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8-K - 8-K - Regional Management Corp.d79340d8k.htm

Exhibit 99.1

 

LOGO

Regional Management Corp. Announces Second Quarter 2015 Results

- Net income of $5.4 million; diluted earnings per share of $0.41 -

- $46.6 million in sequential growth of total finance receivables -

- 47.2% sequential and 116.8% year-over-year growth of large loan receivables -

Greenville, South Carolina – July 23, 2015 – Regional Management Corp. (NYSE: RM), a diversified specialty consumer finance company, today announced results for the second quarter ended June 30, 2015.

Second Quarter 2015 Highlights

 

    Net income for the second quarter of 2015 was $5.4 million, an increase of 22.5% from the prior-year period. Diluted earnings per share were $0.41 based on a diluted share count of 13.1 million.

 

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

 

    Large loan finance receivables as of June 30, 2015 were $93.2 million, an increase of 47.2% sequentially and 116.8% compared to the prior-year period.

 

    Branch small loan and convenience check finance receivables, collectively, as of June 30, 2015 were $314.9 million, an increase of 8.0% sequentially and 14.3% over the prior-year period.

 

    Total finance receivables as of June 30, 2015 were $572.5 million, an increase of 10.5% from the prior-year period.

 

    Total second quarter of 2015 revenue was $53.0 million, an 11.7% increase from the prior-year period.

 

    Total delinquencies as a percentage of total finance receivables as of June 30, 2015 were 20.6%, compared to 23.6% as of June 30, 2014 and 19.2% as of March 31, 2015.

 

    Net charge-offs were $12.9 million for the second quarter of 2015, or 9.4% of average finance receivables, improving from 10.5% in the prior-year period. The related provision for credit losses for the second quarter of 2015 was $12.1 million, or 22.8% of revenue, a decline from 28.7% in the prior-year period.

 

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    Regional Management opened 10 new branches in the second quarter of 2015. As of June 30, 2015, Regional Management’s branch network consisted of 316 locations.

“We are gratified that all of our efforts toward improving the operational performance of the business helped produce improved results in the second quarter,” said Michael R. Dunn, Chief Executive Officer of Regional Management Corp. “We had a strong quarter in receivable growth driven by improved marketing initiatives and in-branch activity. Large loans, which we continue to believe will be a strong driver of our future growth, increased 47% on a sequential basis and 117% from the prior-year period. Branch small loans and convenience checks, which have always been important to the company, also generated solid double-digit growth from the prior-year period. The strong receivable performance led to revenue growth of 11.7% compared to the prior-year period and 1.0% compared to the first quarter of 2015.”

“Total delinquency at the end of the quarter was 20.6%, down from 23.6% in the prior-year period, and up 1.4% from our record low first quarter of 2015,” continued Mr. Dunn. “This level of delinquency is a return to a more normalized profile for the business. We also continued to make progress on achieving operational efficiencies. Total expenses in our branches were $17.1 million, up $1.6 million compared to the prior-year period, but importantly down $2.3 million from the first quarter of 2015, driven primarily by a reduction in our existing branch staffing of 130 people since the end of 2014. Moving forward, our focus remains on growing our core small and large loan portfolios, while maintaining more normalized levels of delinquencies and continuing to focus on our expense structure. Overall, we believe we have solidly positioned ourselves for future consistent top and bottom line growth, and I am proud of the entire Regional Management team for their hard work and dedication in getting us back on track in a short period of time.”

Second Quarter 2015 Results

Finance receivables outstanding at June 30, 2015 were $572.5 million, a 10.5% increase from $518.0 million in the prior-year period. Finance receivables increased primarily due to enhanced efforts to increase originations of both small and large installment loans and the addition of 23 de novo branches since June 30, 2014.

For the second quarter ended June 30, 2015, Regional Management reported total revenue of $53.0 million, an 11.7% increase from $47.4 million in the prior-year period. Interest and fee income for the second quarter of 2015 was $47.7 million, an 11.0% increase from $43.0 million in the prior-year period, primarily due to a significant increase in the portfolios of both small and large installment loans compared to the prior-year period. Insurance income for the second quarter of 2015 was $3.1 million, a 25.8% increase from the prior-year period.

