8-K
Regional Management Corp. (RM)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENTREPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 6, 2020
Regional Management Corp.
(Exact name of registrant as specified in its charter)
| Delaware | 001-35477 | 57-0847115 |
|---|---|---|
| (State or other jurisdiction<br><br><br>of incorporation) | (Commission<br><br><br>File Number) | (IRS Employer<br><br><br>Identification No.) |
979 Batesville Road, Suite B
Greer, South Carolina 29651
(Address of principal executive offices) (zip code)
(864) 448-7000
(Registrant’s telephone number, including area code)
Not Applicable
(Formername 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:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17<br>CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading<br><br><br>Symbol | Name of Each Exchange<br><br><br>on Which Registered |
|---|---|---|
| Common Stock, $0.10 par value | RM | New York Stock Exchange |
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. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On May 6, 2020, Regional Management Corp. (the “Company”) issued a press release announcing financial results for the three months ended March 31, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. On May 6, 2020, the Company will host a conference call to discuss financial results for the three months ended March 31, 2020. 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 9.01. | Financial Statements and Exhibits. |
|---|
(d) Exhibits.
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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.
| Regional Management Corp. | ||
|---|---|---|
| Date: May 6, 2020 | By: | /s/ Robert W. Beck |
| Robert W. Beck | ||
| President and Chief Executive Officer |
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EX-99.1
Exhibit 99.1
Regional Management Corp. Announces First Quarter 2020 Results
- 17.5% year-over-year revenue growth and 18.9% average net finance receivables growth -
- Additional $23.9 million reserve build related to COVID-19 -
- Net loss of $6.3 million and diluted loss per share of $0.56 -
- Available liquidity of $110 million as of May 4, 2020 -
Greenville, South Carolina – May 6, 2020 – Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the first quarter ended March 31, 2020.
“As we navigate through this unprecedented time, we are committed to supporting the overall health and well-being of our customers, employees, and communities,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “Our omni-channel capabilities are serving our customers well and providing them with multiple safe avenues to make payments. We’ve also proactively implemented several borrower assistance programs to help our customers with any challenges, including offering payment deferrals and waiving late fees on deferred payments. Building on our stable 30+ day delinquency position as of March 31st, these programs and the impact from the government stimulus have positioned us well as we closed out the month of April. As of April 30th, our 30+ day contractual delinquencies stood at 5.4%, a reduction of 120 basis points from the end of March.”
“Over the past several years, we have significantly strengthened our balance sheet, our underwriting using custom scorecards, and our credit infrastructure in anticipation of a reversion in the credit cycle,” added Mr. Beck. “As a result, as of May 4, 2020, we have $110 million of available liquidity, and we believe we have more than ample liquidity to operate through 2021 without needing to access the securitization market. As we focus in the near term on our liquidity, our credit, and serving our customers, we believe we are fundamentally well-positioned and comfortably capitalized to manage through the current economic environment and to expand volumes and operating leverage as the economy rebounds.”
First Quarter 2020 Highlights
| • | Net loss for the first quarter of 2020 was $6.3 million and diluted loss per share was $0.56, compared to<br>net income of $8.1 million and diluted earnings per share of $0.67 in the prior-year period. The net loss was due primarily to the build in the reserves related to the expected economic impact of the<br>COVID-19 pandemic, including $23.9 million of |
|---|
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| <br>allowance for credit losses and a $1.3 million reserve for unemployment insurance claims. Excluding the COVID-19 reserve build and $4.9 million<br>of non-operating costs related to the executive transition and loan management system outage, the company generated non-GAAP net income of $12.8 million, or $1.14<br>per diluted share. | |
|---|---|
| • | Net finance receivables as of March 31, 2020 were $1.1 billion, an increase of 18.4%, or<br>$171.4 million, from the prior-year period. |
| --- | --- |
| • | Total core small and large loan net finance receivables increased $191.9 million, or 21.8%, compared<br>to the prior-year period. |
| --- | --- |
| • | Large loan net finance receivables of $632.6 million increased $177.5 million, or 39.0%,<br>from the prior-year period and represented 57.4% of the total loan portfolio. Small loan net finance receivables as of March 31, 2020 were $440.3 million, an increase of 3.4% over the prior-year period. |
| --- | --- |
| • | Total revenue for the first quarter of 2020 was $96.1 million, a $14.3 million, or 17.5%, increase from<br>the prior-year period. |
| --- | --- |
| • | Interest and fee income increased 17.1%, driven by an 18.9% increase in average net finance receivables compared<br>to the prior-year period. |
| --- | --- |
| • | Insurance income, net increased $1.8 million, driven by an increase in premium revenue and a decrease in non-file insurance claims expense (due to the previously disclosed change in business practice to lower the utilization of non-file insurance). Insurance income, net included<br>a $1.3 million reserve for COVID-19 unemployment insurance claims. |
| --- | --- |
| • | Provision for credit losses for the first quarter of 2020 was $49.5 million, an increase of<br>$26.2 million, or 112.1%, from the prior-year period. The increase was primarily due to a build in the allowance for credit losses of $23.9 million related to the expected economic impact of the COVID-19 pandemic. The company<br>ran several macroeconomic stress scenarios, and its final forecast included a 34% peak-to-trough decrease in GDP in the second quarter of 2020 and unemployment<br>increasing to 20% in the second quarter of 2020, with a decline to 7% by mid-2021. |
| --- | --- |
| • | Annualized net credit losses as a percentage of average net finance receivables were 10.5%, a 20 basis point<br>improvement from 10.7% in the prior-year period. |
| --- | --- |
| • | 30+ day contractual delinquencies as of March 31, 2020 were 6.6%, compared to 6.9% in the prior-year period.<br>The delinquency rate in the first quarter of 2020 included 0.1% from the system outage in January, and the rate in the first quarter of 2019 included 0.4% related to hurricane-affected branches. 30+ day contractual delinquencies stood at 5.4% as of<br>April 30, 2020, a decrease of 120 basis points from March 31, 2020. |
| --- | --- |
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| • | General and administrative expenses for the first quarter of 2020 were $46.2 million, an increase of<br>$8.1 million, or 21.1%, from the prior-year period. The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) was 16.5%, an increase of 30 basis points from the<br>prior-year period. General and administrative expenses for the first quarter of 2020 included non-operating costs of $3.1 million related to the executive transition and $0.7 million due to<br>the system outage. The first quarter of 2020 also included $0.7 million of incremental costs related to new branches that opened since the prior-year period. |
|---|---|
| • | In March 2020, the company drew down $50 million on its senior revolving credit facility in a prudent<br>measure to maintain additional cash on hand. As of March 31, 2020, the company had total unused capacity on its revolving credit facilities of approximately $400 million, subject to the borrowing base. |
| --- | --- |
| • | As of May 4, 2020, the company has available liquidity of $110 million, including approximately<br>$50 million of cash on hand. |
| --- | --- |
2020 De Novo Outlook
As of March 31, 2020, the company’s branch network consisted of 368 locations. Due to the economic uncertainty related to the COVID-19 pandemic, the company has temporarily paused its plans to open additional de novo branches and will provide an update once there is more visibility.
Liquidity and Capital Resources
As of March 31, 2020, the company had finance receivables of $1.1 billion and outstanding long-term debt of $777.8 million ($775.6 million of outstanding debt and $2.3 million of interest payable), consisting of:
| • | $312.1 million on its $640.0 million senior revolving credit facility, |
|---|---|
| • | $54.9 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 $399.5 million, or 52.2%, as of March 31, 2020.
The company had a funded debt-to-equity ratio of 3.1 to 1.0 and a stockholders’ equity ratio of 23.3% as of March 31, 2020. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 3.2 to 1.0 as of March 31, 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.
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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, May 13, 2020, by telephone at (844) 512-2921 (toll-free) or (412) 317-6671 (international), passcode 10009289. 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 March 31, 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
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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.
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)
(inthousands, except per share amounts)
| Better (Worse) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 1Q 20 | 1Q 19 | % | |||||||||
| Revenue | |||||||||||
| Interest and fee income | $ | 86,997 | $ | 74,322 | 17.1 | % | |||||
| Insurance income, net | 5,949 | 4,113 | 44.6 | % | |||||||
| Other income | 3,128 | 3,313 | ) | (5.6 | )% | ||||||
| Total revenue | 96,074 | 81,748 | 17.5 | % | |||||||
| Expenses | |||||||||||
| Provision for credit losses | 49,522 | 23,343 | ) | (112.1 | )% | ||||||
| Personnel | 29,511 | 22,393 | ) | (31.8 | )% | ||||||
| Occupancy | 5,771 | 6,165 | 6.4 | % | |||||||
| Marketing | 1,686 | 1,651 | ) | (2.1 | )% | ||||||
| Other | 9,275 | 7,974 | ) | (16.3 | )% | ||||||
| Total general and administrative | 46,243 | 38,183 | ) | (21.1 | )% | ||||||
| Interest expense | 10,159 | 9,721 | ) | (4.5 | )% | ||||||
| Income (loss) before income taxes | (9,850 | ) | 10,501 | ) | (193.8 | )% | |||||
| Income taxes | (3,525 | ) | 2,393 | 247.3 | % | ||||||
| Net income (loss) | $ | (6,325 | ) | $ | 8,108 | **** | ) | **** | (178.0 | )% | |
| Net income (loss) per common share: | |||||||||||
| Basic | $ | (0.58 | ) | $ | 0.69 | ) | (184.1 | )% | |||
| Diluted | $ | (0.56 | ) | $ | 0.67 | ) | (183.6 | )% | |||
| Weighted-average shares outstanding: | |||||||||||
| Basic | 10,897 | 11,712 | 7.0 | % | |||||||
| Diluted | 11,253 | 12,076 | 6.8 | % | |||||||
| Return on average assets (annualized) | (2.3 | )% | 3.4 | % | |||||||
| Return on average equity (annualized) | (9.4 | )% | 11.5 | % |
All values are in US Dollars.
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Regional Management Corp. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(inthousands, except par value amounts)
| Increase (Decrease) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 1Q 19 | % | |||||||||
| Assets | ||||||||||
| Cash | 14,668 | $ | 2,331 | 529.3 | % | |||||
| Net finance receivables | 1,102,285 | 930,844 | 18.4 | % | ||||||
| Unearned insurance premiums | (28,183 | ) | (18,594 | ) | ) | (51.6 | )% | |||
| Allowance for credit losses | (142,400 | ) | (56,400 | ) | ) | (152.5 | )% | |||
| Net finance receivables, less unearned insurance premiums and allowance for credit losses | 931,702 | 855,850 | 8.9 | % | ||||||
| Restricted cash | 54,649 | 38,917 | 40.4 | % | ||||||
| Lease assets | 26,729 | 24,831 | 7.6 | % | ||||||
| Property and equipment | 15,155 | 14,181 | 6.9 | % | ||||||
| Intangible assets | 9,144 | 9,722 | ) | (5.9 | )% | |||||
| Deferred tax asset | 20,025 | — | 100.0 | % | ||||||
| Other assets | 6,818 | 7,635 | ) | (10.7 | )% | |||||
| Total assets | 1,078,890 | $ | 953,467 | 13.2 | % | |||||
| Liabilities and Stockholders’ Equity | ||||||||||
| Liabilities: | ||||||||||
| Long-term debt | 777,847 | $ | 628,786 | 23.7 | % | |||||
| Unamortized debt issuance costs | (8,581 | ) | (8,338 | ) | ) | (2.9 | )% | |||
| Net long-term debt | 769,266 | 620,448 | 24.0 | % | ||||||
| Accounts payable and accrued expenses | 29,459 | 17,470 | 68.6 | % | ||||||
| Lease liabilities | 28,803 | 26,474 | 8.8 | % | ||||||
| Deferred tax liability | — | 1,259 | ) | (100.0 | )% | |||||
| Total liabilities | 827,528 | 665,651 | 24.3 | % | ||||||
| Stockholders’ equity: | ||||||||||
| Preferred stock (0.10 par value, 100,000 shares authorized, no shares issued or<br>outstanding) | — | — | — | |||||||
| Common stock (0.10 par value, 1,000,000 shares authorized, 13,659 shares issued and 11,175 shares<br>outstanding at March 31, 2020 and 13,465 shares issued and 11,919 shares outstanding at March 31, 2019) | 1,366 | 1,347 | 1.4 | % | ||||||
| Additional paid-in capital | 103,488 | 99,310 | 4.2 | % | ||||||
| Retained earnings | 196,582 | 212,205 | ) | (7.4 | )% | |||||
| Treasury stock (2,484 shares at March 31, 2020 and 1,546 shares at March 31,<br>2019) | (50,074 | ) | (25,046 | ) | ) | (99.9 | )% | |||
| Total stockholders’ equity | 251,362 | 287,816 | ) | (12.7 | )% | |||||
| Total liabilities and stockholders’ equity | 1,078,890 | $ | 953,467 | 13.2 | % |
All values are in US Dollars.
