GREENVILLE, S.C.--(BUSINESS WIRE)--Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the fourth quarter ended December 31, 2019.
Fourth Quarter 2019 Highlights
- Net income for the fourth quarter of 2019 was $15.7 million, a 45.6% increase from the prior-year period. Diluted earnings per share for the fourth quarter of 2019 was $1.38, compared to $0.90 in the prior-year period.
- Total finance receivables as of December 31, 2019 were $1.1 billion, an increase of 18.5%, or $172.6 million, from the prior-year period.
- 19th consecutive quarter of year-over-year double-digit finance receivables growth.
- Total core small and large loan finance receivables increased $195.4 million, or 22.3%, compared to the prior-year period.
- Large loan finance receivables of $608.6 million increased $170.6 million, or 39.0%, from the prior-year period and represented 55.1% of the total loan portfolio. Small loan finance receivables as of December 31, 2019 were $462.5 million, an increase of 5.7% over the prior-year period.
- Total revenue for the fourth quarter of 2019 was $98.0 million, a $14.2 million, or 17.0%, increase from the prior-year period.
- 14th consecutive quarter of year-over-year double-digit revenue growth.
- Interest and fee income increased 17.0%, driven by a 17.4% increase in average finance receivables compared to the prior-year period.
- Insurance income, net increased $0.9 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 fourth quarter of 2019 was $26.0 million, an increase of $2.3 million, or 9.9%, from the prior-year period. The increase was due to $4.0 million of higher net credit losses, primarily related to growth in finance receivables.
- Annualized net credit losses as a percentage of average finance receivables were 9.2%, a 10 basis point increase from 9.1% in the prior-year period, 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 December 31, 2019 were 7.2%, compared to 7.7% as of December 31, 2018. 30+ day contractual delinquencies as of December 31, 2018 included 0.5% related to hurricane-affected branches. Additionally, 90+ day contractual delinquencies were 3.2%, compared to 3.5% in the prior-year-period.
- In October 2019, 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 extremely proud of our terrific fourth quarter and full year 2019 performance,” said Peter R. Knitzer, President and Chief Executive Officer of Regional Management Corp. “Our team generated record results on both our top and bottom lines, and our finance receivables exceeded the $1.1 billion mark. The expansion of our core loan portfolio continues to fuel our substantial revenue growth, further validating our hybrid strategy of increasing receivables within existing branches while expanding our footprint.”
“Our credit performance also remained stable in the fourth quarter, as finance receivables that have passed our custom scorecard criteria continue to perform in line with our expectations,” added Mr. Knitzer. “In addition, we continued to invest in our business while also prudently managing our expenses, resulting in significant improvements in our efficiency and operating expense ratios. We exited 2019 in the strongest position in Regional’s history, and we remain primed to succeed and create value in 2020 and over the longer term.”
Fourth Quarter 2019 Results
Finance receivables outstanding at December 31, 2019 were $1.1 billion, an 18.5% increase from $932.2 million in the prior-year period. The increase was primarily due to continued strong growth in both the core small and large loan portfolios.
For the fourth quarter ended December 31, 2019, the company reported total revenue of $98.0 million, a 17.0% increase from $83.7 million in the prior-year period. Interest and fee income for the fourth quarter of 2019 was $87.8 million, a 17.0% increase from $75.0 million in the prior-year period, related to ongoing growth in the core small and large loan portfolios.
The provision for credit losses in the fourth quarter of 2019 was $26.0 million, a $2.3 million, or 9.9%, increase compared to $23.7 million in the prior-year period. The increase was primarily due to $4.0 million of higher net credit losses, including an additional $0.6 million related to the change in business practice to lower the utilization of non-file insurance. The change in business practice had no impact on net income.
Net credit losses were $24.7 million in the fourth quarter of 2019, an increase of $4.0 million over the prior-year period, primarily related to growth in finance receivables. Annualized net credit losses as a percentage of average finance receivables in the fourth quarter of 2019 were 9.2%, a 10 basis point increase from 9.1% in the prior-year period. This 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 fourth quarter of 2019 were $40.9 million, an increase of $4.3 million, or 11.7%, from the prior-year period. The operating expense ratio (annualized general and administrative expenses as a percentage of average finance receivables) was 15.3%, an 80 basis point improvement from the prior-year period. General and administrative expenses for the fourth quarter of 2019 included $0.6 million of incremental costs related to new branches that opened since the prior-year period.
Interest expense was $10.3 million in the fourth quarter of 2019, compared to $9.6 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 fourth quarter of 2019 was $15.7 million, an increase from $10.8 million in the prior-year period. Diluted earnings per share for the fourth quarter of 2019 was $1.38, an increase from $0.90 in the prior-year period.
First Quarter 2020 Developments
As previously disclosed, effective January 1, 2020, Regional replaced its previous incurred loss impairment model for estimating credit losses on financial assets with a current expected credit loss (“CECL”) model. As a result, on January 1, 2020, the company incurred an increase in its allowance for credit losses of $60 million and a one-time, cumulative reduction in retained earnings of approximately $46 million (net of $14 million in taxes). Regional’s allowance for credit losses as a percentage of finance receivables increased from 5.6% on December 31, 2019 to 10.8% on January 1, 2020. The adoption of CECL did not cause the company to violate any of its existing debt covenants and will not inhibit the company in funding its growth or returning capital to its shareholders.
