Regional Management Corp. Announces Second Quarter 2019 Results

Jul 31, 2019 04:30 pm
GREENVILLE, S.C. -- 

Regional Management Corp. (NYSE: RM) (the “Company”), a diversified consumer finance company, today announced results for the second quarter ended June 30, 2019.

Second Quarter 2019 Highlights

  • Net income for the second quarter of 2019 was $8.4 million, a 1.3% reduction from the prior-year period. Diluted earnings per share for the second quarter of 2019 was $0.70, comparable with the prior-year period.
  • Total finance receivables as of June 30, 2019 were $973.4 million, an increase of 14.9%, or $126.2 million, from the prior-year period.
    • 17th consecutive quarter of year-over-year double-digit finance receivables growth.
    • Total core small and large loan finance receivables increased $153.2 million, or 19.7%, compared to the prior-year period.
    • Large loan finance receivables of $498.8 million increased $106.7 million, or 27.2%, from the prior-year period and represented 51.2% of the total loan portfolio. Small loan finance receivables as of June 30, 2019 were $431.2 million, an increase of 12.1% over the prior-year period.
  • Total revenue for the second quarter of 2019 was $84.3 million, an $11.9 million, or 16.4%, increase from the prior-year period.
    • 12th consecutive quarter of year-over-year double-digit revenue growth.
    • Interest and fee income increased 13.7%, driven by a 14.9% increase in finance receivables compared to the prior-year period.
    • Insurance income, net increased $2.2 million, driven by an increase in premium revenue and a decrease in non-file insurance claims expense (due to the previously disclosed change in business practice to lower the utilization of non-file insurance).
  • Provision for credit losses for the second quarter of 2019 was $25.7 million, an increase of $5.5 million, or 27.3%, from the prior-year period. The increase was primarily due to $5.4 million of higher net credit losses, including $1.4 million related to the change in non-file insurance business practice. This change had no impact on net income.
  • Annualized net credit losses as a percentage of average finance receivables were 10.7%, a 120 basis point increase from 9.5% in the prior-year period. Approximately 60 basis points of the increase stemmed from higher late-stage delinquencies at March 31, 2019 compared to March 31, 2018, and the other 60 basis points of the increase was due to incremental non-file insurance claims shifting from insurance income, net to credit losses as compared to the prior-year period. The second quarters of 2019 and 2018 included 60 and 50 basis points of hurricane-related credit losses, respectively.
  • 30+ day contractual delinquencies as of June 30, 2019 were 6.4%, compared to 6.3% as of June 30, 2018.
  • During the second quarter of 2019, the Company repurchased 285,204 shares of its common stock at a weighted-average price of $25.02 per share under the Company’s $25.0 million share repurchase program. As of July 30, 2019, the Company had repurchased 489,428 shares of its common stock under the program at a weighted-average price of $25.54 per share, and there remained $12.5 million available for repurchases under the program.

“We were pleased to complete another strong quarter of performance, including consistent, year-over-year double-digit revenue growth and record sequential finance receivable growth of $61 million,” said Peter R. Knitzer, President and Chief Executive Officer of Regional Management. “We continue to execute very well on our hybrid growth strategy of increasing receivables in existing branches while achieving strong growth from our de novo branches. We also made progress toward becoming a true omni-channel provider for our customers, having launched our new customer-facing website this week.”

“Additionally, our custom credit scorecards are performing very well and, as of June 30th, over 50% of our loan portfolio has been underwritten by these advanced capabilities. We expect to reap the benefits of these advanced tools on our credit performance by the end of 2019 and throughout 2020 and beyond,” added Mr. Knitzer. “We also kept our overall expenses as a percentage of average receivables consistent from the prior year, as we remain focused on controlling expenses. Overall, given our strong second quarter performance, we continue to expect to return to year-over-year double-digit net income growth in the second half of 2019.”

Second Quarter 2019 Results

Finance receivables outstanding at June 30, 2019 were $973.4 million, a 14.9% increase from $847.2 million in the prior-year period. The finance receivables increase was driven by double-digit growth in both the core small and large loan portfolios.

For the second quarter ended June 30, 2019, the Company reported total revenue of $84.3 million, a 16.4% increase from $72.4 million in the prior-year period. Interest and fee income for the second quarter of 2019 was $76.0 million, a 13.7% increase from $66.8 million in the prior-year period, related to continued consistent growth in the small and large loan portfolios.

The provision for credit losses in the second quarter of 2019 was $25.7 million, a $5.5 million, or 27.3%, increase compared to $20.2 million in the prior-year period. The increase was primarily due to $5.4 million of higher net credit losses, including $1.4 million related to the change in business practice to lower the utilization of non-file insurance.

