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Regional Management Corp. Announces Third Quarter 2019 Results

November 6, 2019 4:15 PM

- Net income of $12.6 million and diluted earnings per share of $1.08 -

- 17.7% revenue growth, driven by 16.3% average finance receivables growth -

- Reached milestone of $1 billion in finance receivables -

- Completed $25 million stock repurchase program in October -

GREENVILLE, S.C.--(BUSINESS WIRE)-- Regional Management Corp. (NYSE: RM) (the “Company”), a diversified consumer finance company, today announced results for the third quarter ended September 30, 2019.

Third Quarter 2019 Highlights

“We are thrilled with our results for the third quarter, delivering very strong top and bottom line double-digit year-over-year growth,” said Peter R. Knitzer, President and Chief Executive Officer of Regional Management. “We had another record quarter of sequential receivable growth, and our core loan portfolio grew by 22% versus the prior year. In addition, we surpassed the $1 billion receivable milestone during the quarter. Our growth in receivables led to another quarter of strong revenue, further validating our hybrid growth strategy.”

“Importantly, our credit quality remained stable and our custom credit scorecards continue to perform as expected, with 30+ day delinquencies down 50 basis points compared to the prior-year period. We expect to receive the benefits from these advanced credit tools in 2020 and beyond,” added Mr. Knitzer. “While we continued to invest in areas like digital, operating expenses as a percentage of receivables improved 60 basis points versus the prior-year period, demonstrating strong control of expenses. We remain well positioned to achieve a second consecutive quarter of double-digit net income growth in the fourth quarter of 2019 and to deliver long-term shareholder value.”

Third Quarter 2019 Results

Finance receivables outstanding at September 30, 2019 were $1.0 billion, a 17.4% increase from $888.1 million in the prior-year period. The finance receivables increase was primarily due to continued strong growth in both the core small and large loan portfolios.

For the third quarter ended September 30, 2019, the Company reported total revenue of $91.7 million, a 17.7% increase from $77.9 million in the prior-year period. Interest and fee income for the third quarter of 2019 was $83.1 million, a 15.2% increase from $72.1 million in the prior-year period, related to steady growth in the small and large loan portfolios.

The provision for credit losses in the third quarter of 2019 was $24.5 million, a $0.9 million, or 3.7%, increase compared to $23.6 million in the prior-year period. The increase was primarily due to $4.0 million of higher net credit losses, including $1.2 million related to the change in business practice to lower the utilization of non-file insurance. The third quarter of 2018 also included $3.9 million of hurricane-related provision for credit losses that did not recur in the third quarter of 2019.

Net credit losses were $20.8 million in the third quarter of 2019, an increase of $4.0 million over the prior-year period. Annualized net credit losses as a percentage of average finance receivables in the third quarter of 2019 were 8.2%, a 50 basis point increase from 7.7% in the prior-year period. Approximately 40 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.

General and administrative expenses for the third quarter of 2019 were $40.2 million, an increase of $4.3 million, or 12.0%, from the prior-year period. The operating expense ratio (annualized general and administrative expenses as a percentage of average finance receivables) was 15.9%, a 60 basis point improvement from the prior-year period. General and administrative expenses for the third quarter of 2019 included $1.1 million of incremental costs related to 12 net new branches that opened since the prior-year period.

Interest expense was $10.3 million in the third quarter of 2019, compared to $8.7 million in the prior-year period. The increase in interest expense was primarily due to larger long-term debt amounts outstanding from the ongoing growth in finance receivables.

Net income for the third quarter of 2019 was $12.6 million, an increase from $7.4 million in the prior-year period. Diluted earnings per share for the third quarter of 2019 was $1.08, an increase from $0.61 in the prior-year period.

2019 De Novo Outlook

As of September 30, 2019, the Company’s branch network consisted of 358 locations. The Company continues to expect to open a total of 15 de novo branches for the full year 2019.

Liquidity and Capital Resources

As of September 30, 2019, the Company had finance receivables of $1.0 billion and outstanding long-term debt of $743.8 million, consisting of:

The Company had a funded debt-to-equity ratio of 2.5 to 1.0 and a shareholder equity ratio of 27.3%, as of September 30, 2019. On a non-GAAP basis, the Company had a funded debt-to-tangible equity ratio of 2.6 to 1.0, as of September 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 (855) 327-6837 (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, November 13, 2019, by telephone at (844) 512-2921 (toll-free) or (412) 317-6671 (international), passcode 10007901. 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; 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 358 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)

