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8-K - FORM 8-K - Regional Management Corp.d889641d8k.htm

Exhibit 99.1

 

LOGO

Regional Management Corp. Announces Fourth Quarter 2014 Results

Material Reduction in Early-Stage and Overall Delinquencies Sequentially

and from Prior-Year Period

Greenville, South Carolina – March 9, 2015 – Regional Management Corp. (NYSE: RM), a diversified specialty consumer finance company, today announced results for the fourth quarter and full year periods ended December 31, 2014.

Fourth Quarter 2014 Highlights and Subsequent Events

 

    Total fourth quarter 2014 revenue was $53.8 million, a 10.8% increase from the prior-year period. Same-store1 revenue growth for the fourth quarter of 2014 was 4.8%.

 

    Early-stage delinquencies (defined as accounts delinquent fewer than 60 days) as a percentage of total finance receivables as of December 31, 2014 were 18.0%, compared to 20.2% as of December 31, 2013 and 21.7% as of September 30, 2014.

 

    Total delinquencies as a percentage of total finance receivables as of December 31, 2014 were 22.6%, compared to 25.1% as of December 31, 2013 and 25.5% as of September 30, 2014.

 

    Regional Management’s most important loan categories continue to grow:

 

    Branch small loan and convenience check finance receivables, collectively, as of December 31, 2014 increased 2.9% compared to September 30, 2014 and 10.6% compared to December 31, 2013.

 

    Large loan finance receivables as of December 31, 2014 increased 9.4% compared to September 30, 2014.

 

    Total finance receivables as of December 31, 2014 were $546.2 million, an increase of 0.3% from the prior-year. Same-store finance receivables for the fourth quarter of 2014 declined 6.0%.

 

    Net income for the fourth quarter of 2014 was $3.4 million, a 59.7% decrease from the prior-year period. Diluted earnings per share were $0.26 based on a diluted share count of 13.0 million. Excluding one-time separation costs of $1.2 million and one-time loan system implementation costs of $0.3 million in the fourth quarter of 2014, non-GAAP diluted earnings per share for the fourth quarter were $0.33.

 

1  Defined as stores open for at least 13 months.

 

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    Annualized net charge-offs as a percentage of average finance receivables for the fourth quarter of 2014 were 13.9%, an increase from 7.8% in the prior-year period. Provision for credit losses for the fourth quarter of 2014 was 29.7% of revenue, an increase from 24.0% in the prior-year period.

 

    Regional Management opened four new branches in the fourth quarter of 2014. As of December 31, 2014, Regional Management’s branch network consisted of 300 locations.

 

    In January 2015, Regional Management announced the appointment of Daniel J. Taggart as Chief Risk Officer.

“We have made significant progress over the last few months in terms of improving the credit quality of our portfolio – from solicitation and origination through delinquency and collection,” said Michael R. Dunn, Chief Executive Officer of Regional Management Corp. “Our early-stage and overall delinquency levels declined significantly compared to September 30, 2014, as the lower credit quality convenience check loans we originated in the second and third quarters were either charged off or replaced by higher quality loans originated in the fourth quarter. We also strengthened our leadership team in January with the hiring of Dan Taggart as our Chief Risk Officer, and he has already implemented initiatives that will help us to continue to improve the credit quality of our portfolio as we move forward.”

“In terms of our revenue and portfolio growth, we made solid progress in the quarter by growing our small and large loan portfolios, which are our most important loan categories and which we expect to be core drivers of our future strategy,” continued Mr. Dunn. “While we expect some lingering effects from 2014 will continue to impact the first quarter of 2015, we believe we have incorporated the risk of our prior issues into our 2014 financials.”

Fourth Quarter 2014 Results

For the fourth quarter ended December 31, 2014, Regional Management reported total revenue of $53.8 million, a 10.8% increase from $48.5 million in the prior-year period. Interest and fee income for the fourth quarter of 2014 was $49.0 million, a 12.1% increase from $43.7 million in the prior-year period, primarily due to a shift in product mix toward higher-yielding small installment loans. Insurance income for the fourth quarter of 2014 was $2.3 million, a 21.9% decrease from the prior-year period. Same-store revenue growth for the fourth quarter of 2014 was 4.8%.

Finance receivables outstanding at December 31, 2014 were $546.2 million, a 0.3% increase from $544.7 million in the prior-year period. Finance receivables increased primarily due to the addition of 36 de novo branches since December 31, 2013.