Net credit losses were $24.9 million in the second quarter of 2019, an increase of $5.4 million over the prior-year period. Annualized net credit losses as a percentage of average finance receivables in the second quarter of 2019 were 10.7%, a 120 basis point increase from 9.5% in the prior-year period. Approximately 60 basis points of the increase stemmed from higher late-stage delinquencies at March 31, 2019 compared to March 31, 2018, and the other 60 basis points of the increase was due to incremental non-file insurance claims shifting from insurance income, net to credit losses as compared to the prior-year period. The second quarters of 2019 and 2018 also included 60 and 50 basis points of hurricane-related credit losses, respectively.

General and administrative expenses for the second quarter of 2019 were $37.7 million, an increase of $4.5 million, or 13.6%, from the prior-year period. Annualized general and administrative expenses as a percentage of average finance receivables were 16.2%, comparable with the prior-year period. General and administrative expenses for the second quarter of 2019 included $1.3 million of incremental costs related to 16 net new branches that opened since the prior-year period. The second quarter of 2019 also included $2.3 million of incremental costs for our existing branches to support ongoing loan portfolio growth.

Interest expense was $9.8 million in the second quarter of 2019, compared to $7.9 million in the prior-year period. The increase in interest expense was due to higher cost of funding due to federal funds rate increases and larger long-term debt amounts outstanding from the ongoing growth in finance receivables. In addition, the Company had larger unused lines of credit and incremental debt issuance costs associated with the 2018 asset-backed securitization transactions.

Net income for the second quarter of 2019 was $8.4 million, a slight decrease from $8.5 million in the prior-year period. Diluted earnings per share for the second quarter of 2019 was $0.70, comparable with the prior-year period.

2019 De Novo Outlook

As of June 30, 2019, the Company’s branch network consisted of 356 locations. The Company opened 22 de novo branches since the end of the second quarter of 2018 and expects to open an additional 15 branches by the end of the year.

Liquidity and Capital Resources

As of June 30, 2019, the Company had finance receivables of $973.4 million and outstanding long-term debt of $689.3 million, consisting of:

  • $345.6 million on its $638.0 million senior revolving credit facility,
  • $12.3 million on its amortizing loan,
  • $50.9 million on its $125.0 million revolving warehouse credit facility, and
  • $280.6 million through its asset-backed securitizations.

The Company had a funded debt-to-equity ratio of 2.4 to 1.0 and a shareholder equity ratio of 28.4% as of June 30, 2019.

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 (800) 319-4610 (toll-free) or (631) 891-4304 (direct). Please dial the number 10 minutes prior to the scheduled start time.

*** A supplemental slide presentation will be made available on Regional Management’s website prior to the earnings call at www.RegionalManagement.com. ***

In addition, a live webcast of the conference call will be available on Regional Management’s website at www.RegionalManagement.com.

A replay will be available following the end of the call through Wednesday, August 7, 2019, by telephone at (844) 512-2921 (toll-free) or (412) 317-6671 (international), passcode 10007210. A webcast replay of the call will be available at 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: changes in general economic conditions, including levels of unemployment and bankruptcies; risks associated with Regional Management’s transition to a new loan origination and servicing software system; risks related to opening new branches, including the ability or inability to open new branches as planned; risks inherent in making loans, including credit risk, repayment risk, and value of collateral, which risks may increase in light of adverse or recessionary economic conditions; risks associated with the implementation of new underwriting models and processes, including as to the effectiveness of new custom scorecards; risks relating to Regional Management’s asset-backed securitization transactions; changes in interest rates; the risk that Regional Management’s existing sources of liquidity become insufficient to satisfy its needs or that its access to these sources becomes unexpectedly restricted; changes in federal, state, or local laws, regulations, or regulatory policies and practices, and risks associated with the manner in which laws and regulations are interpreted, implemented, and enforced; the impact of changes in tax laws, guidance, and interpretations, including related to certain provisions of the Tax Cuts and Jobs Act; the timing and amount of revenues that may be recognized by Regional Management; changes in current revenue and expense trends (including trends affecting delinquencies and credit losses); changes in Regional Management’s markets and general changes in the economy (particularly in the markets served by Regional Management); changes in the competitive environment in which Regional Management operates or a decrease in the demand for its products; the impact of a prolonged shutdown of the federal government; risks related to acquisitions; 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 update the information contained in this press release beyond the publication date, except to the extent required by law, and is not responsible for changes made to this document by wire services or Internet services.