Provision for credit losses in the second quarter of 2015 was $12.1 million versus $13.6 million in the prior-year period. Net charge-offs of $12.9 million in the second quarter of 2015 exceeded the provision by $0.8 million as the Company released a portion of the allowance recorded in 2014 for convenience checks. Annualized net charge-offs as a percentage of average finance receivables for the second quarter of 2015 were 9.4%, an improvement from 10.5% in the prior-year period.

 

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On a sequential basis, provision for credit losses increased 24.6%, reflecting the significant increase in small and large loan originations during the second quarter of 2015.

General and administrative expenses for the second quarter of 2015 were $28.2 million, an increase of $5.0 million, or 21.7%, from $23.2 million in the prior-year period. The increase was driven primarily by $1.6 million of additional branch expenses and $3.2 million of additional home office expenses. Branch expenses include changes in staffing and incentive plans for all branches, as well as the expenses associated with 23 branches added since June 30, 2014. The increase in home office expenses includes additional personnel, incentive plan changes and consulting fees.

Net income for the second quarter of 2015 was $5.4 million, a 22.5% increase compared to net income of $4.4 million in the prior-year period. Diluted earnings per share for the second quarter of 2015 were $0.41, an increase from $0.34 in the prior-year period.

First Half 2015 Results

For the six months ended June 30, 2015, Regional Management reported total revenue of $105.5 million, an 8.8% increase from $97.0 million in the prior-year period. Interest and fee income for the six months ended June 30, 2015 was $94.7 million, an 8.8% increase from $87.0 million in the prior-year period, primarily due to a significant increase in the portfolios of both small and large installment loans compared to the prior-year period. Insurance income for the six months ended June 30, 2015 was $6.0 million, a 4.7% increase from the prior-year period.

Provision for credit losses for the six months ended June 30, 2015 was $21.8 million versus $30.6 million in the prior-year period. Net charge-offs of $26.2 million in the six months ended June 30, 2015 exceeded the provision by $4.4 million as the Company released a portion of the allowance recorded in 2014 for convenience checks. Annualized net charge-offs as a percentage of average finance receivables for the six months ended June 30, 2015 was 9.6%, a decline from 10.1% in the prior-year period.

General and administrative expenses for the six months ended June 30, 2015 were $60.9 million, an increase of $17.8 million, or 41.2%, from $43.1 million in the prior-year period. Included in six months 2015 results were a total of $2.7 million in non-operating expenses, while six months 2014 results included a non-operating benefit of $1.4 million related to a change in the Company’s vacation pay policy. The balance of the expense increase of $13.7 million was driven primarily by $6.5 million of additional branch expenses, $5.5 million of additional home office expenses and $1.7 million of additional marketing costs. Branch expenses include changes in staffing and incentive plans for all branches as well as the expenses associated with 52 branches added since December 31, 2013. The increase in home office expenses includes additional personnel, incentive plan changes, the write-off of GoldPoint software costs and legal and consulting fees.

GAAP net income for the six months ended June 30, 2015 was $9.5 million, a 5.3% decrease compared to GAAP net income of $10.0 million in the prior-year period, and diluted earnings per share for the six months ended June 30, 2015 were $0.73 compared to $0.77 in the prior-year period. Excluding the aforementioned non-operating expenses, non-GAAP net income for the six

 

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months ended June 30, 2015 totaled $11.2 million and non-GAAP diluted earnings per share were $0.86. For a reconciliation of non-GAAP financial measures to the nearest comparable GAAP financial measure, please refer to the reconciliation table accompanying this release.

Peter Knitzer Appointed to Board of Directors

The Company announced today that Peter Knitzer has been appointed to the Board of Directors, effective immediately. The appointment increases the Company’s Board size from six directors to seven. Mr. Knitzer will serve on the Company’s Compensation Committee and Corporate Governance and Nominating Committee, and brings to the Board an extensive analytical and financial background with respect to optimizing and integrating digital and traditional consumer marketing, sales and service capabilities, as well as significant experience with public and private financial services companies.

