8-K
Regional Management Corp. (RM)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 6, 2024
Regional Management Corp.
(Exact name of registrant as specified in its charter)
| Delaware | 001-35477 | 57-0847115 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer 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
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ 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 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))
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange 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 November 6, 2024, the Company issued a press release announcing financial results for the three and nine months ended September 30, 2024. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. On November 6, 2024, the Company will host a conference call to discuss financial results for the three and nine months ended September 30, 2024. A copy of the presentation to be used during the conference call is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
All information in the press release and the presentation is furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition,” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 8.01. Other Events.
On November 6, 2024, the Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.30 per share of outstanding common stock, payable on December 11, 2024 to stockholders of record as of the close of business on November 21, 2024.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release issued by Regional Management Corp. on November 6, 2024, announcing financial results for Regional Management Corp. for the three and nine months ended September 30, 2024. |
| 99.2 | Presentation of Regional Management Corp., dated November 6, 2024. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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: November 6, 2024 | By: | /s/ Harpreet Rana |
| Name: | Harpreet Rana | |
| Title: | Executive Vice President and Chief Financial Officer |
EX-99.1
Exhibit 99.1
Regional Management Corp. Announces Third Quarter 2024 Results
Net income of $7.7 million and diluted earnings per share of $0.76, inclusive of a $4.3 million, or $0.42 per share, impact due to hurricane events occurring in the third quarter of 2024 -
Record revenue and ending net receivables driven by $46 million of sequential portfolio growth, an annualized growth rate of 10% -
Net credit loss rate of 10.6% and 30+ day contractual delinquency rate of 6.9% as of September 30, 2024, both 40 basis points better than the prior-year period -
Continued expense discipline with operating expense increasing only 0.6% from the prior-year period and an operating expense ratio of 13.9%, a 50 basis point improvement year-over-year -
Greenville, South Carolina – November 6, 2024 – Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the third quarter ended September 30, 2024.
“Our team once again delivered strong results in the third quarter, and our credit performance continues to improve,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “We generated net income of $7.7 million and diluted EPS of $0.76, inclusive of a $4.3 million impact to net income from third quarter hurricane activity. On a pre-tax basis, we reserved $2.1 million for incremental net credit losses and $3.5 million for estimated personal property insurance claims caused by the hurricanes. While these charges created a drag on our third quarter results, we are pleased to be able to provide our customers with special borrower assistance programs and valuable personal property insurance benefits that will help them rebuild their lives.”
“Despite the hurricane challenges, we grew our portfolio by $46 million sequentially, or 2.6%, to $1.82 billion in the quarter, an annualized growth rate of just above 10%,” added Mr. Beck. “Quality portfolio growth drove our quarterly revenue to a record high of $146 million, and we improved our interest and fee yield by 90 basis points year-over-year to 29.9%—the highest it has been in over two years—from a combination of increased pricing, growth of our higher-margin small loan portfolio, and improved credit performance. Meanwhile, we kept a tight grip on G&A expense while still investing in our growth and strategic initiatives. We improved our operating expense ratio by 50 basis points from the prior-year period to 13.9%, and year-over-year revenue growth outpaced expense growth by 15 times.”
“Overall, our credit quality has improved and we have observed positive trends in our credit metrics in recent quarters, as we have maintained a tight credit box while also increasing the growth of our higher-margin small loan portfolio,” continued Mr. Beck. “Higher-quality originations in our front book continue to perform in line with our expectations, make up a larger portion of our portfolio, and are delivering at lower loss levels than our stressed back book vintages. Looking ahead, we will continue to monitor the economic environment, competitive dynamics, consumer health, and other factors as we allocate capital to grow the different pieces of our portfolio. Ultimately, we will build our portfolio in a way that will generate strong margins that meet our return hurdles and optimize short- and long-term results, while also appropriately balancing credit outcomes and customer needs.”
Third Quarter 2024 Highlights
Net income for the third quarter of 2024 was $7.7 million and diluted earnings per share was $0.76, inclusive of a $4.3 million, or $0.42 per share, impact due to hurricanes occurring in the third quarter of 2024.
Net income also reflects the impact of $46.0 million of sequential portfolio growth in the third quarter, which required a $4.6 million provision for credit losses, or $3.5 million after tax. The company is required to reserve for expected lifetime credit losses at origination of each loan, while the revenue benefits are recognized over the life of the loan, highlighting the impact of portfolio growth on our income statement.
Record net finance receivables as of September 30, 2024 of $1.8 billion, an increase of $68.7 million, or 3.9%, from the prior-year period.
Large loan net finance receivables of $1.3 billion increased $21.5 million, or 1.7%, from the prior-year period and represented 71.1% of the total loan portfolio, compared to 72.6% in the prior-year period.
Small loan net finance receivables of $524.8 million increased $50.6 million, or 10.7%, from the prior-year period and represented 28.8% of the total loan portfolio, compared to 27.1% in the prior-year period.
Net finance receivables with annual percentage rates (APRs) above 36% increased to 17.8% of the portfolio from 14.9% in the prior-year period, driven by the increase in the higher-margin small loan portfolio.
Customer accounts increased by 5.1% from the prior-year period.
Record total revenue for the third quarter of 2024 of $146.3 million, an increase of $5.5 million, or 3.9%, from the prior-year period, primarily due to growth in average net
finance receivables and 90 basis points of higher interest and fee yield compared to the prior-year period.
The increase in interest and fee yield is attributable to increased pricing, growth of the higher-margin small loan portfolio, and improved credit performance.
Large loan interest and fee yield increased by 40 basis points, while the interest and fee yield of the higher-margin small loan portfolio increased by 120 basis points.
Total revenue yield decreased 10 basis points year-over-year primarily due to $3.5 million, or 80 basis points, in increased property insurance claims and reserves related to hurricanes occurring during the third quarter of 2024.
Provision for credit losses for the third quarter of 2024 was $54.3 million, an increase of $3.4 million, or 6.7%, from the prior-year period, inclusive of a $2.1 million incremental provision for credit losses associated with third quarter hurricane activity.
Annualized net credit losses as a percentage of average net finance receivables for the third quarter of 2024 were 10.6%, a 40 basis point improvement compared to 11.0% in the prior-year period. The third quarter 2024 net credit loss rate is inclusive of an estimated 30 basis point impact from year-over-year growth of the higher-rate small loan portfolio.
The provision for credit losses for the third quarter of 2024 included a reserve increase of $6.7 million, or $5.1 million after tax, primarily related to portfolio growth ($4.6 million of provision) and hurricanes ($2.1 million of provision) occurring during the third quarter of 2024.