About Regional Management Corp.

Regional Management Corp. (NYSE: RM) is a diversified consumer finance company that provides attractive, easy-to-understand installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders. Regional Management operates under the name “Regional Finance” in 356 branch locations across 11 states in the Southeastern, Southwestern, Mid-Atlantic, and Midwestern United States. Most of its loan products are secured, and each is structured on a fixed rate, fixed term basis with fully amortizing equal monthly installment payments, repayable at any time without penalty. Regional Management sources loans through its multiple channel platform, which includes branches, centrally-managed direct mail campaigns, digital partners, retailers, and its consumer website. For more information, please visit www.RegionalManagement.com.

 

Regional Management Corp. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

(in thousands, except per share amounts)

 

 

 

 

Better (Worse)

 

 

Better (Worse)

 

2Q 19

2Q 18

$

%

YTD 19

YTD 18

$

%

Revenue

 

 

 

 

 

 

 

 

Interest and fee income

$

75,974

 

$

66,829

 

$

9,145

 

13.7

%

$

150,296

 

$

132,980

 

$

17,316

 

13.0

%

Insurance income, net

 

5,066

 

 

2,882

 

 

2,184

 

75.8

%

 

9,179

 

 

6,271

 

 

2,908

 

46.4

%

Other income

 

3,234

 

 

2,705

 

 

529

 

19.6

%

 

6,547

 

 

5,790

 

 

757

 

13.1

%

 

 

 

 

 

 

 

 

 

Total revenue

 

84,274

 

 

72,416

 

 

11,858

 

16.4

%

 

166,022

 

 

145,041

 

 

20,981

 

14.5

%

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

Provision for credit losses

 

25,714

 

 

20,203

 

 

(5,511

)

(27.3

)%

 

49,057

 

 

39,718

 

 

(9,339

)

(23.5

)%

 

 

 

 

 

 

 

 

 

Personnel

 

22,511

 

 

19,390

 

 

(3,121

)

(16.1

)%

 

44,904

 

 

40,618

 

 

(4,286

)

(10.6

)%

Occupancy

 

6,210

 

 

5,478

 

 

(732

)

(13.4

)%

 

12,375

 

 

11,096

 

 

(1,279

)

(11.5

)%

Marketing

 

2,261

 

 

2,258

 

 

(3

)

(0.1

)%

 

3,912

 

 

3,711

 

 

(201

)

(5.4

)%

Other

 

6,761

 

 

6,089

 

 

(672

)

(11.0

)%

 

14,735

 

 

12,382

 

 

(2,353

)

(19.0

)%

 

 

 

 

 

 

 

 

 

Total general and administrative

 

37,743

 

 

33,215

 

 

(4,528

)

(13.6

)%

 

75,926

 

 

67,807

 

 

(8,119

)

(12.0

)%

 

 

 

 

 

 

 

 

 

Interest expense

 

9,771

 

 

7,915

 

 

(1,856

)

(23.4

)%

 

19,492

 

 

15,092

 

 

(4,400

)

(29.2

)%

 

 

 

 

 

 

 

 

 

Income before income taxes

 

11,046

 

 

11,083

 

 

(37

)

(0.3

)%

 

21,547

 

 

22,424

 

 

(877

)

(3.9

)%

Income taxes

 

2,677

 

 

2,601

 

 

(76

)

(2.9

)%

 

5,070

 

 

5,298

 

 

228

 

4.3

%

 

 

 

 

 

 

 

 

 

Net income

$

8,369

 

$

8,482

 

$

(113

)

(1.3

)%

$

16,477

 

$

17,126

 

$

(649

)

(3.8

)%

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

Basic

$

0.71

 

$

0.73

 

$

(0.02

)

(2.7

)%

$

1.41

 

$

1.47

 

$

(0.06

)

(4.1

)%

 

 

 

 

 

 

 

 

 

Diluted

$

0.70

 

$

0.70

 

$

—

0.0

%

$

1.37

 

$

1.42

 

$

(0.05

)

(3.5

)%

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

11,706

 

 

11,658

 

 

(48

)

(0.4

)%

 

11,709

 

 

11,638

 

 

(71

)

(0.6

)%

 

 

 

 

 

 

 

 

 

Diluted

 

12,022

 

 

12,138

 

 

116

 

1.0

%

 

12,049

 

 

12,084

 

 

35

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

3.4

%

 

4.0

%

 

 

 

3.4

%

 

4.1

%

 

 

 

 

 

 

 

 

 

 

 

Return on average equity (annualized)

