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Regional Management Corp. Announces Fourth Quarter 2015 Results

January 28, 2016 4:15 PM

- Net income of $7.4 million; diluted earnings per share of $0.56 -

- Total finance receivables of $628 million, up $27 million sequentially and $82 million compared to prior-year period -

GREENVILLE, S.C.--(BUSINESS WIRE)-- Regional Management Corp. (NYSE: RM), a diversified specialty consumer finance company, today announced results for the fourth quarter and full year periods ended December 31, 2015.

Fourth Quarter 2015 Highlights

“2015 was a year of continuous improvement at Regional in all aspects of our business processes, and as a result, we enter 2016 in a significantly stronger position from where we started in 2015,” said Michael R. Dunn, Chief Executive Officer of Regional Management Corp. “Our core products, led most prominently by our large loans, drove the 15% year-over-year growth in our portfolio. By the end of 2015, we had more than tripled the amount in our large loan portfolio compared to the end of 2014, and it has become a key component of our business, now comprising 23% of our total loan portfolio and growing. Overall, we ended the year with our combined loan portfolio at $628 million, a sizable increase from the prior year and indicative of solid origination performance throughout the year.”

“We are also gratified by the improvements that were made during 2015 in our credit processes and portfolio quality. Charge-off rates showed improvement versus the prior year in the aggregate as well as on a portfolio basis,” continued Mr. Dunn. “Our delinquencies at the end of the fourth quarter were considerably more aligned with the profile of credit quality we expect to see going forward. In 2016, we will continue the focus on our core products and execution, while we also expect it to be a year of additional investment in operations in order to firmly position us for long-term sustainable and profitable growth.”

______________________

1 Net charge-offs are reported on an annualized basis.

Fourth Quarter 2015 Results

Finance receivables outstanding at December 31, 2015 were $628.4 million, a 15.1% increase from $546.2 million in the prior year. Finance receivables increased primarily due to an increase in both Regional Management’s small and large loan portfolios and the addition of 31 de novo branches since December 31, 2014.

For the fourth quarter ended December 31, 2015, Regional Management reported total revenue of $56.7 million, a 5.4% increase from $53.8 million in the prior-year period. Interest and fee income for the fourth quarter of 2015 was $51.3 million, a 4.8% increase from $49.0 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 fourth quarter of 2015 was $2.8 million, an increase of $0.6 million from the prior-year period.

Provision for credit losses in the fourth quarter of 2015 was $11.4 million versus $16.0 million in the prior-year period. Excluding the one-time bulk sale of charged-off loans, provision for credit losses in the fourth quarter of 2015 was $13.4 million. Net charge-offs were $11.8 million in the fourth quarter of 2015 ($13.7 million excluding the bulk sale of charged-off loans). Net charge-offs as a percentage of average finance receivables for the fourth quarter of 2015 (excluding the bulk sale) were 9.0%, an improvement from 13.9% in the prior-year period.

On a sequential basis, provision for credit losses (excluding the bulk sale) of $13.4 million was $0.7 million lower than the third quarter of 2015, predominantly due to improving credit metrics and a shifting portfolio mix.

General and administrative expenses for the fourth quarter of 2015 were $28.6 million, an increase of 0.5% from $28.4 million in the prior-year period. The increase was driven primarily by $0.8 million of additional branch expenses, partially offset by a $0.4 million decline in marketing costs. Branch expenses include changes in staffing and incentive plans for all branches, as well as the expenses associated with 31 branches added since December 31, 2014.

GAAP net income for the fourth quarter of 2015 was $7.4 million, a 117.9% increase compared to net income of $3.4 million in the prior-year period. Diluted earnings per share for the fourth quarter of 2015 were $0.56, an increase from $0.26 in the prior-year period. Excluding the bulk sale of charged-off loans, non-GAAP net income in the fourth quarter of 2015 would have been $6.1 million and diluted earnings per share would have been $0.47. For a reconciliation of non-GAAP financial measures to the nearest comparable GAAP financial measure, please refer to the reconciliation table accompanying this release.

Full Year 2015 Results

For the full year ended December 31, 2015, Regional Management reported total revenue of $217.3 million, a 6.1% increase from $204.7 million in the prior year. Interest and fee income for the full year ended December 31, 2015 was $195.8 million, a 6.0% increase from $184.8 million in the prior year, primarily due to an increase in the portfolios of both small and large loans compared to the prior year. Insurance income for the full year ended December 31, 2015 was $11.7 million, a 9.2% increase from the prior year.