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Regional Management Corp. and Subsidiaries
Selected Financial Data
(Unaudited)
(inthousands, except per share amounts)
| Net Finance Receivables by Product | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1Q 20 | 4Q 19 | QoQ Inc (Dec) | QoQ %<br>Inc (Dec) | 1Q 19 | YoY Inc (Dec) | YoY %<br>Inc (Dec) | ||||||||||
| Small loans | $ | 440,286 | $ | 467,614 | ) | (5.8 | )% | $ | 425,849 | 3.4 | % | |||||
| Large loans | 632,589 | 632,067 | 0.1 | % | 455,119 | 39.0 | % | |||||||||
| Total core loans | 1,072,875 | 1,099,681 | ) | (2.4 | )% | 880,968 | 21.8 | % | ||||||||
| Automobile loans | 7,532 | 9,640 | ) | (21.9 | )% | 20,556 | ) | (63.4 | )% | |||||||
| Retail loans | 21,878 | 24,083 | ) | (9.2 | )% | 29,320 | ) | (25.4 | )% | |||||||
| Total net finance receivables | $ | 1,102,285 | $ | 1,133,404 | ) | (2.7 | )% | $ | 930,844 | 18.4 | % | |||||
| Number of branches at period end | 368 | 366 | 0.5 | % | 360 | 2.2 | % | |||||||||
| Average net finance receivables per branch | $ | 2,995 | $ | 3,097 | ) | (3.3 | )% | $ | 2,586 | 15.8 | % |
All values are in US Dollars.
| Averages and Yields | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1Q 20 | 4Q 19 | 1Q 19 | |||||||||||||
| Average NetFinanceReceivables | Average Yield<br>(Annualized) | Average NetFinanceReceivables | Average Yield<br>(Annualized) | Average NetFinanceReceivables | Average Yield<br>(Annualized) | ||||||||||
| Small loans | $ | 458,132 | 36.7 | % | $ | 458,391 | 38.1 | % | $ | 438,891 | 37.7 | % | |||
| Large loans | 633,510 | 27.5 | % | 604,137 | 28.2 | % | 452,541 | 27.1 | % | ||||||
| Automobile loans | 8,618 | 13.5 | % | 10,754 | 14.7 | % | 23,279 | 14.8 | % | ||||||
| Retail loans | 23,056 | 17.8 | % | 25,128 | 19.4 | % | 30,052 | 18.6 | % | ||||||
| Total interest and fee yield | $ | 1,123,316 | 31.0 | % | $ | 1,098,410 | 32.0 | % | $ | 944,763 | 31.5 | % | |||
| Total revenue yield | $ | 1,123,316 | 34.2 | % | $ | 1,098,410 | 35.7 | % | $ | 944,763 | 34.6 | % | |||
| Components of Increase in Interest and Fee Income<br>1Q 20 Compared to 1Q 19<br>Increase (Decrease) | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| Volume | Rate | Volume & Rate | Net | ||||||||||||
| Small loans | $ | 1,816 | $ | (1,122 | ) | $ | (50 | ) | $ | 644 | |||||
| Large loans | 12,258 | 509 | 203 | 12,970 | |||||||||||
| Automobile loans | (543 | ) | (76 | ) | 48 | (571 | ) | ||||||||
| Retail loans | (325 | ) | (56 | ) | 13 | (368 | ) | ||||||||
| Product mix | 840 | (408 | ) | (432 | ) | — | |||||||||
| Total increase in interest and fee income | $ | 14,046 | $ | (1,153 | ) | $ | (218 | ) | $ | 12,675 |
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| Net Loans Originated (1) (2) | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1Q 20 | 4Q 19 | QoQ Inc (Dec) | QoQ %<br>Inc (Dec) | 1Q 19 | YoY Inc (Dec) | YoY %<br>Inc (Dec) | ||||||||||
| Small loans | $ | 120,024 | $ | 180,967 | ) | (33.7 | )% | $ | 129,245 | ) | (7.1 | )% | ||||
| Large loans | 105,648 | 174,341 | ) | (39.4 | )% | 84,068 | 25.7 | % | ||||||||
| Retail loans | 3,573 | 3,833 | ) | (6.8 | )% | 6,197 | ) | (42.3 | )% | |||||||
| Total net loans originated | $ | 229,245 | $ | 359,141 | ) | (36.2 | )% | $ | 219,510 | 4.4 | % |
All values are in US Dollars.
| (1) | Represents the balance of loan origination and refinancing net of unearned finance charges.<br> | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (2) | The company ceased originating automobile loans in November 2017. | ||||||||
| --- | --- | ||||||||
| Other Key Metrics | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 1Q 20 | 4Q 19 | 1Q 19 | |||||||
| Net credit losses | $ | 29,422 | $ | 24,739 | $ | 25,243 | |||
| Percentage of average net finance receivables (annualized) | 10.5 | % | 9.0 | % | 10.7 | % | |||
| Provision for credit losses (1) | $ | 49,522 | $ | 26,039 | $ | 23,343 | |||
| Percentage of average net finance receivables (annualized) | 17.6 | % | 9.5 | % | 9.9 | % | |||
| Percentage of total revenue | 51.5 | % | 26.6 | % | 28.6 | % | |||
| General and administrative expenses (2) (3) | $ | 46,243 | $ | 40,891 | $ | 38,183 | |||
| Percentage of average net finance receivables (annualized) | 16.5 | % | 14.9 | % | 16.2 | % | |||
| Percentage of total revenue | 48.1 | % | 41.7 | % | 46.7 | % | |||
| Same store results (4): | |||||||||
| Net finance receivables at period-end | $ | 1,093,701 | $ | 1,109,488 | $ | 920,287 | |||
| Net finance receivable growth rate | 17.6 | % | 17.2 | % | 12.0 | % | |||
| Number of branches in calculation | 351 | 337 | 337 | ||||||
| (1) | Includes COVID-19 pandemic impacts to provision for credit losses of<br>$23,900 for 1Q 20. | ||||||||
| --- | --- | ||||||||
| (2) | Includes non-operating executive transition costs of $3,066 for 1Q 20.<br> | ||||||||
| --- | --- | ||||||||
| (3) | Includes non-operating loan management system outage costs of $720 for<br>1Q 20. | ||||||||
| --- | --- | ||||||||
| (4) | Same store sales reflect the change in year-over-year sales for the comparable branch base. The comparable<br>branch base includes those branches open for at least one year. | ||||||||
| --- | --- |
9
| Contractual Delinquency by Aging | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1Q 20 | 4Q 19 | 1Q 19 | ||||||||||
| Allowance for credit losses (1) | $ | 142,400 | 12.9 | % | $ | 62,200 | 5.5 | % | $ | 56,400 | 6.1 | % |
| Current | 931,032 | 84.4 | % | 949,204 | 83.8 | % | 780,439 | 83.8 | % | |||
| 1 to 29 days past due | 98,896 | 9.0 | % | 104,690 | 9.2 | % | 86,497 | 9.3 | % | |||
| Delinquent accounts: | ||||||||||||
| 30 to 59 days | 20,907 | 1.9 | % | 25,276 | 2.2 | % | 18,172 | 2.0 | % | |||
| 60 to 89 days | 16,456 | 1.5 | % | 18,781 | 1.7 | % | 13,924 | 1.5 | % | |||
| 90 to 119 days | 11,889 | 1.1 | % | 13,916 | 1.2 | % | 11,808 | 1.2 | % | |||
| 120 to 149 days | 12,059 | 1.1 | % | 11,656 | 1.0 | % | 9,955 | 1.1 | % | |||
| 150 to 179 days | 11,046 | 1.0 | % | 9,881 | 0.9 | % | 10,049 | 1.1 | % | |||
| Total contractual delinquency (2) (3) | $ | 72,357 | 6.6 | % | $ | 79,510 | 7.0 | % | $ | 63,908 | 6.9 | % |
| Total net finance receivables | $ | 1,102,285 | 100.0 | % | $ | 1,133,404 | 100.0 | % | $ | 930,844 | 100.0 | % |
| 1 day and over past due | $ | 171,253 | 15.6 | % | $ | 184,200 | 16.2 | % | $ | 150,405 | 16.2 | % |
| Contractual Delinquency by Product | ||||||||||||
| 1Q 20 | 4Q 19 | 1Q 19 | ||||||||||
| Small loans | $ | 37,662 | 8.6 | % | $ | 42,375 | 9.1 | % | $ | 35,086 | 8.2 | % |
| Large loans | 32,201 | 5.1 | % | 33,921 | 5.4 | % | 25,145 | 5.5 | % | |||
| Automobile loans | 508 | 6.7 | % | 755 | 7.8 | % | 1,535 | 7.5 | % | |||
| Retail loans | 1,986 | 9.1 | % | 2,459 | 10.2 | % | 2,142 | 7.3 | % | |||
| Total contractual delinquency (2) (3) | $ | 72,357 | 6.6 | % | $ | 79,510 | 7.0 | % | $ | 63,908 | 6.9 | % |
| (1) | Includes incremental COVID-19 allowance for credit losses of $23,900 in<br>1Q 20. | |||||||||||
| --- | --- | |||||||||||
| (2) | Includes 0.1% delinquency related to the loan management system outage in 1Q 20. | |||||||||||
| --- | --- | |||||||||||
| (3) | Includes 0.4% delinquency related to hurricane-affected branches in 1Q 19. | |||||||||||
| --- | --- |
10
| Income Statement Quarterly Trend | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1Q 19 | 2Q 19 | 3Q 19 | 4Q 19 | 1Q 20 | QoQ B(W) | YoY B(W) | |||||||||
| Revenue | |||||||||||||||
| Interest and fee income | $ | 74,322 | $ | 75,974 | $ | 83,089 | $ | 87,784 | $ | 86,997 | ) | ||||
| Insurance income, net | 4,113 | 5,066 | 5,087 | 6,551 | 5,949 | ) | |||||||||
| Other income | 3,313 | 3,234 | 3,531 | 3,649 | 3,128 | ) | ) | ||||||||
| Total revenue | 81,748 | 84,274 | 91,707 | 97,984 | 96,074 | ) | |||||||||
| Expenses | |||||||||||||||
| Provision for credit losses | 23,343 | 25,714 | 24,515 | 26,039 | 49,522 | ) | ) | ||||||||
| Personnel | 22,393 | 22,511 | 23,791 | 25,305 | 29,511 | ) | ) | ||||||||
| Occupancy | 6,165 | 6,210 | 6,367 | 5,876 | 5,771 | ||||||||||
| Marketing | 1,651 | 2,261 | 2,397 | 1,897 | 1,686 | ) | |||||||||
| Other | 7,974 | 6,761 | 7,612 | 7,813 | 9,275 | ) | ) | ||||||||
| Total general and administrative | 38,183 | 37,743 | 40,167 | 40,891 | 46,243 | ) | ) | ||||||||
| Interest expense | 9,721 | 9,771 | 10,348 | 10,285 | 10,159 | ) | |||||||||
| Income (loss) before income taxes | 10,501 | 11,046 | 16,677 | 20,769 | (9,850 | ) | ) | ) | |||||||
| Income taxes | 2,393 | 2,677 | 4,105 | 5,086 | (3,525 | ) | |||||||||
| Net income (loss) | $ | 8,108 | $ | 8,369 | $ | 12,572 | $ | 15,683 | $ | (6,325 | ) | ) | ) | ||
| Net income (loss) per common share: | |||||||||||||||
| Basic | $ | 0.69 | $ | 0.71 | $ | 1.11 | $ | 1.44 | $ | (0.58 | ) | ) | ) | ||
| Diluted | $ | 0.67 | $ | 0.70 | $ | 1.08 | $ | 1.38 | $ | (0.56 | ) | ) | ) | ||
| Weighted-average shares outstanding: | |||||||||||||||
| Basic | 11,712 | 11,706 | 11,302 | 10,893 | 10,897 | ) | |||||||||
| Diluted | 12,076 | 12,022 | 11,677 | 11,327 | 11,253 | ||||||||||
| Net interest margin | $ | 72,027 | $ | 74,503 | $ | 81,359 | $ | 87,699 | $ | 85,915 | ) | ||||
| Net credit margin | $ | 48,684 | $ | 48,789 | $ | 56,844 | $ | 61,660 | $ | 36,393 | ) | ) | |||
| Balance Sheet Quarterly Trend | |||||||||||||||
| 1Q 19 | 2Q 19 | 3Q 19 | 4Q 19 | 1Q 20 | QoQ Inc (Dec) | YoY Inc (Dec) | |||||||||
| Total assets | $ | 953,467 | $ | 1,019,316 | $ | 1,086,172 | $ | 1,158,540 | $ | 1,078,890 | ) | ||||
| Net finance receivables | $ | 930,844 | $ | 994,980 | $ | 1,067,086 | $ | 1,133,404 | $ | 1,102,285 | ) | ||||
| Allowance for credit losses | $ | 56,400 | $ | 57,200 | $ | 60,900 | $ | 62,200 | $ | 142,400 | |||||
| Long-term debt | $ | 628,786 | $ | 689,310 | $ | 743,835 | $ | 808,218 | $ | 777,847 | ) |
All values are in US Dollars.