Allowance for credit losses was $192.1 million as of September 30, 2024, or 10.6% of net finance receivables, a 10 basis point increase sequentially from 10.5% due to 20 basis points of impact for estimated credit losses related to hurricanes occurring during the third quarter of 2024.
As of September 30, 2024, 30+ day contractual delinquencies totaled $126.0 million, or 6.9% of net finance receivables, comparable sequentially and a 40 basis point improvement from September 30, 2023. The third quarter 2024 delinquency rate is inclusive of an estimated 20 basis point impact from year-over-year growth of the higher-rate small loan portfolio and a 40 basis point benefit from special borrower assistance programs offered to customers impacted by the hurricanes.
The delinquency rate of the large loan portfolio was 5.9% as of the end of the third quarter of 2024, a 60 basis point improvement from the prior-year period.
The delinquency rate of the small loan portfolio was 9.4% as of the end of the third quarter of 2024, a 20 basis point improvement from the prior-year period.
The third quarter 2024 delinquency rate for the small loan portfolio is inclusive of a 30 basis point impact from the year-over-year shift within the portfolio to higher-APR loans. The current-quarter delinquency rates for the large and small loan portfolios also each include 40 basis points of benefit from special borrower assistance programs offered to customers impacted by the hurricanes.
General and administrative expenses for the third quarter of 2024 were $62.5 million, an increase of $0.4 million, or 0.6%, from the prior-year period. The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) for the third quarter of 2024 was 13.9%, a 50 basis point improvement from 14.4% in the prior-year period.
Fourth Quarter 2024 Dividend
The company’s Board of Directors has declared a dividend of $0.30 per common share for the fourth quarter of 2024. The dividend will be paid on December 11, 2024 to shareholders of record as of the close of business on November 21, 2024. The declaration and payment of any future dividend is subject to the discretion of the Board of Directors and will depend on a variety of factors, including the company’s financial condition and results of operations.
Liquidity and Capital Resources
As of September 30, 2024, the company had net finance receivables of $1.8 billion and debt of $1.4 billion. The debt consisted of:
- $173.7 million on the company’s $355 million senior revolving credit facility,
- $76.1 million on the company’s aggregate $375 million revolving warehouse credit facilities, and
- $1.1 billion through the company’s asset-backed securitizations.
As of September 30, 2024, the company’s unused capacity to fund future growth on its revolving credit facilities (subject to the borrowing base) was $482 million, or 66.1%, and the company had available liquidity of $154.7 million, including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities. As of September 30, 2024, the company’s fixed-rate debt as a percentage of total debt was 82%, with a weighted-average coupon of 4.3% and a weighted-average revolving duration of 1.1 years.
The company had a funded debt-to-equity ratio of 4.0 to 1.0 and a stockholders’ equity ratio of 19.4%, each as of September 30, 2024. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 4.2 to 1.0, as of September 30, 2024. Please refer to the reconciliations of non-GAAP measures to comparable GAAP measures included at the end of this press release.
Conference Call Information
Regional Management Corp. will host a conference call and webcast today at 5:00 PM ET to discuss these results.
The dial-in number for the conference call is (855) 327-6837 (toll-free) or (631) 891-4304 (direct). Please dial the number 10 minutes prior to the scheduled start time.
*** A supplemental slide presentation will be made available on Regional’s website prior to the earnings call at www.RegionalManagement.com. ***
In addition, a live webcast of the conference call will be available on Regional’s website at www.RegionalManagement.com.
A webcast replay of the call will be available at www.RegionalManagement.com for one year following the call.
About Regional Management Corp.
Regional Management Corp. (NYSE: RM) is a diversified consumer finance company that provides attractive, easy-to-understand installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders. Regional Management operates under the name “Regional Finance” online and in branch locations in 19 states across the United States. Most of its loan products are secured, and each is structured on a fixed-rate, fixed-term basis with fully amortizing equal monthly installment payments, repayable at any time without penalty. Regional Management sources loans through its multiple channel platform, which includes branches, centrally managed direct mail campaigns, digital partners, and its consumer website. For more information, please visit www.RegionalManagement.com.
Forward-Looking Statements
This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact but instead represent Regional Management Corp.’s expectations or beliefs concerning future events. Forward-looking statements include, without limitation, statements concerning financial outlooks or future plans, objectives, goals, projections, strategies, events, or performance, and underlying assumptions and other statements related thereto. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,”
“believes,” “estimates,” “outlook,” and similar expressions may be used to identify these forward-looking statements. Such forward-looking statements speak only as of the date on which they were made and are about matters that are inherently subject to risks and uncertainties, many of which are outside of the control of Regional Management. As a result, actual performance and results may differ materially from those contemplated by these forward-looking statements. Therefore, investors should not place undue reliance on forward-looking statements.
Factors that could cause actual results or performance to differ from the expectations expressed or implied in forward-looking statements include, but are not limited to, the following: managing growth effectively, implementing Regional Management’s growth strategy, and opening new branches as planned; Regional Management’s convenience check strategy; Regional Management’s policies and procedures for underwriting, processing, and servicing loans; Regional Management’s ability to collect on its loan portfolio; Regional Management’s insurance operations; exposure to credit risk and repayment risk, which risks may increase in light of adverse or recessionary economic conditions; the implementation of evolving underwriting models and processes, including as to the effectiveness of Regional Management's custom scorecards; changes in the competitive environment in which Regional Management operates or a decrease in the demand for its products; the geographic concentration of Regional Management’s loan portfolio; the failure of third-party service providers, including those providing information technology products; changes in economic conditions in the markets Regional Management serves, including levels of unemployment and bankruptcies; the ability to achieve successful acquisitions and strategic alliances; the ability to make technological improvements as quickly as competitors; security breaches, cyber-attacks, failures in information systems, or fraudulent activity; the ability to originate loans; reliance on information technology resources and providers, including the risk of prolonged system outages; changes in current revenue and expense trends, including trends affecting delinquencies and credit losses; any future public health crises, including the impact of such crisis on our operations and financial condition; changes in operating and administrative expenses; the departure, transition, or replacement of key personnel; the ability to timely and effectively implement, transition to, and maintain the necessary information technology systems, infrastructure, processes, and controls to support Regional Management’s operations and initiatives; changes in interest rates; existing sources of liquidity may become insufficient or access to these sources may become unexpectedly restricted; exposure to financial risk due to asset-backed securitization transactions; risks related to regulation and legal proceedings, including changes in laws or regulations or in the interpretation or enforcement of laws or regulations; changes in accounting standards, rules, and interpretations and the failure of related assumptions and estimates; the impact of changes in tax laws and guidance, including the timing and amount of revenues that may be recognized; risks related to the ownership of Regional Management’s common stock, including volatility in the market price of shares of Regional Management’s common stock; the timing and amount of future cash dividend payments; and anti-takeover provisions in Regional Management’s charter documents and applicable state law.