In addition, in January 2020, Regional experienced an isolated information technology infrastructure event that caused an extended outage of its loan management system. The company has determined that an inadvertent operational failure in IT allowed a system back-up process to run concurrently and inappropriately with normal nightly processes, resulting in the event. The outage affected the company’s ability to originate branch loans and process certain types of payments. However, during that time, all branches remained open, serviced customers, and accepted payments via cash, personal check, money order, and certain electronic payment methods. The outage did not impact the security of customer information or the integrity of company and customer data. The event also did not involve an external breach or the compromise of data by any third party. Regional, with the assistance of third party experts, addressed and resolved the issue and is confident that it will not occur again. The loan management system has functioned normally since its restoration, and all branches have been fully operational.
While the event did not impact Regional’s fourth quarter 2019 financial results, the company expects that the outage will adversely impact net income by approximately $1.3 million in the first quarter of 2020 and by an additional $0.3 million throughout the remainder of the year. Management is also evaluating the event in relation to its 2019 year-end assessment of internal controls.
2020 De Novo Outlook
As of December 31, 2019, the company’s branch network consisted of 366 locations. The company continues to expect to open a total of between 25 and 30 de novo branches for the full year 2020.
Liquidity and Capital Resources
As of December 31, 2019, the company had finance receivables of $1.1 billion and outstanding long-term debt of $808.2 million ($805.8 million of outstanding debt and $2.4 million of interest payable), consisting of:
- $349.3 million on its $640.0 million senior revolving credit facility,
- $46.4 million on its $125.0 million revolving warehouse credit facility, and
- $410.1 million through its asset-backed securitizations.
The company’s unused capacity on its revolving credit facilities (subject to the borrowing base) was $369.3 million, or 48.3%, as of December 31, 2019.
The company had a funded debt-to-equity ratio of 2.7 to 1.0 and a shareholder equity ratio of 26.1% as of December 31, 2019. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 2.8 to 1.0 as of December 31, 2019. Please refer to the reconciliations of non-GAAP measures to comparable GAAP measures included at the end of this press release.
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’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’s website at www.RegionalManagement.com.
A replay will be available following the end of the call through Tuesday, March 3, 2020, by telephone at (844) 512-2921 (toll-free) or (412) 317-6671 (international), passcode 10008628. A webcast replay of the call will be available at www.RegionalManagement.com for one year following the call.
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 366 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.
Forward-Looking Statements
This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact but instead represent Regional Management Corp.’s expectations or beliefs concerning future events. Forward-looking statements include, without limitation, statements concerning future plans, objectives, goals, projections, strategies, events, or performance, and underlying assumptions and other statements related thereto. 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 speak only as of the date on which they were made and are about matters that are inherently subject to risks and uncertainties, many of which are outside of the control of Regional Management. As a result, actual performance and results may differ materially from those contemplated by these forward-looking statements. Therefore, investors should not place undue reliance on forward-looking statements.