 

11.5

%

 

13.4

%

 

 

 

11.5

%

 

13.8

%

 

 

 

 

 

 

 

 

 

 

 

Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value amounts)

 

 

 

 

Increase (Decrease)

 

2Q 19

2Q 18

$

%

Assets

 

 

 

 

Cash

$

694

 

$

2,799

 

$

(2,105

)

(75.2

)%

Gross finance receivables

 

1,300,043

 

 

1,121,711

 

 

178,332

 

15.9

%

Unearned finance charges and insurance premiums

 

(326,609

)

 

(274,473

)

 

(52,136

)

(19.0

)%

 

 

 

 

 

Finance receivables

 

973,434

 

 

847,238

 

 

126,196

 

14.9

%

Allowance for credit losses

 

(57,200

)

 

(48,450

)

 

(8,750

)

(18.1

)%

 

 

 

 

 

Net finance receivables

 

916,234

 

 

798,788

 

 

117,446

 

14.7

%

Restricted cash

 

41,803

 

 

26,356

 

 

15,447

 

58.6

%

Lease assets

 

25,575

 

—

 

25,575

 

100.0

%

Property and equipment

 

14,132

 

 

12,072

 

 

2,060

 

17.1

%

Intangible assets

 

9,953

 

 

10,785

 

 

(832

)

(7.7

)%

Deferred tax asset

 

437

 

—

 

437

 

100.0

%

Other assets

 

10,488

 

 

17,420

 

 

(6,932

)

(39.8

)%

 

 

 

 

 

Total assets

$

1,019,316

 

$

868,220

 

$

151,096

 

17.4

%

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

Liabilities:

 

 

 

 

Long-term debt

$

689,310

 

$

595,765

 

$

93,545

 

15.7

%

Unamortized debt issuance costs

 

(7,357

)

 

(7,437

)

 

80

 

1.1

%

 

 

 

 

 

Net long-term debt

 

681,953

 

 

588,328

 

 

93,625

 

15.9

%

Lease liabilities

 

27,454

 

—

 

27,454

 

100.0

%

Accounts payable and accrued expenses

 

19,690

 

 

17,526

 

 

2,164

 

12.3

%

Deferred tax liability

—

 

3,832

 

 

(3,832

)

(100.0

)%

 

 

 

 

 

Total liabilities

 

729,097

 

 

609,686

 

 

119,411

 

19.6

%

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, 13,494 shares issued and 11,663 shares outstanding at June 30, 2019 and 13,334 shares issued and 11,788 shares outstanding at June 30, 2018)

 

1,349

 

 

1,333

 

 

16

 

1.2

%

Additional paid-in-capital

 

100,486

 

 

96,369

 

 

4,117

 

4.3

%

Retained earnings

 

220,574

 

 

185,878

 

 

34,696

 

18.7

%

Treasury stock (1,831 shares at June 30, 2019 and 1,546 shares at June 30, 2018)

 

(32,190

)

 

(25,046

)

 

(7,144

)

(28.5

)%

 

 

 

 

 

Total stockholders’ equity

 

290,219

 

 

258,534

 

 

31,685

 

12.3

%

 

 

 

 

 

Total liabilities and stockholders’ equity

$

1,019,316

 

$

868,220

 

$

151,096

 

17.4

%

 

 

 

 

 

Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(in thousands, except per share amounts)

 

 

Finance Receivables by Product

 

2Q 19

1Q 19

QoQ $

Inc (Dec)

QoQ %

Inc (Dec)

2Q 18

YoY $

Inc (Dec)

YoY %

Inc (Dec)

Small loans

$

431,214

$

421,712

$

9,502

 

2.3

%

$

384,690

$

46,524

 

12.1

%

Large loans

 

498,757

 

440,707

 

58,050

 

13.2

%

 

392,101

 

106,656

 

27.2

%

 

 

 

 

 

 

 

 

Total core loans

 

929,971

 

862,419

 

67,552

 

7.8

%

 

776,791

 

153,180

 

19.7

%

Automobile loans

 

15,686

 

20,511

 

(4,825

)

(23.5

)%

 

39,414

 

(23,728

)

(60.2

)%

Retail loans

 

27,777

 

29,320

 

(1,543

)

(5.3

)%

 

31,033

 

(3,256

)

(10.5

)%

 

 

 

 

 

 

 

 

Total finance receivables

$

973,434

$

912,250

$

61,184

 

6.7

%

$

847,238

$

126,196

 

14.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of branches at period end

 

356

 

360

 

(4

)

(1.1

)%

 

340

 