Mr. Knitzer has been an advisor to financial services companies since 2013. Previously, Mr. Knitzer served as Executive Vice President and head of the Payments group at CIBC and President and Director at E*TRADE Bank. Prior to joining E*TRADE, Mr. Knitzer spent 14 years at Citigroup in various senior roles, including Chairman & Chief Executive Officer of Citibank North America — a top 10 retail and commercial bank with 1,000+ branches and 22,000+ employees — Business Head, Cross-Sell Customer Management for all Citigroup businesses and EVP/Managing Director of Citi Cards, Citigroup’s leading global credit card business. Mr. Knitzer has also previously held senior marketing positions at Chase Manhattan Bank, American Express and Nabisco Brands. He received his MBA in marketing and finance from Columbia University Graduate School of Business and his BA in political science from Brown University.

Mr. Knitzer has also served as a Director for Habitat for Humanity from 2008–2014, including Board Chair from 2011–2013. He is currently on the Advisory Board of Columbia University Business School’s Lang Center for Entrepreneurship.

2015 De Novo Outlook

As of June 30, 2015, Regional Management’s branch network consisted of 316 locations. Regional Management opened 10 de novo branches in the second quarter of 2015 and, for the full year 2015, plans to open a minimum of 25 to 30 de novo branches.

Liquidity and Capital Resources

As of June 30, 2015, Regional Management had finance receivables of $572.5 million and outstanding debt of $359.5 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.

 

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The dial-in number for the conference call is (877) 415-3185 (toll-free) or (857) 244-7328 (direct), passcode 80833819. 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 will be available following the end of the call through Thursday, July 30, 2015, by telephone at (888) 286-8010 (toll-free) or (617) 801-6888 (direct), passcode 29160961. A webcast replay of the call will be available at http://www.RegionalManagement.com for one year following the call.

Forward-Looking Statements

This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which represent Regional Management Corp.’s expectations or beliefs concerning future events. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “outlook” and similar expressions may be used to identify these forward-looking statements. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties, many of which are outside of the control of Regional Management. Factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include, but are not limited to, the following: 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; risks related to opening new branches, including the ability or inability to open new branches as planned; risks inherent in making loans, including repayment risks and value of collateral, which risks may increase in light of adverse or recessionary economic conditions; recently-enacted or proposed legislation; 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 charge-offs); changes in Regional Management’s markets and general changes in the economy (particularly in the markets served by Regional Management); changes in operating and administrative expenses; and the departure, transition or replacement of key personnel. Such factors and others are discussed in greater detail in Regional Management’s filings with the Securities and Exchange Commission. Regional Management will not 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

 

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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

(Unaudited)

(in thousands, except per share amounts)

 

                 Better (Worse)                 Better (Worse)  
     2Q’15     2Q’14     $     %     YTD’15     YTD’14     $     %  

Revenue

                

Interest and fee income

   $ 47,668      $ 42,962      $ 4,706        11.0   $ 94,733      $ 87,041      $ 7,692        8.8

Insurance income, net

     3,120        2,481        639        25.8     6,049        5,776        273        4.7

Other income

     2,213        1,994        219        11.0     4,743        4,201        542        12.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     53,001        47,437        5,564        11.7     105,525        97,018        8,507        8.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Expenses

                

Provision for credit losses

     12,102        13,620        1,518        11.1     21,814        30,564        8,750        28.6

Personnel

     16,211        13,068        (3,143     -24.1     35,971        24,242        (11,729     -48.4

Occupancy

     4,256        3,713        (543     -14.6     8,381        7,133        (1,248     -17.5

Marketing

     2,009        1,750        (259     -14.8     4,480        2,732        (1,748     -64.0

Other

     5,767        4,667        (1,100     -23.6     12,034        8,990        (3,044     -33.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total general and administrative expenses

     28,243        23,198        (5,045     -21.7     60,866        43,097        (17,769     -41.2

Interest expense

     3,932        3,556        (376     -10.6     7,536        7,319        (217     -3.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     8,724        7,063        1,661        23.5     15,309        16,038        (729     -4.5

Income taxes

     3,316        2,649        (667     -25.2     5,818        6,014        196        3.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 5,408      $ 4,414      $ 994        22.5   $ 9,491      $ 10,024      $ (533     -5.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share:

                

Basic

   $ 0.42      $ 0.35      $ 0.07        20.0   $ 0.74      $ 0.79      $ (0.05     -6.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.41      $ 0.34      $ 0.07        20.6   $ 0.73      $ 0.77      $ (0.04     -5.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares outstanding:

                