11
| Other Key Metrics Quarterly Trend | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1Q 19 | 2Q 19 | 3Q 19 | 4Q 19 | 1Q 20 | QoQ<br>Inc (Dec) | YoY<br>Inc (Dec) | |||||||||||||||
| Interest and fee yield (annualized) | 31.5 | % | 31.8 | % | 32.1 | % | 32.0 | % | 31.0 | % | (1.0 | )% | (0.5 | )% | |||||||
| Efficiency ratio (1) | 46.7 | % | 44.8 | % | 43.8 | % | 41.7 | % | 48.1 | % | 6.4 | % | 1.4 | % | |||||||
| Operating expense ratio (2) | 16.2 | % | 15.8 | % | 15.5 | % | 14.9 | % | 16.5 | % | 1.6 | % | 0.3 | % | |||||||
| 30+ contractual delinquency | 6.9 | % | 6.3 | % | 6.5 | % | 7.0 | % | 6.6 | % | (0.4 | )% | (0.3 | )% | |||||||
| Net credit loss ratio (3) | 10.7 | % | 10.4 | % | 8.1 | % | 9.0 | % | 10.5 | % | 1.5 | % | (0.2 | )% | |||||||
| Book value per share | $ | 24.15 | $ | 24.88 | $ | 26.00 | $ | 27.49 | $ | 22.49 | $ | (5.00 | ) | $ | (1.66 | ) | |||||
| (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.<br> | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (3) | Annualized net credit losses as a percentage of average net finance receivables. | ||||||||||||||||||||
| --- | --- |
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 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. In addition, the company has presented non-GAAP measures that adjust for the impacts of the COVID-19 pandemic, the executive transition, and the loan management system outage. The company believes that these non-GAAP measures provide useful information by excluding certain material items that may not be indicative of our core operating results. As a result, the company believes that the non-GAAP measures that it has presented will allow for a better evaluation of the operating performance of the business.
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.
| 1Q 20 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Long-term debt | $ | 777,847 | |||||||||
| Total stockholders’ equity | 251,362 | ||||||||||
| Less: Intangible assets | 9,144 | ||||||||||
| Tangible equity (non-GAAP) | $ | 242,218 | |||||||||
| Funded<br>debt-to-equity ratio | 3.1x | ||||||||||
| Funded<br>debt-to-tangible equity ratio (non-GAAP) | 3.2x | ||||||||||
| Non-GAAP Reconciliation | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 1Q 20 | |||||||||||
| GAAPResults | COVID-19Impact (1) | Non-OperatingItems (2) | Non-GAAPResults | ||||||||
| Total revenue | $ | 96,074 | $ | 1,326 | $ | 419 | $ | 97,819 | |||
| Provision for credit losses | 49,522 | (23,900 | ) | (674 | ) | 24,948 | |||||
| Total general and administrative expense | 46,243 | — | (3,786 | ) | 42,457 | ||||||
| Interest expense | 10,159 | — | 23 | 10,182 | |||||||
| Income (loss) before income taxes | (9,850 | ) | 25,226 | 4,856 | 20,232 | ||||||
| Income taxes | (3,525 | ) | 9,157 | 1,763 | 7,395 | ||||||
| Net income (loss) | $ | (6,325 | ) | $ | 16,069 | $ | 3,093 | $ | 12,837 | ||
| Diluted earnings (losses) per share | $ | (0.56 | ) | $ | 1.43 | $ | 0.27 | $ | 1.14 | ||
| Diluted share count | 11,253 | 11,253 | 11,253 | 11,253 | |||||||
| (1) | COVID-19 impact includes $23,900 for allowance for credit losses and a $1,326 reserve for unemployment<br>insurance claims. | ||||||||||
| --- | --- | ||||||||||
| (2) | Non-operating items include costs of $3,066 related to the executive transition and $1,790 related to the loan<br>management system outage. | ||||||||||
| --- | --- |
13
EX-99.2
Exhibit 99.2 1Q 2020 Earnings Call Supplemental Presentation May 6, 2020Exhibit 99.2 1Q 2020 Earnings Call Supplemental Presentation May 6, 2020
Legal Disclosures This document contains summarized information concerning Regional Management Corp. (the “Company”) and the Company’s business, operations, financial performance, and trends. No representation is made that the information in this document is complete. For additional financial, statistical, and business information, please see the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the U.S. Securities and Exchange Commission (the “SEC”), as well as the Company’s other reports filed with the SEC from time to time. Such reports are or will be available on the Company’s website (www.regionalmanagement.com) and on the SEC’s website (www.sec.gov). The information and opinions contained in this document are provided as of the date of this presentation and are subject to change without notice. This document has not been approved by any regulatory or supervisory authority. This presentation, the related remarks, and the responses to various questions 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 the Company’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 the Company. 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 such 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 the Company’s access to liquidity and the credit risk of the Company’s finance receivable portfolio; risks associated with the Company’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 the Company’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 the Company’s asset-backed securitization transactions; changes in interest rates; the risk that the Company’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 the Company; changes in current revenue and expense trends (including trends affecting delinquencies and credit losses); changes in the Company’s markets and general changes in the economy (particularly in the markets served by the Company); changes in the competitive environment in which the Company 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 foregoing factors and others are discussed in greater detail in the Company’s filings with the SEC. The COVID-19 pandemic may also magnify many of these risks and uncertainties. The Company cannot guarantee future events, results, actions, levels of activity, performance, or achievements. The Company will not update or revise forward-looking statements to reflect events or circumstances after the date of this presentation 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. This presentation also contains certain non-GAAP measures. Please refer to the Appendix accompanying this presentation for a reconciliation of non-GAAP measures to the most comparable GAAP measures. 2Legal Disclosures This document contains summarized information concerning Regional Management Corp. (the “Company”) and the Company’s business, operations, financial performance, and trends. No representation is made that the information in this document is complete. For additional financial, statistical, and business information, please see the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the U.S. Securities and Exchange Commission (the “SEC”), as well as the Company’s other reports filed with the SEC from time to time. Such reports are or will be available on the Company’s website (www.regionalmanagement.com) and on the SEC’s website (www.sec.gov). The information and opinions contained in this document are provided as of the date of this presentation and are subject to change without notice. This document has not been approved by any regulatory or supervisory authority. This presentation, the related remarks, and the responses to various questions 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 the Company’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 the Company. 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 such 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 the Company’s access to liquidity and the credit risk of the Company’s finance receivable portfolio; risks associated with the Company’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 the Company’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 the Company’s asset-backed securitization transactions; changes in interest rates; the risk that the Company’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 the Company; changes in current revenue and expense trends (including trends affecting delinquencies and credit losses); changes in the Company’s markets and general changes in the economy (particularly in the markets served by the Company); changes in the competitive environment in which the Company 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 foregoing factors and others are discussed in greater detail in the Company’s filings with the SEC. The COVID-19 pandemic may also magnify many of these risks and uncertainties. The Company cannot guarantee future events, results, actions, levels of activity, performance, or achievements. The Company will not update or revise forward-looking statements to reflect events or circumstances after the date of this presentation 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. This presentation also contains certain non-GAAP measures. Please refer to the Appendix accompanying this presentation for a reconciliation of non-GAAP measures to the most comparable GAAP measures. 2