The foregoing factors and others are discussed in greater detail in Regional Management’s filings with the Securities and Exchange Commission. Regional Management will not update or revise forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events or the non-occurrence of anticipated events, whether as a result of new information, future developments, or otherwise, except as required by law. Regional Management is not responsible for changes made to this document by wire services or Internet services.
Contact
Investor Relations
Garrett Edson, (203) 682-8331
investor.relations@regionalmanagement.com
Regional Management Corp. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
(dollars in thousands, except per share amounts)
| Better (Worse) | Better (Worse) | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3Q 24 | 3Q 23 | % | YTD 24 | YTD 23 | % | |||||||||||||||||
| Revenue | ||||||||||||||||||||||
| Interest and fee income | $ | 133,932 | $ | 125,018 | 7.1 | % | $ | 390,648 | $ | 363,508 | 7.5 | % | ||||||||||
| Insurance income, net | 7,422 | 11,382 | ) | (34.8 | )% | 28,903 | 33,544 | ) | (13.8 | )% | ||||||||||||
| Other income | 4,984 | 4,478 | 11.3 | % | 14,120 | 12,688 | 11.3 | % | ||||||||||||||
| Total revenue | 146,338 | 140,878 | 3.9 | % | 433,671 | 409,740 | 5.8 | % | ||||||||||||||
| Expenses | ||||||||||||||||||||||
| Provision for credit losses | 54,349 | 50,930 | ) | (6.7 | )% | 154,574 | 151,149 | ) | (2.3 | )% | ||||||||||||
| Personnel | 38,323 | 39,832 | 3.8 | % | 113,240 | 114,848 | 1.4 | % | ||||||||||||||
| Occupancy | 6,551 | 6,315 | ) | (3.7 | )% | 19,075 | 18,761 | ) | (1.7 | )% | ||||||||||||
| Marketing | 5,078 | 4,077 | ) | (24.6 | )% | 14,229 | 11,300 | ) | (25.9 | )% | ||||||||||||
| Other | 12,516 | 11,880 | ) | (5.4 | )% | 36,508 | 33,414 | ) | (9.3 | )% | ||||||||||||
| Total general and administrative | 62,468 | 62,104 | ) | (0.6 | )% | 183,052 | 178,323 | ) | (2.7 | )% | ||||||||||||
| Interest expense | 19,356 | 16,947 | ) | (14.2 | )% | 54,725 | 49,953 | ) | (9.6 | )% | ||||||||||||
| Income before income taxes | 10,165 | 10,897 | ) | (6.7 | )% | 41,320 | 30,315 | 36.3 | % | |||||||||||||
| Income taxes | 2,502 | 2,077 | ) | (20.5 | )% | 10,007 | 6,783 | ) | (47.5 | )% | ||||||||||||
| Net income | $ | 7,663 | $ | 8,820 | ) | (13.1 | )% | $ | 31,313 | $ | 23,532 | 33.1 | % | |||||||||
| Net income per common share: | ||||||||||||||||||||||
| Basic | $ | 0.79 | $ | 0.94 | ) | (16.0 | )% | $ | 3.25 | $ | 2.51 | 29.5 | % | |||||||||
| Diluted | $ | 0.76 | $ | 0.91 | ) | (16.5 | )% | $ | 3.16 | $ | 2.45 | 29.0 | % | |||||||||
| Weighted-average common shares outstanding: | ||||||||||||||||||||||
| Basic | 9,683 | 9,429 | ) | (2.7 | )% | 9,622 | 9,385 | ) | (2.5 | )% | ||||||||||||
| Diluted | 10,090 | 9,650 | ) | (4.6 | )% | 9,900 | 9,613 | ) | (3.0 | )% | ||||||||||||
| Return on average assets (annualized) | 1.7 | % | 2.0 | % | 2.3 | % | 1.8 | % | ||||||||||||||
| Return on average equity (annualized) | 8.7 | % | 10.8 | % | 12.3 | % | 9.8 | % |
All values are in US Dollars.
Regional Management Corp. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(dollars in thousands, except par value amounts)
| Increase (Decrease) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 3Q 23 | % | |||||||||
| Assets | ||||||||||
| Cash | 4,745 | $ | 7,413 | ) | (36.0 | )% | ||||
| Net finance receivables | 1,819,756 | 1,751,009 | 3.9 | % | ||||||
| Unearned insurance premiums | (46,508 | ) | (48,764 | ) | 4.6 | % | ||||
| Allowance for credit losses | (192,100 | ) | (184,900 | ) | ) | (3.9 | )% | |||
| Net finance receivables, less unearned insurance premiums and allowance for credit losses | 1,581,148 | 1,517,345 | 4.2 | % | ||||||
| Restricted cash | 115,576 | 117,029 | ) | (1.2 | )% | |||||
| Lease assets | 37,229 | 34,864 | 6.8 | % | ||||||
| Intangible assets | 22,250 | 15,048 | 47.9 | % | ||||||
| Restricted available-for-sale investments | 21,727 | 22,510 | ) | (3.5 | )% | |||||
| Property and equipment | 13,425 | 14,157 | ) | (5.2 | )% | |||||
| Deferred tax assets, net | 11,833 | 14,140 | ) | (16.3 | )% | |||||
| Other assets | 13,898 | 22,834 | ) | (39.1 | )% | |||||
| Total assets | 1,821,831 | $ | 1,765,340 | 3.2 | % | |||||
| Liabilities and Stockholders’ Equity | ||||||||||
| Liabilities: | ||||||||||
| Debt | 1,395,892 | $ | 1,372,748 | 1.7 | % | |||||
| Unamortized debt issuance costs | (4,645 | ) | (5,647 | ) | 17.7 | % | ||||
| Net debt | 1,391,247 | 1,367,101 | 1.8 | % | ||||||
| Lease liabilities | 39,350 | 37,095 | 6.1 | % | ||||||
| Accounts payable and accrued expenses | 38,306 | 30,559 | 25.4 | % | ||||||
| Total liabilities | 1,468,903 | 1,434,755 | 2.4 | % | ||||||
| Stockholders’ equity: | ||||||||||
| Preferred stock (0.10 par value, 100,000 shares authorized, none issued or outstanding) | — | — | — | |||||||
| Common stock (0.10 par value, 1,000,000 shares authorized, 14,971 shares issued and 10,164 shares outstanding at September 30, 2024 and 14,642 shares issued and 9,835 shares outstanding at September 30, 2023) | 1,497 | 1,464 | 2.3 | % | ||||||
| Additional paid-in capital | 129,936 | 119,507 | 8.7 | % | ||||||
| Retained earnings | 371,725 | 360,155 | 3.2 | % | ||||||
| Accumulated other comprehensive loss | (87 | ) | (398 | ) | 78.1 | % | ||||
| Treasury stock (4,807 shares at September 30, 2024 and September 30, 2023) | (150,143 | ) | (150,143 | ) | — | |||||
| Total stockholders’ equity | 352,928 | 330,585 | 6.8 | % | ||||||
| Total liabilities and stockholders’ equity | 1,821,831 | $ | 1,765,340 | 3.2 | % |
All values are in US Dollars.
