Attached files
| file | filename |
|---|---|
| EX-99.2 - EX-99.2 - Regional Management Corp. | d17711dex992.htm |
| 8-K - 8-K - Regional Management Corp. | d17711d8k.htm |
Exhibit 99.1
Regional Management Corp. Announces Third Quarter 2015 Results
- Net income of $6.5 million; diluted earnings per share of $0.50 -
- Total finance receivables of $602 million, up $29 million sequentially and $58 million compared to prior-year period -
- Announced marketing of existing and forward-flow charged-off accounts -
Greenville, South Carolina – October 22, 2015 – Regional Management Corp. (NYSE: RM), a diversified specialty consumer finance company, today announced results for the third quarter ended September 30, 2015.
Third Quarter 2015 Highlights and Subsequent Events
| • | Net income for the third quarter of 2015 was $6.5 million, a $1.1 million increase sequentially and an increase of $5.1 million from the prior-year period, which included the impact of poor credit quality convenience check solicitations. Diluted earnings per share were $0.50 based on a diluted share count of 13.1 million. |
| • | Total finance receivables as of September 30, 2015 were $601.6 million, an increase of 10.7% from the prior-year period. Core loan categories continue to grow: |
| • | Large loan finance receivables as of September 30, 2015 were $119.7 million, an increase of 28.5% sequentially and 183.9% compared to the prior-year period. |
| • | Branch small loan and convenience check finance receivables, collectively, as of September 30, 2015 were $328.2 million, an increase of 4.2% sequentially and 5.7% over the prior-year period. |
| • | Total revenue for the third quarter of 2015 was $55.1 million, an increase of $2.1 million sequentially and a $1.2 million increase from the prior-year period. Revenue growth over the prior-year period was driven by a 10.7% increase in receivables, mostly offset by an overall yield decline of 270 basis points. |
| • | Branch small loan yield declined 450 basis points primarily due to the origination of higher balance loans that carry lower rates. |
| • | Convenience check yield declined 620 basis points, also primarily due to the origination of higher balance loans that carry lower rates. The yield decline from the prior-year period was also due to the absence of higher rate, poorer credit quality loans originated last year and which have now rolled out of the portfolio. |
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| • | Net charge-offs were $12.5 million for the third quarter of 2015, or 8.5% of average finance receivables (annualized), improving from 8.7% in the prior-year period. The related provision for credit losses for the third quarter of 2015 was $14.1 million, a decline from $22.5 million in the prior-year period, and an increase from $12.1 million in the second quarter of 2015. The $2.0 million increase compared to the second quarter of 2015 primarily relates to the growth in the total portfolio. |
| • | Total delinquencies as a percentage of total finance receivables as of September 30, 2015 were 22.4%, down from 25.5% as of September 30, 2014 and up from 20.6% as of June 30, 2015, primarily reflecting seasonal industry trends. |
| • | Regional Management opened 6 new branches in the third quarter of 2015. As of September 30, 2015, Regional Management’s branch network consisted of 322 locations. |
| • | Regional Management renewed its senior revolving credit facility agreement in September, receiving an increase in the committed line under the credit facility to $538 million from the previous amount of $500 million, and a maturity extension from May 2016 to September 2018. |
| • | Earlier today, Regional Management initiated the marketing of $100 million of its existing charged-off accounts as well as the forward flow of its charge-offs and intends to complete the transaction in the fourth quarter of 2015, with the possibility that the transaction may be completed in the first quarter of 2016. |
“The third quarter results continued the sequential quarter-over-quarter trend of reporting increased profits that began in the fourth quarter of 2014,” said Michael R. Dunn, Chief Executive Officer of Regional Management Corp. “Our core products of branch small loans, convenience checks and large loans saw strong receivables growth, up 27.0% compared to the prior-year period, and as a result, our combined loan portfolio grew to over $600 million for the first time. Large loan receivables at the end of the quarter stood at $120 million, up 28% on a sequential basis and nearly triple the amount in our portfolio at the end of the third quarter of 2014. Notably, large loan receivables now comprise 20% of our total portfolio compared to 8% at the end of the prior-year quarter, and we believe there remain opportunities for continued growth.”
“Our net charge-off rate of 8.5% for the third quarter of 2015 was down from 8.7% in the third quarter of 2014 and 9.4% in the second quarter of 2015, and demonstrates the improving quality of our portfolio,” continued Mr. Dunn. “Our delinquencies at the end of the third quarter were up from the second quarter, mainly due to seasonality. General and administrative expenses increased $900,000 over the prior-year period, primarily due to higher branch expenses. Importantly, last month we announced the renewal of our senior revolving credit facility. In addition to seeing an increase in the size of our committed line, we gained approval to complete an auto loan securitization of up to $100 million, which will provide available funding as we
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continue to focus on growing our core loan portfolios. We were pleased with the continued support from our group of lenders, and with that now behind us, we are fully focused on further building a profitable and well-managed business.”