Factors that could cause actual results or performance to differ from the expectations expressed or implied in 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 ability to timely and effectively implement, transition to, and maintain the necessary information technology systems, infrastructure, processes, and controls to support its operations and initiatives; risks associated with Regional Management’s loan origination and servicing software system, including the risk of prolonged system outages; 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; changes in accounting standards, rules, and interpretations, and the failure of related assumptions and estimates, including those associated with the implementation of current expected credit loss (CECL) accounting; the impact of changes in tax laws, guidance, and interpretations; 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.
The foregoing factors and others are discussed in greater detail in Regional Management’s filings with the Securities and Exchange Commission. Regional Management will not update or revise forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events or the non-occurrence of anticipated events, whether as a result of new information, future developments, or otherwise, except as required by law. Regional Management is not responsible for changes made to this document by wire services or Internet services.
Regional Management Corp. and Subsidiaries |
||||||||||||||||||||||||||||||
Consolidated Statements of Income |
||||||||||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||||||||||
(in thousands, except per share amounts) |
||||||||||||||||||||||||||||||
|
|
|
|
|
Better (Worse) |
|
|
|
|
|
Better (Worse) |
|||||||||||||||||||
|
4Q 19 |
|
4Q 18 |
|
$ |
|
% |
|
FY 19 |
|
FY 18 |
|
$ |
|
% |
|||||||||||||||
Revenue |
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Interest and fee income |
$ |
87,784 |
|
$ |
75,013 |
|
$ |
12,771 |
|
17.0 |
% |
$ |
321,169 |
|
$ |
280,121 |
|
$ |
41,048 |
|
14.7 |
% |
||||||||
Insurance income, net |
|
6,551 |
|
|
5,624 |
|
|
927 |
|
16.5 |
% |
|
20,817 |
|
|
14,793 |
|
|
6,024 |
|
40.7 |
% |
||||||||
Other income |
|
3,649 |
|
|
3,112 |
|
|
537 |
|
17.3 |
% |
|
13,727 |
|
|
11,792 |
|
|
1,935 |
|
16.4 |
% |
||||||||
Total revenue |
|
97,984 |
|
|
83,749 |
|
|
14,235 |
|
17.0 |
% |
|
355,713 |
|
|
306,706 |
|
|
49,007 |
|
16.0 |
% |
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Expenses |
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Provision for credit losses |
|
26,039 |
|
|
23,698 |
|
|
(2,341 |
) |
(9.9 |
)% |
|
99,611 |
|
|
87,056 |
|
|
(12,555 |
) |
(14.4 |
)% |
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Personnel |
|
25,305 |
|
|
22,074 |
|
|
(3,231 |
) |
(14.6 |
) % |
|
94,000 |
|
|
84,068 |
|
|
(9,932 |
) |
(11.8 |
) % |
||||||||
Occupancy |
|
5,876 |
|
|
5,933 |
|
|
57 |
|
1.0 |
% |
|
24,618 |
|
|
22,519 |
|
|
(2,099 |
) |
(9.3 |
) % |
||||||||
Marketing |
|
1,897 |
|
|
1,902 |
|
|
5 |
|
0.3 |
% |
|
8,206 |
|
|
7,745 |
|
|
(461 |
) |
(6.0 |
) % |
||||||||
Other |
|
7,813 |
|
|
6,707 |
|
|
(1,106 |
) |
(16.5 |
) % |
|
30,160 |
|
|
25,952 |
|
|
(4,208 |
) |
(16.2 |
) % |
||||||||
Total general and administrative |
|
40,891 |
|
|
36,616 |
|
|
(4,275 |
) |
(11.7 |
) % |
|
156,984 |
|
|
140,284 |
|
|
(16,700 |
) |
(11.9 |
) % |
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Interest expense |
|
10,285 |
|
|
9,643 |
|
|
(642 |
) |
(6.7 |
) % |
|
40,125 |
|
|
33,464 |
|
|
(6,661 |
) |
(19.9 |
) % |
||||||||
Income before income taxes |
|
20,769 |
|
|
13,792 |
|
|
6,977 |
|
50.6 |
% |
|
58,993 |
|
|
45,902 |
|
|
13,091 |
|
28.5 |
% |
||||||||
Income taxes |
|
5,086 |
|
|
3,022 |
|
|
(2,064 |
) |
(68.3 |
) % |
|
14,261 |
|
|
10,557 |
|
|
(3,704 |