Provision for credit losses for the full year ended December 31, 2015 was $47.3 million ($49.3 million excluding the bulk sale of charged-off loans) versus $69.1 million in the prior year. Net charge-offs of $50.4 million ($52.4 million excluding the bulk sale) in the full year ended December 31, 2015 exceeded the provision by $3.1 million as Regional Management released a portion of the allowance recorded in 2014 for convenience checks. Net charge-offs as a percentage of average finance receivables for the full year ended December 31, 2015 (excluding the bulk sale) was 9.1%, a decline from 10.7% in the prior year.

General and administrative expenses for the full year ended December 31, 2015 were $115.6 million, an increase of $18.8 million, or 19.4%, from $96.8 million in the prior year, driven by $9.3 million of additional branch expenses, $8.8 million of additional home office expenses and $0.7 million of additional marketing costs. Branch expenses include changes in staffing and incentive plans for all branches, as well as the expenses associated with 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 full year ended December 31, 2015 was $23.4 million, a 57.9% increase compared to GAAP net income of $14.8 million in the prior year, and diluted earnings per share for the full year ended December 31, 2015 were $1.79 compared to $1.14 in the prior year. Excluding certain non-operating expenses and the bulk sale of charged-off loans, non-GAAP net income for the full year ended December 31, 2015 totaled $23.8 million and non-GAAP diluted earnings per share were $1.82.

2016 De Novo Outlook

As of December 31, 2015, Regional Management’s branch network consisted of 331 locations. Regional Management opened 9 de novo branches in the fourth quarter of 2015 and, for the full year 2016, plans to open between 20 and 25 de novo branches.

Liquidity and Capital Resources

As of December 31, 2015, Regional Management had finance receivables of $628.4 million and outstanding debt of $411.2 million (consisting of $338.3 million of debt on its $538.0 million senior revolving credit facility and $72.9 million of debt on its $75 million amortizing loan).

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) 318-8611 (toll-free) or (617) 399-5130 (direct), passcode 47330233. 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, February 4, 2016, 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, Georgia and Virginia. 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.

Regional Management Corp. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

(in thousands, except per share amounts)

Better (Worse) Better (Worse)
4Q’15 4Q’14

$

% YTD’15 YTD’14 $ %
Revenue
Interest and fee income $ 51,320 $ 48,964 $ 2,356 4.8 % $ 195,794 $ 184,797 $ 10,997 6.0 %
Insurance income, net 2,838 2,261 577 25.5 % 11,654 10,673 981 9.2 %
Other income 2,527 2,567

(40

)

(1.6

)%

9,858 9,249 609 6.6 %
Total revenue 56,685 53,792 2,893 5.4 % 217,306 204,719 12,587 6.1 %
Expenses
Provision for credit losses 11,449 15,950 4,501 28.2 % 47,348 69,057 21,709 31.4 %
Personnel 17,283 17,099

(184

)

(1.1

)%

69,247 55,383

(13,864

)

(25.0

)%

Occupancy 4,722 4,157

(565

)

(13.6

)%

17,775 15,575

(2,200

)

(14.1

)%

Marketing 1,403 1,842 439 23.8 % 7,017 6,330

(687

)

(10.9

)%

Other 5,142 5,298 156 2.9 % 21,559 19,488

(2,071

)

(10.6

)%

Total general and administrative 28,550 28,396

(154

)

(0.5

)%

115,598 96,776

(18,822

)

(19.4

)%

Interest expense 4,350 3,780 (570 ) (15.1

)%

16,221 14,947

(1,274

)

(8.5

)%

Income before income taxes 12,336 5,666 6,670 117.7 % 38,139 23,939 14,200 59.3 %
Income taxes 4,969 2,285

(2,684

)

(117.5

)%

14,774 9,137

(5,637

)

(61.7

)%

Net income $ 7,367 $ 3,381 $ 3,986 117.9 % $ 23,365 $ 14,802 $ 8,563 57.9 %
Net income per common share:
Basic $ 0.57 $ 0.27 $ 0.30 111.1 % $ 1.82 $ 1.17 $ 0.65 55.6 %
Diluted $ 0.56 $ 0.26 $ 0.30 115.4 % $ 1.79 $ 1.14 $ 0.65 57.0 %
Weighted-average shares outstanding:
Basic 12,891 12,744 147 1.2 % 12,849 12,701 148 1.2 %
Diluted 13,105 12,955 150 1.2 % 13,074 12,951 123 0.9 %
Return on average assets (annualized) 4.9 % 2.6 % 4.2 % 2.9 %
Return on average equity (annualized) 14.6 % 7.7 % 12.2 % 8.7 %

Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value amounts)

Increase (Decrease)
4Q’15 4Q’14 $ %
Assets
Cash $ 7,654 $ 4,012 $ 3,642 90.8 %
Gross finance receivables 785,042 663,432 121,610 18.3 %
Less unearned finance charges, insurance premiums, and commissions

(156,598

)

(117,240

)

(39,358

)

33.6 %
Finance receivables 628,444 546,192 82,252 15.1 %
Allowance for credit losses

(37,452

)

(40,511

)

3,059 (7.6

)%

Net finance receivables 590,992 505,681 85,311 16.9 %
Restricted cash 10,506 1,901 8,605 452.7 %
Property and equipment, net of accumulated depreciation 10,441 8,905 1,536 17.2 %
Deferred tax asset, net — 1,870 (1,870 )

(100.0

)%

Goodwill 716 716 —

0.0

%

Intangible assets, net 473 847

(374

)

(44.2

)%

Repossessed assets at net realizable value 307 556

(249

)

(44.8

)%

Other assets 7,979 5,782 2,197 38.0 %
Total assets $ 629,068 $ 530,270 $ 98,798 18.6 %
Liabilities and Stockholders’ Equity
Liabilities:
Long-term debt $ 411,177 $ 341,419 $ 69,758 20.4 %
Accounts payable and accrued expenses 12,089 10,528 1,561 14.8 %
Deferred tax liability, net 575 — 575 100.0 %
Total liabilities 423,841 351,947 71,894 20.4 %
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, 12,914 and 12,748 shares issued and outstanding at December 31, 2015 and 2014, respectively 1,291 1,275 16 1.3 %
Additional paid-in-capital 89,178 85,655 3,523 4.1 %
Retained earnings 114,758 91,393 23,365 25.6 %
Total stockholders’ equity 205,227 178,323 26,904 15.1 %
Total liabilities and stockholders’ equity $ 629,068 $ 530,270 $ 98,798 18.6 %

Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(in thousands, except per share amounts)

Averages and Yields
4Q’15 3Q’15 4Q’14
Average FinanceReceivables Average Yield

(Annualized)

Average FinanceReceivables Average Yield

(Annualized)

Average FinanceReceivables Average Yield

(Annualized)

Branch small loans $ 151,983

43.1

%

$ 144,551 43.5 % $ 119,097 48.4 %
Convenience checks 180,395 41.4 % 178,940 42.8 % 192,951 46.8 %
Large loans 133,457 28.0 % 106,155 27.6 % 43,464 27.1 %
Automobile loans 122,049 18.4 % 133,857 18.8 % 159,047 19.5 %
Retail loans 26,453 19.4 % 25,022 19.1 % 26,493 18.7 %
Total interest and fee yield $ 614,337 33.4 % $ 588,525 33.8 % $ 541,052 36.2 %
Total revenue yield $ 614,337 36.9 % $ 588,525 37.4 % $ 541,052 39.8 %
Components of Increase in Interest and Fee Income

4Q’15 Compared to 4Q’14

Increase (Decrease)

Volume Rate Net
Branch small loans $ 3,670 $ (1,700 ) $ 1,970
Convenience checks (1,410 ) (2,513 ) (3,923 )
Large loans 6,301 102 6,403
Automobile loans (1,725 ) (416 ) (2,141 )
Retail loans (2 ) 49 47
Change in product mix (274 ) 274 —
Total increase (decrease) in interest and fee income $ 6,560 $ (4,204 ) $ 2,356
Net Loans Originated (1)
4Q’15 3Q’15 4Q’14 QoQ $

Inc (Dec)

QoQ %

Inc (Dec)

YoY $

Inc (Dec)

YoY %

Inc (Dec)