3Q 19

3Q 18

$

%

YTD 19

YTD 18

$

%

Revenue

Interest and fee income

$

83,089

$

72,128

$

10,961

15.2

%

$

233,385

$

205,108

$

28,277

13.8

%

Insurance income, net

5,087

2,898

2,189

75.5

%

14,266

9,169

5,097

55.6

%

Other income

3,531

2,890

641

22.2

%

10,078

8,680

1,398

16.1

%

Total revenue

91,707

77,916

13,791

17.7

%

257,729

222,957

34,772

15.6

%

Expenses

Provision for credit losses

24,515

23,640

(875

)

(3.7

)%

73,572

63,358

(10,214

)

(16.1

)%

Personnel

23,791

21,376

(2,415

)

(11.3

)%

68,695

61,994

(6,701

)

(10.8

)%

Occupancy

6,367

5,490

(877

)

(16.0

)%

18,742

16,586

(2,156

)

(13.0

)%

Marketing

2,397

2,132

(265

)

(12.4

)%

6,309

5,843

(466

)

(8.0

)%

Other

7,612

6,863

(749

)

(10.9

)%

22,347

19,245

(3,102

)

(16.1

)%

Total general and administrative

40,167

35,861

(4,306

)

(12.0

)%

116,093

103,668

(12,425

)

(12.0

)%

Interest expense

10,348

8,729

(1,619

)

(18.5

)%

29,840

23,821

(6,019

)

(25.3

)%

Income before income taxes

16,677

9,686

6,991

72.2

%

38,224

32,110

6,114

19.0

%

Income taxes

4,105

2,237

(1,868

)

(83.5

)%

9,175

7,535

(1,640

)

(21.8

)%

Net income

$

12,572

$

7,449

$

5,123

68.8

%

$

29,049

$

24,575

$

4,474

18.2

%

Net income per common share:

Basic

$

1.11

$

0.64

$

0.47

73.4

%

$

2.51

$

2.11

$

0.40

19.0

%

Diluted

$

1.08

$

0.61

$

0.47

77.0

%

$

2.44

$

2.03

$

0.41

20.2

%

Weighted-average shares outstanding:

Basic

11,302

11,672

370

3.2

%

11,572

11,649

77

0.7

%

Diluted

11,677

12,133

456

3.8

%

11,924

12,101

177

1.5

%

Return on average assets (annualized)

4.7

%

3.3

%

3.9

%

3.8

%

Return on average equity (annualized)

17.2

%

11.3

%

13.4

%

12.9

%

Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value amounts)

Increase (Decrease)

3Q 19

3Q 18

$

%

Assets

Cash

$

2,044

$

517

$

1,527

295.4

%

Gross finance receivables

1,404,172

1,175,797

228,375

19.4

%

Unearned finance charges and insurance premiums

(361,986

)

(287,721

)

(74,265

)

(25.8

)%

Finance receivables

1,042,186

888,076

154,110

17.4

%

Allowance for credit losses

(60,900

)

(55,300

)

(5,600

)

(10.1

)%

Net finance receivables

981,286

832,776

148,510

17.8

%

Restricted cash

43,659

29,327

14,332

48.9

%

Lease assets

25,688

—

25,688

100.0

%

Property and equipment

14,512

12,540

1,972

15.7

%

Intangible assets

9,574

10,429

(855

)

(8.2

)%

Deferred tax asset

1,445

—

1,445

100.0

%

Other assets

7,964

7,690

274

3.6

%

Total assets

$

1,086,172

$

893,279

$

12,893

21.6

%

Liabilities and Stockholders’ Equity

Liabilities:

Long-term debt

$

743,835

$

611,593

$

12,242

21.6

%

Unamortized debt issuance costs

(7,828

)

(7,216

)

(612

)

(8.5

)%

Net long-term debt

736,007

604,377

131,630

21.8

%

Lease liabilities

27,714

—

27,714

100.0

%

Accounts payable and accrued expenses

25,764

19,510

6,254

32.1

%

Deferred tax liability

—

1,963

(1,963

)

(100.0

)%

Total liabilities

789,485

625,850

163,635

26.1

%

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, 13,513 shares issued and 11,409 shares outstanding at September 30, 2019 and 13,336 shares issued and 11,790 shares outstanding at September 30, 2018)

1,351

1,334

17

1.3

%

Additional paid-in-capital

101,682

97,814

3,868

4.0

%

Retained earnings

233,146

193,327

39,819

20.6

%

Treasury stock (2,104 shares at September 30, 2019 and 1,546 shares at September 30, 2018)

(39,492

)

(25,046

)

(14,446

)

(57.7

)%

Total stockholders’ equity

296,687

267,429

29,258

10.9

%

Total liabilities and stockholders’ equity

$

1,086,172

$

893,279

$

192,893

21.6

%

Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(in thousands, except per share amounts)