Proudly Supporting Our Customers and Employees Supporting Our Customers Supporting Our Employees • Our branches remain open and available to service the needs • Created an HR contact center designed to: of our customers ̶ Monitor employee exposure ̶ Substantially all of our branches are open, and we have ̶ Address field employee questions and concerns increased the frequency of cleaning and disinfecting our facilities • Offering contingent pay for employees that test positive for ̶ Strictly following CDC guidelines on social distancing COVID-19 ̶ Loan closings by appointment only, and we also offer • Expanded the PTO policy to provide employees flexibility to curbside closings address personal obligations and to assist in situations where ̶ Branches offer curbside payment drop-off, and employees are unable to work remotely customers are also taking advantage of our customer payment portal • Implemented more frequent cleaning and sanitizing of our branches, and equipped staff with disinfectant and face • Rolling out remote loan closing for customers this month masks • Communicating with our customers to inform them of our • Corporate, centralized employees, and some field staff are borrower assistance programs, ability to pay via electronic working remotely using secure remote access connections and telephonic means, and branch hours • Rolled out several special borrower assistance programs to support our customers ̶ Special renewal and upsell programs to existing customers ̶ Expanded deferral eligibility policies, including waiving late fees 3Proudly Supporting Our Customers and Employees Supporting Our Customers Supporting Our Employees • Our branches remain open and available to service the needs • Created an HR contact center designed to: of our customers ̶ Monitor employee exposure ̶ Substantially all of our branches are open, and we have ̶ Address field employee questions and concerns increased the frequency of cleaning and disinfecting our facilities • Offering contingent pay for employees that test positive for ̶ Strictly following CDC guidelines on social distancing COVID-19 ̶ Loan closings by appointment only, and we also offer • Expanded the PTO policy to provide employees flexibility to curbside closings address personal obligations and to assist in situations where ̶ Branches offer curbside payment drop-off, and employees are unable to work remotely customers are also taking advantage of our customer payment portal • Implemented more frequent cleaning and sanitizing of our branches, and equipped staff with disinfectant and face • Rolling out remote loan closing for customers this month masks • Communicating with our customers to inform them of our • Corporate, centralized employees, and some field staff are borrower assistance programs, ability to pay via electronic working remotely using secure remote access connections and telephonic means, and branch hours • Rolled out several special borrower assistance programs to support our customers ̶ Special renewal and upsell programs to existing customers ̶ Expanded deferral eligibility policies, including waiving late fees 3
Proven Operating Model and Well Positioned to Manage Through the COVID-19 Crisis Our Proven Approach COVID-19 Response • Strong relationship-driven customer • Shifted branch focus toward servicing interaction model allows us to customers and proactively deployed Customer-Centric create responsible lending solutions borrower assistance programs; April 30+ Focus and service our customers’ needs day delinquency rate at 5.4% • Adoption of new scorecards positions • Paused direct mail and digital us well throughout the cycle originations in April to recalibrate risk- adjusted returns • Proactively monitor credit trends to Sound Data- make underwriting adjustments• Restarting these channels in May to Driven Credit achieve acceptable risk-adjusted returns • Large loan upsell strategy provides Underwriting under our severe stress scenario “on us” payment history • Tightened branch credit underwriting • Proven borrower assistance programs using our custom scorecards to mitigate losses • Available liquidity of $110 million as • Reducing discretionary expenses and Significant of May 4, 2020 pacing investments Liquidity and • Liquidity includes $50 million of cash • Benefits from credit programs support Strong Balance capital and liquidity • Conservatively funded debt-to- Sheet tangible equity ratio (1) of 3.2x as of March 31, 2020 (1) This is a non-GAAP measure. Refer to the Appendix (slide 27) for a reconciliation to the most comparable GAAP measure. 4Proven Operating Model and Well Positioned to Manage Through the COVID-19 Crisis Our Proven Approach COVID-19 Response • Strong relationship-driven customer • Shifted branch focus toward servicing interaction model allows us to customers and proactively deployed Customer-Centric create responsible lending solutions borrower assistance programs; April 30+ Focus and service our customers’ needs day delinquency rate at 5.4% • Adoption of new scorecards positions • Paused direct mail and digital us well throughout the cycle originations in April to recalibrate risk- adjusted returns • Proactively monitor credit trends to Sound Data- make underwriting adjustments• Restarting these channels in May to Driven Credit achieve acceptable risk-adjusted returns • Large loan upsell strategy provides Underwriting under our severe stress scenario “on us” payment history • Tightened branch credit underwriting • Proven borrower assistance programs using our custom scorecards to mitigate losses • Available liquidity of $110 million as • Reducing discretionary expenses and Significant of May 4, 2020 pacing investments Liquidity and • Liquidity includes $50 million of cash • Benefits from credit programs support Strong Balance capital and liquidity • Conservatively funded debt-to- Sheet tangible equity ratio (1) of 3.2x as of March 31, 2020 (1) This is a non-GAAP measure. Refer to the Appendix (slide 27) for a reconciliation to the most comparable GAAP measure. 4
Monthly Lending and Collection Activity 30+ Delinquencies Branch Originations $61.6 $60.4 7.5% 7.1% $50.7 6.6% $30.0 5.4% January February March April January February March April % Y/Y Change (0%) 20% 4% (63%) March 1H / 2H 32% / (20%) • January branch originations impacted by system Direct Mail & Digital Originations outage with a strong rebound in February. First half of $25.5 March originations were up 23%, but down 15% in the second half of March due to COVID-19 $16.8 • Second half of March and April originations down due $14.3 to temporary pause in direct mail and digital investments, as well as slow demand in the branch channel $3.3 • Continue to see the benefits of new credit scorecards • April delinquency improvement related to borrower January February March April assistance programs and government stimulus % Y/Y Change 0% (10%) (5%) (82%) March 1H / 2H (15%) / 2% 5 in Millions in MillionsMonthly Lending and Collection Activity 30+ Delinquencies Branch Originations $61.6 $60.4 7.5% 7.1% $50.7 6.6% $30.0 5.4% January February March April January February March April % Y/Y Change (0%) 20% 4% (63%) March 1H / 2H 32% / (20%) • January branch originations impacted by system Direct Mail & Digital Originations outage with a strong rebound in February. First half of $25.5 March originations were up 23%, but down 15% in the second half of March due to COVID-19 $16.8 • Second half of March and April originations down due $14.3 to temporary pause in direct mail and digital investments, as well as slow demand in the branch channel $3.3 • Continue to see the benefits of new credit scorecards • April delinquency improvement related to borrower January February March April assistance programs and government stimulus % Y/Y Change 0% (10%) (5%) (82%) March 1H / 2H (15%) / 2% 5 in Millions in Millions
Significant Capacity to Absorb Losses Our balance sheet is in a strong position to absorb losses Absorption Capacity (in millions) 1Q 20 Total stockholders' equity $251.4 Allowance for credit losses $142.4 Total absorption capacity $393.8 Absorption capacity as % of net finance receivables 35.7% (1) TTM Margin (revenue less G&A and interest expense) $164.4 Additional capacity using TTM margin 14.9% Total absorption capacity with TTM margin 50.6% (2) TTM Net credit loss rate 9.5% Net finance receivables $1,102.3 (1) TTM Margin defined as total revenue of $370.0 million, less general and administrative expenses of $165.0 million and interest expense of $40.6 million from 2Q 19 through 1Q 20 (2) Net credit losses as a percentage of average net finance receivables 6Significant Capacity to Absorb Losses Our balance sheet is in a strong position to absorb losses Absorption Capacity (in millions) 1Q 20 Total stockholders' equity $251.4 Allowance for credit losses $142.4 Total absorption capacity $393.8 Absorption capacity as % of net finance receivables 35.7% (1) TTM Margin (revenue less G&A and interest expense) $164.4 Additional capacity using TTM margin 14.9% Total absorption capacity with TTM margin 50.6% (2) TTM Net credit loss rate 9.5% Net finance receivables $1,102.3 (1) TTM Margin defined as total revenue of $370.0 million, less general and administrative expenses of $165.0 million and interest expense of $40.6 million from 2Q 19 through 1Q 20 (2) Net credit losses as a percentage of average net finance receivables 6
1Q 20 Financial Highlights dollars in millions 1Q 20 1Q 19 $ Chg B/(W) % Chg B/(W) (except per share amounts) Average net finance receivables (ANR) $ 1 ,123.3 $ 9 44.8 $ 178.6 18.9% Interest & fee income 87.0 74.3 12.7 17.1% Total revenue 96.1 81.7 14.3 17.5% Provision for credit losses 49.5 23.3 (26.2) (112.1%) G&A expense 46.2 38.2 (8.1) (21.1%) Interest expense 10.2 9.7 (0.4) (4.5%) Net income (loss) (6.3) 8.1 (14.4) (178.0%) ROA (2.3%) 3.4% (5.7%) (167.6%) ROE (9.4%) 11.5% (20.9%) (181.7%) Diluted EPS $ (0.56) $ 0 .67 $ (1.23) (183.6%) • Net loss of $6.3 million, or $0.56 diluted loss per share • Total revenue growth of 17.5% driven by $178.6 million year-over-year average portfolio growth ₋ Interest and fee income up 17.1% year-over-year on 18.9% increase in average net finance receivables ₋ Insurance income, net increased $1.8 million, driven by an increase in premium revenue and a decrease in non-file insurance claims expense (due to the previously disclosed change in business practice to lower the utilization of non-file insurance), partially offset by a $1.3 million reserve for COVID-19 unemployment insurance claims • Provision for credit losses up 112.1%, or $26.2 million, primarily due to: ₋ $23.9 million increase in the allowance for credit losses resulting from COVID-19 ₋ 18.9% increase in average net finance receivables • Operating expense ratio increased 0.3% over prior year to 16.5% ₋ 1Q 20 included approximately $3.8 million of non-operating costs; $3.1 million related to the executive transition and $0.7 million from the system outage • Interest expense increase of 4.5%, primarily due to portfolio growth, offset by Fed rate decreases 71Q 20 Financial Highlights dollars in millions 1Q 20 1Q 19 $ Chg B/(W) % Chg B/(W) (except per share amounts) Average