UPDATE: Enova (ENVA) Says Revenue of CFPB-Covered Products Could Decline 30% - 40% Under Proposed Rule

June 6, 2016 5:58 PM EDT

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(Updated - June 7, 2016 11:04 AM EDT)

Enova International, Inc. (NYSE: ENVA) is down as 10% after-hours after the company announced that it has completed a preliminary assessment of the proposed rule regarding small-dollar loans issued on June 2nd by the Consumer Financial Protection Bureau (CFPB). As previously announced, the Company will hold an investor call to discuss the proposed rule today at 4:00 p.m. Central Time / 5:00 p.m. Eastern Time.

Enova has been a leader in online lending since 2004. In that time, it has originated more than $17.7 billion in loans and financing, served over four million customers and developed 12 brands in six different countries. Over the last several years, Enova has successfully executed its strategy to diversify its revenue stream and reduce regulatory risk by expanding its product portfolio and its geographic reach. The company has developed a flexible online lending platform that has proven able to quickly adapt to regulatory changes, including numerous state law changes in the U.S. and, most recently, significant new regulation in the U.K.

"We support smart regulations that protect consumer access to credit, and while we don't agree with the entire proposed rule, it didn't contain any big surprises," said David Fisher, CEO of Enova International. "The proposed rule will not affect consumers' need for short-term credit, and we believe we'll continue to have a strong U.S. business once the rule is final and implemented, which is anticipated to be in mid-2018. Many of the changes that will be required of all lenders play to our strengths as a technology and analytics company. It's also important to note that given the specifics of the proposed rule and the long timeline to implement, we believe the transition for our U.S. business will be smoother than the one undertaken by our U.K. business."

The company anticipates that if the proposed rule is adopted without additional changes, products that today compose approximately 60% to 65% of its current total revenue will be subject to the final rule, and that revenue for those impacted products could decline by 30% to 40% from current levels. This initial assessment does not take into account potential offsets from changes in the competitive landscape as a result of the final rule, any changes in state regulation, Enova's ongoing diversification efforts, including the expansion of the U.S. near-prime NetCredit business, the continued growth of its small business lending and financing group, expanding international operations in Brazil, or Enova Decisions, the emerging Analytics as a Service offering.

"Enova has always been committed to treating customers fairly and putting them first," said Fisher. "We fully embrace regulations that protect consumers while preserving their access to fast, trustworthy credit. While we believe that there are places in this rule where the CFPB has made the requirements far too restrictive and burdensome for consumers, we are confident in our ability to adapt to the new rules. The flexibility of our online platform, our proprietary analytics and our experience in adapting to new regulations provides us with a significant advantage. Overall, we believe that Enova remains well positioned to continue to provide high-quality and compliant credit options to the millions of hard-working U.S. consumers who depend on us."

The company will hold an investor call to discuss its preliminary assessment of the new rule at 4:00 p.m. Central Time / 5:00 p.m. Eastern Time on Monday, June 6. The live webcast of the call can be accessed at the Enova Investor Relations website at http://ir.enova.com. The U.S. dial-in for the call is 1-855-560-2575 (1-412-542-4161 for non-U.S. callers). Please ask to be joined to the Enova International Call. A replay of the conference call will be available until June 13, 2016, at 10:59 p.m. Central Time / 11:59 p.m. Eastern Time. The U.S. dial-in for the conference call replay is 1-877-344-7529 (1-412-317-0088). The replay access code is 10087359.



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