) |
(35.1 |
) % |
||||||||
Net income |
$ |
15,683 |
|
$ |
10,770 |
|
$ |
4,913 |
|
45.6 |
% |
$ |
44,732 |
|
$ |
35,345 |
|
$ |
9,387 |
|
26.6 |
% |
||||||||
Net income per common share: |
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Basic |
$ |
1.44 |
|
$ |
0.92 |
|
$ |
0.52 |
|
56.5 |
% |
$ |
3.92 |
|
$ |
3.03 |
|
$ |
0.89 |
|
29.4 |
% |
||||||||
Diluted |
$ |
1.38 |
|
$ |
0.90 |
|
$ |
0.48 |
|
53.3 |
% |
$ |
3.80 |
|
$ |
2.93 |
|
$ |
0.87 |
|
29.7 |
% |
||||||||
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Basic |
|
10,893 |
|
|
11,672 |
|
|
779 |
|
6.7 |
% |
|
11,401 |
|
|
11,655 |
|
|
254 |
|
2.2 |
% |
||||||||
Diluted |
|
11,327 |
|
|
12,010 |
|
|
683 |
|
5.7 |
% |
|
11,773 |
|
|
12,078 |
|
|
305 |
|
2.5 |
% |
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Return on average assets (annualized) |
|
5.6 |
% |
|
4.6 |
% |
|
|
|
4.3 |
% |
|
4.0 |
% |
|
|
||||||||||||||
Return on average equity (annualized) |
|
21.1 |
% |
|
15.7 |
% |
|
|
|
15.4 |
% |
|
13.6 |
% |
|
|
||||||||||||||
Regional Management Corp. and Subsidiaries |
|||||||||||||||
Consolidated Balance Sheets |
|||||||||||||||
(Unaudited) |
|||||||||||||||
(in thousands, except par value amounts) |
|||||||||||||||
|
|
|
|
|
|
|
Increase (Decrease) |
||||||||
|
4Q 19 |
|
|
4Q 18 |
|
|
$ |
|
|
% |
|||||
|
|
|
|
||||||||||||
Assets |
|
|
|
|
|||||||||||
Cash |
$ |
2,263 |
$ |
3,657 |
$ |
(1,394 |
) |
(38.1 |
)% |
||||||
Gross finance receivables |
1,500,962 |
|
1,237,526 |
263,436 |
21.3 |
% |
|||||||||
Unearned finance charges and insurance premiums |
(396,149 |
) |
|
(305,283 |
) |
(90,866 |
) |
(29.8 |
)% |
||||||
Finance receivables |
|
1,104,813 |
|
932,243 |
|
172,570 |
18.5 |
% |
|||||||
Allowance for credit losses |
|
(62,200 |
) |
(58,300 |
) |
|
(3,900 |
) |
(6.7 |
)% |
|||||
Net finance receivables |
|
1,042,613 |
|
|
873,943 |
|
|
168,670 |
|
19.3 |
% |
||||
Restricted cash |
|
54,164 |
|
|
46,484 |
|
|
7,680 |
|
16.5 |
% |
||||
Lease assets |
|
26,438 |
|
— |
|
26,438 |
|
100.0 |
% |
||||||
Property and equipment |
15,301 |
13,926 |
|
1,375 |
9.9 |
% |
|||||||||
Intangible assets |
|
9,438 |
|
|
10,010 |
(572 |
) |
(5.7 |
)% |
||||||
Deferred tax asset |
619 |
— |
619 |
100.0 |
% |
||||||||||
Other assets |
|
7,704 |
|
|
8,375 |
|
(671 |
) |
(8.0 |
)% |
|||||
Total assets |
$ |
1,158,540 |
|
$ |
956,395 |
|
$ |
202,145 |
|
21.1 |
% |
||||
Liabilities and Stockholders’ Equity |
|
|
|
|
|||||||||||
Liabilities: |
|
|
|
|
|||||||||||
Long-term debt |
$ |
808,218 |
$ |
660,507 |
$ |
147,711 |
22.4 |
% |
|||||||
Unamortized debt issuance costs |
|
(9,607 |
) |
(9,158 |
) |
|
(449 |
) |
(4.9 |
)% |
|||||
|
|
|
|
|
|||||||||||
Net long-term debt |
|
798,611 |
|
|
651,349 |
|
|
147,262 |
|
22.6 |
% |
||||
Accounts payable and accrued expenses |
|
28,676 |
|
|
25,138 |
|
|
3,538 |
|
14.1 |
% |
||||
Lease liabilities |
|
28,470 |
— |
|
28,470 |
100.0 |
% |
||||||||
Deferred tax liability |
— |
|
747 |
|
|
(747 |
) |
(100.0 |
)% |
||||||
|
|
|
|
|
|||||||||||
Total liabilities |
|
855,757 |
|
|
677,234 |
|
|
178,523 |
|
26.4 |
% |
||||
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, 13,497 shares issued and 11,013 shares outstanding at December 31, 2019 and 13,323 shares issued and 11,777 shares outstanding at December 31, 2018) |
|
1,350 |
|
|
1,332 |
|
|
18 |
|
1.4 |
% |
||||
Additional paid-in-capital |
|
102,678 |
|
|
98,778 |
|
|
3,900 |
|
3.9 |
% |
||||
Retained earnings |
|
248,829 |
204,097 |
|
44,732 |
21.9 |
% |
||||||||
Treasury stock (2,484 shares at December 31, 2019 and 1,546 shares at December 31, 2018) |
|
(50,074 |
) |
|
(25,046 |
) |
|
(25,028 |
) |
(99.9 |
)% |
||||
|
|
|
|
|
|||||||||||
Total stockholders’ equity |
|
302,783 |
|
|
279,161 |
|
|
23,622 |
|
8.5 |
% |
||||
Total liabilities and stockholders’ equity |
$ |
1,158,540 |
|
$ |
956,395 |
|
$ |
202,145 |
|
21.1 |
% |
||||
Regional Management Corp. and Subsidiaries |
|||||||||||||||||||||||