Regional Management Corp. and Subsidiaries
Selected Financial Data
(Unaudited)
(dollars in thousands, except per share amounts)
| Net Finance Receivables | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3Q 24 | 2Q 24 | QoQ Inc (Dec) | QoQ %<br>Inc (Dec) | 3Q 23 | YoY Inc (Dec) | YoY %<br>Inc (Dec) | ||||||||||
| Large loans | $ | 1,293,410 | $ | 1,266,032 | 2.2 | % | $ | 1,271,891 | 1.7 | % | ||||||
| Small loans | 524,826 | 505,640 | 3.8 | % | 474,181 | 10.7 | % | |||||||||
| Retail loans | 1,520 | 2,071 | ) | (26.6 | )% | 4,937 | ) | (69.2 | )% | |||||||
| Total net finance receivables | $ | 1,819,756 | $ | 1,773,743 | 2.6 | % | $ | 1,751,009 | 3.9 | % | ||||||
| Number of branches at period end | 340 | 343 | ) | (0.9 | )% | 347 | ) | (2.0 | )% | |||||||
| Net finance receivables per branch | $ | 5,352 | $ | 5,171 | 3.5 | % | $ | 5,046 | 6.1 | % |
All values are in US Dollars.
| Averages and Yields | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3Q 24 | 2Q 24 | 3Q 23 | |||||||||||||
| Average Net Finance Receivables | Average <br>Yield (1) | Average Net Finance Receivables | Average <br>Yield (1) | Average Net Finance Receivables | Average <br>Yield (1) | ||||||||||
| Large loans | $ | 1,279,720 | 26.7 | % | $ | 1,255,729 | 26.1 | % | $ | 1,257,168 | 26.3 | % | |||
| Small loans | 511,294 | 37.8 | % | 490,615 | 37.3 | % | 459,320 | 36.6 | % | ||||||
| Retail loans | 1,795 | 16.3 | % | 2,433 | 16.6 | % | 5,647 | 16.9 | % | ||||||
| Total interest and fee yield | $ | 1,792,809 | 29.9 | % | $ | 1,748,777 | 29.3 | % | $ | 1,722,135 | 29.0 | % | |||
| Total revenue yield | $ | 1,792,809 | 32.6 | % | $ | 1,748,777 | 32.7 | % | $ | 1,722,135 | 32.7 | % |
(1) Annualized interest and fee income as a percentage of average net finance receivables.
| Components of Increase in Interest and Fee Income | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3Q 24 Compared to 3Q 23 | ||||||||||||||||
| Increase (Decrease) | ||||||||||||||||
| Volume | Rate | Volume & Rate | Total | |||||||||||||
| Large loans | $ | 1,484 | $ | 1,246 | $ | 23 | $ | 2,753 | ||||||||
| Small loans | 4,757 | 1,410 | 159 | 6,326 | ||||||||||||
| Retail loans | (162 | ) | (8 | ) | 5 | (165 | ) | |||||||||
| Product mix | (948 | ) | 986 | (38 | ) | — | ||||||||||
| Total increase in interest and fee income | $ | 5,131 | $ | 3,634 | $ | 149 | $ | 8,914 | ||||||||
| Loans Originated (1) | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 3Q 24 | 2Q 24 | QoQ Inc (Dec) | QoQ %<br>Inc (Dec) | 3Q 23 | YoY Inc (Dec) | YoY %<br>Inc (Dec) | ||||||||||
| Large loans | $ | 251,563 | $ | 254,779 | ) | (1.3 | )% | $ | 251,999 | ) | (0.2 | )% | ||||
| Small loans | 174,632 | 171,282 | 2.0 | % | 173,074 | 0.9 | % | |||||||||
| Total loans originated | $ | 426,195 | $ | 426,061 | — | $ | 425,073 | 0.3 | % |
All values are in US Dollars.
(1) Represents the principal balance of loan originations and refinancings.
| Other Key Metrics | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 3Q 24 | 2Q 24 | 3Q 23 | |||||||
| Net credit losses | $ | 47,649 | $ | 55,502 | $ | 47,430 | |||
| Percentage of average net finance receivables (annualized) | 10.6 | % | 12.7 | % | 11.0 | % | |||
| Provision for credit losses | $ | 54,349 | $ | 53,802 | $ | 50,930 | |||
| Percentage of average net finance receivables (annualized) | 12.1 | % | 12.3 | % | 11.8 | % | |||
| Percentage of total revenue | 37.1 | % | 37.6 | % | 36.2 | % | |||
| General and administrative expenses | $ | 62,468 | $ | 60,136 | $ | 62,104 | |||
| Percentage of average net finance receivables (annualized) | 13.9 | % | 13.8 | % | 14.4 | % | |||
| Percentage of total revenue | 42.7 | % | 42.0 | % | 44.1 | % | |||
| Same store results (1): | |||||||||
| Net finance receivables at period-end | $ | 1,815,187 | $ | 1,759,075 | $ | 1,684,757 | |||
| Net finance receivable growth rate | 3.7 | % | 4.5 | % | 4.9 | % | |||
| Number of branches in calculation | 337 | 338 | 330 |
(1) Same store sales reflect the change in year-over-year sales for the comparable branch base. The comparable branch base includes those branches open for at least one year.