Basic

     12,845        12,691        (154     -1.2     12,812        12,673        (139     -1.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     13,078        12,916        (162     -1.3     13,040        12,958        (82     -0.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Return on average assets (annualized)

     4.0     3.6         3.6     4.0    
  

 

 

   

 

 

       

 

 

   

 

 

     

Return on average equity (annualized)

     11.5     10.4         10.3     12.0    
  

 

 

   

 

 

       

 

 

   

 

 

     

 

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Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value amounts)

 

                 Increase (Decrease)  
     2Q’15     2Q’14     $     %  

Assets

        

Cash

   $ 4,793      $ 3,562      $ 1,231        34.6

Gross finance receivables

     704,862        622,854        82,008        13.2

Less unearned finance charges, insurance premiums, and commissions

     (132,337     (104,879     (27,458     -26.2
  

 

 

   

 

 

   

 

 

   

 

 

 

Finance receivables

     572,525        517,975        54,550        10.5

Allowance for credit losses

     (36,171     (34,584     (1,587     -4.6
  

 

 

   

 

 

   

 

 

   

 

 

 

Net finance receivables

     536,354        483,391        52,963        11.0

Property and equipment, net of accumulated depreciation

     8,646        7,929        717        9.0

Deferred tax asset, net

     2,305        —         2,305        100.0

Repossessed assets at net realizable value

     407        615        (208     -33.8

Goodwill

     716        716        —         0.0

Intangible assets, net

     655        1,068        (413     -38.7

Other assets

     7,105        6,714        391        5.8
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 560,981      $ 503,995      $ 56,986        11.3
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

        

Liabilities:

        

Senior revolving credit facility

   $ 359,491      $ 324,570      $ 34,921        10.8

Accounts payable and accrued expenses

     10,733        6,718        4,015        59.8

Deferred tax liability, net

           847        (847     -100.0
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     370,224        332,135        38,089        11.5

Commitments and Contingencies

        

Stockholders’ equity:

        

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

     —         —         —         —    

Common stock, $0.10 par value, 1,000,000 shares authorized, 12,889 and 12,702 shares issued and outstanding at June 30, 2015 and 2014, respectively

     1,289        1,270        19        1.5

Additional paid-in-capital

     88,584        83,975        4,609        5.5

Retained earnings

     100,884        86,615        14,269        16.5
  

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     190,757        171,860        18,897        11.0
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 560,981      $ 503,995      $ 56,986        11.3
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(in thousands, except per share amounts)

 

     Averages and Yields  
     2Q’15     1Q’15     2Q’14  
     Average Finance
Receivables
     Average Yield
(Annualized)
    Average Finance
Receivables
     Average Yield
(Annualized)
    Average Finance
Receivables
     Average Yield
(Annualized)
 

Branch small loans

   $ 130,806         45.3   $ 124,350         46.2   $ 103,595         48.5

Convenience checks

     171,323         45.0     181,425         45.9     158,564         44.4

Large loans

     79,756         27.7     52,738         26.7     42,380         27.3

Automobile loans

     143,659         19.3     150,107         19.2     173,676         19.8

Retail loans

     24,556         18.8     25,121         18.2     28,810         18.4
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total interest and fee yield

   $ 550,100         34.7   $ 533,741         35.3   $ 507,025         33.9
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total revenue yield

   $ 550,100         38.5   $ 533,741         39.4   $ 507,025         37.4
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

     Components of Increase in Interest and Fee Income
2Q’15 Compared to 2Q’14
Increase (Decrease)
 
     Volume     Rate     Net  

Branch small loans

   $ 3,124      $ (884   $ 2,240   

Convenience checks

     1,432        230        1,662   

Large loans

     2,585        43        2,628   

Automobile loans

     (1,516     (139     (1,655

Retail loans

     (191     22        (169

Change in product mix

     (1,718     1,718        —     
  

 

 

   

 

 

   

 

 

 

Total increase in interest and fee income

   $ 3,716      $ 990      $ 4,706   
  

 

 

   

 

 

   

 

 

 

Percentage of change in interest and fee income

     79.0     21.0     100.0
  

 

 

   

 

 

   

 

 

 

 

     Net Loans Originated (1)  
     2Q’15      1Q’15      2Q’14      QoQ $
Inc (Dec)
    QoQ %
Inc (Dec)
    YoY $
Inc (Dec)
    YoY %
Inc (Dec)
 