Selected Financial Data |
|||||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||||
(in thousands, except per share amounts) |
|||||||||||||||||||||||
|
Finance Receivables by Product |
||||||||||||||||||||||
|
|
|
|
|
QoQ $ |
|
QoQ % |
|
|
|
YoY $ |
|
YoY % |
||||||||||
4Q 19 |
|
3Q 19 |
|
Inc (Dec) |
|
Inc (Dec) |
|
4Q 18 |
|
Inc (Dec) |
|
Inc (Dec) |
|||||||||||
Small loans |
$ |
462,499 |
$ |
449,416 |
$ |
13,083 |
|
2.9 |
% |
$ |
437,662 |
$ |
24,837 |
|
5.7 |
% |
|||||||
Large loans |
|
608,608 |
|
554,664 |
|
53,944 |
|
9.7 |
% |
|
437,998 |
|
170,610 |
|
39.0 |
% |
|||||||
Total core loans |
|
1,071,107 |
|
1,004,080 |
|
67,027 |
|
6.7 |
% |
|
875,660 |
|
195,447 |
|
22.3 |
% |
|||||||
Automobile loans |
|
9,623 |
|
12,121 |
|
(2,498 |
) |
(20.6 |
)% |
|
26,154 |
|
(16,531 |
) |
(63.2 |
)% |
|||||||
Retail loans |
|
24,083 |
|
25,985 |
|
(1,902 |
) |
(7.3 |
)% |
|
30,429 |
|
(6,346 |
) |
(20.9 |
)% |
|||||||
Total finance receivables |
$ |
1,104,813 |
$ |
1,042,186 |
$ |
62,627 |
|
6.0 |
% |
$ |
932,243 |
$ |
172,570 |
|
18.5 |
% |
|||||||
|
|
|
|
|
|
|
|
||||||||||||||||
Number of branches at period end |
|
366 |
|
358 |
|
8 |
|
2.2 |
% |
|
359 |
|
7 |
|
1.9 |
% |
|||||||
Average finance receivables per branch |
$ |
3,019 |
$ |
2,911 |
$ |
108 |
|
3.7 |
% |
$ |
2,597 |
$ |
422 |
|
16.2 |
% |
|||||||
|
Averages and Yields |
|||||||||||||||||||||
|
4Q 19 |
3Q 19 |
4Q 18 |
|||||||||||||||||||
Average Finance |
Average Yield |
Average Finance |
Average Yield |
Average Finance |
Average Yield |
|||||||||||||||||
Receivables |
(Annualized) |
Receivables |
(Annualized) |
Receivables |
(Annualized) |
|||||||||||||||||
Small loans |
$ |
453,490 |
38.5 |
% |
$ |
442,137 |
38.8 |
% |
$ |
426,901 |
39.5 |
% |
||||||||||
Large loans |
|
581,913 |
29.2 |
% |
|
527,670 |
29.1 |
% |
|
425,948 |
28.4 |
% |
||||||||||
Automobile loans |
|
10,734 |
14.8 |
% |
|
13,806 |
15.0 |
% |
|
29,114 |
15.0 |
% |
||||||||||
Retail loans |
|
25,128 |
19.4 |
% |
|
26,902 |
19.1 |
% |
|
30,555 |
19.1 |
% |
||||||||||
Total interest and fee yield |
$ |
1,071,265 |
32.8 |
% |
$ |
1,010,515 |
32.9 |
% |
$ |
912,518 |
32.9 |
% |
||||||||||
Total revenue yield |
$ |
1,071,265 |
36.6 |
% |
$ |
1,010,515 |
36.3 |
% |
$ |
912,518 |
36.7 |
% |
||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
Components of Increase in Interest and Fee Income |
||||||||||||||
|
|
|
|
|
|
4Q 19 Compared to 4Q 18 |
||||||||||||||
|
|
|
|
|
|
Increase (Decrease) |
||||||||||||||
|
|
|
|
|
|
Volume |
|
Rate |
|
Volume & Rate |
|
Net |
||||||||
|
|
|
|
Small loans |
|
$ |
2,628 |
|
|
$ |
(1,121 |
) |
|
$ |
(70 |
) |
|
$ |
1,437 |
|
|
|
|
|
Large loans |
|
|
11,080 |
|
|
|
874 |
|
|
|
320 |
|
|
|
12,274 |
|
|
|
|
|
Automobile loans |
|
|
(690 |
) |
|
|
(19 |
) |
|
|
12 |
|
|
|
(697 |
) |
|
|
|
|
Retail loans |
|
|
(259 |
) |
|
|
20 |
|
|
|
(4 |
) |
|
|
(243 |
) |
|
|
|
|
Product mix |
|
|
291 |
|
|
|
9 |
|
|
|
(300 |
) |
|
— |
|
|
|
|
|
|
Total increase in interest and fee income |
|
$ |
13,050 |
|
|
$ |
(237 |
) |
|
$ |
(42 |
) |
|
$ |
12,771 |
|
|
Net Loans Originated (1) (2) |
||||||||||||||||||||||||||
|
|
|
QoQ $ |
QoQ % |
|
YoY $ |
YoY % |
||||||||||||||||||||
4Q 19 |
3Q 19 |
Inc (Dec) |
Inc (Dec) |
4Q 18 |
Inc (Dec) |
Inc (Dec) |
|||||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Small loans |
$ |
180,967 |
$ |
177,629 |
$ |
3,338 |
|
1.9 |
% |
$ |
172,820 |
$ |
8,147 |
|
4.7 |
% |
|||||||||||
Large loans |
|
174,341 |
|
166,835 |
|
7,506 |
|
4.5 |
% |
|
115,805 |
|
58,536 |
|
50.5 |
% |
|||||||||||
Retail loans |
|
3,833 |
|
4,421 |
|
(588 |
) |
(13.3 |
)% |
|
6,593 |
|
(2,760 |
) |
(41.9 |
)% |
|||||||||||
Total net loans originated |
$ |
359,141 |
$ |
348,885 |
$ |
10,256 |
|
2.9 |
% |
$ |
295,218 |
$ |
63,923 |
|
21.7 |
% |
|||||||||||
(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 |
|||||||||||||||
4Q 19 |
3Q 19 |
4Q 18 |
||||||||||||||
Net credit losses (1) (2) |
$ |
24,739 |
|