| Contractual Delinquency | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3Q 24 | 2Q 24 | 3Q 23 | |||||||||||||||||
| Allowance for credit losses | $ | 192,100 | 10.6 | % | $ | 185,400 | 10.5 | % | $ | 184,900 | 10.6 | % | |||||||
| Current | 1,529,171 | 84.1 | % | 1,497,219 | 84.4 | % | 1,472,931 | 84.2 | % | ||||||||||
| 1 to 29 days past due | 164,568 | 9.0 | % | 153,788 | 8.7 | % | 149,648 | 8.5 | % | ||||||||||
| Delinquent accounts: | |||||||||||||||||||
| 30 to 59 days | 35,300 | 1.9 | % | 34,924 | 1.9 | % | 36,502 | 2.1 | % | ||||||||||
| 60 to 89 days | 27,704 | 1.5 | % | 27,689 | 1.6 | % | 28,130 | 1.6 | % | ||||||||||
| 90 to 119 days | 23,964 | 1.4 | % | 21,607 | 1.2 | % | 23,420 | 1.3 | % | ||||||||||
| 120 to 149 days | 22,544 | 1.2 | % | 19,333 | 1.1 | % | 21,309 | 1.2 | % | ||||||||||
| 150 to 179 days | 16,505 | 0.9 | % | 19,183 | 1.1 | % | 19,069 | 1.1 | % | ||||||||||
| Total contractual delinquency | $ | 126,017 | 6.9 | % | $ | 122,736 | 6.9 | % | $ | 128,430 | 7.3 | % | |||||||
| Total net finance receivables | $ | 1,819,756 | 100.0 | % | $ | 1,773,743 | 100.0 | % | $ | 1,751,009 | 100.0 | % | |||||||
| 1 day and over past due | $ | 290,585 | 15.9 | % | $ | 276,524 | 15.6 | % | $ | 278,078 | 15.8 | % | |||||||
| Contractual Delinquency by Product | |||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||
| 3Q 24 | 2Q 24 | 3Q 23 | |||||||||||||||||
| Large loans | $ | 76,435 | 5.9 | % | $ | 76,432 | 6.0 | % | $ | 82,256 | 6.5 | % | |||||||
| Small loans | 49,351 | 9.4 | % | 46,015 | 9.1 | % | 45,438 | 9.6 | % | ||||||||||
| Retail loans | 231 | 15.2 | % | 289 | 14.0 | % | 736 | 14.9 | % | ||||||||||
| Total contractual delinquency | $ | 126,017 | 6.9 | % | $ | 122,736 | 6.9 | % | $ | 128,430 | 7.3 | % | |||||||
| Income Statement Quarterly Trend | |||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 3Q 23 | 4Q 23 | 1Q 24 | 2Q 24 | 3Q 24 | QoQ B(W) | YoY B(W) | |||||||||||||
| Revenue | |||||||||||||||||||
| Interest and fee income | $ | 125,018 | $ | 126,190 | $ | 128,818 | $ | 127,898 | $ | 133,932 | |||||||||
| Insurance income, net | 11,382 | 10,985 | 10,974 | 10,507 | 7,422 | ) | ) | ||||||||||||
| Other income | 4,478 | 4,484 | 4,516 | 4,620 | 4,984 | ||||||||||||||
| Total revenue | 140,878 | 141,659 | 144,308 | 143,025 | 146,338 | ||||||||||||||
| Expenses | |||||||||||||||||||
| Provision for credit losses | 50,930 | 68,885 | 46,423 | 53,802 | 54,349 | ) | ) | ||||||||||||
| Personnel | 39,832 | 42,024 | 37,820 | 37,097 | 38,323 | ) | |||||||||||||
| Occupancy | 6,315 | 6,268 | 6,375 | 6,149 | 6,551 | ) | ) | ||||||||||||
| Marketing | 4,077 | 4,474 | 4,315 | 4,836 | 5,078 | ) | ) | ||||||||||||
| Other | 11,880 | 12,030 | 11,938 | 12,054 | 12,516 | ) | ) | ||||||||||||
| Total general and administrative | 62,104 | 64,796 | 60,448 | 60,136 | 62,468 | ) | ) | ||||||||||||
| Interest expense | 16,947 | 17,510 | 17,504 | 17,865 | 19,356 | ) | ) | ||||||||||||
| Income (loss) before income taxes | 10,897 | (9,532 | ) | 19,933 | 11,222 | 10,165 | ) | ) | |||||||||||
| Income taxes | 2,077 | (1,958 | ) | 4,728 | 2,777 | 2,502 | ) | ||||||||||||
| Net income (loss) | $ | 8,820 | $ | (7,574 | ) | $ | 15,205 | $ | 8,445 | $ | 7,663 | ) | ) | ||||||
| Net income (loss) per common share: | |||||||||||||||||||
| Basic | $ | 0.94 | $ | (0.80 | ) | $ | 1.59 | $ | 0.88 | $ | 0.79 | ) | ) | ||||||
| Diluted | $ | 0.91 | $ | (0.80 | ) | $ | 1.56 | $ | 0.86 | $ | 0.76 | ) | ) | ||||||
| Weighted-average shares outstanding: | |||||||||||||||||||
| Basic | 9,429 | 9,437 | 9,569 | 9,613 | 9,683 | ) | ) | ||||||||||||
| Diluted | 9,650 | 9,437 | 9,746 | 9,863 | 10,090 | ) | ) | ||||||||||||
| Balance Sheet Quarterly Trend | |||||||||||||||||||
| 3Q 23 | 4Q 23 | 1Q 24 | 2Q 24 | 3Q 24 | QoQ Inc (Dec) | YoY Inc (Dec) | |||||||||||||
| Total assets | $ | 1,765,340 | $ | 1,794,527 | $ | 1,756,748 | $ | 1,789,052 | $ | 1,821,831 | |||||||||
| Net finance receivables | $ | 1,751,009 | $ | 1,771,410 | $ | 1,744,286 | $ | 1,773,743 | $ | 1,819,756 | |||||||||
| Allowance for credit losses | $ | 184,900 | $ | 187,400 | $ | 187,100 | $ | 185,400 | $ | 192,100 | |||||||||
| Debt | $ | 1,372,748 | $ | 1,399,814 | $ | 1,358,795 | $ | 1,378,449 | $ | 1,395,892 | |||||||||
| Other Key Metrics Quarterly Trend | |||||||||||||||||||
| 3Q 23 | 4Q 23 | 1Q 24 | 2Q 24 | 3Q 24 | QoQInc (Dec) | YoYInc (Dec) | |||||||||||||
| Interest and fee yield (annualized) | 29.0 | % | 28.8 | % | 29.3 | % | 29.3 | % | 29.9 | % | % | % | |||||||
| Efficiency ratio (1) | 44.1 | % | 45.7 | % | 41.9 | % | 42.0 | % | 42.7 | % | % | )% | |||||||
| Operating expense ratio (2) | 14.4 | % | 14.8 | % | 13.7 | % | 13.8 | % | 13.9 | % | % | )% | |||||||
| 30+ contractual delinquency | 7.3 | % | 6.9 | % | 7.1 | % | 6.9 | % | 6.9 | % | )% | ||||||||
| Net credit loss ratio (3) | 11.0 | % | 15.1 | % | 10.6 | % | 12.7 | % | 10.6 | % | )% | )% | |||||||
| Book value per share | $ | 33.61 | $ | 33.02 | $ | 34.10 | $ | 33.96 | $ | 34.72 |
All values are in US Dollars.