Third Quarter 2015 Results
Finance receivables outstanding at September 30, 2015 were $601.6 million, a 10.7% increase from $543.4 million in the prior-year period. Finance receivables increased primarily due to an increase in both Regional Management’s small and large loan portfolios and the addition of 26 de novo branches since September 30, 2014.
For the third quarter ended September 30, 2015, Regional Management reported total revenue of $55.1 million, a 2.2% increase from $53.9 million in the prior-year period. Interest and fee income for the third quarter of 2015 was $49.7 million, a 1.9% increase from $48.8 million in the prior-year period, primarily due to an increase in the portfolios of both small and large loans compared to the prior-year period and partially offset by lower interest and fee yield, primarily in the convenience check and branch small loan portfolios. Insurance income for the third quarter of 2015 was $2.8 million, a 5.0% increase from the prior-year period.
Provision for credit losses in the third quarter of 2015 was $14.1 million versus $22.5 million in the prior-year period. Net charge-offs were $12.5 million in the third quarter of 2015. Annualized net charge-offs as a percentage of average finance receivables for the third quarter of 2015 were 8.5%, an improvement from 8.7% in the prior-year period.
On a sequential basis, provision for credit losses of $14.1 million was $2.0 million higher than the second quarter of 2015, predominantly due to loan growth.
General and administrative expenses for the third quarter of 2015 were $26.2 million, an increase of 3.6% from $25.3 million in the prior-year period. The increase was driven primarily by $2.0 million of additional branch expenses, offset by a $0.5 million decline in home office expenses and a $0.6 million decline in marketing costs. Branch expenses include changes in staffing and incentive plans for all branches, as well as the expenses associated with 26 branches added since September 30, 2014.
Net income for the third quarter of 2015 was $6.5 million, a 365.8% increase compared to net income of $1.4 million in the prior-year period. Diluted earnings per share for the third quarter of 2015 were $0.50, an increase from $0.11 in the prior-year period.
Nine Months 2015 Results
For the nine months ended September 30, 2015, Regional Management reported total revenue of $160.6 million, a 6.4% increase from $150.9 million in the prior-year period. Interest and fee income for the nine months ended September 30, 2015 was $144.5 million, a 6.4% increase from $135.8 million in the prior-year period, primarily due to an increase in the portfolios of both small and large loans compared to the prior-year period. Insurance income for the nine months ended September 30, 2015 was $8.8 million, a 4.8% increase from the prior-year period.
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Provision for credit losses for the nine months ended September 30, 2015 was $35.9 million versus $53.1 million in the prior-year period. Net charge-offs of $38.6 million in the nine months ended September 30, 2015 exceeded the provision by $2.7 million as Regional Management 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 nine months ended September 30, 2015 was 9.2%, a decline from 9.6% in the prior-year period.
General and administrative expenses for the nine months ended September 30, 2015 were $87.0 million, an increase of $18.7 million, or 27.3%, from $68.4 million in the prior-year period. Included in the nine months 2015 results were $2.7 million in non-operating expenses. The balance of the expense increase of $16.0 million was driven primarily by $8.5 million of additional branch expenses, $6.5 million of additional home office expenses and $1.1 million of additional marketing costs. Branch expenses include changes in staffing and incentive plans for all branches, as well as the expenses associated with 58 branches added since December 31, 2013. The increase in home office expenses includes additional personnel, incentive plan changes and legal and consulting fees.
GAAP net income for the nine months ended September 30, 2015 was $16.0 million, a 40.1% increase compared to GAAP net income of $11.4 million in the prior-year period, and diluted earnings per share for the nine months ended September 30, 2015 were $1.22 compared to $0.88 in the prior-year period. Excluding the aforementioned non-operating expenses, non-GAAP net income for the nine months ended September 30, 2015 totaled $17.7 million and non-GAAP diluted earnings per share were $1.35. For a reconciliation of non-GAAP financial measures to the nearest comparable GAAP financial measure, please refer to the reconciliation table accompanying this release.
2015 De Novo Outlook
As of September 30, 2015, Regional Management’s branch network consisted of 322 locations. Regional Management opened 6 de novo branches in the third quarter of 2015 and, for the full year 2015, plans to open a minimum of 30 de novo branches.
Liquidity and Capital Resources
As of September 30, 2015, Regional Management had finance receivables of $601.6 million and outstanding debt of $379.6 million on its $538.0 million senior revolving credit facility.
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 (866) 515-2909 (toll-free) or (617) 399-5123 (direct), passcode 62776115. 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.