$ |
20,815 |
|
$ |
20,698 |
|
|||||||
Percentage of average finance receivables (annualized) |
|
9.2 |
% |
|
8.2 |
% |
|
9.1 |
% |
|||||||
|
|
|
|
|||||||||||||
Provision for credit losses (3) |
$ |
26,039 |
|
$ |
24,515 |
|
$ |
23,698 |
|
|||||||
Percentage of average finance receivables (annualized) |
|
9.7 |
% |
|
9.7 |
% |
|
10.4 |
% |
|||||||
Percentage of total revenue |
|
26.6 |
% |
|
26.7 |
% |
|
28.3 |
% |
|||||||
|
|
|
|
|||||||||||||
General and administrative expenses |
$ |
40,891 |
|
$ |
40,167 |
|
$ |
36,616 |
|
|||||||
Percentage of average finance receivables (annualized) |
|
15.3 |
% |
|
15.9 |
% |
|
16.1 |
% |
|||||||
Percentage of total revenue |
|
41.7 |
% |
|
43.8 |
% |
|
43.7 |
% |
|||||||
|
|
|
|
|||||||||||||
Same store results (4): |
|
|
|
|||||||||||||
Finance receivables at period-end |
$ |
1,082,050 |
|
$ |
1,021,291 |
|
$ |
925,621 |
|
|||||||
Finance receivable growth rate |
|
16.7 |
% |
|
15.9 |
% |
|
13.7 |
% |
|||||||
Number of branches in calculation |
|
337 |
|
|
332 |
|
|
337 |
|
|||||||
(1) |
Includes hurricane-related net credit losses of $117 for 4Q 18. |
||||
(2) |
Includes net credit losses related to lower utilization of non-file insurance of $2,405, $1,791, and $1,781 for 4Q 19, 3Q 19, and 4Q 18, respectively. |
||||
(3) |
Includes hurricane-related provision for credit losses of $(183) for 4Q 18. |
||||
(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 |
|||||||||||||||||
|
4Q 19 |
3Q 19 |
4Q 18 |
|||||||||||||||
Allowance for credit losses (1) |
$ |
62,200 |
5.6 |
% |
$ |
60,900 |
5.8 |
% |
$ |
58,300 |
6.3 |
% |
||||||
|
|
|
|
|
|
|
||||||||||||
Current |
|
921,856 |
83.4 |
% |
|
872,246 |
83.7 |
% |
|
754,162 |
80.9 |
% |
||||||
1 to 29 days past due |
|
103,925 |
9.4 |
% |
|
101,412 |
9.7 |
% |
|
105,920 |
11.4 |
% |
||||||
Delinquent accounts: |
|
|
|
|
|
|
||||||||||||
30 to 59 days |
|
25,110 |
2.3 |
% |
|
22,919 |
2.3 |
% |
|
22,529 |
2.3 |
% |
||||||
60 to 89 days |
|
18,665 |
1.7 |
% |
|
16,148 |
1.5 |
% |
|
17,382 |
1.9 |
% |
||||||
90 to 119 days |
|
13,836 |
1.3 |
% |
|
11,736 |
1.1 |
% |
|
12,279 |
1.3 |
% |
||||||
120 to 149 days |
|
11,595 |
1.0 |
% |
|
9,676 |
0.9 |
% |
|
10,890 |
1.2 |
% |
||||||
150 to 179 days |
|
9,826 |
0.9 |
% |
|
8,049 |
0.8 |
% |
|
9,081 |
1.0 |
% |
||||||
|
|
|
|
|
|
|
||||||||||||
Total contractual delinquency (2) |
$ |
79,032 |
7.2 |
% |
$ |
68,528 |
6.6 |
% |
$ |
72,161 |
7.7 |
% |
||||||
Total finance receivables |
$ |
1,104,813 |
100.0 |
% |
$ |
1,042,186 |
100.0 |
% |
$ |
932,243 |
100.0 |
% |
||||||
|
|
|
|
|
|
|
||||||||||||
1 day and over past due |
$ |
182,957 |
16.6 |
% |
$ |
169,940 |
16.3 |
% |
$ |
178,081 |
19.1 |
% |
||||||
|
|
|
|
|
|
|
||||||||||||
|
Contractual Delinquency by Product |
|||||||||||||||||
4Q 19 |
3Q 19 |
4Q 18 |
||||||||||||||||
Small loans |
$ |
42,265 |
9.1 |
% |
$ |
36,620 |
8.1 |
% |
$ |
40,663 |
9.3 |
% |
||||||
Large loans |
|
33,554 |
5.5 |
% |
|
28,563 |
5.1 |
% |
|
26,814 |
6.1 |
% |
||||||
Automobile loans |
|
754 |
7.8 |
% |
|
1,153 |
9.5 |
% |
|
2,083 |
8.0 |
% |
||||||
Retail loans |
|
2,459 |
10.2 |
% |
|
2,192 |
8.4 |
% |
|
2,601 |
8.5 |
% |
||||||
|
|
|
|
|
|
|
||||||||||||
Total contractual delinquency (2) |
$ |
79,032 |
7.2 |
% |
$ |
68,528 |
6.6 |
% |
$ |
72,161 |
7.7 |
% |
||||||
(1) |
Includes incremental hurricane allowance for credit losses of $3,600 in 4Q 18. |
(2) |
Includes 0.5% delinquency related to hurricane-affected branches in 4Q 18. |
|
Income Statement Quarterly Trend |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
QoQ $ |
|
YoY $ |
||||||||||
4Q 18 |
|
1Q 19 |
|
2Q 19 |
|
3Q 19 |
|
4Q 19 |
|
B(W) |
|
B(W) |
|||||||||||
|
|
||||||||||||||||||||||
Revenue |
|
|
|
|
|
|
|
||||||||||||||||
Interest and fee income |
$ |
75,013 |
$ |
74,322 |
$ |
75,974 |
$ |
83,089 |
$ |
87,784 |
$ |
4,695 |
|
$ |
12,771 |
|
|||||||
Insurance income, net |
|
5,624 |
|
4,113 |
|
5,066 |
|
5,087 |
|
6,551 |
|
1,464 |
|
|