(1) General and administrative expenses as a percentage of total revenue.
(2) Annualized general and administrative expenses as a percentage of average net finance receivables.
(3) Annualized net credit losses as a percentage of average net finance receivables.
| Averages and Yields | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| YTD 24 | YTD 23 | |||||||||||
| Average Net Finance Receivables | Average <br>Yield (1) | Average Net Finance Receivables | Average <br>Yield (1) | |||||||||
| Large loans | $ | 1,266,363 | 26.3 | % | $ | 1,232,170 | 26.1 | % | ||||
| Small loans | 497,987 | 37.7 | % | 456,893 | 35.4 | % | ||||||
| Retail loans | 2,521 | 16.2 | % | 7,252 | 17.5 | % | ||||||
| Total interest and fee yield | $ | 1,766,871 | 29.5 | % | $ | 1,696,315 | 28.6 | % | ||||
| Total revenue yield | $ | 1,766,871 | 32.7 | % | $ | 1,696,315 | 32.2 | % | ||||
| Components of Increase in Interest and Fee Income | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| YTD 24 Compared to YTD 23 | ||||||||||||
| Increase (Decrease) | ||||||||||||
| Volume | Rate | Volume & Rate | Total | |||||||||
| Large loans | $ | 6,695 | $ | 1,651 | $ | 46 | $ | 8,392 | ||||
| Small loans | 10,910 | 7,784 | 700 | 19,394 | ||||||||
| Retail loans | (621 | ) | (72 | ) | 47 | (646 | ) | |||||
| Product mix | (1,864 | ) | 2,177 | (313 | ) | — | ||||||
| Total increase in interest and fee income | $ | 15,120 | $ | 11,540 | $ | 480 | $ | 27,140 | ||||
| Loans Originated (1) | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| YTD 24 | YTD 23 | YTD Inc (Dec) | YTD %<br>Inc (Dec) | |||||||||
| Large loans | $ | 691,416 | $ | 695,084 | ) | (0.5 | )% | |||||
| Small loans | 487,195 | 432,018 | 12.8 | % | ||||||||
| Retail loans | — | 146 | ) | (100.0 | )% | |||||||
| Total loans originated | $ | 1,178,611 | $ | 1,127,248 | 4.6 | % |
All values are in US Dollars.
(1) Represents the principal balance of loan originations and refinancings.
| Other Key Metrics | ||||||
|---|---|---|---|---|---|---|
| YTD 24 | YTD 23 | |||||
| Net credit losses | $ | 149,874 | $ | 145,049 | ||
| Percentage of average net finance receivables (annualized) | 11.3 | % | 11.4 | % | ||
| Provision for credit losses | $ | 154,574 | $ | 151,149 | ||
| Percentage of average net finance receivables (annualized) | 11.7 | % | 11.9 | % | ||
| Percentage of total revenue | 35.6 | % | 36.9 | % | ||
| General and administrative expenses | $ | 183,052 | $ | 178,323 | ||
| Percentage of average net finance receivables (annualized) | 13.8 | % | 14.0 | % | ||
| Percentage of total revenue | 42.2 | % | 43.5 | % |
Non-GAAP Financial Measures
In addition to financial measures presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures. The company’s management utilizes non-GAAP measures as additional metrics to aid in, and enhance, its understanding of the company’s financial results. Tangible equity and the funded debt-to-tangible equity ratio are non-GAAP measures that adjust GAAP measures to exclude intangible assets. Management uses these equity measures to evaluate and manage the company’s capital and leverage position. The company also believes that these equity measures are commonly used in the financial services industry and provide useful information to users of the company’s financial statements in the evaluation of its capital and leverage position.
This non-GAAP financial information should be considered in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. In addition, the company’s non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies. The following tables provide a reconciliation of GAAP measures to non-GAAP measures.