16

 

4.7

%

Average finance receivables per branch

$

2,734

$

2,534

$

200

 

7.9

%

$

2,492

$

242

 

9.7

%

 

 

 

 

 

 

 

 

 

Averages and Yields

 

2Q 19

1Q 19

2Q 18

Average Finance
Receivables

Average Yield

(Annualized)

Average Finance
Receivables

Average Yield

(Annualized)

Average Finance
Receivables

Average Yield

(Annualized)

Small loans

$

419,349

38.6

%

$

434,195

38.2

%

$

366,647

40.1

%

Large loans

 

468,305

28.6

%

 

437,475

28.0

%

 

375,836

28.6

%

Automobile loans

 

17,933

14.6

%

 

23,226

14.8

%

 

43,980

16.0

%

Retail loans

 

28,786

18.8

%

 

30,052

18.6

%

 

31,530

18.8

%

 

 

 

 

 

 

 

Total interest and fee yield

$

934,373

32.5

%

$

924,948

32.1

%

$

817,993

32.7

%

 

 

 

 

 

 

 

Total revenue yield

$

934,373

36.1

%

$

924,948

35.4

%

$

817,993

35.4

%

 

 

 

 

 

 

 

 

Components of Increase in Interest and Fee Income

2Q 19 Compared to 2Q 18

Increase (Decrease)

Volume

Rate

Volume & Rate

Net

Small loans

$

5,279

 

$

(1,363

)

$

(196

)

$

3,720

 

Large loans

 

6,609

 

 

38

 

 

9

 

 

6,656

 

Automobile loans

 

(1,042

)

 

(153

)

 

91

 

 

(1,104

)

Retail loans

 

(129

)

 

2

 

—

 

(127

)

Product mix

 

(1,209

)

 

1,158

 

 

51

 

—

 

 

 

 

 

Total increase in interest and fee income

$

9,508

 

$

(318

)

$

(45

)

$

9,145

 

 

 

 

 

 

 

 

 

Net Loans Originated (1) (2) 

 

 

 

2Q 19 

 

1Q 19 

 

QoQ $

Inc (Dec) 

 

QoQ %

Inc (Dec) 

 

2Q 18 

 

YoY $

Inc (Dec) 

 

YoY %

Inc (Dec) 

 

Small loans

 

$

174,440

 

$

129,245

 

$

45,195

 

 

35.0

%

 

$

165,023

 

$

9,417

 

 

5.7

%

 

Large loans

 

 

169,373

 

 

84,068

 

 

85,305

 

 

101.5

%

 

 

109,186

 

 

60,187

 

 

55.1

%

 

Retail loans

 

 

5,179

 

 

6,197

 

 

(1,018

)

 

(16.4

)%

 

 

6,713

 

 

(1,534

)

 

(22.9

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net loans originated

 

$

348,992

 

$

219,510

 

$

129,482

 

 

59.0

%

 

$

280,922

 

$

68,070

 

 

24.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(1)

Represents the balance of loan origination and refinancing net of unearned finance charges.

(2)

The Company ceased originating automobile loans in November 2017.

 

 

 

Other Key Metrics 

 

2Q 19 

 

1Q 19 

 

2Q 18 

Net credit losses (1) (2)

 

$

24,915

 

 

$

25,243

 

 

$

19,503

 

Percentage of average finance receivables (annualized)

 

 

10.7

%

 

 

10.9

%

 

 

9.5

%

 

 

 

 

 

 

 

Provision for credit losses (3)

 

$

25,714

 

 

$

23,343

 

 

$

20,203

 

Percentage of average finance receivables (annualized)....

 

 

11.0

%

 

 

10.1

%

 

 

9.9

%

Percentage of total revenue

 

 

30.5

%

 

 

28.6

%

 

 

27.9

%

 

 

 

 

 

 

 

General and administrative expenses

 

$

37,743

 

 

$

38,183

 

 

$

33,215

 

Percentage of average finance receivables (annualized)

 

 

16.2

%

 

 

16.5

%

 

 

16.2

%

Percentage of total revenue

 

 

44.8

%

 

 

46.7

%

 

 

45.9

%

 

 

 

 

 

 

 

Same store results:

 

 

 

 

 

 

Finance receivables at period-end

 

$

956,277

 

 

$

902,090

 

 

$

839,741

 

Finance receivable growth rate

 

 

12.9

%

 

 

12.1

%

 

 

15.6

%

Number of branches in calculation

 

 

333

 

 

 

337

 

 

 

334

 

(1)

Includes hurricane-related net credit losses of $1,429, $896, and $1,073 for 2Q 19, 1Q 19, and 2Q 18, respectively.