Finance Receivables by Product

3Q 19

2Q 19

QoQ $

Inc (Dec)

QoQ %

Inc (Dec)

3Q 18

YoY $

Inc (Dec)

YoY %

Inc (Dec)

Small loans

$

449,416

$

431,214

$

18,202

4.2

%

$

414,441

$

34,975

8.4

%

Large loans

554,664

498,757

55,907

11.2

%

410,811

143,853

35.0

%

Total core loans

1,004,080

929,971

74,109

8.0

%

825,252

178,828

21.7

%

Automobile loans

12,121

15,686

(3,565

)

(22.7

)%

32,322

(20,201

)

(62.5

)%

Retail loans

25,985

27,777

(1,792

)

(6.5

) %

30,502

(4,517

)

(14.8

)%

Total finance receivables

$

1,042,186

$

973,434

$

68,752

7.1

%

$

888,076

$

154,110

17.4

%

Number of branches at period end.

358

356

2

0.6

%

346

12

3.5

%

Average finance receivables per branch

$

2,911

$

2,734

$

177

6.5

%

$

2,567

$

344

13.4

%

Averages and Yields

3Q 19

2Q 19

3Q 18

Average Finance
Receivables

Average Yield

(Annualized)

Average Finance
Receivables

Average Yield

(Annualized)

Average Finance
Receivables

Average Yield

(Annualized)

Small loans

$

442,137

38.8

%

$

419,349

38.6

%

$

401,132

40.4

%

Large loans

527,670

29.1

%

468,305

28.6

%

401,212

28.6

%

Automobile loans

13,806

15.0

%

17,933

14.6

%

35,845

15.6

%

Retail loans

26,902

19.1

%

28,786

18.8

%

30,861

19.3

%

Total interest and fee yield

$

1,010,515

32.9

%

$

934,373

32.5

%

$

869,050

33.2

%

Total revenue yield

$

1,010,515

36.3

%

$

934,373

36.1

%

$

869,050

35.9

%

Components of Increase in Interest and Fee Income

3Q 19 Compared to 3Q 18

Increase (Decrease)

Volume

Rate

Volume & Rate

Net

Small loans

$

4,143

$

(1,635

)

$

(167

)

$

2,341

Large loans

9,048

504

159

9,711

Automobile loans

(861

)

(59

)

36

(884

)

Retail loans

(191

)

(18

)

2

(207

)

Product mix

(398

)

537

(139

)

—

Total increase in interest and fee income

$

11,741

$

(671

)

$

(109

)

$

10,961

Net Loans Originated (1) (2)

3Q 19

2Q 19

QoQ $

Inc (Dec)

QoQ %

Inc (Dec)

3Q 18

YoY $

Inc (Dec)

YoY %

Inc (Dec)

Small loans

$

177,629

$

174,440

$

3,189

1.8

%

$

162,644

$

14,985

9.2

%

Large loans

166,835

169,373

(2,538

)

(1.5

)%

95,410

71,425

74.9

%

Retail loans

4,421

5,179

(758

)

(14.6

)%

5,971

(1,550

)

(26.0

)%

Total net loans originated

$

348,885

$

348,992

$

(107

)

(0.0

)%

$

264,025

$

84,860

32.1

%

(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

3Q 19

2Q 19

3Q 18

Net credit losses (1) (2)

$

20,815

$

24,914

$

16,790

Percentage of average finance receivables (annualized)

8.2

%

10.7

%

7.7

%

Provision for credit losses (3)

$

24,515

$

25,714

$

23,640

Percentage of average finance receivables (annualized)

9.7

%

11.0

%

10.9

%

Percentage of total revenue

26.7

%

30.5

%

30.3

%

General and administrative expenses

$

40,167

$

37,743

$

35,861

Percentage of average finance receivables (annualized)

15.9

%

16.2

%

16.5

%

Percentage of total revenue

43.8

%

44.8

%

46.0

%

Same store results (4):

Finance receivables at period-end

$

1,021,291

$

956,277

$

886,104

Finance receivable growth rate

15.9

%

12.9

%

14.4

%

Number of branches in calculation

332

333

338

(1)

Includes hurricane-related net credit losses of $1,429 for 2Q 19.

(2)

Includes net credit losses related to lower utilization of non-file insurance of $1,791, $1,745, and $632 for 3Q 19, 2Q 19, and 3Q 18, respectively.

(3)

Includes hurricane-related provision for credit losses of $(571) and $3,900 for 2Q 19 and 3Q 18, respectively.

(4)

Same store sales reflect the change in year-over-year sales for the comparable branch base. The comparable branch base includes those branches open for at least one year.