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A replay will be available following the end of the call through Thursday, October 29, 2015, by telephone at (888) 286-8010 (toll-free) or (617) 801-6888 (direct), passcode 63457927. 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 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) | |||||||||||||||||||||||||||||||
| 3Q’15 | 3Q’14 | $ | % | YTD’15 | YTD’14 | $ | % | |||||||||||||||||||||||||
| Revenue |
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| Interest and fee income |
$ | 49,741 | $ | 48,792 | $ | 949 | 1.9 | % | $ | 144,474 | $ | 135,833 | $ | 8,641 | 6.4 | % | ||||||||||||||||
| Insurance income, net |
2,767 | 2,636 | 131 | 5.0 | % | 8,816 | 8,412 | 404 | 4.8 | % | ||||||||||||||||||||||
| Other income |
2,588 | 2,481 | 107 | 4.3 | % | 7,331 | 6,682 | 649 | 9.7 | % | ||||||||||||||||||||||
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| Total revenue |
55,096 | 53,909 | 1,187 | 2.2 | % | 160,621 | 150,927 | 9,694 | 6.4 | % | ||||||||||||||||||||||
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| Expenses |
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| Provision for credit losses |
14,085 | 22,542 | 8,457 | 37.5 | % | 35,899 | 53,106 | 17,207 | 32.4 | % | ||||||||||||||||||||||
| Personnel |
15,993 | 14,042 | (1,951 | ) | -13.9 | % | 51,964 | 38,284 | (13,680 | ) | -35.7 | % | ||||||||||||||||||||
| Occupancy |
4,590 | 4,221 | (369 | ) | -8.7 | % | 13,053 | 11,418 | (1,635 | ) | -14.3 | % | ||||||||||||||||||||
| Marketing |
1,134 | 1,756 | 622 | 35.4 | % | 5,614 | 4,488 | (1,126 | ) | -25.1 | % | |||||||||||||||||||||
| Other |
4,465 | 5,265 | 800 | 15.2 | % | 16,417 | 14,191 | (2,226 | ) | -15.7 | % | |||||||||||||||||||||
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| Total general and administrative expenses |
26,182 | 25,284 | (898 | ) | -3.6 | % | 87,048 | 68,381 | (18,667 | ) | -27.3 | % | ||||||||||||||||||||
| Interest expense |
4,335 | 3,848 | (487 | ) | -12.7 | % | 11,871 | 11,167 | (704 | ) | -6.3 | % | ||||||||||||||||||||
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| Income before income taxes |
10,494 | 2,235 | 8,259 | 369.5 | % | 25,803 | 18,273 | 7,530 | 41.2 | % | ||||||||||||||||||||||
| Income taxes |
3,987 | 838 | (3,149 | ) | -375.8 | % | 9,805 | 6,852 | (2,953 | ) | -43.1 | % | ||||||||||||||||||||
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| Net income |
$ | 6,507 | $ | 1,397 | $ | 5,110 | 365.8 | % | $ | 15,998 | $ | 11,421 | $ | 4,577 | 40.1 | % | ||||||||||||||||
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| Net income per common share: |
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| Basic |
$ | 0.51 | $ | 0.11 | $ | 0.40 | 363.6 | % | $ | 1.25 | $ | 0.90 | $ | 0.35 | 38.9 | % | ||||||||||||||||
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| Diluted |
$ | 0.50 | $ | 0.11 | $ | 0.39 | 354.5 | % | $ | 1.22 | $ | 0.88 | $ | 0.34 | 38.6 | % | ||||||||||||||||
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| Weighted-average shares outstanding: |
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| Basic |
12,881 | 12,714 | 167 | 1.3 | % | 12,835 | 12,687 | 148 | 1.2 | % | ||||||||||||||||||||||
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| Diluted |
13,111 | 12,934 | 177 | 1.4 | % | 13,063 | 12,950 | 113 | 0.9 | % | ||||||||||||||||||||||
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| Return on average assets (annualized) |
4.5 | % | 1.1 | % | 3.9 | % | 3.0 | % | ||||||||||||||||||||||||
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| Return on average equity (annualized) |
13.4 | % | 3.2 | % | 11.4 | % | 9.0 | % | ||||||||||||||||||||||||
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Regional Management Corp. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(in thousands, except par value amounts)
| Increase (Decrease) | ||||||||||||||||
| 3Q’15 | 3Q’14 | $ | % | |||||||||||||
| Assets |
