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
- Net income for the third quarter of 2019 was $12.6 million, a 68.8% increase from the prior-year period. Diluted earnings per share for the third quarter of 2019 was $1.08, compared to $0.61 in the prior-year period. Net income and diluted earnings per share for the prior-year period included hurricane-related impacts of $2.9 million and $0.24, respectively.
-
Total finance receivables as of September 30, 2019 were $1.0 billion, an increase of 17.4%, or $154.1 million, from the prior-year period.
- 18th consecutive quarter of year-over-year double-digit finance receivables growth.
- Total core small and large loan finance receivables increased $178.8 million, or 21.7%, compared to the prior-year period.
- Large loan finance receivables of $554.7 million increased $143.9 million, or 35.0%, from the prior-year period and represented 53.2% of the total loan portfolio. Small loan finance receivables as of September 30, 2019 were $449.4 million, an increase of 8.4% over the prior-year period.
-
Total revenue for the third quarter of 2019 was $91.7 million, a $13.8 million, or 17.7%, increase from the prior-year period.
- 13th consecutive quarter of year-over-year double-digit revenue growth.
- Interest and fee income increased 15.2%, driven by a 17.4% 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 third quarter of 2019 was $24.5 million, an increase of $0.9 million, or 3.7%, from 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 utilization of non-file insurance. The change in business practice had no impact on net income. The third quarter of 2018 included $3.9 million of hurricane-related provision for credit losses that did not recur in the third quarter of 2019.
- Annualized net credit losses as a percentage of average finance receivables 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.
- 30+ day contractual delinquencies as of September 30, 2019 were 6.6%, compared to 7.1% as of September 30, 2018.
- During the third quarter of 2019, the Company repurchased approximately 273,000 shares of its common stock at a weighted-average price of $26.74 per share under the Company’s $25.0 million stock repurchase program. In October 2019, the Company completed the stock repurchase program, having repurchased approximately 938,000 shares in total at a weighted-average price of $26.65 per share.
- Subsequent to quarter-end, the Company completed a third asset-backed securitization, a $130 million note issuance (senior class rated “AA” by DBRS) with a weighted-average coupon of 3.17%.
“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:
- $363.7 million on its $640.0 million senior revolving credit facility,
- $8.6 million on its amortizing loan,
- $91.0 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 2.5 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
|
Average Yield (Annualized) |
Average Finance
|
Average Yield (Annualized) |
Average Finance
|
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 $
|
YoY $
|
|||||||||||||||
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
|
Average Yield (Annualized) |
Average Finance
|
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 |
|||||