(2)

Includes net credit losses related to lower utilization of non-file insurance of $1,779, $1,634, and $344 for 2Q 19, 1Q 19, and 2Q 18, respectively.

(3)

Includes hurricane-related provision for credit losses of $(571), $(704), and $(677) for 2Q 19, 1Q 19, and 2Q 18, respectively.

 

 

Contractual Delinquency by Aging

 

 

2Q 19

 

1Q 19 

 

2Q 18 

Allowance for credit losses (1)

 

$

57,200

 

5.9

%

 

$

56,400

 

6.2

%

 

$

48,450

 

5.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

805,215

 

82.7

%

 

 

762,748

 

83.6

%

 

 

704,770

 

83.1

%

1 to 29 days past due

 

 

106,017

 

10.9

%

 

 

85,942

 

9.4

%

 

 

89,510

 

10.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Delinquent accounts:

 

 

 

 

 

 

 

 

 

 

 

 

30 to 59 days

 

 

22,082

 

2.3

%

 

 

18,066

 

2.0

%

 

 

18,886

 

2.3

%

60 to 89 days

 

 

13,961

 

1.4

%

 

 

13,850

 

1.5

%

 

 

12,103

 

1.4

%

90 to 119 days

 

 

9,962

 

1.1

%

 

 

11,745

 

1.3

%

 

 

8,373

 

1.0

%

120 to 149 days

 

 

8,089

 

0.8

%

 

 

9,902

 

1.1

%

 

 

6,857

 

0.8

%

150 to 179 days

 

 

8,108

 

0.8

%

 

 

9,997

 

1.1

%

 

 

6,739

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total contractual delinquency (2)

 

$

62,202

 

6.4

%

 

$

63,560

 

7.0

%

 

$

52,958

 

6.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total finance receivables

 

$

973,434

 

100.0

%

 

$

912,250

 

100.0

%

 

$

847,238

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 day and over past due

 

$

168,219

 

17.3

%

 

$

149,502

 

16.4

%

 

$

142,468

 

16.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contractual Delinquency by Product 

 
 

2Q 19 

 

1Q 19 

 

2Q 18 

 

Small loans

 

$

33,276

 

7.7

%

 

$

34,990

 

8.3

%

 

$

28,347

 

7.4

%

 

Large loans

 

 

25,447

 

5.1

%

 

 

24,893

 

5.6

%

 

 

19,600

 

5.0

%

 

Automobile loans

 

 

1,294

 

8.2

%

 

 

1,534

 

7.5

%

 

 

2,909

 

7.4

%

 

Retail loans

 

 

2,185

 

7.9

%

 

 

2,143

 

7.3

%

 

 

2,102

 

6.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total contractual delinquency (2)

 

$

62,202

 

6.4

%

 

$

63,560

 

7.0

%

 

$

52,958

 

6.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes incremental hurricane allowance for credit losses of $2,000 in 1Q 19.

(2)

Includes 0.4% delinquency related to hurricane-affected branches for 1Q 19.

 

 

 

 

Income Statement Quarterly Trend 

 

 

2Q 18

 

3Q 18 

 

4Q 18 

 

1Q 19 

 

2Q 19 

 

QoQ $
B(W) 

 

YoY $
B(W) 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fee income

 

$

66,829

 

$

72,128

 

$

75,013

 

$

74,322

 

$

75,974

 

$

1,652

 

 

$

9,145

 

Insurance income, net

 

 

2,882

 

 

2,898

 

 

5,624

 

 

4,113

 

 

5,066

 

 

953

 

 

 

2,184

 

Other income

 

 

2,705

 

 

2,890

 

 

3,112

 

 

3,313

 

 

3,234

 

 

(79

)

 

 

529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

 

72,416

 

 

77,916

 

 

83,749

 

 

81,748

 

 

84,274

 

 

2,526

 

 

 

11,858

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

20,203

 

 

23,640

 

 

23,698

 

 

23,343

 

 

25,714

 

 

(2,371

)

 

 

(5,511

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

 

19,390

 

 

21,376

 

 

22,074

 

 

22,393

 

 

22,511

 

 

(118

)

 

 

(3,121

)

Occupancy

 

 

5,478

 

 

5,490

 

 

5,933

 

 

6,165

 

 

6,210

 

 

(45

)

 

 

(732

)

Marketing

 

 

2,258

 

 

2,132

 

 

1,902

 

 

1,651

 

 

2,261

 

 

(610

)

 

 