Branch small loans

   $ 80,818       $ 51,371       $ 62,751       $ 29,447        57.3   $ 18,067        28.8

Convenience checks

     90,745         60,653         84,576         30,092        49.6     6,169        7.3

Large loans

     46,134         29,829         13,020         16,305        54.7     33,114        254.3

Automobile loans

     11,802         14,590         18,786         (2,788     -19.1     (6,984     -37.2

Retail loans

     8,136         6,727         7,345         1,409        20.9     791        10.8
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total net loans originated

   $ 237,635       $ 163,170       $ 186,478       $ 74,465        45.6   $ 51,157        27.4
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

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     Other Key Metrics  
     2Q’15     1Q’15     2Q’14  

Net charge-offs

   $ 12,881      $ 13,273      $ 13,361   

Percentage of average finance receivables (annualized)

     9.4     9.9     10.5

Provision for credit losses

   $ 12,102      $ 9,712      $ 13,620   

Percentage of average finance receivables (annualized)

     8.8     7.3     10.7

Percentage of total revenue

     22.8     18.5     28.7

General and administrative expenses

   $ 28,243      $ 32,623      $ 23,198   

Percentage of average finance receivables (annualized)

     20.5     24.4     18.3

Percentage of total revenue

     53.3     62.1     48.9

Same store results:

      

Finance receivables at period-end

   $ 545,928      $ 501,393      $ 484,048   

Finance receivable growth rate

     8.0     1.1     6.6

Number of branches in calculation

     281        264        232   

 

     Finance Receivables by Product  
     2Q’15      1Q’15      QoQ $
Inc (Dec)
    QoQ %
Inc (Dec)
    2Q’14      YoY $
Inc (Dec)
    YoY %
Inc (Dec)
 

Branch small loans

   $ 140,161       $ 121,649       $ 18,512        15.2   $ 107,598       $ 32,563        30.3

Convenience checks

     174,786         170,013         4,773        2.8     167,858         6,928        4.1

Large loans

     93,203         63,338         29,865        47.2     42,996         50,207        116.8

Automobile loans

     139,593         146,724         (7,131     -4.9     171,777         (32,184     -18.7

Retail loans

     24,782         24,183         599        2.5     27,746         (2,964     -10.7
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Total finance receivables

   $ 572,525       $ 525,907       $ 46,618        8.9   $ 517,975       $ 54,550        10.5
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

 

     2Q’14      1Q’14      QoQ $
Inc (Dec)
     QoQ %
Inc (Dec)
 

Total finance receivables

   $ 517,975       $ 501,734       $ 16,241         3.2
  

 

 

    

 

 

    

 

 

    

 

 

 

 

10


     Contractual Delinquency by Aging  
     2Q’15     1Q’15     2Q’14  
     Amount      Percentage of
Total Finance
Receivables
    Amount      Percentage of
Total Finance
Receivables
    Amount      Percentage of
Total Finance
Receivables
 

Allowance for credit losses

   $ 36,171         6.3   $ 36,950         7.0   $ 34,584         6.7

Current

     454,424         79.4     425,088         80.8     395,791         76.4

1 to 29 days past due

     81,275         14.2     67,653         12.9     87,799         17.0
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Delinquent accounts:

               

30 to 59 days

     14,665         2.5     11,596         2.2     14,984         2.9

60 to 89 days

     8,113         1.4     6,824         1.3     6,772         1.3

90 to 119 days

     5,633         1.0     4,844         0.9     4,435         0.9

120 to 149 days

     4,597         0.8     4,881         0.9     3,206         0.6

150 to 179 days

     3,818         0.7     5,021         1.0     2,155         0.4

180 days and over

     —          0.0     —           0.0     2,833         0.5
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total contractual delinquency

   $ 36,826         6.4   $ 33,166         6.3   $ 34,385         6.6
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total finance receivables

   $ 572,525         100.0   $ 525,907         100.0   $ 517,975         100.0
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

1 day and over past due

   $ 118,101         20.6   $ 100,819         19.2   $ 122,184         23.6
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

     Contractual Delinquency by Product  
     2Q’15     1Q’15     2Q’14  
     Amount      Percentage of
Product Finance
Receivables
    Amount      Percentage of
Product Finance
Receivables
    Amount      Percentage of
Product Finance
Receivables
 