927 |
|
|||||||
Other income |
|
3,112 |
|
3,313 |
|
3,234 |
|
3,531 |
|
3,649 |
|
118 |
|
|
537 |
|
|||||||
Total revenue |
|
83,749 |
|
81,748 |
|
84,274 |
|
91,707 |
|
97,984 |
|
6,277 |
|
|
14,235 |
|
|||||||
|
|
|
|
|
|
|
|
||||||||||||||||
Expenses |
|
|
|
|
|
|
|
||||||||||||||||
Provision for credit losses |
|
23,698 |
|
23,343 |
|
25,714 |
|
24,515 |
|
26,039 |
|
(1,524 |
) |
|
(2,341 |
) |
|||||||
|
|
|
|
|
|
|
|
||||||||||||||||
Personnel |
|
22,074 |
|
22,393 |
|
22,511 |
|
23,791 |
|
25,305 |
|
(1,514 |
) |
|
(3,231 |
) |
|||||||
Occupancy |
|
5,933 |
|
6,165 |
|
6,210 |
|
6,367 |
|
5,876 |
|
491 |
|
|
57 |
|
|||||||
Marketing |
|
1,902 |
|
1,651 |
|
2,261 |
|
2,397 |
|
1,897 |
|
500 |
|
|
5 |
|
|||||||
Other |
|
6,707 |
|
7,974 |
|
6,761 |
|
7,612 |
|
7,813 |
|
(201 |
) |
|
(1,106 |
) |
|||||||
Total general and administrative |
|
36,616 |
|
38,183 |
|
37,743 |
|
40,167 |
|
40,891 |
|
(724 |
) |
|
(4,275 |
) |
|||||||
|
|
|
|
|
|
|
|
||||||||||||||||
Interest expense |
|
9,643 |
|
9,721 |
|
9,771 |
|
10,348 |
|
10,285 |
|
63 |
|
|
(642 |
) |
|||||||
Income before income taxes |
|
13,792 |
|
10,501 |
|
11,046 |
|
16,677 |
|
20,769 |
|
4,092 |
|
|
6,977 |
|
|||||||
Income taxes |
|
3,022 |
|
2,393 |
|
2,677 |
|
4,105 |
|
5,086 |
|
(981 |
) |
|
(2,064 |
) |
|||||||
Net income |
$ |
10,770 |
$ |
8,108 |
$ |
8,369 |
$ |
12,572 |
$ |
15,683 |
$ |
3,111 |
|
$ |
4,913 |
|
|||||||
Net income per common share: |
|
|
|
|
|
|
|
||||||||||||||||
Basic |
$ |
0.92 |
$ |
0.69 |
$ |
0.71 |
$ |
1.11 |
$ |
1.44 |
$ |
0.33 |
|
$ |
0.52 |
|
|||||||
Diluted |
$ |
0.90 |
$ |
0.67 |
$ |
0.70 |
$ |
1.08 |
$ |
1.38 |
$ |
0.30 |
|
$ |
0.48 |
|
|||||||
|
|
|
|
|
|
|
|
||||||||||||||||
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
||||||||||||||||
Basic |
|
11,672 |
|
11,712 |
|
11,706 |
|
11,302 |
|
10,893 |
|
409 |
|
|
779 |
|
|||||||
Diluted |
|
12,010 |
|
12,076 |
|
12,022 |
|
11,677 |
|
11,327 |
|
350 |
|
|
683 |
|
|||||||
|
|
|
|
|
|
|
|
||||||||||||||||
Net interest margin |
$ |
74,106 |
$ |
72,027 |
$ |
74,503 |
$ |
81,359 |
$ |
87,699 |
$ |
6,340 |
|
$ |
13,593 |
|
|||||||
Net credit margin |
$ |
50,408 |
$ |
48,684 |
$ |
48,789 |
$ |
56,844 |
$ |
61,660 |
$ |
4,816 |
|
$ |
11,252 |
|
|||||||
|
|
|
|
|
|
|
|
||||||||||||||||
|
Balance Sheet Quarterly Trend |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
QoQ $ |
|
YoY $ |
||||||||||
4Q 18 |
|
1Q 19 |
|
2Q 19 |
|
3Q 19 |
|
4Q 19 |
|
Inc (Dec) |
|
Inc (Dec) |
|||||||||||
|
|
||||||||||||||||||||||
Total assets |
$ |
956,395 |
$ |
953,467 |
$ |
1,019,316 |
$ |
1,086,172 |
$ |
1,158,540 |
$ |
72,368 |
|
$ |
202,145 |
|
|||||||
Finance receivables |
$ |
932,243 |
$ |
912,250 |
$ |
973,434 |
$ |
1,042,186 |
$ |
1,104,813 |
$ |
62,627 |
|
$ |
172,570 |
|
|||||||
Allowance for credit losses |
$ |
58,300 |
$ |
56,400 |
$ |
57,200 |
$ |
60,900 |
$ |
62,200 |
$ |
1,300 |
|
$ |
3,900 |
|
|||||||
Long-term debt |
$ |
660,507 |
$ |
628,786 |
$ |
689,310 |
$ |
743,835 |
$ |
808,218 |
$ |
64,383 |
|
$ |
147,711 |
|
|||||||
|
Other Key Metrics Quarterly Trend |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
QoQ |
|
YoY |
|||||||||||||||
4Q 18 |
|
1Q 19 |
|
2Q 19 |
|
3Q 19 |
|
4Q 19 |
|
Inc (Dec) |
|
Inc (Dec) |
||||||||||||||||
|
|
|||||||||||||||||||||||||||
Interest and fee yield (annualized) |
|
32.9 |
% |
|
32.1 |
% |
|
32.5 |
% |
|
32.9 |
% |
|
32.8 |
% |
|
(0.1 |
)% |
|
(0.1 |
)% |
|||||||
Efficiency ratio (1) |
|
43.7 |
% |
|
46.7 |
% |
|
44.8 |
% |
|
43.8 |
% |
|
41.7 |
% |
|
(2.1 |
)% |
|
(2.0 |
)% |
|||||||
Operating expense ratio (2) |
|
16.1 |
% |
|
16.5 |
% |
|
16.2 |
% |
|
15.9 |
% |
|
15.3 |
% |
|
(0.6 |
)% |
|
(0.8 |
)% |
|||||||
30+ contractual delinquency |
|
7.7 |
% |
|
7.0 |
% |
|
6.4 |
% |
|
6.6 |
% |
|
7.2 |
% |
|
0.6 |
% |
|
(0.5 |
)% |
|||||||
Net credit loss ratio (3) |
|
9.1 |
% |
|
10.9 |
% |
|
10.7 |
% |
|
8.2 |
% |
|
9.2 |
% |
|
1.0 |
% |
|
0.1 |
% |
|||||||
Book value per share |
$ |
