Regional Management Corp Logo     Print Page  Close Window

News Release

Regional Management Corp. Announces Fourth Quarter 2017 Results

- Net income of $10.9 million and diluted earnings per share of $0.92, including $0.30 net tax benefit related to Tax Cuts and Jobs Act and R&D tax credit -

- Eleventh consecutive quarter of double-digit total finance receivables growth -

- Fully converted branches to new loan system platform -

GREENVILLE, S.C.--(BUSINESS WIRE)--Feb. 13, 2018-- Regional Management Corp. (NYSE:RM), a diversified consumer finance company, today announced results for the fourth quarter and full year ended December 31, 2017.

Fourth Quarter 2017 Highlights

  • Net income for the fourth quarter of 2017 was $10.9 million, an increase of 68.3% from the prior-year period. Diluted earnings per share for the fourth quarter of 2017 was $0.92, based on a diluted share count of 11.9 million. Net income and diluted earnings per share for the fourth quarter of 2017 included a non-cash net tax benefit of $3.1 million, or $0.27 per diluted share, related to accounting adjustments recorded as a result of the recently passed Tax Cuts and Jobs Act (“new Tax Act”) and a research and development tax credit of $0.4 million, or $0.03 per diluted share.
  • Total finance receivables as of December 31, 2017 were $817.5 million, an increase of 13.9%, or $99.7 million, from the prior year, and up 5.5%, or $42.6 million, sequentially.
    • Eleventh consecutive quarter that total finance receivables have grown at least 10% over the prior-year period.
    • Total core small and large loan receivables increased $129.2 million, or 21.8%, compared to the prior-year period, and $51.1 million, or 7.6%, sequentially.
    • Large loan finance receivables of $347.2 million increased $111.9 million, or 47.5%, from the prior-year period and now represent 42.5% of the total loan portfolio. Small loan finance receivables as of December 31, 2017 were $375.8 million, an increase of 4.8% over the prior-year period.
  • Total revenue for the fourth quarter of 2017 was $72.1 million, an $8.1 million, or 12.6%, increase from the prior-year period.
    • Sixth consecutive quarter of year-over-year double-digit revenue growth.
    • Interest and fee income increased 11.3%, driven by a 13.9% increase in receivables compared to the prior-year period.
    • Comparable overall yield on a year-over-year basis.
  • Provision for credit losses for the fourth quarter of 2017 was $19.5 million, comparable with the prior-year period. Net credit losses increased $0.7 million due to the temporary shift of $0.8 million in insurance claims, offset by a $0.7 million smaller build in the allowance for credit losses.
    • Annualized net credit losses as a percentage of finance receivables were 9.0%, a decrease from 9.8% in the prior-year period.
  • 30+ day contractual delinquencies were 7.5% (0.2% of which was due to the hurricanes), a slight increase from 7.4% as of December 31, 2016 and up from 6.8% sequentially.
  • The Company successfully completed the conversion of all of its branches onto its new loan management platform in early 2018.

“We ended 2017 with a strong fourth quarter as our top line growth was driven once again by the continued growth of our core loan products,” said Peter R. Knitzer, President and Chief Executive Officer of Regional Management. “Total finance receivables, revenue, and net income (excluding tax benefits) all increased by double digits versus the fourth quarter of 2016. Importantly, we have successfully completed the system conversion of our entire branch network.”

“Over the past couple of years, we have made significant investments in our loan system, centralized collections, digital presence, and other initiatives in order to modernize our infrastructure,” continued Mr. Knitzer. “With much of the heavy lifting now completed, we enter 2018 focused on realizing the benefits of these investments to generate significant top- and bottom- line growth. During the year, we expect to continue to employ our hybrid approach to growth through further increasing our receivables per branch while reaccelerating our de novo branch expansion in the back half of the year. In addition, our enhanced credit tools already provide us with automated underwriting, and we will have new custom scorecards in place in the first half of the year. These credit enhancements, coupled with our robust centralized collections team, should help reduce net credit losses and allow our branch teams to focus more on sales and customer service. We are excited about the near- and long-term future of Regional Management, and will continue to focus on delivering long-term shareholder value.”

Fourth Quarter 2017 Results

Finance receivables outstanding at December 31, 2017 were $817.5 million, a 13.9% increase from $717.8 million in the prior year. Finance receivables increased from strong growth in both the core small and large loan portfolios.

For the fourth quarter ended December 31, 2017, the Company reported total revenue of $72.1 million, a 12.6% increase from $64.0 million in the prior-year period. Interest and fee income for the fourth quarter of 2017 was $66.4 million, an 11.3% increase from $59.7 million in the prior-year period, primarily due to an increase in the small and large loan portfolios compared to the prior-year period. Insurance income, net for the fourth quarter of 2017 was $3.1 million, a $1.5 million, or 95.9%, increase from the prior-year period. The change is inclusive of a $0.8 million, or 50.0%, increase from the prior-year period due to the transition in insurance carriers, causing some of the Company’s insurance claims to impact net credit losses instead of insurance income. This line swing had no impact on net income. Other income for the fourth quarter of 2017 was $2.7 million, a 5.1% decrease from the prior-year period.

The provision for credit losses in the fourth quarter of 2017 was $19.5 million, a slight increase compared to $19.4 million in the prior-year period. A $99.7 million increase in finance receivables and the temporary shift of $0.8 million in insurance claims expense was mostly offset by a $1.5 million build in the allowance for credit losses compared to a $2.2 million build in the fourth quarter of 2016.

