
|
9,526 |
|
|
|
9,411 |
|
|
|
115 |
|
|
|
766 |
|
|
|
|
Balance Sheet Quarterly Trend |
|
|||||||||||||||||||||||||
|
|
|
4Q 21 |
|
|
1Q 22 |
|
|
2Q 22 |
|
|
3Q 22 |
|
|
4Q 22 |
|
|
QoQ $ Inc (Dec) |
|
|
YoY $ Inc (Dec) |
|
|||||||
|
Total assets |
|
$ |
1,459,662 |
|
|
$ |
1,497,671 |
|
|
$ |
1,547,944 |
|
|
$ |
1,606,550 |
|
|
$ |
1,724,987 |
|
|
$ |
118,437 |
|
|
$ |
265,325 |
|
|
Net finance receivables |
|
$ |
1,426,257 |
|
|
$ |
1,446,071 |
|
|
$ |
1,525,659 |
|
|
$ |
1,607,598 |
|
|
$ |
1,699,393 |
|
|
$ |
91,795 |
|
|
$ |
273,136 |
|
|
Allowance for credit losses |
|
$ |
159,300 |
|
|
$ |
158,800 |
|
|
$ |
167,500 |
|
|
$ |
179,800 |
|
|
$ |
178,800 |
|
|
$ |
(1,000 |
) |
|
$ |
19,500 |
|
|
Debt |
|
$ |
1,107,953 |
|
|
$ |
1,134,377 |
|
|
$ |
1,194,570 |
|
|
$ |
1,241,039 |
|
|
$ |
1,355,359 |
|
|
$ |
114,320 |
|
|
$ |
247,406 |
|
|
|
|
Other Key Metrics Quarterly Trend |
|
|||||||||||||||||||||||||
|
|
4Q 21 |
|
|
1Q 22 |
|
|
2Q 22 |
|
|
3Q 22 |
|
|
4Q 22 |
|
|
QoQ Inc (Dec) |
|
|
YoY Inc (Dec) |
|
||||||||
|
Interest and fee yield (annualized) |
|
|
31.4 |
% |
|
|
30.0 |
% |
|
|
29.8 |
% |
|
|
29.6 |
% |
|
|
28.5 |
% |
|
|
(1.1 |
)% |
|
|
(2.9 |
)% |
|
Efficiency ratio (1) |
|
|
46.5 |
% |
|
|
45.6 |
% |
|
|
44.0 |
% |
|
|
44.2 |
% |
|
|
41.8 |
% |
|
|
(2.4 |
)% |
|
|
(4.7 |
)% |
|
Operating expense ratio (2) |
|
|
16.3 |
% |
|
|
15.4 |
% |
|
|
14.7 |
% |
|
|
14.9 |
% |
|
|
13.4 |
% |
|
|
(1.5 |
)% |
|
|
(2.9 |
)% |
|
30+ contractual delinquency |
|
|
6.0 |
% |
|
|
5.7 |
% |
|
|
6.2 |
% |
|
|
7.2 |
% |
|
|
7.1 |
% |
|
|
(0.1 |
)% |
|
|
1.1 |
% |
|
Net credit loss ratio (3) |
|
|
6.4 |
% |
|
|
8.7 |
% |
|
|
10.0 |
% |
|
|
9.1 |
% |
|
|
15.0 |
% |
|
|
5.9 |
% |
|
|
8.6 |
% |
|
Book value per share |
|
$ |
28.89 |
|
|
$ |
30.47 |
|
|
$ |
31.15 |
|
|
$ |
32.18 |
|
|
$ |
32.41 |
|
|
$ |
0.23 |
|
|
$ |
3.52 |
|
|
(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. |
11
|
|
|
Averages and Yields |
|
|||||||||||||
|
|
|
FY 22 |
|
|
FY 21 |
|
||||||||||
|
|
|
Average Net Finance Receivables |
|
|
Average Yield |
|
|
Average Net Finance Receivables |
|
|
Average Yield |
|
||||
|
Small loans |
|
$ |
456,141 |
|
|
|
35.2 |
% |
|
$ |
394,394 |
|
|
|
38.2 |
% |
|
Large loans |
|
|
1,063,365 |
|
|
|
27.1 |
% |
|
|
808,230 |
|
|
|
28.4 |
% |
|
Retail loans |
|
|
10,737 |
|
|
|
17.9 |
% |
|
|
11,259 |
|
|
|
18.3 |
% |
|
Total interest and fee yield |
|
$ |
1,530,243 |
|
|
|
29.5 |
% |
|
$ |
1,213,883 |
|
|
|
31.5 |
% |
|
Total revenue yield |
|
$ |
1,530,243 |
|
|
|
33.1 |
% |
|
$ |
1,213,883 |
|
|
|
35.3 |
% |
|
|
|
Components of Increase in Interest and Fee Income |
|
|||||||||||||
|
|
FY 22 Compared to FY 21 |
|
||||||||||||||
|
|
|
Increase (Decrease) |
|
|||||||||||||
|
|
|
Volume |
|
|
Rate |
|
|
Volume & Rate |
|
|
Total |
|
||||
|
Small loans |
|
$ |
23,582 |
|
|
$ |
(11,923 |
) |
|
$ |
(1,866 |
) |
|
$ |
9,793 |
|
|
Large loans |
|
|
72,558 |
|
|
|
(10,560 |
) |
|
|
(3,334 |
) |
|
|
58,664 |
|
|
Retail loans |
|
|
(96 |
) |
|
|
(54 |
) |
|
|
3 |