Branch small loans

   $ 10,804         7.7   $ 8,890         7.3   $ 8,525         7.9

Convenience checks

     13,561         7.8     14,681         8.6     11,197         6.7

Large loans

     2,748         2.9     1,704         2.7     2,437         5.7

Automobile loans

     8,619         6.2     6,854         4.7     10,981         6.4

Retail loans

     1,094         4.4     1,037         4.3     1,245         4.5
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total contractual delinquency

     36,826         6.4     33,166         6.3     34,385         6.6
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

11


     Quarterly Trend  
     2Q’14      3Q’14      4Q’14      1Q’15      2Q’15      QoQ $
B(W)
    YoY $
B(W)
 

Revenue

                   

Interest and fee income

   $ 42,962       $ 48,792       $ 48,964       $ 47,065       $ 47,668       $ 603      $ 4,706   

Insurance income, net

     2,481         2,636         2,261         2,929         3,120         191        639   

Other income

     1,994         2,481         2,567         2,530         2,213         (317     219   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total revenue

     47,437         53,909         53,792         52,524         53,001         477        5,564   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Expenses

                   

Provision for credit losses

     13,620         22,542         15,950         9,712         12,102         (2,390     1,518   

Personnel

     13,068         14,042         17,099         19,760         16,211         3,549        (3,143

Occupancy

     3,713         4,179         4,115         4,125         4,256         (131     (543

Marketing

     1,750         1,756         1,842         2,471         2,009         462        (259

Other

     4,667         5,307         5,340         6,267         5,767         500        (1,100
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total general and administrative

     23,198         25,284         28,396         32,623         28,243         4,380        (5,045

Interest expense

     3,556         3,848         3,780         3,604         3,932         (328     (376
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Income before income taxes

     7,063         2,235         5,666         6,585         8,724         2,139        1,661   

Income taxes

     2,649         838         2,285         2,502         3,316         (814     (667
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net income

   $ 4,414       $ 1,397       $ 3,381       $ 4,083       $ 5,408       $ 1,325      $ 994   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net income per common share:

                   

Basic

   $ 0.35       $ 0.11       $ 0.27       $ 0.32       $ 0.42       $ 0.10      $ 0.07   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Diluted

   $ 0.34       $ 0.11       $ 0.26       $ 0.31       $ 0.41       $ 0.10      $ 0.07   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Weighted-average shares outstanding:

                   

Basic

     12,691         12,714         12,744         12,838         12,845         (7     (154
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Diluted

     12,916         12,934         12,955         13,061         13,078         (17     (162
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
     2Q’14      3Q’14      4Q’14      1Q’15      2Q’15      QoQ $
Inc (Dec)
    YoY $
Inc (Dec)
 

Total assets

     503,995         522,820         530,270         507,742         560,981         53,239        56,986   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Finance receivables

     517,975         543,353         546,192         525,907         572,525         46,618        54,550   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Allowance for credit losses

     34,584         43,301         40,511         36,950         36,171         779        (1,587
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Senior revolving credit facility

     324,570         339,323         341,419         312,538         359,491         46,953        34,921   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

12


     Headcount Trend  
     2Q’14      3Q’14      4Q’14      1Q’15      2Q’15      QoQ
Inc (Dec)
    YoY
Inc (Dec)
 

Branch headcount

     1,176         1,313         1,335         1,273         1,205         (68     29   

2015 new branches

              15         40         25        40   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total branch headcount

  1,176      1,313      1,335      1,288      1,245      (43   69   

Home office headcount

  88      92      105      125      120      (5   32   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total headcount

  1,264      1,405      1,440      1,413      1,365      (48   101   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Number of branches

  293      296      300      306      316      10      23   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

     General & Administrative Expenses Trend  
     2Q’14      3Q’14      4Q’14      1Q’15      2Q’15      QoQ $
B(W)
    YoY $
B(W)
 

Branch G&A expenses

   $ 15,525       $ 16,866       $ 18,020       $ 19,284       $ 16,596       $ 2,688      $ (1,071

2015 new branches

              86         498         (412     (498
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total branch G&A expenses

  15,525      16,866      18,020      19,370      17,094      2,276      (1,569

Marketing

  1,750      1,756      1,842      2,471      2,009      462      (259

Home office G&A expenses

  5,923      6,662      8,534      10,782      9,140      1,642      (3,217
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total G&A expenses