| 3Q 24 | |||
|---|---|---|---|
| Debt | $ | 1,395,892 | |
| Total stockholders' equity | 352,928 | ||
| Less: Intangible assets | 22,250 | ||
| Tangible equity (non-GAAP) | $ | 330,678 | |
| Funded debt-to-equity ratio | 4.0 | x | |
| Funded debt-to-tangible equity ratio (non-GAAP) | 4.2 | x |
3Q 24 Earnings Presentation November 6, 2024 Exhibit 99.2
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 financial outlook or future plans, objectives, goals, projections, strategies, events, or performance, and underlying assumptions and other statements related thereto. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “outlook,” and similar expressions may be used to identify these forward-looking statements. Such forward-looking statements speak only as of the date on which they were made and are about matters that are inherently subject to risks and uncertainties, many of which are outside of the control of 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: managing growth effectively, implementing Regional Management's growth strategy, and opening new branches as planned; Regional Management's convenience check strategy; Regional Management's policies and procedures for underwriting, processing, and servicing loans; Regional Management's ability to collect on its loan portfolio; Regional Management's insurance operations; exposure to credit risk and repayment risk, which risks may increase in light of adverse or recessionary economic conditions; the implementation of evolving underwriting models and processes, including as to the effectiveness of Regional Management’s custom scorecards; changes in the competitive environment in which Regional Management operates or a decrease in the demand for its products; the geographic concentration of Regional Management's loan portfolio; the failure of third-party service providers, including those providing information technology products; changes in economic conditions in the markets Regional Management serves, including levels of unemployment and bankruptcies; the ability to achieve successful acquisitions and strategic alliances; the ability to make technological improvements as quickly as competitors; security breaches, cyber-attacks, failures in information systems, or fraudulent activity; the ability to originate loans; reliance on information technology resources and providers, including the risk of prolonged system outages; changes in current revenue and expense trends, including trends affecting delinquencies and credit losses; any future public health crises, including the impact of such crisis on our operations and financial condition; changes in operating and administrative expenses; the departure, transition, or replacement of key personnel; the ability to timely and effectively implement, transition to, and maintain the necessary information technology systems, infrastructure, processes, and controls to support Regional Management's operations and initiatives; changes in interest rates; existing sources of liquidity may become insufficient or access to these sources may become unexpectedly restricted; exposure to financial risk due to asset-backed securitization transactions; risks related to regulation and legal proceedings, including changes in laws or regulations or in the interpretation or enforcement of laws or regulations; changes in accounting standards, rules, and interpretations and the failure of related assumptions and estimates; the impact of changes in tax laws and guidance, including the timing and amount of revenues that may be recognized; risks related to the ownership of Regional Management's common stock, including volatility in the market price of shares of Regional Management's common stock; the timing and amount of future cash dividend payments; and anti-takeover provisions in Regional Management's charter documents and applicable state law. The foregoing factors and others are discussed in greater detail in the Company's filings with the SEC. 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
3Q 24 Highlights 557,400 Customer Accounts Up 5.1% YoY $1.82 billion Net Finance Receivables Up 3.9% YoY $426 million Origination Volume Up 0.3% YoY 13.9% Operating Expense Ratio* Down 50 basis points YoY 29.9% Interest and Fee Yield* Up 90 basis points YoY 6.9% 30+ Delinquencies 10.6% Net Credit Loss Rate* Down 40 basis points YoY 1.7% Return on Assets* $0.76 Diluted Earnings Per Share Inclusive of estimated hurricane impacts of $0.42 per share 3.7% Dividend Yield* 3Q 24 $0.30 dividend per share $482 million Unused Capacity Substantial bandwidth to fund growth 82% Fixed-Rate Debt Weighted-average revolving duration of 1.1 years 3 *See appendix for glossary
3Q 24 Financial Highlights Net income of $7.7 million; diluted EPS of $0.76, down $0.15 versus 3Q 23, inclusive of estimated hurricane impacts of $4.3 million, or $0.42 per share Record total revenue of $146.3 million increased $5.5 million, or 3.9%, year-over-year due to the impact of pricing changes, growth in our higher-margin small loan business, and a 4.1% increase in ANR*, reduced by lower insurance income from personal property insurance claims and reserves of $3.5 million related to hurricane activity Provision for credit losses increased by $3.4 million, or 6.7% Higher provision build of $3.2 million year-over-year, inclusive of a $2.1 million reserve related to third quarter hurricane activity Increase in net credit losses of $0.2 million; NCL rate down 40 basis points from 11.0% to 10.6% G&A expense up only 0.6% year-over-year and operating expense ratio down 50 basis points from continued disciplined expense management Revenue growth outpaced G&A expense growth by 15.0x compared to the prior-year period Interest expense increased $2.4 million due to maturing lower-cost fixed-rate debt and funding ANR growth of $70.7 million at higher rates 4 (1) Includes $4.6 million and $6.3 million impacts to provision for credit losses, or $3.5 million and $4.8 million impacts to net income, from sequential portfolio growth of $46.0 million and $62.1 million in 3Q 24 and 3Q 23, respectively *See appendix for glossary (1) (1)
Originations Trend Quarterly Origination Trend ($ in millions) 5 Branch originations in 3Q 24 were up year-over-year by 5.3%, while digital originations remained relatively flat year-over-year. Direct mail originations were down year-over-year by 9.1%, as we de-emphasized large loan convenience check offers to new borrowers as part of our credit tightening.
Controlled Portfolio Growth and Solid Small Loan Growth Generated sequential portfolio growth of $46 million, or 2.6%, to $1.82 billion in 3Q 24, an annualized growth rate of 10.4% Achieved year-over-year portfolio growth of $69 million, or 3.9%, in 3Q 24; higher-margin small loan business growth of $51 million outpaced large loan growth of $22 million As of September 30, 2024, 82% of our portfolio carried an APR at or below 36%, down from 85% as of the prior-year period due to product mix shift to higher-margin small loan business ENR* at or below 36% APR and Product Mix 6 *See appendix for glossary
Record total revenue of $146.3 million grew 3.9% year-over-year, inclusive of a 250 basis point impact from lower insurance income due to personal property insurance claims and reserves of $3.5 million related to hurricane activity Despite the impact of the hurricanes on revenue, revenue growth in line with ANR growth of 4.1% due to higher interest and fee yield which increased 90 basis points year-over-year from the impact of pricing changes, growth in our higher-margin small loan business, and improved credit performance Higher-margin small loan yields increased by 120 basis points year-over-year, while large loan yields increased by 40 basis points year-over-year Total revenue yield decreased by 10 basis points year-over-year inclusive of an 80 basis point impact due to lower insurance income from personal property insurance claims and reserves Total Revenue ($ in millions) 7 Revenue and Average Net Finance Receivables Trends Average Net Finance Receivables ($ in millions) Total Revenue and Interest & Fee Yields *See appendix for glossary (1) Hurricane impact represents the unfavorable impact from hurricane activity on total revenue yield in 3Q 24