Provision for credit losses in the fourth quarter of 2014 was $16.0 million versus $11.6 million in the prior-year period. On a sequential basis, provision for credit losses declined 29.2%, reflecting

 

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improvements in credit quality during the fourth quarter of 2014. Annualized net charge-offs as a percentage of average finance receivables for the fourth quarter of 2014 were 13.9%, an increase from 7.8% in the prior-year period. Net charge-offs of $18.7 million in the fourth quarter of 2014 exceeded the provision as the Company utilized a portion of the additional allowance recorded at September 30, 2014.

General and administrative expenses for the fourth quarter of 2014 were $28.4 million, an increase of 45.8% from $19.5 million in the prior-year period, primarily related to increased personnel costs from opening an additional 36 branches since December 31, 2013. Regional Management’s efficiency ratio — the percentage of general and administrative expenses compared to total revenue — was 52.8% in the fourth quarter of 2014, an increase from 40.1% in the prior-year period. Excluding one-time CEO separation costs of $1.2 million and one-time loan system implementation costs of $0.3 million in the fourth quarter of 2014, Regional Management’s efficiency ratio would have been 50.0%.

Net income for the fourth quarter of 2014 was $3.4 million, a 59.7% decrease compared to net income of $8.4 million in the prior-year period. Diluted earnings per share for the fourth quarter of 2014 were $0.26, a decrease from $0.65 in the prior-year period. Excluding the aforementioned one-time expenses, non-GAAP diluted earnings per share for the fourth quarter were $0.33. For a reconciliation of non-GAAP financial measures to the nearest comparable GAAP financial measure, please refer to the reconciliation table accompanying this release.

Full Year 2014 Results

For the full year ended December 31, 2014, Regional Management reported total revenue of $204.7 million, a 20.0% increase from $170.6 million in the prior year. Interest and fee income for the full year ended December 31, 2014 was $184.8 million, a 21.3% increase from $152.3 million in the prior year, primarily due to a shift in product mix toward higher-yielding small installment loans and an increase in average finance receivables. Insurance income for the full year ended December 31, 2014 was $10.7 million, a 6.9% decrease from the prior year.

Provision for credit losses in the full year ended December 31, 2014 was $69.1 million versus $39.2 million in the prior year, primarily due to branch personnel issues in the first half of 2014 combined with issues related to the Company’s summer convenience check campaigns. GAAP net charge-offs as a percentage of average finance receivables for the full year ended December 31, 2014 was 11.1%, an increase from 6.9% in the prior year. Excluding $2.1 million of one-time charge-offs for the full year ended December 31, 2014 caused by a change in the Company’s charge-off policy for 180 day and over delinquent loans, non-GAAP net charge-offs as a percentage of finance receivables for the full year ended December 31, 2014 was 10.7%.

General and administrative expenses for the full year ended December 31, 2014 were $96.8 million, an increase of 36.2% from $71.0 million in the prior year, primarily due to increased personnel costs associated with the 36 de novo branches opened during 2014. Regional Management’s efficiency ratio for the full year ended December 31, 2014 was 47.3%, an increase from 41.6% in the prior-year period. Excluding a net $1.5 million of one-time expenses, Regional Management’s efficiency ratio for the full year ended December 31, 2014 was 46.5%.

 

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GAAP net income for the full year ended December 31, 2014 was $14.8 million, a 48.6% decrease compared to GAAP net income of $28.8 million in the prior year, and diluted earnings per share for the full year ended December 31, 2014 were $1.14 compared to $2.23 in the prior year. Excluding net one-time expenses, non-GAAP net income for the full year ended December 31, 2014 totaled $15.8 million and non-GAAP diluted earnings per share totaled $1.22.

2015 De Novo Outlook

As of December 31, 2014, Regional Management’s branch network consisted of 300 locations. Regional Management has opened one de novo branch quarter to date in 2015 and, for the full year 2015, plans to open between 25 and 30 de novo branches.

Liquidity and Capital Resources

As of December 31, 2014, Regional Management had finance receivables of $546.2 million and outstanding debt of $341.4 million on its $500.0 million senior revolving credit facility.

Conference Call Information

Regional Management Corp. will host a conference call and webcast today at 4:30 PM ET to discuss these results.

The dial-in number for the conference call is (877) 474-9503 (toll free) or (857) 244-7556 (direct), passcode 94963836. Please dial the number 10 minutes prior to the scheduled start time. A live webcast of the conference call will also be available on Regional Management’s website at www.RegionalManagement.com.