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| Cash |
$ | 4,922 | $ | 3,831 | $ | 1,091 | 28.5 | % | ||||||||
| Gross finance receivables |
743,003 | 656,079 | 86,924 | 13.2 | % | |||||||||||
| Less unearned finance charges, insurance premiums, and commissions |
(141,395 | ) | (112,726 | ) | (28,669 | ) | -25.4 | % | ||||||||
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| Finance receivables |
601,608 | 543,353 | 58,255 | 10.7 | % | |||||||||||
| Allowance for credit losses |
(37,786 | ) | (43,301 | ) | 5,515 | -12.7 | % | |||||||||
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| Net finance receivables |
563,822 | 500,052 | 63,770 | 12.8 | % | |||||||||||
| Property and equipment, net of accumulated depreciation |
9,377 | 8,553 | 824 | 9.6 | % | |||||||||||
| Deferred tax asset, net |
265 | 2,915 | (2,650 | ) | -90.9 | % | ||||||||||
| Repossessed assets at net realizable value |
343 | 733 | (390 | ) | -53.2 | % | ||||||||||
| Goodwill |
716 | 716 | — | 0.0 | % | |||||||||||
| Intangible assets, net |
564 | 978 | (414 | ) | -42.3 | % | ||||||||||
| Other assets |
8,957 | 5,042 | 3,915 | 77.6 | % | |||||||||||
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| Total assets |
$ | 588,966 | $ | 522,820 | $ | 66,146 | 12.7 | % | ||||||||
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| Liabilities and Stockholders’ Equity |
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| Liabilities: |
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| Senior revolving credit facility |
$ | 379,617 | $ | 339,323 | $ | 40,294 | 11.9 | % | ||||||||
| Accounts payable and accrued expenses |
11,754 | 9,864 | 1,890 | 19.2 | % | |||||||||||
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| Total liabilities |
391,371 | 349,187 | 42,184 | 12.1 | % | |||||||||||
| Commitments and Contingencies |
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| Stockholders’ equity: |
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| 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, 12,914 and 12,716 shares issued and outstanding at September 30, 2015 and 2014, respectively |
1,291 | 1,272 | 19 | 1.5 | % | |||||||||||
| Additional paid-in-capital |
88,913 | 84,349 | 4,564 | 5.4 | % | |||||||||||
| Retained earnings |
107,391 | 88,012 | 19,379 | 22.0 | % | |||||||||||
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| Total stockholders’ equity |
197,595 | 173,633 | 23,962 | 13.8 | % | |||||||||||
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| Total liabilities and stockholders’ equity |
$ | 588,966 | $ | 522,820 | $ | 66,146 | 12.7 | % | ||||||||
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Regional Management Corp. and Subsidiaries
Selected Financial Data
(Unaudited)
(in thousands, except per share amounts)
| Averages and Yields | ||||||||||||||||||||||||
| 3Q’15 | 2Q’15 | 3Q’14 | ||||||||||||||||||||||
| Average Finance Receivables |
Average Yield (Annualized) |
Average Finance Receivables |
Average Yield (Annualized) |
Average Finance Receivables |
Average Yield (Annualized) |
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| Branch small loans |
$ | 144,551 | 43.5 | % | $ | 130,806 | 45.3 | % | $ | 111,713 | 48.0 | % | ||||||||||||
| Convenience checks |
178,940 | 42.8 | % | 171,323 | 45.0 | % | 187,845 | 49.0 | % | |||||||||||||||
| Large loans |
106,155 | 27.6 | % | 79,756 | 27.7 | % | 42,691 | 26.6 | % | |||||||||||||||
| Automobile loans |
133,857 | 18.8 | % | 143,659 | 19.3 | % | 168,226 | 19.6 | % | |||||||||||||||
| Retail loans |
25,022 | 19.1 | % | 24,556 | 18.8 | % | 27,271 | 18.7 | % | |||||||||||||||
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| Total interest and fee yield |
$ | 588,525 | 33.8 | % | $ | 550,100 | 34.7 | % | $ | 537,746 | 36.3 | % | ||||||||||||
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| Total revenue yield |
$ | 588,525 | 37.4 | % | $ | 550,100 | 38.5 | % | $ | 537,746 | 40.1 | % | ||||||||||||