23.70 |
|
$ |
24.15 |
|
$ |
24.88 |
|
$ |
26.00 |
|
$ |
27.49 |
|
$ |
1.49 |
|
$ |
3.79 |
|
|||||||
(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 |
|||||||||||
|
FY 19 |
|
FY 18 |
|||||||||
|
Average Finance |
|
|
|
Average Finance |
|
|
|||||
Receivables |
|
Average Yield |
|
Receivables |
|
Average Yield |
||||||
Small loans |
$ |
437,358 |
38.5 |
% |
$ |
391,481 |
40.0 |
% |
||||
Large loans |
|
504,302 |
28.8 |
% |
|
389,919 |
28.5 |
% |
||||
Automobile loans |
|
16,384 |
14.8 |
% |
|
41,026 |
15.6 |
% |
||||
Retail loans |
|
27,701 |
19.0 |
% |
|
31,393 |
19.0 |
% |
||||
Total interest and fee yield |
$ |
985,745 |
32.6 |
% |
$ |
853,819 |
32.8 |
% |
||||
Total revenue yield |
$ |
985,745 |
36.1 |
% |
$ |
853,819 |
35.9 |
% |
||||
|
Components of Increase in Interest and Fee Income |
|||||||||||||||
FY 19 Compared to FY 18 |
||||||||||||||||
Increase (Decrease) |
||||||||||||||||
|
Volume |
Rate |
Volume & Rate |
Net |
||||||||||||
Small loans |
$ |
18,356 |
|
$ |
(5,932 |
) |
$ |
(695 |
) |
$ |
11,729 |
|
||||
Large loans |
|
32,602 |
|
|
1,067 |
|
|
314 |
|
|
33,983 |
|
||||
Automobile loans |
|
(3,842 |
) |
|
(315 |
) |
|
189 |
|
|
(3,968 |
) |
||||
Retail loans |
|
(700 |
) |
|
4 |
|
— |
|
(696 |
) |
||||||
Product mix |
|
(3,134 |
) |
|
3,241 |
|
|
(107 |
) |
— |
||||||
Total increase in interest and fee income |
$ |
43,282 |
|
$ |
(1,935 |
) |
$ |
(299 |
) |
$ |
41,048 |
|
||||
|
Net Loans Originated (1) (2) |
||||||||||||
|
|
|
|
|
FY $ |
|
FY % |
||||||
FY 19 |
|
FY 18 |
|
Inc (Dec) |
|
Inc (Dec) |
|||||||
Small loans |
$ |
662,281 |
$ |
624,243 |
$ |
38,038 |
|
6.1 |
% |
||||
Large loans |
|
594,617 |
|
409,174 |
|
185,443 |
|
45.3 |
% |
||||
Retail loans |
|
19,630 |
|
26,579 |
|
(6,949 |
) |
(26.1 |
)% |
||||
Total net loans originated |
$ |
1,276,528 |
$ |
1,059,996 |
$ |
216,532 |
|
20.4 |
% |
||||
(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 |
|||||||
|
FY 19 |
|
FY 18 |
|||||
Net credit losses (1) (2) |
$ |
95,711 |
|
$ |
77,666 |
|
||
Percentage of average finance receivables |
|
9.7 |
% |
|
9.1 |
% |
||
|
|
|
||||||
Provision for credit losses (3) |
$ |
99,611 |
|
$ |
87,056 |
|
||
Percentage of average finance receivables |
|
10.1 |
% |
|
10.2 |
% |
||
Percentage of total revenue |
|
28.0 |
% |
|
28.4 |
% |
||
|
|
|
||||||
General and administrative expenses |
$ |
156,984 |
|
$ |
140,284 |
|
||
Percentage of average finance receivables |
|
15.9 |
% |
|
16.4 |
% |
||
Percentage of total revenue |
|
44.1 |
% |
|
45.7 |
% |
||
(1) |
Includes hurricane-related net credit losses of $2,325 and $1,936 for FY 19 and FY 18, respectively. |
(2) |
Includes net credit losses related to lower utilization of non-file insurance of $7,575 and $3,362 for FY 19 and FY 18, respectively. |
(3) |
Includes hurricane-related provision for credit losses of $(1,275) and $2,736 for FY 19 and FY 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. The company’s management utilizes non-GAAP measures as additional metrics to aid in, and enhance, its understanding of the company’s financial results. Tangible equity and funded debt-to-tangible equity ratio are non-GAAP measures that adjust GAAP measures to exclude intangible assets. Management uses these non-GAAP measures to evaluate and manage the company’s capital and leverage position. The company also believes that these non-GAAP measures are commonly used in the financial services industry and provide useful information to users of the company’s financial statements in the evaluation of its 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, the company’s 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.
|
4Q 19 |
||
Long-term debt |
$ |
808,218 |
|
|
|
||
Total stockholders’ equity |
|
302,783 |
|
Less: Intangible assets |
|
9,438 |
|
Tangible equity (non-GAAP) |
$ |
293,345 |
|
|
|
||
Funded debt-to-equity ratio |
2.67x |
||
Funded debt-to-tangible equity ratio (non-GAAP) |
2.76x |
||