(3

)

Other

 

 

6,089

 

 

6,863

 

 

6,707

 

 

7,974

 

 

6,761

 

 

1,213

 

 

 

(672

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total general and administrative

 

 

33,215

 

 

35,861

 

 

36,616

 

 

38,183

 

 

37,743

 

 

440

 

 

 

(4,528

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

7,915

 

 

8,729

 

 

9,643

 

 

9,721

 

 

9,771

 

 

(50

)

 

 

(1,856

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

11,083

 

 

9,686

 

 

13,792

 

 

10,501

 

 

11,046

 

 

545

 

 

 

(37

)

Income taxes

 

 

2,601

 

 

2,237

 

 

3,022

 

 

2,393

 

 

2,677

 

 

(284

)

 

 

(76

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

8,482

 

$

7,449

 

$

10,770

 

$

8,108

 

$

8,369

 

$

261

 

 

$

(113

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.73

 

$

0.64

 

$

0.92

 

$

0.69

 

$

0.71

 

$

0.02

 

 

$

(0.02

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

0.70

 

$

0.61

 

$

0.90

 

$

0.67

 

$

0.70

 

$

0.03

 

 

$ —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

11,658

 

 

11,672

 

 

11,672

 

 

11,712

 

 

11,706

 

 

6

 

 

 

(48

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

12,138

 

 

12,133

 

 

12,010

 

 

12,076

 

 

12,022

 

 

54

 

 

 

116

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

$

64,501

 

$

69,187

 

$

74,106

 

$

72,027

 

$

74,503

 

$

2,476

 

 

$

10,002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net credit margin

 

$

44,298

 

$

45,547

 

$

50,408

 

$

48,684

 

$

48,789

 

$

105

 

 

$

4,491

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Quarterly Trend 

 

 

2Q 18 

 

3Q 18 

 

4Q 18 

 

1Q 19 

 

2Q 19 

 

QoQ $

Inc (Dec) 

 

YoY $

Inc (Dec) 

Total assets

 

$ 868,220

 

$ 893,279

 

$ 956,395

 

$ 953,467

 

$ 1,019,316

 

$ 65,849

 

$ 151,096

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance receivables

 

$ 847,238

 

$ 888,076

 

$ 932,243

 

$ 912,250

 

$ 973,434

 

$ 61,184

 

$ 126,196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses

 

$ 48,450

 

$ 55,300

 

$ 58,300

 

$ 56,400

 

$ 57,200

 

$ 800

 

$ 8,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

$ 595,765

 

$ 611,593

 

$ 660,507

 

$ 628,786

 

$ 689,310

 

$ 60,524

 

$ 93,545

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Key Metrics Quarterly Trend 

 

 

2Q 18

 

3Q 18 

 

4Q 18 

 

1Q 19 

 

2Q 19 

 

QoQ

Inc (Dec) 

 

YoY

Inc (Dec) 

Interest and fee yield (annualized)

 

32.7%

 

33.2%

 

32.9%

 

32.1%

 

32.5%

 

0.4 %

 

(0.2) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expense ratio (1).

 

16.2%

 

16.5%

 

16.1%

 

16.5%

 

16.2%

 

(0.3) %

 

0.0 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30+ contractual delinquency

 

6.3%

 

7.1%

 

7.7%

 

7.0%

 

6.4%

 

(0.6) %

 

0.1 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net credit loss (2)

 

9.5%

 

7.7%

 

9.1%

 

10.9%

 

10.7%

 

(0.2) %

 

1.2 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$ 21.93

 

$ 22.68

 

$ 23.70

 

$ 24.15

 

$ 24.88

 

$ 0.73

 

$ 2.95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Annualized general and administrative expenses as a percentage of average finance receivables.

(2) Annualized net credit losses as a percentage of average finance receivables.

 

 

 

Finance Receivables by Product 

 

 

2Q 19 

 

1Q 19 

 

QoQ $

Inc (Dec) 

 

QoQ %

Inc (Dec) 

 

2Q 18 

 

YoY $

Inc (Dec) 

 

YoY %

Inc (Dec)

Small loans

 

$

431,214

 

$

421,712

 

$

9,502

 

 

2.3

%

 

$

384,690

 

$

46,524

 

 

12.1

%

Large loans

 

 

498,757

 

 

440,707

 

 

58,050

 

 

13.2

%

 

 

392,101

 

 

106,656

 

 

27.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total core loans

 

 

929,971

 

 

862,419

 

 

67,552

 

 

7.8

%

 

 

776,791

 

 

153,180

 

 