Branch small loans $ 81,074 $ 63,647 $ 80,171 $ 17,427 27.4 % $ 903 1.1 %
Convenience checks 83,230 80,675 95,330 2,555 3.2 % (12,100 ) (12.7 ) %
Large loans 52,686 44,911 17,737 7,775 17.3 % 34,949 197.0 %
Automobile loans 7,563 7,665 13,516 (102 ) (1.3 ) % (5,953 ) (44.0 ) %
Retail loans 8,978 7,868 7,634 1,110 14.1 % 1,344 17.6 %
Total net loans originated $ 233,531 $ 204,766 $ 214,388 $ 28,765 14.0 % $ 19,143 8.9 %

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

Other Key Metrics
4Q’15 3Q’15 4Q’14
Net charge-offs $ 11,783 $ 12,470 $ 18,740
Net charge-offs (bulk sale of charged-off loans) 1,964 — —
Net charge-offs (excluding sale) $ 13,747 $ 12,470 $ 18,740
Percentage of average finance receivables (annualized) 9.0 % 8.5 % 13.9 %
Provision for credit losses $ 11,449 $ 14,085 $ 15,950
Provision for credit losses (bulk sale of charged-off loans) 1,964 — —
Provision for credit losses (excluding sale) $ 13,413 $ 14,085 $ 15,950
Percentage of average finance receivables (annualized) 8.7 % 9.6 % 11.8 %
Percentage of total revenue 23.7 % 25.6 % 29.7 %
General and administrative expenses $ 28,550 $ 26,182 $ 28,396
Percentage of average finance receivables (annualized) 18.6 % 17.8 % 21.0 %
Percentage of total revenue 50.4 % 47.5 % 52.8 %
Same store results:
Finance receivables at period-end $ 599,415 $ 573,221 $ 504,697
Finance receivable growth rate 11.7 % 7.1 % -6.0 %
Number of branches in calculation 296 293 264
Finance Receivables by Product
4Q’15 3Q’15 QoQ $

Inc (Dec)

QoQ %

Inc (Dec)

4Q’14 YoY $

Inc (Dec)

YoY %

Inc (Dec)

Branch small loans $ 157,755 $ 147,664 $ 10,091 6.8 % $ 128,217 $ 29,538 23.0 %
Convenience checks 180,402 180,543 (141 ) (0.1 ) % 191,316 (10,914 ) (5.7 ) %
Large loans 146,553 119,731 26,822 22.4 % 46,147 100,406 217.6 %
Total core loans 484,710 447,938 36,772 8.2 % 365,680 119,030 32.6 %
Automobile loans 116,109 128,131 (12,022 ) (9.4 ) % 154,382 (38,273 ) (24.8 ) %
Retail loans 27,625 25,539 2,086 8.2 % 26,130 1,495 5.7 %
Total finance receivables $ 628,444 $ 601,608 $ 26,836 4.5 % $ 546,192 $ 82,252 15.1 %
Number of branches at period end 331 322 9 2.8 % 300 31 10.3 %
Average finance receivables per branch $ 1,899 $ 1,868 $ 31 1.7 % $ 1,821 $ 78 4.3 %
4Q’14 3Q’14 QoQ $

Inc (Dec)

QoQ %

Inc (Dec)

Total finance receivables $ 546,192 $ 543,353 $ 2,839 0.5 %
Contractual Delinquency by Aging
4Q’15 3Q’15 4Q’14
Allowance for credit losses $ 37,452 6.0 % $ 37,786 6.3 % $ 40,511 7.4 %
Current 500,591 79.7 % 466,847 77.6 % 422,342 77.4 %
1 to 29 days past due 82,589 13.1 % 90,626 15.1 % 82,714 15.1 %
Delinquent accounts:
30 to 59 days 15,654 2.5 % 17,094 2.8 % 15,951 2.9 %
60 to 89 days 9,858 1.6 % 9,952 1.7 % 9,624 1.8 %
90 to 119 days 7,696 1.1 % 6,874 1.1 % 6,899 1.2 %
120 to 149 days 6,678 1.1 % 5,766 1.0 % 4,988 0.9 %
150 to 179 days 5,378 0.9 % 4,449 0.7 % 3,674 0.7 %
Total contractual delinquency $ 45,264 7.2 % $ 44,135 7.3 % $ 41,136 7.5 %
Total finance receivables $ 628,444 100.0 % $ 601,608 100.0 % $ 546,192 100.0 %
1 day and over past due $ 127,853 20.3 % $ 134,761 22.4 % $ 123,850 22.6 %
Contractual Delinquency by Product
4Q’15 3Q’15 4Q’14
Branch small loans $ 14,765 9.4 % $ 14,166 9.6 % $ 10,247 8.0 %
Convenience checks 15,420 8.5 % 15,605 8.6 % 17,165 9.0 %
Large loans 4,945 3.4 % 3,829 3.2 % 2,106 4.6 %
Automobile loans 8,713 7.5 % 9,327 7.3 % 10,302 6.7 %
Retail loans 1,421 5.1 % 1,208 4.7 % 1,316 5.0 %
Total contractual delinquency $ 45,264 7.2 % $ 44,135 7.3 % $ 41,136 7.5 %
Quarterly Trend
4Q’14 1Q’15 2Q’15 3Q’15 4Q’15 QoQ $