|
|
|
(147 |
) |
|
Product mix |
|
|
3,654 |
|
|
|
(2,362 |
) |
|
|
(1,292 |
) |
|
|
— |
|
|
Total increase in interest and fee income |
|
$ |
99,698 |
|
|
$ |
(24,899 |
) |
|
$ |
(6,489 |
) |
|
$ |
68,310 |
|
|
|
|
Loans Originated (1) |
|
|||||||||||||
|
|
|
FY 22 |
|
|
FY 21 |
|
|
FY $ Inc (Dec) |
|
|
FY % Inc (Dec) |
|
||||
|
Small loans |
|
$ |
653,155 |
|
|
$ |
602,613 |
|
|
$ |
50,542 |
|
|
|
8.4 |
% |
|
Large loans |
|
|
979,557 |
|
|
|
856,699 |
|
|
|
122,858 |
|
|
|
14.3 |
% |
|
Retail loans |
|
|
8,596 |
|
|
|
8,275 |
|
|
|
321 |
|
|
|
3.9 |
% |
|
Total loans originated |
|
$ |
1,641,308 |
|
|
$ |
1,467,587 |
|
|
$ |
173,721 |
|
|
|
11.8 |
% |
|
(1) |
Represents the principal balance of loan originations and refinancings. |
|
|
|
Other Key Metrics |
|
|||||
|
|
|
FY 22 |
|
|
FY 21 |
|
||
|
Net credit losses |
|
$ |
165,615 |
|
|
$ |
79,715 |
|
|
Percentage of average net finance receivables |
|
|
10.8 |
% |
|
|
6.6 |
% |
|
Provision for credit losses |
|
$ |
185,115 |
|
|
$ |
89,015 |
|
|
Percentage of average net finance receivables |
|
|
12.1 |
% |
|
|
7.3 |
% |
|
Percentage of total revenue |
|
|
36.5 |
% |
|
|
20.8 |
% |
|
General and administrative expenses |
|
$ |
222,528 |
|
|
$ |
195,514 |
|
|
Percentage of average net finance receivables |
|
|
14.5 |
% |
|
|
16.1 |
% |
|
Percentage of total revenue |
|
|
43.9 |
% |
|
|
45.6 |
% |
12
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. Adjusted net income and adjusted diluted net income per common share are non-GAAP measures that adjust GAAP measures to exclude the impacts of the non-performing loan sale. Management uses these adjusted measures to evaluate and manage the company's performance by excluding certain material items that may not be representative of the company’s financial results. As a result, the company also believes that these adjusted measures will aid users of its financial statements in the evaluation of its operating performance.
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.
|
|
|
4Q 22 |
|
|
|
Debt |
|
$ |
1,355,359 |
|
|
Total stockholders' equity |
|
|
308,633 |
|
|
Less: Intangible assets |
|
|
12,122 |
|
|
Tangible equity (non-GAAP) |
|
$ |
296,511 |
|
|
Funded debt-to-equity ratio |
|
|
4.4 |
x |
|
Funded debt-to-tangible equity ratio (non-GAAP) |
|
|
4.6 |
x |
|
|
|
4Q 22 Non-GAAP Reconciliation |
|
|||||||||
|
|
|
GAAP |
|
|
Adjustments |
|
|
Non-GAAP |
|
|||
|
Total revenue (1) |
|
$ |
132,016 |
|
|
$ |
2,185 |
|
|
$ |
134,201 |
|
|
Provision for credit losses (2) |
|
$ |
60,786 |
|
|
$ |
(1,278 |
) |
|
$ |
59,508 |
|
|
Income taxes |
|
$ |
(1,159 |
) |
|
$ |
807 |
|
|
$ |
(352 |
) |
|
Net income |
|
$ |
2,391 |
|
|
$ |
2,656 |
|
|
$ |
5,047 |
|
|
Diluted net income per common share |
|
$ |
0.25 |
|
|
$ |
0.29 |
|
|
$ |
0.54 |
|
|
(1) |
Total revenue adjustments include revenue reversals pertaining to the non-performing loan sale. |
|
(2) |
Provision for credit losses adjustment include impacts in 4Q 22 due to the non-performing loan sale. |
13