A replay of the call will be available through Monday, March 16th at www.RegionalManagement.com and by phone at (888) 286-8010 (toll free) or (617) 801-6888 (direct), passcode 22319608.

Forward-Looking Statements

This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which represent Regional Management Corp.’s expectations or beliefs concerning future events. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “outlook” and similar expressions may be used to identify these forward-looking statements. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties, many of which are outside of the control of Regional Management. Factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include, but are not limited to, the following: the continuation or worsening of adverse conditions in the global and domestic credit markets and uncertainties regarding, or the impact of, governmental responses to those conditions; changes in interest rates; risks related to acquisitions and new branches; risks inherent in making loans, including repayment risks and value of collateral, which risks may increase in light of adverse or recessionary economic conditions; recently-enacted or proposed legislation; the timing and

 

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amount of revenues that may be recognized by Regional Management; changes in current revenue and expense trends (including trends affecting delinquencies and charge-offs); changes in Regional Management’s markets and general changes in the economy (particularly in the markets served by Regional Management); and the departure, transition or replacement of key personnel. Such factors and others are discussed in greater detail in Regional Management’s filings with the Securities and Exchange Commission. Regional Management will not and is not responsible for updating the information contained in this press release beyond the publication date, or for changes made to this document by wire services or Internet services.

About Regional Management Corp.

Regional Management Corp. (NYSE: RM) is a diversified specialty consumer finance company providing a broad array of loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies and other traditional lenders. Regional Management began operations in 1987 with four branches in South Carolina and has since expanded its branch network across South Carolina, Texas, North Carolina, Tennessee, Alabama, Oklahoma, New Mexico and Georgia. Each of its loan products is structured on a fixed rate, fixed term basis with fully amortizing equal monthly installment payments and is repayable at any time without penalty. Regional Management’s loans are sourced through its multiple channel platform, including in its branches, through direct mail campaigns, independent and franchise automobile dealerships, online credit application networks, retailers and its consumer website. For more information, please visit http://www.RegionalManagement.com.

Contact:

Investor Relations

Garrett Edson, (203) 682-8331

 

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Regional Management Corp. and Subsidiaries

Consolidated Statements of Income

(in thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
     2014      2013      2014      2013  

Revenue

           

Interest and fee income

   $ 48,960       $ 43,668       $ 184,786       $ 152,343   

Insurance income, net

     2,261         2,895         10,673         11,470   

Other income

     2,571         1,979         9,260         6,816   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

  53,792      48,542      204,719      170,629   
  

 

 

    

 

 

    

 

 

    

 

 

 

Expenses

Provision for credit losses

  15,950      11,638      69,057      39,192   

General and administrative expenses

Personnel

  17,099      10,082      55,383      39,868   

Occupancy

  4,115      3,261      15,427      11,640   

Marketing

  1,842      1,144      6,330      3,980   

Other

  5,340      4,993      19,636      15,551   

Interest expense

  3,780      3,909      14,947      14,144   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses

  48,126      35,027      180,780      124,375   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes

  5,666      13,515      23,939      46,254   

Income taxes

  2,285      5,130      9,137      17,460   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

$ 3,381    $ 8,385    $ 14,802    $ 28,794   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income per common share:

Basic

$ 0.27    $ 0.66    $ 1.17    $ 2.29   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

$ 0.26    $ 0.65    $ 1.14    $ 2.23   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average common shares outstanding:

Basic

  12,743,534      12,614,503      12,701,083      12,572,298   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

  12,954,887      12,984,270      12,951,441      12,893,693   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

December 31, 2014 and 2013

(in thousands, except per share amounts)

(Unaudited)

 

     2014     2013  

Assets

    

Cash

   $ 4,012      $ 4,121   

Gross finance receivables

     663,432        658,176   

Less unearned finance charges, insurance premiums, and commissions

     (117,240     (113,492
  

 

 

   

 

 

 

Finance receivables

  546,192      544,684   

Allowance for credit losses

  (40,511   (30,089
  

 

 

   

 

 

 

Net finance receivables

  505,681      514,595   

Property and equipment, net of accumulated depreciation

  8,905      7,100   

Deferred tax asset, net

  1,870      —    

Repossessed assets at net realizable value

  556      548   

Goodwill

  716      716   

Intangible assets, net

  847      1,386   

Other assets

  7,683      5,422   
  

 

 

   

 

 

 

Total assets

$ 530,270    $ 533,888   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

Liabilities:

Senior revolving credit facility

  341,419      362,750   

Accounts payable and accrued expenses

  10,528      7,312   

Deferred tax liability, net

$ —      $ 2,653   
  

 

 

   

 

 

 

Total liabilities

  351,947      372,715   

Commitments and Contingencies

Stockholders’ equity:

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

  —        —     

Common stock, $0.10 par value, 1,000,000,000 shares authorized, 12,747,767 and 12,652,197 shares issued and outstanding at December 31, 2014 and 2013, respectively

  1,275      1,265   

Additional paid-in-capital

  85,655      83,317   

Retained earnings

  91,393      76,591   
  

 

 

   

 

 

 

Total stockholders’ equity

  178,323      161,173   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

$ 530,270    $ 533,888   
  

 

 

   

 

 

 

 

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Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(in thousands)

 

     Three Months Ended December 31,  
     2014     2013  
     Average Finance
Receivables
     Average Yield
(Annualized)
    Average Finance
Receivables
     Average Yield
(Annualized)
 

Branch small loans

   $ 119,097         48.4   $ 103,184         48.3

Convenience checks

     192,951         46.8     166,251         42.8

Large loans

     43,464         27.1     43,093         27.0

Automobile loans

     159,047         19.5     182,317         19.9

Retail loans

     26,493         18.6     31,407         18.4
  

 

 

    

 

 

   

 

 

    

 

 

 

Total interest and fee yield

$ 541,052      36.2 $ 526,252      33.2
  

 

 

    

 

 

   

 

 

    

 

 

 

Total revenue yield

$ 541,052      39.8 $ 526,252      36.9
  

 

 

    

 

 

   

 

 

    

 

 

 

 

     Components of Increase in Interest and Fee Income
Three Months Ended December 31,  2014
Compared to Three Months Ended December 31, 2013
Increase (Decrease)
 
     Volume     Rate     Net  

Branch small loans

   $ 1,927      $ 33      $ 1,960   

Convenience checks

     3,026        1,796        4,822   

Large loans

     25        14        39   

Automobile loans

     (1,179     (139     (1,318

Retail loans

     (223     12        (211
  

 

 

   

 

 

   

 

 

 

Total increase in interest and fee income

$ 3,576    $ 1,716    $ 5,292   
  

 

 

   

 

 

   

 

 

 

 

     Net Loans Originated (1)
Three Months Ended December 31,
 
     2014      2013  

Branch small loans

   $ 80,171       $ 65,347   

Convenience checks

     95,330         95,225   

Large loans

     17,737         13,418   

Automobile loans

     13,516         20,330   

Retail loans

     7,634         8,694   
  

 

 

    

 

 

 

Total net loans originated

$ 214,388    $ 203,014   
  

 

 

    

 

 

 

 

(1) Represents the balance of loan origination and refinancing net of unearned finance charges

 

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     Three Months Ended December 31,  
     2014     2013  
     Amount      Percentage of
Average Finance
Receivables

(Annualized)
    Amount      Percentage of
Average Finance
Receivables

(Annualized)
 

Net charge-offs

   $ 18,740         13.9   $ 10,231         7.8

Provision for credit losses

   $ 15,950         11.8   $ 11,638         8.8
     Amount      Percentage of
Total Revenue
    Amount      Percentage of
Total Revenue
 

Provision for credit losses

   $ 15,950         29.7   $ 11,638         24.0

General and administrative expenses

   $ 28,396         52.8   $ 19,480         40.1
     Amount      Growth Rate     Amount      Growth Rate  

Same store finance receivables at period-end/growth rate

   $ 504,697         -6.0   $ 478,969         11.5

Same store revenue during period/growth rate

   $ 50,875         4.8   $ 43,305         17.0

Number of branches in calculation

     264           213      

 

 

 

     Twelve Months Ended December 31,  
     2014     2013  
     Average Finance
Receivables
     Average Yield     Average Finance
Receivables
     Average Yield  

Branch small loans

   $ 110,531         48.0   $ 88,979         48.9

Convenience checks

     178,181         45.8     133,723         40.7

Large loans

     42,887         26.9     45,374         27.6

Automobile loans

     169,607         19.7     178,247         20.3

Retail loans

     28,295         18.3     31,031         18.1
  

 

 

    

 

 

   

 

 

    

 

 

 

Total interest and fee yield

$ 529,501      34.9 $ 477,354      31.9
  

 

 

    

 

 

   

 

 

    

 

 