B(W)

YoY $

B(W)

Revenue
Interest and fee income $ 48,964 $ 47,065 $ 47,668 $ 49,741 $ 51,320 $ 1,579 $ 2,356
Insurance income, net 2,261 2,929 3,120 2,767 2,838 71 577
Other income 2,567 2,530 2,213 2,588 2,527 (61 ) (40 )
Total revenue 53,792 52,524 53,001 55,096 56,685 1,589 2,893
Expenses
Provision for credit losses 15,950 9,712 12,102 14,085 11,449 2,636 4,501
Personnel 17,099 19,760 16,211 15,993 17,283 (1,290 ) (184 )
Occupancy 4,157 4,165 4,298 4,590 4,722 (132 ) (565 )
Marketing 1,842 2,471 2,009 1,134 1,403 (269 ) 439
Other 5,298 6,227 5,725 4,465 5,142 (677 ) 156
Total general and administrative 28,396 32,623 28,243 26,182 28,550 (2,368 ) (154 )
Interest expense 3,780 3,604 3,932 4,335 4,350 (15 ) (570 )
Income before income taxes 5,666 6,585 8,724 10,494 12,336 1,842 6,670
Income taxes 2,285 2,502 3,316 3,987 4,969 (982 ) (2,684 )
Net income $ 3,381 $ 4,083 $ 5,408 $ 6,507 $ 7,367 $ 860 $ 3,986
Net income per common share:
Basic $ 0.27 $ 0.32 $ 0.42 $ 0.51 $ 0.57 $ 0.06 $ 0.30
Diluted $ 0.26 $ 0.31 $ 0.41 $ 0.50 $ 0.56 $ 0.06 $ 0.30
Weighted-average shares outstanding:
Basic 12,744 12,838 12,845 12,881 12,891 10 147
Diluted 12,955 13,061 13,078 13,111 13,105 (6 ) 150
4Q’14 1Q’15 2Q’15 3Q’15 4Q’15 QoQ $

Inc (Dec)

YoY $

Inc (Dec)

Total assets 530,270 507,742 560,981 588,966 629,068 40,102 98,798
Finance receivables 546,192 525,907 572,525 601,608 628,444 26,836 82,252
Allowance for credit losses 40,511 36,950 36,171 37,786 37,452 (334 ) (3,059 )
Long-term debt 341,419 312,538 359,491 379,617 411,177 31,560 69,758
Headcount Trend
4Q’14 1Q’15 2Q’15 3Q’15 4Q’15 QoQ

Inc (Dec)

YoY

Inc (Dec)

Legacy branch headcount 1,335 1,273 1,205 1,208 1,208 — (127 )
2015 new branches 15 40 48 72 24 72
Total branch headcount 1,335 1,288 1,245 1,256 1,280 24 (55 )
Home office headcount 105 125 120 129 133 4 28
Total headcount 1,440 1,413 1,365 1,385 1,413 28 (27 )
Number of branches 300 306 316 322 331 9 31
General & Administrative Expenses Trend
4Q’14 1Q’15 2Q’15 3Q’15 4Q’15 QoQ $

B(W)

YoY $

B(W)