Contractual Delinquency by Aging

3Q 19

2Q 19

3Q 18

Allowance for credit losses (1)

$

60,900

5.8

%

$

57,200

5.9

%

$

55,300

6.2

%

Current

872,246

83.7

%

805,215

82.7

%

726,003

81.8

%

1 to 29 days past due

101,412

9.7

%

106,017

10.9

%

99,008

11.1

%

Delinquent accounts:

30 to 59 days

22,919

2.3

%

22,082

2.3

%

22,215

2.5

%

60 to 89 days.

16,148

1.5

%

13,961

1.4

%

15,360

1.7

%

90 to 119 days

11,736

1.1

%

9,962

1.1

%

10,183

1.1

%

120 to 149 days

9,676

0.9

%

8,089

0.8

%

8,476

1.0

%

150 to 179 days

8,049

0.8

%

8,108

0.8

%

6,831

0.8

%

Total contractual delinquency (2)

$

68,528

6.6

%

$

62,202

6.4

%

$

63,065

7.1

%

Total finance receivables

$

1,042,186

100.0

%

$

973,434

100.0

%

$

888,076

100.0

%

1 day and over past due

$

169,940

16.3

%

$

168,219

17.3

%

$

162,073

18.2

%

Contractual Delinquency by Product

3Q 19

2Q 19

3Q 18

Small loans

$

36,620

8.1

%

$

33,276

7.7

%

$

34,581

8.3

%

Large loans

28,563

5.1

%

25,447

5.1

%

23,406

5.7

%

Automobile loans

1,153

9.5

%

1,294

8.2

%

2,686

8.3

%

Retail loans

2,192

8.4

%

2,185

7.9

%

2,392

7.8

%

Total contractual delinquency (2)

$

68,528

6.6

%

$

62,202

6.4

%

$

63,065

7.1

%

(1)

Includes incremental hurricane allowance for credit losses of $3,900 in 3Q 18.

(2)

Includes a 0.2% delinquency benefit related to hurricane payment deferrals in 3Q 18.

Income Statement Quarterly Trend

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

QoQ $
B(W)

YoY $
B(W)

Revenue

Interest and fee income

$

72,128

$

75,013

$

74,322

$

75,974

$

83,089

$

7,115

$

10,961

Insurance income, net

2,898

5,624

4,113

5,066

5,087

21

2,189

Other income

2,890

3,112

3,313

3,234

3,531

297

641

Total revenue

77,916

83,749

81,748

84,274

91,707

7,433

13,791

Expenses

Provision for credit losses

23,640

23,698

23,343

25,714

24,515

1,199

(875

)

Personnel

21,376

22,074

22,393

22,511

23,791

(1,280

)

(2,415

)

Occupancy

5,490

5,933

6,165

6,210

6,367

(157

)

(877

)

Marketing

2,132

1,902

1,651

2,261

2,397

(136

)

(265

)

Other

6,863

6,707

7,974

6,761

7,612

(851

)

(749

)

Total general and administrative

35,861

36,616

38,183

37,743

40,167

(2,424

)

(4,306

)

Interest expense

8,729

9,643

9,721

9,771

10,348

(577

)

(1,619

)

Income before income taxes

9,686

13,792

10,501

11,046

16,677

5,631

6,991

Income taxes

2,237

3,022

2,393

2,677

4,105

(1,428

)

(1,868

)

Net income

$

7,449

$

10,770

$

8,108

$

8,369

$

12,572

$

4,203

$

5,123

Net income per common share:

Basic

$

0.64

$

0.92

$

0.69

$

0.71

$

1.11

$

0.40

$

0.47

Diluted

$

0.61

$

0.90

$

0.67

$

0.70

$

1.08

$

0.38

$

0.47

Weighted-average shares outstanding:

Basic

11,672

11,672

11,712

11,706

11,302

404

370

Diluted

12,133

12,010

12,076

12,022

11,677

345

456

Net interest margin

$

69,187

$

74,106

$

72,027

$

74,503

$

81,359

$

6,856

$

12,172

Net credit margin

$

45,547

$

50,408

$

48,684

$

48,789

$

56,844

$

8,055

$

11,297

Balance Sheet Quarterly Trend

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

QoQ $

Inc (Dec)

YoY $

Inc (Dec)