net finance receivables (ANR) $ 1 ,123.3 $ 9 44.8 $ 178.6 18.9% Interest & fee income 87.0 74.3 12.7 17.1% Total revenue 96.1 81.7 14.3 17.5% Provision for credit losses 49.5 23.3 (26.2) (112.1%) G&A expense 46.2 38.2 (8.1) (21.1%) Interest expense 10.2 9.7 (0.4) (4.5%) Net income (loss) (6.3) 8.1 (14.4) (178.0%) ROA (2.3%) 3.4% (5.7%) (167.6%) ROE (9.4%) 11.5% (20.9%) (181.7%) Diluted EPS $ (0.56) $ 0 ..67 $ (1.23) (183.6%) • Net loss of $6.3 million, or $0.56 diluted loss per share • Total revenue growth of 17.5% driven by $178.6 million year-over-year average portfolio growth ₋ Interest and fee income up 17.1% year-over-year on 18.9% increase in average net finance receivables ₋ Insurance income, net increased $1.8 million, driven by an increase in premium revenue and a decrease in non-file insurance claims expense (due to the previously disclosed change in business practice to lower the utilization of non-file insurance), partially offset by a $1.3 million reserve for COVID-19 unemployment insurance claims • Provision for credit losses up 112.1%, or $26.2 million, primarily due to: ₋ $23.9 million increase in the allowance for credit losses resulting from COVID-19 ₋ 18.9% increase in average net finance receivables • Operating expense ratio increased 0.3% over prior year to 16.5% ₋ 1Q 20 included approximately $3.8 million of non-operating costs; $3.1 million related to the executive transition and $0.7 million from the system outage • Interest expense increase of 4.5%, primarily due to portfolio growth, offset by Fed rate decreases 7
1Q 20 Adjustments to GAAP Results GAAP COVID-19 Non-Operating Non-GAAP in millions (1) (2) (except per share amounts) Results Impact Items Results Total revenue $96.1 $1.3 $0.4 $97.8 Provision for credit losses 49.5 (23.9) (0.7) 24.9 G&A expense 46.2 - (3.8) 42.5 Interest expense 10.2 - - 10.2 Income (loss) before income taxes (9.9) 25.2 4.9 20.2 Income taxes (3.5) 9.2 1.8 7.4 Net income (loss) ($6.3) $16.1 $3.1 $12.8 Diluted earnings (losses) per share ($0.56) $1.43 $0.27 $1.14 Diluted share count 11.3 11.3 11.3 11.3 (1) COVID-19 impact includes $23.9 million for allowance for credit losses and a $1.3 million reserve for unemployment insurance claims (2) Non-operating items include $3.1 million of executive transition costs and $1.8 million related to the system outage 81Q 20 Adjustments to GAAP Results GAAP COVID-19 Non-Operating Non-GAAP in millions (1) (2) (except per share amounts) Results Impact Items Results Total revenue $96.1 $1.3 $0.4 $97.8 Provision for credit losses 49.5 (23.9) (0.7) 24.9 G&A expense 46.2 - (3.8) 42.5 Interest expense 10.2 - - 10.2 Income (loss) before income taxes (9.9) 25.2 4.9 20.2 Income taxes (3.5) 9.2 1.8 7.4 Net income (loss) ($6.3) $16.1 $3.1 $12.8 Diluted earnings (losses) per share ($0.56) $1.43 $0.27 $1.14 Diluted share count 11.3 11.3 11.3 11.3 (1) COVID-19 impact includes $23.9 million for allowance for credit losses and a $1.3 million reserve for unemployment insurance claims (2) Non-operating items include $3.1 million of executive transition costs and $1.8 million related to the system outage 8
1Q 20 GAAP Results vs. 1Q 19 ($6.3) (1) Includes adjustments for $23.9 million of COVID-19 impacts, a $1.3 million reserve for unemployment insurance claims, costs of $3.1 million related to the executive transition, and $1.8 million related to the loan management system outage 91Q 20 GAAP Results vs. 1Q 19 ($6.3) (1) Includes adjustments for $23.9 million of COVID-19 impacts, a $1.3 million reserve for unemployment insurance claims, costs of $3.1 million related to the executive transition, and $1.8 million related to the loan management system outage 9
1Q 20 Non-GAAP Results Impacted by COVID-19 ($6.3) $1.70 (1) COVID-19 impact includes $23.9 million for allowance for credit losses and a $1.3 million reserve for unemployment claims (2) Non-operating items include $3.1 million of executive transition costs and $1.8 million related to the system outage 101Q 20 Non-GAAP Results Impacted by COVID-19 ($6.3) $1.70 (1) COVID-19 impact includes $23.9 million for allowance for credit losses and a $1.3 million reserve for unemployment claims (2) Non-operating items include $3.1 million of executive transition costs and $1.8 million related to the system outage 10
Strong Portfolio Growth Ending Net Finance Receivables (ENR) vs. 4Q 19 vs. 1Q 19 in millions 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 $ Chg I/(D) % Chg I/(D) $ Chg I/(D) % Chg I/(D) Small loans (≤ $2,500) $380 $364 $389 $419 $442 $426 $435 $454 $468 $440 ($27) (5.8%) $14 3.4% Large loans (≥ $2,500) 359 377 406 424 452 455 516 575 632 633 1 0.1% 177 39.0% Core loan products $739 $741 $794 $843 $895 $881 $951 $1,029 $1,100 $1,073 ($27) (2.4%) $192 21.8% Automobile loans 62 49 40 32 26 21 16 12 10 8 (2) (21.9%) (13) (63.4%) Retail loans 33 32 31 31 30 29 28 26 24 22 (2) (9.2%) (7) (25.4%) Total $834 $822 $865 $906 $951 $931 $995 $1,067 $1,133 $1,102 ($31) (2.7%) $171 18.4% Total YoY Δ ($) $105 $115 $126 $117 $117 $109 $130 $161 $182 $171 Total YoY Δ (%) 14.4% 16.3% 17.0% 14.8% 14.0% 13.3% 15.0% 17.8% 19.2% 18.4% • 20 consecutive quarters of year-over-year double-digit growth in ending net finance receivables • Strong core loan growth of 22% from prior year 11Strong Portfolio Growth Ending Net Finance Receivables (ENR) vs. 4Q 19 vs. 1Q 19 in millions 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 $ Chg I/(D) % Chg I/(D) $ Chg I/(D) % Chg I/(D) Small loans (≤ $2,500) $380 $364 $389 $419 $442 $426 $435 $454 $468 $440 ($27) (5.8%) $14 3.4% Large loans (≥ $2,500) 359 377 406 424 452 455 516 575 632 633 1 0.1% 177 39.0% Core loan products $739 $741 $794 $843 $895 $881 $951 $1,029 $1,100 $1,073 ($27) (2.4%) $192 21.8% Automobile loans 62 49 40 32 26 21 16 12 10 8 (2) (21.9%) (13) (63.4%) Retail loans 33 32 31 31 30 29 28 26 24 22 (2) (9.2%) (7) (25.4%) Total $834 $822 $865 $906 $951 $931 $995 $1,067 $1,133 $1,102 ($31) (2.7%) $171 18.4% Total YoY Δ ($) $105 $115 $126 $117 $117 $109 $130 $161 $182 $171 Total YoY Δ (%) 14.4% 16.3% 17.0% 14.8% 14.0% 13.3% 15.0% 17.8% 19.2% 18.4% • 20 consecutive quarters of year-over-year double-digit growth in ending net finance receivables • Strong core loan growth of 22% from prior year 11
Strong Revenue Growth Driven by Portfolio Growth Revenue $98.0 $96.1 $100.0 • Total revenue increased 17.5% vs. $91.7 the prior-year period $90.0 $84.3 $83.7 $81.7 $77.9 $80.0• Interest and fee yield decreased 50 $72.6 $72.4 $72.1 basis points vs. the prior-year $70.0 period, as large loan portfolio $60.0 growth outpaced higher-yielding small loan growth $50.0 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 • As of March 31, 2020, 77.8% of net Interest and Fee Income Insurance Income Other Income finance receivables were at or below 4.2% 0.7% (0.3%) 7.6% 7.5% (2.4%) 3.1% 8.8% 6.8% (1.9%) Sequential Δ 36% APR YoY Δ 12.6% 10.3% 10.8% 12.6% 16.1% 12.6% 16.4% 17.7% 17.0% 17.5% Total Revenue and Interest & Fee Yields Average Net Finance Receivables 40.0% $1,200 Includes $1.3 $1,123 $1,098 million IUI reserve $1,100 37.5% $1,034 35.9% 35.7% $1,000 35.5% 35.5% $955 35.3% $945 35.1% $933 34.9% 34.6% 34.6% 35.0% 34.2% $888 $900 $837 $833 $813 32.7% 32.5% 32.2% 32.1% 32.0% $800 31.9% 32.5% 31.8% 31.8% 31.5% 31.0% $700 30.0% 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 $600 Total Revenue Yield Interest and Fee Yield 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Sequential Δ 5.9% 2.5% 0.5% 6.2% 5.0% 1.3% 1.1% 8.3% 6.2% 2.3% Sequential Δ (0.6%) (0.6%) (0.3%) 0.5% 0.8% (1.3%) 0.7% 0.2% 0.2% (1.5%) YoY Δ 13.2% 15.5% 16.3% 15.8% 14.8% 13.5% 14.1% 16.4% 17.8% 18.9% YoY Δ (0.2%) (1.6%) (1.7%) (1.0%) 0.4% (0.3%) 0.7% 0.4% (0.2%) (0.4%) Note: Table above reflects changes in total revenue yield 12 Millions MillionsStrong Revenue Growth Driven by Portfolio Growth Revenue $98.0 $96.1 $100.0 • Total revenue increased 17.5% vs. $91.7 the prior-year period $90.0 $84.3 $83.7 $81.7 $77.9 $80.0• Interest and fee yield decreased 50 $72.6 $72.4 $72.1 basis points vs. the prior-year $70.0 period, as large loan portfolio $60.0 growth outpaced higher-yielding small loan growth $50.0 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 • As of March 31, 2020, 77.8% of net Interest and Fee Income Insurance Income Other Income finance receivables were at or below 4.2% 0.7% (0.3%) 7.6% 7.5% (2.4%) 3.1% 8.8% 6.8% (1.9%) Sequential Δ 36% APR YoY Δ 12.6% 10.3% 10.8% 12.6% 16.1% 12.6% 16.4% 17.7% 17.0% 17.5% Total Revenue and Interest & Fee Yields Average Net Finance Receivables 40.0% $1,200 Includes $1.3 $1,123 $1,098 million IUI reserve $1,100 37.5% $1,034 35.9% 35.7% $1,000 35.5% 35.5% $955 35.3% $945 35.1% $933 34.9% 34.6% 34.6% 35.0% 34.2% $888 $900 $837 $833 $813 32.7% 32.5% 32.2% 32.1% 32.0% $800 31.9% 32.5% 31.8% 31.8% 31.5% 31.0% $700 30.0% 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 $600 Total Revenue Yield Interest and Fee Yield 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Sequential Δ 5.9% 2.5% 0.5% 6.2% 5.0% 1.3% 1.1% 8.3% 6.2% 2.3% Sequential Δ (0.6%) (0.6%) (0.3%) 0.5% 0.8% (1.3%) 0.7% 0.2% 0.2% (1.5%) YoY Δ 13.2% 15.5% 16.3% 15.8% 14.8% 13.5% 14.1% 16.4% 17.8% 18.9% YoY Δ (0.2%) (1.6%) (1.7%) (1.0%) 0.4% (0.3%) 0.7% 0.4% (0.2%) (0.4%) Note: Table above reflects changes in total revenue yield 12 Millions Millions