 

Total revenue yield

$ 529,501      38.7 $ 477,354      35.7
  

 

 

    

 

 

   

 

 

    

 

 

 

 

     Components of Increase in Interest and Fee Income
Twelve Months Ended December 31, 2014
Compared to Twelve Months Ended December 31, 2013
Increase (Decrease)
 
     Volume     Rate     Net  

Branch small loans

   $ 10,361      $ (830   $ 9,531   

Convenience checks

     19,753        7,453        27,206   

Large loans

     (700     (311     (1,011

Automobile loans

     (1,789     (1,064     (2,853

Retail loans

     (490     60        (430
  

 

 

   

 

 

   

 

 

 

Total increase in interest and fee income

$ 27,135    $ 5,308    $ 32,443   
  

 

 

   

 

 

   

 

 

 

 

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     Net Loans Originated (1)
Twelve Months Ended December 31,
 
     2014      2013  

Branch small loans

   $ 240,465       $ 216,677   

Convenience checks

     334,115         297,259   

Large loans

     50,731         48,454   

Automobile loans

     64,842         100,622   

Retail loans

     29,984         34,228   
  

 

 

    

 

 

 

Total net loans originated

$ 720,137    $ 697,240   
  

 

 

    

 

 

 

 

(1) Represents the balance of loan origination and refinancing net of unearned finance charges

 

     Twelve Months Ended December 31,  
     2014     2013  
     Amount      Percentage of
Average Finance
Receivables
    Amount      Percentage of
Average Finance
Receivables
 

Net charge-offs

   $ 56,529         10.7   $ 32,719         6.9

Net charge-offs (180+ policy change)

     2,106         0.4     —           0.0
  

 

 

    

 

 

   

 

 

    

 

 

 

Total net charge-offs

$ 58,635      11.1 $ 32,719      6.9
  

 

 

    

 

 

   

 

 

    

 

 

 

Provision for credit losses

$ 69,057      13.0 $ 39,192      8.2
     Amount      Percentage of
Total Revenue
    Amount      Percentage of
Total Revenue
 

Provision for credit losses

   $ 69,057         33.7   $ 39,192         23.0

General and administrative expenses

   $ 96,776         47.3   $ 71,039         41.6

 

 

 

     Finance Receivables As of December 31,  
     2014     2013     2012  
     Finance
Receivables
     Percentage of
Total
    Finance
Receivables
     Percentage of
Total
    Finance
Receivables
     Percentage of
Total
 

Branch small loans

   $ 128,217         23.5   $ 109,776         20.1   $ 78,366         17.8

Convenience checks

     191,316         35.0     179,203         32.9     110,196         25.1

Large loans

     46,147         8.4     43,311         8.0     52,001         11.8

Automobile loans

     154,382         28.3     181,126         33.3     168,604         38.4

Retail loans

     26,130         4.8     31,268         5.7     30,307         6.9
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total finance receivables

$ 546,192      100.0 $ 544,684      100.0 $ 439,474      100.0
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Number of branches at period end

  300      264      221   

Average finance receivables per branch

$ 1,821    $ 2,063    $ 1,989   
  

 

 

      

 

 

      

 

 

    

 

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     Contractual Delinquency As of  
     December 31, 2014     September 30, 2014     December 31, 2013  
     Amount      Percentage of
Total Finance
Receivables
    Amount      Percentage of
Total Finance
Receivables
    Amount      Percentage of
Total Finance
Receivables
 

Allowance for credit losses

   $ 40,511         7.4   $ 43,301         8.0   $ 30,089         5.5

Current

     422,342         77.4     404,756         74.5     407,571         74.9

1 to 29 days delinquent

     82,714         15.1     98,304         18.1     93,303         17.1
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Delinquent accounts:

30 to 59 days

  15,951      2.9   19,274      3.6   17,088      3.1

60 to 89 days

  9,624      1.8   9,406      1.7   9,267      1.7

90 to 119 days

  6,899      1.2   5,508      1.0   6,843      1.3

120 to 149 days

  4,988      0.9   4,284      0.8   5,108      0.9

150 to 179 days

  3,674      0.7   1,821      0.3   3,409      0.6

180 days and over

  —        0.0   —        0.0   2,095      0.4
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total contractual delinquency

$ 41,136      7.5 $ 40,293      7.4 $ 43,810      8.0
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total finance receivables

$ 546,192      100.0 $ 543,353      100.0 $ 544,684      100.0
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