Recent Credit Trends – Continued Year-Over-Year Improvement 3Q 24 delinquency of 6.9% improved 40 basis points from 3Q 23 3Q 24 30+ delinquency was inclusive of an estimated 40 basis point benefit from special borrower assistance programs related to hurricane activity and an estimated 20 basis point negative impact from growth in our higher-margin small loan business 30+ days past due of $126.0 million compares favorably to loan loss reserves of $192.1 million as of 3Q 24 3Q 24 net credit loss rate of 10.6%, down 40 basis points from 3Q 23, inclusive of an estimated 30 basis point impact from growth in higher-margin small loan business 30+ & 90+ Delinquency Rates ($ in millions) Net Credit Loss Rates 8 *See appendix for glossary
Front Book 86% of Total Portfolio (1) Total delinquency over 30 days was 6.9% (2) Total portfolio loan loss reserve rate was 10.6% *See appendix for glossary 9 Reserved at 13.4% Reserved at 10.2% 30+ DQ at 6.5% 30+ DQ at 10.0% Higher-credit-quality ENR from the front book is performing as expected and becoming a larger portion of the portfolio Front book was 86% of the total portfolio, an increase from 83% as of June 30, 2024 Front book was 81% of the 30+ delinquent loan receivables Front and back book delinquencies were 6.5% and 10.0%, respectively; front book continues to mature Loans from our back book represent 17% of 30+ delinquent loan receivables as of September 30, 2024; back book loans are expected to represent only 8% to 10% of the total portfolio by the end of 2024 Front and back book loan loss reserves were 84% and 15% of total loan loss reserves, respectively Front and back book loan loss reserve rates* were 10.2% and 13.4%, respectively $1,820 $126 (1) $192 (2) Reserved at 6.9% 30+ DQ at 8.1%
Reserved For Stressed Credit Losses In 3Q 24, we increased our loan loss reserves by $6.7 million due to portfolio growth ($4.6 million) and hurricanes ($2.1 million) that occurred during the third quarter of 2024. The $2.1 million provision related to hurricanes increased our reserve rate by 20 basis points. The reserve rate is impacted by the change in product mix to higher-margin small loan business Loan Loss Reserves ($ in millions) 10
Continued Focus on Operating Leverage & Expense Control G&A expense increased only $0.4 million, or 0.6%, from 3Q 23 while the operating expense ratio decreased 50 basis points due to continued disciplined expense management 3Q 24 year-over-year total revenue growth outpaced G&A expense growth by 15.0x Operating Expense ($ in millions) 11 Operating Expense Ratio ($ in millions)
3Q 24 cost of funds* increased 30 basis points year-over-year due to the maturation of lower-cost, fixed-rate debt Interest Expense ($ in millions) Cost of Funds *See appendix for glossary 12
As of September 30, 2024, total unused capacity was $482 million(1) (subject to borrowing base) Available liquidity of $155 million as of September 30, 2024 Fixed-rate debt represented 82% of total debt as of September 30, 2024, with a weighted-average coupon of 4.3% and a weighted-average revolving duration of 1.1 years Strong Funding Profile Unused Capacity ($ in millions) Fixed vs. Variable Debt Funded Debt Ratios 13 (1) Unused capacity increased by $50 million on October 3, 2024 (2) This is a non-GAAP measure. Refer to the Appendix for a reconciliation to the most comparable GAAP measure. *See appendix for glossary (1)
3Q 24 Results and Outlook 14 (1) Prior to discrete items, such as any tax impacts of equity compensation Key Metrics 3Q 24 Results 4Q 24 Outlook ENR Growth $46.0 million ~$65.0 - $70.0 million ANR Growth $44.0 million ~$63.5 million Total Revenue Yield 10 basis points sequential decrease ~60 basis points sequential increase Net Credit Losses $47.6 million ~$50.5 million Reserves as % of ENR 10.6% ~10.5% G&A Expense $62.5 million ~$65.5 million Interest Expense $19.4 million ~$20.5 million Effective Tax Rate 24.6% ~24.5%(1)
Appendix 15
Higher ENR Per Branch is Driving Efficiency Branch consolidations and our new-state, lighter-footprint strategy with larger branches drove higher ENR per branch Same store* year-over-year growth rate of 3.7% in 3Q 24 vs. 4.9% in the prior-year period The less than 1 year branch cohort as of 3Q 24 consisted of branches with an average age of approximately 3 months compared to the cohort as of 3Q 23 with an average age of approximately 9 months *See glossary 16
Digital volume represented 29.0% of our total new borrower volume in 3Q 24 Large loans represented 71.1% of new borrower digitally sourced loans booked in 3Q 24 Digitally Sourced Origination Volume ($ in millions) Digitally Sourced Originations 17
Diversified Liquidity Profile Long history of liquidity support from a strong group of banking partners Diversified funding platform with a senior revolving facility, warehouse facilities, and securitizations 18 (1) During October 2024, we amended our BMO warehouse facility to, among other things, increase the commitment amount from $75 million to $125 million, decrease margin from 3.00% to 2.40%, extend the maturity date from October 2025 to October 2026, and the facility now allows for funding of >36% APR loans
Consolidated Income Statements 19
Consolidated Balance Sheets 20
Non-GAAP Financial Measures In addition to financial measures presented in accordance with generally accepted accounting principles (“GAAP”), this presentation 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. The Company believes that these non-GAAP measures provide useful information by excluding certain material items that may not be indicative of our operating results. As a result, the Company believes that the non-GAAP measures that it has presented will aid in the evaluation of the operating performance of the business. Tangible equity and the funded debt-to-tangible equity ratio are non-GAAP measures that adjust GAAP measures to exclude intangible assets. Management uses these equity measures to evaluate and manage the company’s capital and leverage position. The Company also believes that these equity measures are commonly used in the financial services industry and provide useful information to users of the Company’s financial statements in the evaluation of its capital and leverage position. As a result, the Company also believes that these adjusted measures will aid users of its financial statements in the evaluation of its operating performance. This non-GAAP financial information should be considered in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. In addition, the Company’s non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies. The following tables provide reconciliations of GAAP measures to non-GAAP measures. 21
Non-GAAP Financial Measures (Cont’d) 22
Glossary 23 ANR – average net finance receivables Back book – loans originated from 4Q 21 to 3Q 22 and all delinquent renewals associated with loans originated prior to 4Q 22 Cost of funds – annualized interest expense as a percentage of average net finance receivables Debt balance – the balance for each respective debt agreement, composed of principal balance and accrued interest Dividend yield – annualized dividends per share divided by the closing share price as of the last day of the quarter DQ % – delinquent loans outstanding as a percentage of ending net finance receivables ENR – ending net finance receivables Front book – loans originated during or after 4Q 22 excluding delinquent renewals associated with loans originated prior to 4Q 22 Funded debt ratio – total debt divided by total assets Interest and fee yield – annualized interest and fee income as a percentage of average net finance receivables Loan loss reserve rate – loan loss reserves as a percentage of ending net finance receivables Loan sale (“LS”) impacts – the unfavorable impacts of the loans sales on net credit loss rates in 4Q 22 and 4Q 23 and the estimated favorable impacts to 1Q 23 and 1Q 24 MTM – mark-to-market value increase/decrease on interest rate caps Net credit loss rate – annualized net credit losses as a percentage of average net finance receivables Operating expense ratio – annualized general and administrative expenses as a percentage of average net finance receivables Other book – loans originated prior to 4Q 21 Return on assets – annualized net income as a percentage of average total assets Return on equity – annualized net income as a percentage of average stockholders’ equity Same store – comparison of branches with a comparable branch base; the comparable branch base includes those branches open for at least one year Total revenue yield – annualized total revenue as a percentage of average net finance receivables WAC – weighted-average coupon