Recent Net Credit Loss Trends • Annualized net credit loss rate decreased 20 basis points vs. the prior-year period. Net credit losses in 1Q 20 include 20 basis points of incremental non-file insurance claims (bankruptcy losses) that shifted to net credit losses following the business policy change implemented in 4Q 18 and 30 basis points of net credit losses related to the system outage at the beginning of 1Q 20. Net credit losses in 1Q 19 include 40 basis points of hurricane-related credit losses from the 2018 hurricane. 12.0% Net Credit Loss Rates 10.7% 10.5% 10.4% 9.9% 10.0% 9.3% 9.0% 8.9% 8.8% 8.1% 7.6% 8.0% 6.0% 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Sequential Δ 1.1% 1.1% (0.6%) (1.7%) 1.3% 1.8% (0.3%) (2.3%) 0.9% 1.5% Year/Year Δ (0.8%) (0.9%) (0.5%) (0.1%) 0.1% 0.8% 1.1% 0.5% 0.1% (0.2%) Net credit loss rate above includes: Non-file claims 0.4% 0.3% 0.2% 0.3% 0.8% 0.7% 0.7% 0.7% 0.9% 0.9% System outage - - - - - - - - - 0.3% Hurricane losses - 0.4% 0.5% - 0.1% 0.4% 0.6% - - - 13 Annualized % of ANRRecent Net Credit Loss Trends • Annualized net credit loss rate decreased 20 basis points vs. the prior-year period. Net credit losses in 1Q 20 include 20 basis points of incremental non-file insurance claims (bankruptcy losses) that shifted to net credit losses following the business policy change implemented in 4Q 18 and 30 basis points of net credit losses related to the system outage at the beginning of 1Q 20. Net credit losses in 1Q 19 include 40 basis points of hurricane-related credit losses from the 2018 hurricane. 12.0% Net Credit Loss Rates 10.7% 10.5% 10.4% 9.9% 10.0% 9.3% 9.0% 8.9% 8.8% 8.1% 7.6% 8.0% 6.0% 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Sequential Δ 1.1% 1.1% (0.6%) (1.7%) 1.3% 1.8% (0.3%) (2.3%) 0.9% 1.5% Year/Year Δ (0.8%) (0.9%) (0.5%) (0.1%) 0.1% 0.8% 1.1% 0.5% 0.1% (0.2%) Net credit loss rate above includes: Non-file claims 0.4% 0.3% 0.2% 0.3% 0.8% 0.7% 0.7% 0.7% 0.9% 0.9% System outage - - - - - - -
-
- 0.3% Hurricane losses - 0.4% 0.5% - 0.1% 0.4% 0.6% - - - 13 Annualized % of ANR
Seasonal Pattern of Delinquency • 1Q 20 delinquency is down from prior year ₋ 30+ days past due of 6.6% is 30 basis points lower than prior year ₋ 90+ days past due of 3.2% is 20 basis points lower than prior year 30+ & 90+ Delinquency Rates 12.0% $35.5 $75.0 $32.4 $35.0 10.0% $29.6 $60.0 $31.8 $25.6 $26.3 $27.6 8.0% $22.1 $26.5 7.6% $45.0 7.4% 7.0% 7.0% 6.9% 6.0% 6.6% 6.5% 6.4% 6.3% 6.2% $30.0 3.4% 3.3% 3.4% 4.0% 3.2% 3.2% 3.1% 2.8% 2.8% 2.6% 2.6% $15.0 2.0% $34.2 $26.5 $31.2 $37.8 $40.1 $32.1 $36.2 $39.3 $44.1 $37.4 $- - 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 30-89 Days 90-179 Days 30+ DQ % 90+ DQ % 30+ DQ 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Sequential Δ 0.6% (1.0%) (0.2%) 0.8% 0.6% (0.7%) (0.6%) 0.2% 0.5% (0.4%) YoY Δ - - (0.3%) 0.2% 0.2% 0.5% 0.1% (0.5%) (0.6%) (0.3%) 90+ DQ 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Sequential Δ 0.4% (0.1%) (0.6%) 0.2% 0.6% - (0.8%) 0.2% 0.3% 0.1% YoY Δ (0.2%) 0.2% (0.1%) (0.1%) 0.1% 0.2% - - (0.3%) (0.2%) 14 Delinquency in Millions % of ENRSeasonal Pattern of Delinquency • 1Q 20 delinquency is down from prior year ₋ 30+ days past due of 6.6% is 30 basis points lower than prior year ₋ 90+ days past due of 3.2% is 20 basis points lower than prior year 30+ & 90+ Delinquency Rates 12.0% $35.5 $75.0 $32.4 $35.0 10.0% $29.6 $60.0 $31.8 $25.6 $26.3 $27.6 8.0% $22.1 $26.5 7.6% $45.0 7.4% 7.0% 7.0% 6.9% 6.0% 6.6% 6.5% 6.4% 6.3% 6.2% $30.0 3.4% 3.3% 3.4% 4.0% 3.2% 3.2% 3.1% 2.8% 2.8% 2.6% 2.6% $15.0 2.0% $34.2 $26.5 $31.2 $37.8 $40.1 $32.1 $36.2 $39.3 $44.1 $37.4 $- - 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 30-89 Days 90-179 Days 30+ DQ % 90+ DQ % 30+ DQ 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Sequential Δ 0.6% (1.0%) (0.2%) 0.8% 0.6% (0.7%) (0.6%) 0.2% 0.5% (0.4%) YoY Δ - - (0.3%) 0.2% 0.2% 0.5% 0.1% (0.5%) (0.6%) (0.3%) 90+ DQ 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Sequential Δ 0.4% (0.1%) (0.6%) 0.2% 0.6% - (0.8%) 0.2% 0.3% 0.1% YoY Δ (0.2%) 0.2% (0.1%) (0.1%) 0.1% 0.2% - - (0.3%) (0.2%) 14 Delinquency in Millions % of ENR
CECL Implementation with Related Stress from COVID-19 We ran several macroeconomic stress scenarios, and our final forecast contemplated the following: a 34% peak-to-trough decrease in GDP in the second quarter and unemployment increasing to 20% in the second quarter of 2020, with a decline to 7% by mid-2021. The macroeconomic scenario was adjusted for the potential benefits of the federal stimulus and internal borrower assistance programs. (in millions) $20.1 $142.4 $60.1 $122.3 $62.2 4Q 19 Ending Jan. 1st CECL 1Q 20 Beginning 1Q 20 Reserve 1Q 20 Ending (1) Reserves Implementation Reserve Build Reserves Reserves as % of ENR 5.5% 5.3% 10.8% 2.1% 12.9% (1) Includes $23.9 million of COVID-19 impact (less $3.8 million primarily related to portfolio liquidation) 15CECL Implementation with Related Stress from COVID-19 We ran several macroeconomic stress scenarios, and our final forecast contemplated the following: a 34% peak-to-trough decrease in GDP in the second quarter and unemployment increasing to 20% in the second quarter of 2020, with a decline to 7% by mid-2021. The macroeconomic scenario was adjusted for the potential benefits of the federal stimulus and internal borrower assistance programs. (in millions) $20.1 $142.4 $60.1 $122.3 $62.2 4Q 19 Ending Jan. 1st CECL 1Q 20 Beginning 1Q 20 Reserve 1Q 20 Ending (1) Reserves Implementation Reserve Build Reserves Reserves as % of ENR 5.5% 5.3% 10.8% 2.1% 12.9% (1) Includes $23.9 million of COVID-19 impact (less $3.8 million primarily related to portfolio liquidation) 15
Achieving Operating Leverage • 1Q 20 includes 135 basis points of non-operating costs; $3.1 million related to the executive transition and $0.7 million from the system outage $50.0 19.0% $46.2 Operating Expense Ratio $40.9 $40.2 $40.0 18.0% $38.2 $37.7 $36.6 $35.9 $34.6 $34.0 $33.2 $30.0 17.0% 16.7% 16.6% 16.5% 16.2% 15.9% 15.8% $20.0 16.0% 15.7% 16.1% 15.5% 15.1% 14.9% $10.0 15.0% $- 14.0% 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Total SG&A Expenses % of ANR (1) Non-GAAP % of ANR (1) As % of ANR (1) 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Year/Year Δ 0.6% (0.9%) (1.7%) (1.5%) (1.0%) (0.4%) (0.1%) (0.6%) (0.8%) 0.3% (1) Annualized general and administrative expenses as a percentage of average net finance receivables 16 Millions % of ANRAchieving Operating Leverage • 1Q 20 includes 135 basis points of non-operating costs; $3.1 million related to the executive transition and $0.7 million from the system outage $50.0 19.0% $46.2 Operating Expense Ratio $40.9 $40.2 $40.0 18.0% $38.2 $37.7 $36.6 $35.9 $34.6 $34.0 $33.2 $30.0 17.0% 16.7% 16.6% 16.5% 16.2% 15.9% 15.8% $20.0 16.0% 15.7% 16.1% 15.5% 15.1% 14.9% $10.0 15.0% $- 14.0% 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Total SG&A Expenses % of ANR (1) Non-GAAP % of ANR (1) As % of ANR (1) 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Year/Year Δ 0.6% (0.9%) (1.7%) (1.5%) (1.0%) (0.4%) (0.1%) (0.6%) (0.8%) 0.3% (1) Annualized general and administrative expenses as a percentage of average net finance receivables 16 Millions % of ANR
Cost of Funds Trending Downward $12.0 12.0% $10.3 $10.3 $10.2 $9.8 $9.7 $9.6 $10.0 10.0% $8.7 $7.9 $8.0 8.0% $7.2 $6.8 $6.0 6.0% 4.1% 4.1% 4.1% 4.0% 4.0% 3.7% 3.7% 3.6% 3.5% 3.4% $4.0 4.0% $2.0 2.0% $- - 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 (1) Interest Expense % of ANR As % of ANR (1) 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Year/Year Δ 0.4% 0.7% 0.8% 0.5% 0.7% 0.6% 0.4% - (0.4%) (0.5%) • 1Q 20 annualized interest expense as a percentage of average net finance receivables decreased 50 basis points from the prior-year period • Senior revolver has a 1% LIBOR floor; as such we are nearing the lower end of our cost of funds (1) Annualized interest expense as a percentage of average net finance receivables 17 Millions % of ANRCost of Funds Trending Downward $12.0 12.0% $10.3 $10.3 $10.2 $9.8 $9.7 $9.6 $10.0 10.0% $8.7 $7.9 $8.0 8.0% $7.2 $6.8 $6.0 6.0% 4.1% 4.1% 4.1% 4.0% 4.0% 3.7% 3.7% 3.6% 3.5% 3.4% $4.0 4.0% $2.0 2.0% $- - 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 (1) Interest Expense % of ANR As % of ANR (1) 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Year/Year Δ 0.4% 0.7% 0.8% 0.5% 0.7% 0.6% 0.4% - (0.4%) (0.5%) • 1Q 20 annualized interest expense as a percentage of average net finance receivables decreased 50 basis points from the prior-year period • Senior revolver has a 1% LIBOR floor; as such we are nearing the lower end of our cost of funds (1) Annualized interest expense as a percentage of average net finance receivables 17 Millions % of ANR
Strong Funding Profile Debt Capacity • As of March 31, 2020, total undrawn capacity was $400 million (subject to $500 borrowing base) $400 $94 $70 $95 • $130 million securitization in 4Q 19 $74 $79 $120 $43 $300 $34 increased capacity $34 $59 $200 • Fixed-rate debt represents 53% of $339 $329 $312 $294 $287 $291 $277 total debt $257 $224 $100 $188 • Senior revolver has a 1% LIBOR $- floor; as such we are nearing the 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 lower end of our cost of funds Undrawn Senior Revolver Capacity Undrawn Warehouse Capacity Funded Debt Ratios Fixed vs Variable Debt 3.50 3.21 3.09 100% 2.76 3.00 2.67 2.50 2.45 2.39 2.37 80% 2.50 47.2% 49.2% 54.2% 2.00 60% 90.7% 1.50 40% 1.00 0.72 0.69 0.69 0.70 52.8% 50.8% 45.8% 20% 0.50 9.3% - - 2017 2018 2019 1Q 20 2017 2018 2019 1Q 20 Funded Debt Ratio (Debt / Assets) Funded Debt-to-Equity Ratio (1) % Fixed Debt % Variable Debt Funded Debt-to-Tangible Equity Ratio Interest 3.2% 3.7% 4.0% 3.6% Expense % (2) (1) This is a non-GAAP measure. Refer to the Appendix for a reconciliation to the most comparable GAAP measure. (2) Interest expense as a percentage of average net finance receivables 18 MillionsStrong Funding Profile Debt Capacity • As of March 31, 2020, total undrawn capacity was $400 million (subject to $500 borrowing base) $400 $94 $70 $95 • $130 million securitization in 4Q 19 $74 $79 $120 $43 $300 $34 increased capacity $34 $59 $200 • Fixed-rate debt represents 53% of $339 $329 $312 $294 $287 $291 $277 total debt $257 $224 $100 $188 • Senior revolver has a 1% LIBOR $- floor; as such we are nearing the 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 lower end of our cost of funds Undrawn Senior Revolver Capacity Undrawn Warehouse Capacity Funded Debt Ratios Fixed vs Variable Debt 3.50 3.21 3.09 100% 2.76 3.00 2.67 2.50 2.45 2.39 2.37 80% 2.50 47.2% 49.2% 54.2% 2.00 60% 90.7% 1.50 40% 1.00 0.72 0.69 0.69 0.70 52.8% 50.8% 45.8% 20% 0.50 9.3% - - 2017 2018 2019 1Q 20 2017 2018 2019 1Q 20 Funded Debt Ratio (Debt / Assets) Funded Debt-to-Equity Ratio (1) % Fixed Debt % Variable Debt Funded Debt-to-Tangible Equity Ratio Interest 3.2% 3.7% 4.0% 3.6% Expense % (2) (1) This is a non-GAAP measure. Refer to the Appendix for a reconciliation to the most comparable GAAP measure. (2) Interest expense as a percentage of average net finance receivables 18 Millions