1 day and over delinquent

$ 123,850      22.6 $ 138,597      25.5 $ 137,113      25.1
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

     Contractual Delinquency by Product  
     December 31, 2014     September 30, 2014     December 31, 2013  
     Amount      Percentage of
Total Finance
Receivables
    Amount      Percentage of
Total Finance
Receivables
    Amount      Percentage of
Total Finance
Receivables
 

Branch small loans

   $ 10,247         8.0     17,151         8.7   $ 10,211         9.3

Convenience checks

     17,165         9.0     9,209         8.0     15,427         8.6

Large loans

     2,106         4.6     2,114         5.0     3,010         6.9

Automobile loans

     10,302         6.7     10,588         6.5     12,972         7.2

Retail loans

     1,316         5.0     1,231         4.6     2,190         7.0
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total contractual delinquency

  41,136      7.5 $ 40,293      7.4   43,810      8.0
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

     Subset of
Convenience Checks

December 31, 2014 (1)
 

Current

   $ 20,717   

1 to 29 days contractually delinquent

     4,965   

30 days and over contractually delinquent

     7,534   
  

 

 

 

Total finance receivables

$ 33,216   
  

 

 

 

Allowance for credit losses

$ 9,337   

Allowance as a % of 30 days and over contractually delinquent

  124

Allowance as a % of 1 day and over contractually delinquent

  75

 

(1) Remaining balance of convenience checks originated in April, June, July, August, and September 2014 that contained a higher percentage of lower credit quality customers

 

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Regional Management Corp. and Subsidiaries

Unaudited Non-GAAP Reconciliation of Selected Financial Data

(in thousands, except per share amounts)

Because it adjusts for certain non-recurring and non-cash items, the Company believes that these non-GAAP measures are useful to investors as supplemental financial measures that, when viewed with its GAAP financial information, provide information regarding trends in the Company’s results of operations and credit metrics, which is intended to help investors meaningfully evaluate and compare the Company’s results of operations and credit metrics between periods.

 

     Three Months Ended December 31, 2014  
     Actual     Adjustments     Non-GAAP  

General and administrative expenses

   $ 28,396      $ (1,489 )(1)(2)    $ 26,907   

Income taxes

   $ 2,285      $ 568 (4)    $ 2,853   

Net income

   $ 3,381      $ 921      $ 4,302   

Diluted net income per common share

   $ 0.26      $ 0.07      $ 0.33   

Efficiency ratio

     52.8     -2.8     50.0

 

     Twelve Months Ended December 31, 2014  
     Actual     Adjustments     Non-GAAP  

General and administrative expenses

   $ 96,776      $ (1,538 )(1)(2)(3)    $ 95,238   

Income taxes

   $ 9,137      $ 587 (4)    $ 9,724   

Net income

   $ 14,802      $ 951      $ 15,753   

Diluted net income per common share

   $ 1.14      $ 0.08      $ 1.22   

Efficiency ratio

     47.3     -0.8     46.5

 

(1) Exclude one-time CEO separation costs of $1,154
(2) Exclude one-time loan system conversion costs of $335 and $1,772 for the three and twelve months ended December 31, 2014
(3) Benefit related to the reversal of vacation pay liability of $1,388
(4) Tax effect of the adjustments

 

     Three Months Ended December 31, 2013  
     Actual     Adjustments     Non-GAAP  

General and administrative expenses

   $ 19,480      $ (1,503 )(5)(6)    $ 17,977   

Income taxes

   $ 5,130      $ 450 (7)    $ 5,580   

Net income

   $ 8,385      $ 1,053      $ 9,438   

Diluted net income per common share

   $ 0.65      $ 0.08      $ 0.73   

Efficiency ratio

     40.1     -3.1     37.0

 

     Twelve Months Ended December 31, 2013  
     Actual     Adjustments     Non-GAAP  

General and administrative expenses

   $ 71,039      $ (1,959 )(5)(6)    $ 69,080   

Income taxes

   $ 17,460      $ 450 (7)    $ 17,910   

Net income

   $ 28,794      $ 1,509      $ 30,303   

Diluted net income per common share

   $ 2.23      $ 0.12      $ 2.35   

Efficiency ratio

     41.6     -1.1     40.5

 

(5) Exclude director compensation of $1,210
(6) Exclude one-time secondary offering costs of $293 and $749 for the three and twelve months ended December 31, 2013
(7) Tax effect of the adjustments (secondary offering expense is non-deductible for tax purposes)

 

12