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| Components of Increase in Interest and Fee Income 3Q’15 Compared to 3Q’14 Increase (Decrease) |
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| Volume | Rate | Net | ||||||||||
| Branch small loans |
$ | 3,663 | $ | (1,336 | ) | $ | 2,327 | |||||
| Convenience checks |
(1,054 | ) | (2,798 | ) | (3,852 | ) | ||||||
| Large loans |
4,381 | 110 | 4,491 | |||||||||
| Automobile loans |
(1,630 | ) | (310 | ) | (1,940 | ) | ||||||
| Retail loans |
(107 | ) | 30 | (77 | ) | |||||||
| Change in product mix |
(805 | ) | 805 | — | ||||||||
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| Total increase in interest and fee income |
$ | 4,448 | $ | (3,499 | ) | $ | 949 | |||||
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| Net Loans Originated (1) | ||||||||||||||||||||||||||||
| 3Q’15 | 2Q’15 | 3Q’14 | QoQ $ Inc (Dec) |
QoQ % Inc (Dec) |
YoY $ Inc (Dec) |
YoY % Inc (Dec) |
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| Branch small loans |
$ | 63,647 | $ | 80,818 | $ | 62,910 | $ | (17,171 | ) | -21.2 | % | $ | 737 | 1.2 | % | |||||||||||||
| Convenience checks |
80,675 | 90,745 | 111,415 | (10,070 | ) | -11.1 | % | (30,740 | ) | -27.6 | % | |||||||||||||||||
| Large loans |
44,911 | 46,134 | 11,301 | (1,223 | ) | -2.7 | % | 33,610 | 297.4 | % | ||||||||||||||||||
| Automobile loans |
7,665 | 11,802 | 16,222 | (4,137 | ) | -35.1 | % | (8,557 | ) | -52.7 | % | |||||||||||||||||
| Retail loans |
7,868 | 8,136 | 7,725 | (268 | ) | -3.3 | % | 143 | 1.9 | % | ||||||||||||||||||
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| Total net loans originated |
$ | 204,766 | $ | 237,635 | $ | 209,573 | $ | (32,869 | ) | -13.8 | % | $ | (4,807 | ) | -2.3 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (1) | Represents the balance of loan origination and refinancing net of unearned finance charges |
8
| Other Key Metrics | ||||||||||||
| 3Q’15 | 2Q’15 | 3Q’14 | ||||||||||
| Net charge-offs |
$ | 12,470 | $ | 12,881 | $ | 13,825 | ||||||
| Net charge-offs (180+ policy change) |
— | — | (2,106 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net charge-offs (excluding policy change) |
$ | 12,470 | $ | 12,881 | $ | 11,719 | ||||||
| Percentage of average finance receivables (annualized) |
8.5 | % | 9.4 | % | 8.7 | % | ||||||
| Provision for credit losses |
$ | 14,085 | $ | 12,102 | $ | 22,542 | ||||||
| Percentage of average finance receivables (annualized) |
9.6 | % | 8.8 | % | 16.8 | % | ||||||
| Percentage of total revenue |
25.6 | % | 22.8 | % | 41.8 | % | ||||||
| General and administrative expenses |
$ | 26,182 | $ | 28,243 | $ | 25,284 | ||||||
| Percentage of average finance receivables (annualized) |
17.8 | % | 20.5 | % | 18.8 | % | ||||||
| Percentage of total revenue |
47.5 | % | 53.3 | % | 46.9 | % | ||||||
| Same store results: |
||||||||||||
| Finance receivables at period-end |
$ | 573,221 | $ | 545,928 | $ | 525,468 | ||||||
| Finance receivable growth rate |
7.1 | % | 8.0 | % | 3.8 | % | ||||||
| Number of branches in calculation |
293 | 281 | 263 | |||||||||
| Finance Receivables by Product | ||||||||||||||||||||||||||||
| 3Q’15 | 2Q’15 | QoQ $ Inc (Dec) |
QoQ % Inc (Dec) |
3Q’14 | YoY $ Inc (Dec) |
YoY % Inc (Dec) |
||||||||||||||||||||||
| Branch small loans |
$ | 147,664 | $ | 140,161 | $ | 7,503 | 5.4 | % | $ | 114,398 | $ | 33,266 | 29.1 | % | ||||||||||||||
| Convenience checks |
180,543 | 174,786 | 5,757 | 3.3 | % | 196,026 | (15,483 | ) | -7.9 | % | ||||||||||||||||||
| Large loans |
119,731 | 93,203 | 26,528 | 28.5 | % | 42,177 | 77,554 | 183.9 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total core loans |
447,938 | 408,150 | 39,788 | 9.7 | % | 352,601 | 95,337 | 27.0 | % | |||||||||||||||||||
| Automobile loans |
128,131 | 139,593 | (11,462 | ) | -8.2 | % | 163,825 | (35,694 | ) | -21.8 | % | |||||||||||||||||
| Retail loans |
25,539 | 24,782 | 757 | 3.1 | % | 26,927 | (1,388 | ) | -5.2 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total finance receivables |