Total assets

$

893,279

$

956,395

$

953,467

$

1,019,316

$

1,086,172

$

66,856

$

192,893

Finance receivables

$

888,076

$

932,243

$

912,250

$

973,434

$

1,042,186

$

68,752

$

154,110

Allowance for credit losses

$

55,300

$

58,300

$

56,400

$

57,200

$

60,900

$

3,700

$

5,600

Long-term debt

$

611,593

$

660,507

$

628,786

$

689,310

$

743,835

$

54,525

$

132,242

Other Key Metrics Quarterly Trend

3Q 18

4Q 18

1Q 19

2Q 19

3Q 19

QoQ

Inc (Dec)

YoY

Inc (Dec)

Interest and fee yield (annualized)

33.2

%

32.9

%

32.1

%

32.5

%

32.9

%

0.4

%

(0.3

)%

Efficiency ratio (1)

46.0

%

43.7

%

46.7

%

44.8

%

43.8

%

(1.0

)%

(2.2

)%

Operating expense ratio (2)

16.5

%

16.1

%

16.5

%

16.2

%

15.9

%

(0.3

)%

(0.6

)%

30+ contractual delinquency

7.1

%

7.7

%

7.0

%

6.4

%

6.6

%

0.2

%

(0.5

)%

Net credit loss (3)

7.7

%

9.1

%

10.9

%

10.7

%

8.2

%

(2.5

)%

0.5

%

Book value per share

$

22.68

$

23.70

$

24.15

$

24.88

$

26.00

$

1.12

$

3.32

(1)

General and administrative expenses as a percentage of total revenue.

(2)

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

(3)

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

Averages and Yields

YTD 19

YTD 18

Average Finance
Receivables

Average Yield

(Annualized)

Average Finance
Receivables

Average Yield

(Annualized)

Small loans

$

431,923

38.5

%

$

379,543

40.2

%

Large loans

478,147

28.6

%

377,777

28.5

%

Automobile loans

18,287

14.8

%

45,041

15.7

%

Retail loans

28,568

18.8

%

31,676

18.9

%

Total interest and fee yield

$

956,925

32.5

%

$

834,037

32.8

%

Total revenue yield

$

956,925

35.9

%

$

834,037

35.6

%

Components of Increase in Interest and Fee Income

YTD 19 Compared to YTD 18

Increase (Decrease)

Volume

Rate

Volume & Rate

Net

Small loans

$

15,793

$

(4,836

)

$

(667

)

$

10,290

Large loans

21,488

174

47

21,709

Automobile loans

(3,150

)

(293

)

174

(3,269

)

Retail loans

(440

)

(14

)

1

(453

)

Product mix

(3,470

)

3,275

195

—

Total increase in interest and fee income

$

30,221

$

(1,694

)

$

(250

)

$

28,277

Net Loans Originated (1) (2)

YTD 19

YTD 18

YTD $

Inc (Dec)

YTD %

Inc (Dec)

Small loans

$

481,314

$

451,423

$

29,891

6.6

%

Large loans

420,276

293,369

126,907

43.3

%

Retail loans

15,797

19,986

(4,189

)

(21.0

)%

Total net loans originated

$

917,387

$

764,778

$

152,609

20.0

%

(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)

$

70,972

$

56,968

Percentage of average finance receivables (annualized)

9.9

%

9.1

%

Provision for credit losses (3)

$

73,572

$

63,358

Percentage of average finance receivables (annualized)

10.3

%

10.1

%

Percentage of total revenue

28.5

%

28.4

%

General and administrative expenses

$

116,093

$

103,668

Percentage of average finance receivables (annualized)

16.2

%

16.6

%

Percentage of total revenue

45.0

%

46.5

%

(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 $5,204 and $1,581 for YTD 19 and YTD 18, respectively.

(3)

Includes hurricane-related provision for credit losses of $(1,275) and $2,919 for YTD 19 and YTD 18, respectively.

Non-GAAP Financial Measures

In addition to financial measures presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures. We utilize non-GAAP measures as additional metrics to aid in, and enhance, the understanding of our financial results. Tangible equity and funded debt-to-tangible equity ratio are non-GAAP measures that adjust GAAP measures to exclude intangible assets. We use these non-GAAP measures to evaluate and manage our capital and leverage position. We also believe that these non-GAAP measures are commonly used in the financial services industry and provide useful information to users of our financial statements in the evaluation of our capital and leverage position. This non-GAAP financial information should be considered in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. In addition, our non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies. The following table provides a reconciliation of GAAP measures to non-GAAP measures.

3Q 19

Long-term debt

$

743,835

Total stockholders’ equity

296,687

Less: Intangible assets

9,574

Tangible equity (non-GAAP)

$

287,113

Funded debt-to-equity ratio

2.51x

Funded debt-to-tangible equity ratio (non-GAAP)

2.59x

Investor Relations

Garrett Edson, (203) 682-8331

Source: Regional Management Corp.

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