AppendixAppendix
Same Store Portfolio Growth (1) • Same store portfolio growth in 1Q 20 of 17.6% vs. 12.0% in the prior-year period • Considerable growth opportunities in our existing branch footprint, particularly from branches opened within the last 3 years • Wisconsin de novo branches moved from <1 year to 1-3 year cohort, driving the ENR per branch below the 2019 1-3 year cohort Ending Net Finance Receivables Per Branch $3,500 1Q 19 $3,000 1Q 20 $2,500 $2,000 $3,221 $3,218 $1,500 $2,803 $2,560 $2,386 $2,057 $1,000 $500 $505 $452 $- < 1 Year 1-3 Years 3-5 Years 5+ Years # of Branches (1Q 20) 17 31 37 283 # of Branches (1Q 19) 23 20 65 252 (1) Same store sales are based on branches more than 1 year old 20 ENR per Branch (in thousands)Same Store Portfolio Growth (1) • Same store portfolio growth in 1Q 20 of 17.6% vs. 12.0% in the prior-year period • Considerable growth opportunities in our existing branch footprint, particularly from branches opened within the last 3 years • Wisconsin de novo branches moved from <1 year to 1-3 year cohort, driving the ENR per branch below the 2019 1-3 year cohort Ending Net Finance Receivables Per Branch $3,500 1Q 19 $3,000 1Q 20 $2,500 $2,000 $3,221 $3,218 $1,500 $2,803 $2,560 $2,386 $2,057 $1,000 $500 $505 $452 $- < 1 Year 1-3 Years 3-5 Years 5+ Years # of Branches (1Q 20) 17 31 37 283 # of Branches (1Q 19) 23 20 65 252 (1) Same store sales are based on branches more than 1 year old 20 ENR per Branch (in thousands)
Digitally-Sourced Originations • Digital originations are sourced from either our affiliate partnerships or directly from our website • All digitally-sourced loans are underwritten in our branches by our custom credit scorecards and serviced by our branches • As of 1Q 20, our digitally-sourced volume represented approximately 15% of our total new borrower volume, inclusive of convenience checks cashed ─ Large loans represented 63% of digitally-sourced loans booked Digitally-Sourced Origination Volume Trend $18,000 $15,967 24.0% $16,000 $14,768 22.0% $14,000 $12,202 21.8% $11,624 $12,000 20.0% $10,803 20.8% $9,540 $10,000 18.0% 18.8% 16.3% 18.6% $7,406 $8,000 $6,278 16.0% 14.6% $6,000 15.2% 14.0% $4,000 14.2% 12.0% $2,000 $- 10.0% 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Small Loans Large Loans % of New Borrowers 21 Thousands % of New Borrower VolumeDigitally-Sourced Originations • Digital originations are sourced from either our affiliate partnerships or directly from our website • All digitally-sourced loans are underwritten in our branches by our custom credit scorecards and serviced by our branches • As of 1Q 20, our digitally-sourced volume represented approximately 15% of our total new borrower volume, inclusive of convenience checks cashed ─ Large loans represented 63% of digitally-sourced loans booked Digitally-Sourced Origination Volume Trend $18,000 $15,967 24.0% $16,000 $14,768 22.0% $14,000 $12,202 21.8% $11,624 $12,000 20.0% $10,803 20.8% $9,540 $10,000 18.0% 18.8% 16.3% 18.6% $7,406 $8,000 $6,278 16.0% 14.6% $6,000 15.2% 14.0% $4,000 14.2% 12.0% $2,000 $- 10.0% 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Small Loans Large Loans % of New Borrowers 21 Thousands % of New Borrower Volume
Achieving Operating Leverage • 1Q 20 includes 470 basis points related to the impact of non-operating items, including the executive transition, loan management system outage, and unemployment insurance claim reserves related to COVID-19 50.0 60.0% Efficiency Ratio $46.2 $40.9 $40.2 55.0% $38.2 40.0 $37.7 $36.6 $35.9 $34.6 $34.0 $33.2 50.0% 48.1% 47.6% 47.2% 46.7% 30.0 46.0% 45.9% 44.8% 43.8% 43.7% 45.0% 43.4% 41.7% 20.0 40.0% 10.0 35.0% $- 30.0% 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Total SG&A Expenses % of Revenue Non-GAAP % of Revenue As % of Revenue 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Year/Year Δ 2.2% (0.2%) (2.5%) (2.9%) (3.5%) (0.9%) (1.1%) (2.2%) (2.0%) 1.4% 22 Millions % of RevenueAchieving Operating Leverage • 1Q 20 includes 470 basis points related to the impact of non-operating items, including the executive transition, loan management system outage, and unemployment insurance claim reserves related to COVID-19 50.0 60.0% Efficiency Ratio $46.2 $40.9 $40.2 55.0% $38.2 40.0 $37.7 $36.6 $35.9 $34.6 $34.0 $33.2 50.0% 48.1% 47.6% 47.2% 46.7% 30.0 46.0% 45.9% 44.8% 43.8% 43.7% 45.0% 43.4% 41.7% 20.0 40.0% 10.0 35.0% $- 30.0% 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Total SG&A Expenses % of Revenue Non-GAAP % of Revenue As % of Revenue 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 Year/Year Δ 2.2% (0.2%) (2.5%) (2.9%) (3.5%) (0.9%) (1.1%) (2.2%) (2.0%) 1.4% 22 Millions % of Revenue
Diversified Liquidity Profile §§ L Lo on ng g h hi is st to or ry y o of f l li iq qu ui id di it ty y s su up pp po or rt t f fr ro om m a a s st tr ro on ng g g gr ro ou up p o of f b ba an nk ki in ng g p pa ar rt tn ne er rs s §§ D Di iv ve er rs si if fi ie ed d f fu un nd di in ng g p pl la at tf fo or rm m w wi it th h a a s se en ni io or r r re ev vo ol lv vi in ng g f fa ac ci il li it ty y, , w wa ar re eh ho ou us se e f fa ac ci il li it ty y, , a an nd d s se ec cu ur ri it ti iz za at ti io on ns s Senior Revolver Warehouse Facility Large Loan Securitizations § Size: $640 million§ Size: Up to $150 million§ Size: Successfully completed three transactions totaling $410 million § Interest Type: Floating§ Interest Type: Floating § Interest Type: Fixed § Maturity: September 2022§ Maturity: April 2022 § Maturities: § Lenders: Wells Fargo Bank (Agent), § Administrative Agent: Wells Fargo $150 million, Jul. 2027, WAC – 3.93% Bank of America, BMO Harris, First Bank $130 million, Jan. 2028, WAC – 4.87% Tennessee, Texas Capital, Synovus, $130 million, Nov. 2028, WAC – 3.17% Bank United, Axos Bank§ Structuring Agent: Credit Suisse § Lenders: Qualified institutional investors § Collateral: Allows for the funding of § Collateral: Allows for the funding of Small, Large, and Retail loans Large Loans § Collateral: Allows for the funding of Large Loans § Facility has been upsized and renewed multiple times over the last 30 years § Amendment added flexibility to execute on small loan securitizations and warehouse facilities 23Diversified Liquidity Profile §§ L Lo on ng g h hi is st to or ry y o of f l li iq qu ui id di it ty y s su up pp po or rt t f fr ro om m a a s st tr ro on ng g g gr ro ou up p o of f b ba an nk ki in ng g p pa ar rt tn ne er rs s §§ D Di iv ve er rs si if fi ie ed d f fu un nd di in ng g p pl la at tf fo or rm m w wi it th h a a s se en ni io or r r re ev vo ol lv vi in ng g f fa ac ci il li it ty y, , w wa ar re eh ho ou us se e f fa ac ci il li it ty y, , a an nd d s se ec cu ur ri it ti iz za at ti io on ns s Senior Revolver Warehouse Facility Large Loan Securitizations § Size: $640 million§ Size: Up to $150 million§ Size: Successfully completed three transactions totaling $410 million § Interest Type: Floating§ Interest Type: Floating § Interest Type: Fixed § Maturity: September 2022§ Maturity: April 2022 § Maturities: § Lenders: Wells Fargo Bank (Agent), § Administrative Agent: Wells Fargo $150 million, Jul. 2027, WAC – 3.93% Bank of America, BMO Harris, First Bank $130 million, Jan. 2028, WAC – 4.87% Tennessee, Texas Capital, Synovus, $130 million, Nov. 2028, WAC – 3.17% Bank United, Axos Bank§ Structuring Agent: Credit Suisse § Lenders: Qualified institutional investors § Collateral: Allows for the funding of § Collateral: Allows for the funding of Small, Large, and Retail loans Large Loans § Collateral: Allows for the funding of Large Loans § Facility has been upsized and renewed multiple times over the last 30 years § Amendment added flexibility to execute on small loan securitizations and warehouse facilities 23
Consolidated Income Statements in thousands 1Q 20 1Q 19 2019 2018 2017 2016 Revenue Interest and fee income $ 8 6,997 $ 74,322 $ 321,169 $ 280,121 $ 249,034 $ 220,963 Insurance income, net 5,949 4,113 20,817 14,793 13,061 9,456 Other income 3,128 3,313 13,727 11,792 10,364 10,099 Total revenue 96,074 81,748 3 55,713 306,706 272,459 2 40,518 Expenses Provision for credit losses 49,522 23,343 99,611 87,056 77,339 63,014 Personnel 29,511 22,393 94,000 84,068 75,992 68,979 Occupancy 5,771 6,165 24,618 22,519 21,530 20,059 Marketing 1,686 1,651 8,206 7,745 7,128 6,837 Other 9,275 7,974 30,160 25,952 26,305 22,757 Total general and administrative 46,243 38,183 1 56,984 140,284 130,955 1 18,632 Interest expense 10,159 9,721 40,125 33,464 23,908 19,924 Income (loss) before income taxes ( 9,850) 10,501 58,993 45,902 40,257 38,948 Income taxes ( 3,525) 2,393 14,261 10,557 10,294 14,917 Net income (loss) $ (6,325) $ 8,108 $ 44,732 $ 35,345 $ 29,963 $ 24,031 24Consolidated Income Statements in thousands 1Q 20 1Q 19 2019 2018 2017 2016 Revenue Interest and fee income $ 8 6,997 $ 74,322 $ 321,169 $ 280,121 $ 249,034 $ 220,963 Insurance income, net 5,949 4,113 20,817 14,793 13,061 9,456 Other income 3,128 3,313 13,727 11,792 10,364 10,099 Total revenue 96,074 81,748 3 55,713 306,706 272,459 2 40,518 Expenses Provision for credit losses 49,522 23,343 99,611 87,056 77,339 63,014 Personnel 29,511 22,393 94,000 84,068 75,992 68,979 Occupancy 5,771 6,165 24,618 22,519 21,530 20,059 Marketing 1,686 1,651 8,206 7,745 7,128 6,837 Other 9,275 7,974 30,160 25,952 26,305 22,757 Total general and administrative 46,243 38,183 1 56,984 140,284 130,955 1 18,632 Interest expense 10,159 9,721 40,125 33,464 23,908 19,924 Income (loss) before income taxes ( 9,850) 10,501 58,993 45,902 40,257 38,948 Income taxes ( 3,525) 2,393 14,261 10,557 10,294 14,917 Net income (loss) $ (6,325) $ 8,108 $ 44,732 $ 35,345 $ 29,963 $ 24,031 24