$ | 601,608 | $ | 572,525 | $ | 29,083 | 5.1 | % | $ | 543,353 | $ | 58,255 | 10.7 | % | ||||||||||||||
|
|
|
|
|
|
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|
|
|
|
|
|
|
|||||||||||||||
| Number of branches at period end |
322 | 316 | 6 | 1.9 | % | 296 | 26 | 8.8 | % | |||||||||||||||||||
| Average finance receivables per branch |
$ | 1,868 | $ | 1,812 | $ | 56 | 3.1 | % | $ | 1,836 | $ | 32 | 1.7 | % | ||||||||||||||
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|
|||||||||||||||
| 3Q’14 | 2Q’14 | QoQ $ Inc (Dec) |
QoQ % Inc (Dec) |
|||||||||||||
| Total finance receivables |
$ | 543,353 | $ | 517,975 | $ | 25,378 | 4.9 | % | ||||||||
|
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|
|
|
|
|
|
|
|||||||||
9
| Contractual Delinquency by Aging | ||||||||||||||||||||||||
| 3Q’15 | 2Q’15 | 3Q’14 | ||||||||||||||||||||||
| Allowance for credit losses |
$ | 37,786 | 6.3 | % | $ | 36,171 | 6.3 | % | $ | 43,301 | 8.0 | % | ||||||||||||
| Current |
466,847 | 77.6 | % | 454,424 | 79.4 | % | 404,756 | 74.5 | % | |||||||||||||||
| 1 to 29 days past due |
90,626 | 15.1 | % | 81,275 | 14.2 | % | 98,304 | 18.1 | % | |||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|||||||||||||
| Delinquent accounts: |
||||||||||||||||||||||||
| 30 to 59 days |
17,094 | 2.8 | % | 14,665 | 2.5 | % | 19,274 | 3.6 | % | |||||||||||||||
| 60 to 89 days |
9,952 | 1.7 | % | 8,113 | 1.4 | % | 9,406 | 1.7 | % | |||||||||||||||
| 90 to 119 days |
6,874 | 1.1 | % | 5,633 | 1.0 | % | 5,508 | 1.0 | % | |||||||||||||||
| 120 to 149 days |
5,766 | 1.0 | % | 4,597 | 0.8 | % | 4,284 | 0.8 | % | |||||||||||||||
| 150 to 179 days |
4,449 | 0.7 | % | 3,818 | 0.7 | % | 1,821 | 0.3 | % | |||||||||||||||
| 180 days and over |
— | 0.0 | % | — | 0.0 | % | — | 0.0 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total contractual delinquency |
$ | 44,135 | 7.3 | % | $ | 36,826 | 6.4 | % | $ | 40,293 | 7.4 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total finance receivables |
$ | 601,608 | 100.0 | % | $ | 572,525 | 100.0 | % | $ | 543,353 | 100.0 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 1 day and over past due |
$ | 134,761 | 22.4 | % | $ | 118,101 | 20.6 | % | $ | 138,597 | 25.5 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Contractual Delinquency by Product | ||||||||||||||||||||||||
| 3Q’15 | 2Q’15 | 3Q’14 | ||||||||||||||||||||||
| Branch small loans |
$ | 14,166 | 9.6 | % | $ | 10,804 | 7.7 | % | $ | 9,209 | 8.0 | % | ||||||||||||
| Convenience checks |
15,605 | 8.6 | % | 13,561 | 7.8 | % | 17,151 | 8.7 | % | |||||||||||||||
| Large loans |
3,829 | 3.2 | % | 2,748 | 2.9 | % | 2,114 | 5.0 | % | |||||||||||||||
| Automobile loans |
9,327 | 7.3 | % | 8,619 | 6.2 | % | 10,588 | 6.5 | % | |||||||||||||||
| Retail loans |
1,208 | 4.7 | % | 1,094 | 4.4 | % | 1,231 | 4.6 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total contractual delinquency |
$ | 44,135 | 7.3 | % | $ | 36,826 | 6.4 | % | $ | 40,293 | 7.4 | % | ||||||||||||
|
|
|
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|
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|
|
|||||||||||||
10
| Quarterly Trend | ||||||||||||||||||||||||||||
| 3Q’14 | 4Q’14 | 1Q’15 | 2Q’15 | 3Q’15 | QoQ $ B(W) |
YoY $ B(W) |
||||||||||||||||||||||
| Revenue |
||||||||||||||||||||||||||||
| Interest and fee income |
$ | 48,792 | $ | 48,964 | $ | 47,065 | $ | 47,668 | $ | 49,741 | $ | 2,073 | $ | 949 | ||||||||||||||
| Insurance income, net |
2,636 | 2,261 | 2,929 | 3,120 | 2,767 | (353 | ) | 131 | ||||||||||||||||||||
| Other income |
2,481 | 2,567 | 2,530 | 2,213 | 2,588 | 375 | 107 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total revenue |
53,909 | 53,792 | 52,524 | 53,001 | 55,096 | 2,095 | 1,187 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Expenses |
||||||||||||||||||||||||||||
| Provision for credit losses |
22,542 | 15,950 | 9,712 | 12,102 | 14,085 | (1,983 | ) | 8,457 | ||||||||||||||||||||