19.7

%

Automobile loans

 

 

15,686

 

 

20,511

 

 

(4,825

)

 

(23.5

) %

 

 

39,414

 

 

(23,728

)

 

(60.2

) %

Retail loans

 

 

27,777

 

 

29,320

 

 

(1,543

)

 

(5.3

) %

 

 

31,033

 

 

(3,256

)

 

(10.5

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total finance receivables

 

$

973,434

 

$

912,250

 

$

61,184

 

 

6.7

%

 

$

847,238

 

$

126,196

 

 

14.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of branches at period end

 

 

356

 

 

360

 

 

(4

)

 

(1.1

) %

 

 

340

 

 

16

 

 

4.7

%

Average finance receivables per branch

 

$

2,734

 

$

2,534

 

$

200

 

 

7.9

%

 

$

2,492

 

$

242

 

 

9.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Averages and Yields 

       

 

 

YTD 19 

 

YTD 18 

       

 

 

Average Finance
Receivables 

 

Average Yield

(Annualized) 

 

Average Finance
Receivables 

 

Average Yield

(Annualized) 

       

Small loans

 

$

426,732

 

38.4

%

 

$

368,570

 

40.1

%

       

Large loans

 

 

452,975

 

28.3

%

 

 

365,865

 

28.5

%

       

Automobile loans

 

 

20,565

 

14.8

%

 

 

49,715

 

15.7

%

       

Retail loans

 

 

29,415

 

18.7

%

 

 

32,091

 

18.7

%

       

 

 

 

 

 

 

 

 

 

       

Total interest and fee yield

 

$

929,687

 

32.3

%

 

$

816,241

 

32.6

%

       

 

 

 

 

 

 

 

 

 

       

Total revenue yield

 

$

929,687

 

35.7

%

 

$

816,241

 

35.5

%

       

 

 

 

 

 

 

 

 

 

       

 

 

Components of Increase in Interest and Fee Income

YTD 19 Compared to YTD 18

Increase (Decrease)

 

 

Volume

 

Rate

 

Volume & Rate

 

Net

Small loans

 

$

11,663

 

 

$

(3,208

)

 

$

(506

)

 

$

7,949

 

Large loans

 

 

12,422

 

 

 

(342

)

 

 

(82

)

 

 

11,998

 

Automobile loans

 

 

(2,288

)

 

 

(235

)

 

 

138

 

 

 

(2,385

)

Retail loans

 

 

(250

)

 

 

4

 

 

—      

 

 

(246

)

Product mix

 

 

(3,065

)

 

 

2,757

 

 

 

308

 

 

—      

 

 

 

 

 

 

 

 

 

Total increase in interest and fee income

 

$

18,482

 

 

$

(1,024

)

 

$

(142

)

 

$

17,316

 

 

 

 

 

 

 

 

 

 

 

Net Loans Originated (1) (2) 

 

YTD 19 

YTD 18 

YTD $

Inc (Dec) 

YTD %

Inc (Dec) 

Small loans

$ 303,685

$ 288,779

$ 14,906

5.2 %

Large loans

253,441

197,959

55,482

28.0 %

Retail loans

11,376

14,015

(2,639 )

(18.8) %

 

 

 

 

 

Total net loans originated

$ 568,502

$ 500,753

$ 67,749

13.5 %

 

 

 

 

 

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

(2) The Company ceased originating automobile loans in November 2017.

 

Other Key Metrics 

 

YTD 19 

 

YTD 18 

Net credit losses (1) (2)

$

50,157

 

 

$

40,178

 

Percentage of average finance receivables (annualized)

 

10.8

%

 

 

9.8

%

 

 

 

 

Provision for credit losses (3)

$

49,057

 

 

$

39,718

 

Percentage of average finance receivables (annualized)

 

10.6

%

 

 

9.7

%

Percentage of total revenue

 

29.5

%

 

 

27.4

%

 

 

 

 

General and administrative expenses

$

75,926

 

 

$

67,807

 

Percentage of average finance receivables (annualized)

 

16.3

%

 

 

16.6

%

Percentage of total revenue

 

45.7

%

 

 

46.8

%

(1) Includes hurricane-related net credit losses of $2,325 and $1,819 for YTD 19 and YTD 18, respectively.

(2) Includes net credit losses related to lower utilization of non-file insurance of $3,413 and $949 for YTD 19 and YTD 18, respectively.

(3) Includes hurricane-related provision for credit losses of $(1,275) and $(981) for YTD 19 and YTD 18, respectively.

 

Investor Relations
Garrett Edson, (203) 682-8331