Consolidated Balance Sheets in thousands 1Q 20 1Q 19 2019 2018 2017 2016 Cash $ 14,668 $ 2,331 $ 2,263 $ 3,657 $ 5,230 $ 4,446 Net finance receivables 1,102,285 930,844 1,133,404 951,183 834,045 729,161 Unearned insurance premiums (28,183) ( 18,594) ( 28,591) ( 18,940) ( 16,582) ( 11,386) Allowance for credit losses (142,400) ( 56,400) ( 62,200) ( 58,300) ( 48,910) ( 41,250) Net finance receivables, less unearned insurance premiums and allowance for credit losses 931,702 855,850 1,042,613 873,943 768,553 676,525 Restricted cash 54,649 38,917 54,164 46,484 16,787 8,297 Lease assets 26,729 24,831 26,438 - - - Property and equipment 15,155 14,181 15,301 13,926 12,294 11,693 Intangible assets 9,144 9 ,722 9,438 10,010 10,607 6,448 Deferred tax asset 20,025 - 619 - - 3 3 Other assets 6,818 7 ,635 7,704 8,375 16,012 4,782 Total assets $ 1,078,890 $ 9 53,467 $ 1,158,540 $ 9 56,395 $ 8 29,483 $ 7 12,224 Long-term debt $ 777,847 $ 6 28,786 $ 808,218 $ 6 60,507 $ 5 71,496 $ 4 91,678 Unamortized debt issuance costs (8,581) (8,338) (9,607) (9,158) (4,950) (2,152) Net long-term debt 769,266 620,448 798,611 651,349 566,546 489,526 Accounts payable and accrued expenses 29,459 17,470 28,676 25,138 18,565 15,223 Lease liabilities 28,803 26,474 28,470 - - - Deferred tax liability - 1 ,259 - 747 4,961 - Total liabilities 827,528 665,651 855,757 677,234 590,072 504,749 Common stock 1,366 1 ,347 1,350 1,332 1,321 1,300 Additional paid-in capital 103,488 99,310 102,678 98,778 94,384 92,432 Retained earnings 196,582 212,205 248,829 204,097 168,752 138,789 Treasury stock (50,074) ( 25,046) ( 50,074) ( 25,046) ( 25,046) ( 25,046) Total stockholders' equity 251,362 287,816 302,783 279,161 239,411 207,475 Total liabilities and stockholders' equity $ 1,078,890 $ 9 53,467 $ 1,158,540 $ 9 56,395 $ 8 29,483 $ 7 12,224 25Consolidated Balance Sheets in thousands 1Q 20 1Q 19 2019 2018 2017 2016 Cash $ 14,668 $ 2,331 $ 2,263 $ 3,657 $ 5,230 $ 4,446 Net finance receivables 1,102,285 930,844 1,133,404 951,183 834,045 729,161 Unearned insurance premiums (28,183) ( 18,594) ( 28,591) ( 18,940) ( 16,582) ( 11,386) Allowance for credit losses (142,400) ( 56,400) ( 62,200) ( 58,300) ( 48,910) ( 41,250) Net finance receivables, less unearned insurance premiums and allowance for credit losses 931,702 855,850 1,042,613 873,943 768,553 676,525 Restricted cash 54,649 38,917 54,164 46,484 16,787 8,297 Lease assets 26,729 24,831 26,438 - - - Property and equipment 15,155 14,181 15,301 13,926 12,294 11,693 Intangible assets 9,144 9 ,722 9,438 10,010 10,607 6,448 Deferred tax asset 20,025 - 619 - - 3 3 Other assets 6,818 7 ,635 7,704 8,375 16,012 4,782 Total assets $ 1,078,890 $ 9 53,467 $ 1,158,540 $ 9 56,395 $ 8 29,483 $ 7 12,224 Long-term debt $ 777,847 $ 6 28,786 $ 808,218 $ 6 60,507 $ 5 71,496 $ 4 91,678 Unamortized debt issuance costs (8,581) (8,338) (9,607) (9,158) (4,950) (2,152) Net long-term debt 769,266 620,448 798,611 651,349 566,546 489,526 Accounts payable and accrued expenses 29,459 17,470 28,676 25,138 18,565 15,223 Lease liabilities 28,803 26,474 28,470 - - - Deferred tax liability - 1 ,259 - 747 4,961 - Total liabilities 827,528 665,651 855,757 677,234 590,072 504,749 Common stock 1,366 1 ,347 1,350 1,332 1,321 1,300 Additional paid-in capital 103,488 99,310 102,678 98,778 94,384 92,432 Retained earnings 196,582 212,205 248,829 204,097 168,752 138,789 Treasury stock (50,074) ( 25,046) ( 50,074) ( 25,046) ( 25,046) ( 25,046) Total stockholders' equity 251,362 287,816 302,783 279,161 239,411 207,475 Total liabilities and stockholders' equity $ 1,078,890 $ 9 53,467 $ 1,158,540 $ 9 56,395 $ 8 29,483 $ 7 12,224 25
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. In addition, the company has presented non-GAAP measures that adjust for the impacts of the COVID-19 pandemic, the executive transition, and the loan management system outage. The company believes that these non-GAAP measures provide useful information by excluding certain material items that may not be indicative of our core operating results. As a result, the company believes that the non-GAAP measures that it has presented will allow for a better evaluation of the operating performance of the business. 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. (1) (2) in thousands GAAP COVID-19 Non-Operating Non-GAAP Total revenue $ 96,074 $ 1,326 $ 419 $ 97,819 Provision for credit losses 49,522 (23,900) ( 674) 24,948 G&A expense 46,243 - (3,786) 42,457 Interest expense 10,159 - 2 3 10,182 Income (loss) before income taxes (9,850) 25,226 4 ,856 20,232 Income taxes (3,525) 9 ,157 1 ,763 7 ,395 Net income (loss) $ ( 6,325) $ 16,069 $ 3,093 $ 12,837 Diluted earnings (losses) per share $ (0.56) $ 1.43 $ 0.27 $ 1.14 Diluted share count 11,253 11,253 11,253 11,253 (1) COVID-19 impact includes $23,900 for allowance for credit losses and a $1,326 reserve for unemployment insurance claims (2) Non-operating items include costs of $3,066 related to the executive transition and $1,790 related to the loan management system outage 26Non-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. In addition, the company has presented non-GAAP measures that adjust for the impacts of the COVID-19 pandemic, the executive transition, and the loan management system outage. The company believes that these non-GAAP measures provide useful information by excluding certain material items that may not be indicative of our core operating results. As a result, the company believes that the non-GAAP measures that it has presented will allow for a better evaluation of the operating performance of the business. 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. (1) (2) in thousands GAAP COVID-19 Non-Operating Non-GAAP Total revenue $ 96,074 $ 1,326 $ 419 $ 97,819 Provision for credit losses 49,522 (23,900) ( 674) 24,948 G&A expense 46,243 - (3,786) 42,457 Interest expense 10,159 - 2 3 10,182 Income (loss) before income taxes (9,850) 25,226 4 ,856 20,232 Income taxes (3,525) 9 ,157 1 ,763 7 ,395 Net income (loss) $ ( 6,325) $ 16,069 $ 3,093 $ 12,837 Diluted earnings (losses) per share $ (0.56) $ 1.43 $ 0.27 $ 1.14 Diluted share count 11,253 11,253 11,253 11,253 (1) COVID-19 impact includes $23,900 for allowance for credit losses and a $1,326 reserve for unemployment insurance claims (2) Non-operating items include costs of $3,066 related to the executive transition and $1,790 related to the loan management system outage 26
Non-GAAP Financial Measures (Cont’d) in thousands 1Q 20 1Q 19 2019 2018 2017 2016 Total assets $ 1,078,890 $ 953,467 $ 1,158,540 $ 956,395 $ 829,483 $ 712,224 Less: Intangible assets 9,144 9,722 9,438 1 0,010 10,607 6,448 Tangible assets (non-GAAP) 1 ,069,746 943,745 1,149,102 946,385 818,876 705,776 Gross long-term debt 777,847 628,786 808,218 660,507 571,496 491,678 Total stockholders' equity 251,362 287,816 302,783 279,161 239,411 207,475 Less: Intangible assets 9,144 9,722 9,438 1 0,010 10,607 6,448 Tangible common equity (non-GAAP) $ 242,218 $ 278,094 $ 293,345 $ 269,151 $ 228,804 $ 201,027 Diluted weighted-average shares 11,253 1 2,076 11,773 1 2,078 11,783 12,085 Funded debt-to-equity ratio 3.09 2.18 2.67 2.37 2.39 2.37 Funded debt-to-tangible equity ratio (non-GAAP) 3.21 2.26 2.76 2.45 2.50 2.45 Total stockholders' equity to total assets 23.3% 30.2% 26.1% 29.2% 28.9% 29.1% Tangible equity to tangible assets (non-GAAP) 22.6% 29.5% 25.5% 28.4% 27.9% 28.5% Total stockholders' equity per share $ 22.34 $ 2 3.83 $ 25.72 $ 2 3.11 $ 20.32 $ 17.17 Tangible equity per share (non-GAAP) $ 21.52 $ 2 3.03 $ 24.92 $ 2 2.28 $ 19.42 $ 16.63 27Non-GAAP Financial Measures (Cont’d) in thousands 1Q 20 1Q 19 2019 2018 2017 2016 Total assets $ 1,078,890 $ 953,467 $ 1,158,540 $ 956,395 $ 829,483 $ 712,224 Less: Intangible assets 9,144 9,722 9,438 1 0,010 10,607 6,448 Tangible assets (non-GAAP) 1 ,069,746 943,745 1,149,102 946,385 818,876 705,776 Gross long-term debt 777,847 628,786 808,218 660,507 571,496 491,678 Total stockholders' equity 251,362 287,816 302,783 279,161 239,411 207,475 Less: Intangible assets 9,144 9,722 9,438 1 0,010 10,607 6,448 Tangible common equity (non-GAAP) $ 242,218 $ 278,094 $ 293,345 $ 269,151 $ 228,804 $ 201,027 Diluted weighted-average shares 11,253 1 2,076 11,773 1 2,078 11,783 12,085 Funded debt-to-equity ratio 3.09 2.18 2.67 2.37 2.39 2.37 Funded debt-to-tangible equity ratio (non-GAAP) 3.21 2.26 2.76 2.45 2.50 2.45 Total stockholders' equity to total assets 23.3% 30.2% 26.1% 29.2% 28.9% 29.1% Tangible equity to tangible assets (non-GAAP) 22.6% 29.5% 25.5% 28.4% 27.9% 28.5% Total stockholders' equity per share $ 22.34 $ 2 3.83 $ 25.72 $ 2 3.11 $ 20.32 $ 17.17 Tangible equity per share (non-GAAP) $ 21.52 $ 2 3.03 $ 24.92 $ 2 2.28 $ 19.42 $ 16.63 27
Non-GAAP Financial Measures (Cont’d) (1) (2) in thousands GAAP Non-Operating Non-GAAP G&A expense $ 46,243 $ (3,786) $ 42,457 Total revenue $ 96,074 $ 1,745 $ 97,819 Efficiency ratio 48.1% (4.7%) 43.4% G&A expense $ 46,243 $ (3,786) $ 42,457 Average net finance receivables $ 1,123,316 $ - $ 1,123,316 (3) Operating expense ratio 16.5% (1.4%) 15.1% (1) Non-operating G&A expense items include costs of $3,066 related to the executive transition and $720 related to the loan management system outage (2) Non-operating total revenue items include $419 related to the loan management system outage and a $1,326 reserve for unemployment insurance claims related to COVID-19 28Non-GAAP Financial Measures (Cont’d) (1) (2) in thousands GAAP Non-Operating Non-GAAP G&A expense $ 46,243 $ (3,786) $ 42,457 Total revenue $ 96,074 $ 1,745 $ 97,819 Efficiency ratio 48.1% (4.7%) 43.4% G&A expense $ 46,243 $ (3,786) $ 42,457 Average net finance receivables $ 1,123,316 $ - $ 1,123,316 (3) Operating expense ratio 16.5% (1.4%) 15.1% (1) Non-operating G&A expense items include costs of $3,066 related to the executive transition and $720 related to the loan management system outage (2) Non-operating total revenue items include $419 related to the loan management system outage and a $1,326 reserve for unemployment insurance claims related to COVID-19 28