| Personnel |
14,042 | 17,099 | 19,760 | 16,211 | 15,993 | 218 | (1,951 | ) | ||||||||||||||||||||
| Occupancy |
4,221 | 4,157 | 4,165 | 4,298 | 4,590 | (292 | ) | (369 | ) | |||||||||||||||||||
| Marketing |
1,756 | 1,842 | 2,471 | 2,009 | 1,134 | 875 | 622 | |||||||||||||||||||||
| Other |
5,265 | 5,298 | 6,227 | 5,725 | 4,465 | 1,260 | 800 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total general and administrative |
25,284 | 28,396 | 32,623 | 28,243 | 26,182 | 2,061 | (898 | ) | ||||||||||||||||||||
| Interest expense |
3,848 | 3,780 | 3,604 | 3,932 | 4,335 | (403 | ) | (487 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Income before income taxes |
2,235 | 5,666 | 6,585 | 8,724 | 10,494 | 1,770 | 8,259 | |||||||||||||||||||||
| Income taxes |
838 | 2,285 | 2,502 | 3,316 | 3,987 | (671 | ) | (3,149 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net income |
$ | 1,397 | $ | 3,381 | $ | 4,083 | $ | 5,408 | $ | 6,507 | $ | 1,099 | $ | 5,110 | ||||||||||||||
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|||||||||||||||
| Net income per common share: |
||||||||||||||||||||||||||||
| Basic |
$ | 0.11 | $ | 0.27 | $ | 0.32 | $ | 0.42 | $ | 0.51 | $ | 0.09 | $ | 0.40 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Diluted |
$ | 0.11 | $ | 0.26 | $ | 0.31 | $ | 0.41 | $ | 0.50 | $ | 0.09 | $ | 0.39 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Weighted-average shares outstanding: |
||||||||||||||||||||||||||||
| Basic |
12,714 | 12,744 | 12,838 | 12,845 | 12,881 | 36 | 167 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Diluted |
12,934 | 12,955 | 13,061 | 13,078 | 13,111 | 33 | 177 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 3Q’14 | 4Q’14 | 1Q’15 | 2Q’15 | 3Q’15 | QoQ $ Inc (Dec) |
YoY $ Inc (Dec) |
||||||||||||||||||||||
| Total assets |
522,820 | 530,270 | 507,742 | 560,981 | 588,966 | 27,985 | 66,146 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Finance receivables |
543,353 | 546,192 | 525,907 | 572,525 | 601,608 | 29,083 | 58,255 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Allowance for credit losses |
43,301 | 40,511 | 36,950 | 36,171 | 37,786 | 1,615 | (5,515 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Senior revolving credit facility |
339,323 | 341,419 | 312,538 | 359,491 | 379,617 | 20,126 | 40,294 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
11
| Headcount Trend | ||||||||||||||||||||||||||||
| 3Q’14 | 4Q’14 | 1Q’15 | 2Q’15 | 3Q’15 | QoQ Inc (Dec) |
YoY Inc (Dec) |
||||||||||||||||||||||
| Branch headcount |
1,313 | 1,335 | 1,273 | 1,205 | 1,208 | 3 | (105 | ) | ||||||||||||||||||||
| 2015 new branches |
15 | 40 | 48 | 8 | 48 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total branch headcount |
1,313 | 1,335 | 1,288 | 1,245 | 1,256 | 11 | (57 | ) | ||||||||||||||||||||
| Home office headcount |
92 | 105 | 125 | 120 | 129 | 9 | 37 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total headcount |
1,405 | 1,440 | 1,413 | 1,365 | 1,385 | 20 | (20 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Number of branches |
296 | 300 | 306 | 316 | 322 | 6 | 26 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| General & Administrative Expenses Trend | ||||||||||||||||||||||||||||
| 3Q’14 | 4Q’14 | 1Q’15 | 2Q’15 | 3Q’15 | QoQ $ B(W) |
YoY $ B(W) |
||||||||||||||||||||||
| Branch G&A expenses |
$ | 16,866 | $ | 18,020 | $ | 19,284 | $ | 16,596 | $ | 17,946 | $ | (1,350 | ) | $ | (1,080 | ) | ||||||||||||
| 2015 new branches |
86 | 498 | 930 | (432 | ) | (930 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total branch G&A expenses |
16,866 | 18,020 | 19,370 | 17,094 | 18,876 | (1,782 | ) | (2,010 | ) | |||||||||||||||||||
| Marketing |
1,756 | 1,842 | 2,471 | 2,009 | 1,134 | 875 | 621 | |||||||||||||||||||||
| Home office G&A expenses |
6,662 | 8,534 | 10,782 | 9,140 | 6,172 | 2,968 | 491 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total G&A expenses |