Legacy branch G&A expenses $ 18,020 $ 19,284 $ 16,596 $ 17,946 $ 17,361 $ 585 $ 659
2015 new branches 86 498 930 1,501 (571 ) (1,501 )
Total branch G&A expenses 18,020 19,370 17,094 18,876 18,862 14 (842 )
Marketing 1,842 2,471 2,009 1,134 1,403 (269 ) 439
Home office G&A expenses 8,534 10,782 9,140 6,172 8,285 (2,113 ) 249
Total G&A expenses $ 28,396 $ 32,623 $ 28,243 $ 26,182 $ 28,550 $ (2,368 ) $ (154 )
Averages and Yields
YTD’15 YTD’14
Average FinanceReceivables Average Yield Average FinanceReceivables Average Yield
Branch small loans $ 138,253 44.3 % $ 110,531 48.0 %
Convenience checks 178,692 43.6 % 178,181 45.8 %
Large loans 93,243 27.6 % 42,887 26.9 %
Automobile loans 137,249 19.0 % 169,607 19.7 %
Retail loans 25,392 18.8 % 28,295 18.4 %
Total interest and fee yield $ 572,829 34.2 % $ 529,501 34.9 %
Total revenue yield $ 572,829 37.9 % $ 529,501 38.7 %
Components of Increase in Interest and Fee Income

YTD’15 Compared to YTD’14

Increase (Decrease)

Volume Rate Net
Branch small loans $ 12,529 $ (4,289 ) $ 8,240
Convenience checks 233 (3,981 ) (3,748 )
Large loans 13,884 322 14,206
Automobile loans (6,180 ) (1,106 ) (7,286 )
Retail loans (543 ) 128 (415 )
Change in product mix (4,974 ) 4,974 —
Total increase (decrease) in interest and fee income $ 14,949 $ (3,952 ) $ 10,997
Net Loans Originated (1)
YTD’15 YTD’14 YTD $

Inc (Dec)

YTD %

Inc (Dec)

Branch small loans $ 276,908 $ 240,465 $ 36,443 15.2 %
Convenience checks 315,303 334,115 (18,812 ) (5.6 ) %
Large loans 173,560 50,731 122,829 242.1 %
Automobile loans 41,621 64,842 (23,221 ) (35.8 ) %
Retail loans 31,710 29,984 1,726 5.8 %
Total net loans originated $ 839,102 $ 720,137 $ 118,965 16.5 %

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

Other Key Metrics
YTD’15 YTD’14
Net charge-offs $ 50,407 $ 58,635
Net charge-offs (bulk sale of charged-off loans) 1,964 —
Net charge-offs (180+ policy change) — (2,106 )
Net charge-offs (excluding policy change and sale) $ 52,371 $ 56,529
Percentage of average finance receivables 9.1 % 10.7 %
Provision for credit losses $ 47,348 $ 69,057
Provision for credit losses (bulk sale of charged-off loans) 1,964 —
Provision for credit losses (excluding sale) $ 49,312 $ 69,057
Percentage of average finance receivables 8.6 % 13.0 %
Percentage of total revenue 22.7 % 33.7 %
General and administrative expenses $ 115,598 $ 96,776
Percentage of average finance receivables 20.2 % 18.3 %
Percentage of total revenue 53.2 % 47.3 %

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
Q4 ‘15 Adjustments Non-GAAP
Provision for credit losses $ 11,449 $

1,964

(1)

$ 13,413
Income taxes $ 4,969 $ (746 )(7) $ 4,223
Net income $ 7,367 $ (1,218 ) $ 6,149
Diluted net income per common share $ 0.56 $ (0.09 ) $ 0.47
Non-GAAP Reconciliation
YTD’15 Adjustments Non-GAAP
General and administrative expenses $ 115,598 $ (2,676 )(2)(3)(4) $ 112,922
Provision for credit losses $ 47,348 $

1,964

(1)

$ 49,312
Income taxes $ 14,774 $

271

(7)

$ 15,045
Net income $ 23,365 $ 441 $ 23,806
Diluted net income per common share $ 1.79 $ 0.03 $ 1.82
Non-GAAP Reconciliation
YTD’14 Adjustments Non-GAAP
General and administrative expenses $ 96,776 $ (1,538 )(3)(5)(6) $ 95,238
Income taxes $ 9,137 $

577

(7)

$ 9,714
Net income $ 14,802 $ 961 $ 15,763
Diluted net income per common share $ 1.14 $ 0.08 $ 1.22

(1)

Benefit related to bulk sale of charged-off loans of $1,964

(2)

Exclude executive retirement agreement costs of $533

(3)

Exclude loan system conversion costs of $613 and $1,772 for YTD’15 and YTD’14

(4)

Exclude CEO equity award costs of $1,530

(5)

Benefit related to vacation policy change of $1,388

(6)

Exclude CEO separation costs of $1,154

(7)

Tax effect of the adjustments

Investor Relations

Garrett Edson, 203-682-8331

Source: Regional Management Corp.

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