$ 23,198    $ 25,284    $ 28,396    $ 32,623    $ 28,243    $ 4,380    $ (5,045
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

     Averages and Yields  
     YTD’15     YTD’14  
     Average Finance
Receivables
     Average Yield
(Annualized)
    Average Finance
Receivables
     Average Yield
(Annualized)
 

Branch small loans

   $ 128,425         45.4   $ 105,096         48.0

Convenience checks

     177,283         45.2     165,293         43.6

Large loans

     66,663         27.1     42,583         26.9

Automobile loans

     146,905         19.3     175,915         19.7

Retail loans

     24,932         18.5     29,635         18.1
  

 

 

    

 

 

   

 

 

    

 

 

 

Total interest and fee yield

$ 544,208      34.8 $ 518,522      33.6
  

 

 

    

 

 

   

 

 

    

 

 

 

Total revenue yield

$ 544,208      38.8 $ 518,522      37.4
  

 

 

    

 

 

   

 

 

    

 

 

 

 

     Components of Increase in Interest and Fee Income
YTD’15 Compared to YTD’14
Increase (Decrease)
 
     Volume     Rate     Net  

Branch small loans

   $ 5,359      $ (1,417   $ 3,942   

Convenience checks

     2,678        1,351        4,029   

Large loans

     3,266        46        3,312   

Automobile loans

     (2,920     (285     (3,205

Retail loans

     (419     33        (386

Change in product mix

     (3,561     3,561        —     
  

 

 

   

 

 

   

 

 

 

Total increase in interest and fee income

$ 4,403    $ 3,289    $ 7,692   
  

 

 

   

 

 

   

 

 

 

Percentage of change in interest and fee income

  57.2   42.8   100.0
  

 

 

   

 

 

   

 

 

 

 

13


     Net Loans Originated (1)  
     YTD’15      YTD’14      YTD $
Inc (Dec)
     YTD %
Inc (Dec)
 

Branch small loans

   $ 132,189       $ 105,597       $ 26,592         25.2

Convenience checks

     151,398         137,233         14,165         10.3

Large loans

     75,963         23,378         52,585         224.9

Automobile loans

     26,392         37,684         (11,292      -30.0

Retail loans

     14,863         15,862         (999      -6.3
  

 

 

    

 

 

    

 

 

    

 

 

 

Total net loans originated

$ 400,805    $ 319,754    $ 81,051      25.3
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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

 

     Other Key Metrics  
     YTD’15     YTD’14  

Net charge-offs

   $ 26,154      $ 26,069   

Percentage of average finance receivables (annualized)

     9.6     10.1

Provision for credit losses

   $ 21,814      $ 30,564   

Percentage of average finance receivables (annualized)

     8.0     11.8

Percentage of total revenue

     20.7     31.5

General and administrative expenses

   $ 60,866      $ 43,097   

Percentage of average finance receivables (annualized)

     22.4     16.6

Percentage of total revenue

     57.7     44.4

Because it adjusts for certain non-operating and non-cash items, the Company believes that 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.

 

     Non-GAAP Reconciliation  
     YTD’15      Adjustments     Non-GAAP  

General and administrative expenses

   $ 60,866       $ (2,676 )(1)(2)(3)    $ 58,190   

Income taxes

   $ 5,818       $ 1,017 (5)    $ 6,835   

Net income

   $ 9,491       $ 1,659      $ 11,150   

Diluted net income per common share

   $ 0.73       $ 0.13      $ 0.86   
     Non-GAAP Reconciliation  
     YTD’14      Adjustments     Non-GAAP  

General and administrative expenses

   $ 43,097       $ 566 (2)(4)    $ 43,663   

Income taxes

   $ 6,014       $ (212 )(5)    $ 5,802   

Net income

   $ 10,024       $ (354   $ 9,670   

Diluted net income per common share

   $ 0.77       $ (0.02   $ 0.75   

 

(1) Exclude executive retirement agreement costs of $533
(2) Exclude loan system conversion costs of $613 and $822 for YTD’15 and YTD’14
(3) Exclude CEO equity award costs of $1,530
(4) Benefit related to vacation policy change of $1,388
(5) Tax effect of the adjustments

 

14