$ | 25,284 | $ | 28,396 | $ | 32,623 | $ | 28,243 | $ | 26,182 | $ | 2,061 | $ | (898 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Averages and Yields | ||||||||||||||||
| YTD’15 | YTD’14 | |||||||||||||||
| Average Finance Receivables |
Average Yield (Annualized) |
Average Finance Receivables |
Average Yield (Annualized) |
|||||||||||||
| Branch small loans |
$ | 133,701 | 44.8 | % | $ | 107,493 | 47.9 | % | ||||||||
| Convenience checks |
178,196 | 44.3 | % | 174,057 | 45.2 | % | ||||||||||
| Large loans |
79,806 | 27.4 | % | 42,585 | 26.8 | % | ||||||||||
| Automobile loans |
142,417 | 19.1 | % | 173,252 | 19.7 | % | ||||||||||
| Retail loans |
24,983 | 18.7 | % | 28,879 | 18.3 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total interest and fee yield |
$ | 559,103 | 34.5 | % | $ | 526,266 | 34.4 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenue yield |
$ | 559,103 | 38.3 | % | $ | 526,266 | 38.2 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Components of Increase in Interest and Fee Income YTD’15 Compared to YTD’14 Increase (Decrease) |
||||||||||||
| Volume | Rate | Net | ||||||||||
| Branch small loans |
$ | 8,935 | $ | (2,665 | ) | $ | 6,270 | |||||
| Convenience checks |
1,389 | (1,215 | ) | 174 | ||||||||
| Large loans |
7,635 | 169 | 7,804 | |||||||||
| Automobile loans |
(4,445 | ) | (700 | ) | (5,145 | ) | ||||||
| Retail loans |
(544 | ) | 82 | (462 | ) | |||||||
| Change in product mix |
(4,548 | ) | 4,548 | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Total increase in interest and fee income |
$ | 8,422 | $ | 219 | $ | 8,641 | ||||||
|
|
|
|
|
|
|
|||||||
12
| Net Loans Originated (1) | ||||||||||||||||
| YTD’15 | YTD’14 | YTD $ Inc (Dec) |
YTD % Inc (Dec) |
|||||||||||||
| Branch small loans |
$ | 195,835 | $ | 160,293 | $ | 35,542 | 22.2 | % | ||||||||
| Convenience checks |
232,074 | 238,785 | (6,711 | ) | -2.8 | % | ||||||||||
| Large loans |
120,874 | 32,995 | 87,879 | 266.3 | % | |||||||||||
| Automobile loans |
34,057 | 51,326 | (17,269 | ) | -33.6 | % | ||||||||||
| Retail loans |
22,731 | 22,350 | 381 | 1.7 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total net loans originated |
$ | 605,571 | $ | 505,749 | $ | 99,822 | 19.7 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (1) | Represents the balance of loan origination and refinancing net of unearned finance charges |
| Other Key Metrics | ||||||||
| YTD’15 | YTD’14 | |||||||
| Net charge-offs |
$ | 38,624 | $ | 39,894 | ||||
| Net charge-offs (180+ policy change) |
— | (2,106 | ) | |||||
|
|
|
|
|
|||||
| Net charge-offs (excluding policy change) |
$ | 38,624 | $ | 37,788 | ||||
| Percentage of average finance receivables (annualized) |
9.2 | % | 9.6 | % | ||||
| Provision for credit losses |
$ | 35,899 | $ | 53,106 | ||||
| Percentage of average finance receivables (annualized) |
8.6 | % | 13.5 | % | ||||
| Percentage of total revenue |
22.4 | % | 35.2 | % | ||||
| General and administrative expenses |
$ | 87,048 | $ | 68,381 | ||||
| Percentage of average finance receivables (annualized) |
20.8 | % | 17.3 | % | ||||
| Percentage of total revenue |
54.2 | % | 45.3 | % | ||||
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 |
$ | 87,048 | $ | (2,676 | )(1)(2)(3) | $ | 84,372 | |||||
| Income taxes |
$ | 9,805 | $ | 1,017 | (5) | $ | 10,822 | |||||
| Net income |
$ | 15,998 | $ | 1,659 | $ | 17,657 | ||||||
| Diluted net income per common share |
$ | 1.22 | $ | 0.13 | $ | 1.35 | ||||||
| Non-GAAP Reconciliation | ||||||||||||
| YTD’14 | Adjustments | Non-GAAP | ||||||||||
| General and administrative expenses |
$ | 68,381 | $ | (49 | )(2)(4) | $ | 68,332 | |||||
| Income taxes |
$ | 6,852 | $ | 18 | (5) | $ | 6,870 | |||||
| Net income |
$ | 11,421 | $ | 31 | $ | 11,452 | ||||||
| Diluted net income per common share |
$ | 0.88 | $ | — | $ | 0.88 | ||||||
| (1) | Exclude executive retirement agreement costs of $533 |
| (2) | Exclude loan system conversion costs of $613 and $1,437 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 |
13