Net credit losses were $18.0 million in the fourth quarter of 2017, an increase of $0.7 million over the prior-year period and consistent with portfolio growth. Net credit losses for the fourth quarter of 2017 included $0.8 million of losses attributable to the temporary shift of certain insurance claims expense into net credit losses during a transition in the Company’s insurance provider. Annualized net credit losses as a percentage of average finance receivables in the fourth quarter of 2017 were 9.0%, an improvement from 9.8% in the prior-year period.

General and administrative expenses for the fourth quarter of 2017 were $34.0 million, an increase of 18.0%, or $5.2 million, from the prior-year period. General and administrative expenses for the fourth quarter of 2017 included higher personnel costs from staffing increases in IT, centralized collections, and branches to support ongoing loan portfolio growth. Incentive expense, as well as amortization of capitalized costs for the new loan system, were also higher compared to the prior-year period. Sequentially, general and administrative expenses increased $0.2 million, or 0.5%, from the third quarter of 2017.

Interest expense was $6.8 million in the fourth quarter of 2017, compared to $5.3 million in the prior-year period. The increase in interest expense was due to higher long-term debt amounts outstanding from finance receivable growth, federal funds rate increases, larger unused lines of credit, and incremental debt issuance costs associated with upsizing the senior revolving credit facility and entering into the new warehouse credit facility. The Company’s diversified sources of funding continue to position it for long-term growth.

Income tax expense was $0.9 million in the fourth quarter of 2017, compared to $4.0 million in the prior-year period. The decrease in income tax expense was primarily due to a total non-operating benefit of $3.5 million, or $0.30 per diluted share, in the fourth quarter of 2017 related to the application of the lower federal corporate tax rate from the new Tax Act to the Company’s net deferred tax liabilities, as well as the impact of research and development tax credits.

Net income for the fourth quarter of 2017 was $10.9 million, an increase from $6.5 million in the prior-year period. Diluted earnings per share for the fourth quarter of 2017 was $0.92, an increase from $0.55 in the prior-year period. Non-operating income tax benefits contributed $0.30 per diluted share in the fourth quarter of 2017, and there were no comparable non-operating items in the fourth quarter of 2016.

Full Year 2017 Results

For the full year ended December 31, 2017, the Company reported total revenue of $272.5 million, a 13.3% increase from $240.5 million in the prior year. Interest and fee income for the full year ended December 31, 2017 was $249.0 million, a 12.7% increase from $221.0 million in the prior-year period, primarily due to an increase in the portfolios of both small and large installment loans compared to the prior year. Insurance income, net for the full year ended December 31, 2017 was $13.1 million, a 38.1% increase from the prior year, primarily attributable to the temporary shift of certain claims expense into provision for credit losses during the Company’s transition to a new insurance provider. This line swing had no impact on net income. Other income for the full year ended December 31, 2017 was $10.4 million, a 2.6% increase from the prior year.

The provision for credit losses for the full year ended December 31, 2017 was $77.3 million, compared to $63.0 million in the prior year. Net credit losses for the full year ended December 31, 2017 were $69.7 million, compared to $59.2 million in the prior year. Net credit losses for the full year 2017 included $4.4 million of losses attributable to the temporary shift of certain insurance claims expense into net credit losses during a transition in the Company’s insurance provider. Annualized net credit losses as a percentage of average finance receivables for the full year ended December 31, 2017 were 9.4% (inclusive of 0.6% attributable to a shift in insurance claims expense noted above), an increase from 9.0% in the prior year.

General and administrative expenses for the full year ended December 31, 2017 were $131.0 million, an increase of $12.3 million, or 10.4%, from the prior year. Included in the full year 2017 and 2016 results were $1.5 million and $1.6 million in loan system conversion costs, respectively. As a percentage of average net receivables, general and administrative expenses were 17.6%, down from 18.0% in the prior year.

Income tax expense for the full year ended December 31, 2017 was $10.3 million, a decrease of $4.6 million, or 31.0%, from the prior year. The decrease in income tax expense was primarily due to $3.5 million of non-operating income tax benefits in 2017.

Net income for the full year ended December 31, 2017 was $30.0 million, a 24.7% increase compared to net income of $24.0 million in the prior year. Diluted earnings per share for the full year ended December 31, 2017 was $2.54 compared to $1.99 in the prior year. The 2017 results included non-operating income tax benefits of $0.30 per diluted share, a $0.13 per diluted share tax benefit related to share-based compensation, and a bulk debt sale gain of $0.05 per diluted share. These benefits were partially offset by negative impacts of $0.18 per diluted share due to hurricanes and $0.02 per diluted share related to non-operating COO transition costs.

2018 De Novo Outlook

As of December 31, 2017, the Company’s branch network consisted of 342 locations. For the full year 2018, with the Company’s infrastructure build largely completed, the Company expects to return to a more historical level of de novo branch openings. As a result, the Company plans to open between 25 and 30 de novo branches during 2018, all of which should occur during the second half of 2018.

2018 Estimated Effective Tax Rate

As a result of the passage of the new Tax Act on December 22, 2017, the Company estimates that its effective combined federal and state income tax rate for 2018 will be approximately 25%.

Liquidity and Capital Resources

As of December 31, 2017, the Company had finance receivables of $817.5 million and outstanding long-term debt of $571.5 million (consisting of $452.1 million of long-term debt on its $638.0 million senior revolving credit facility, $66.1 million of long-term debt on its $125.0 million revolving warehouse credit facility, and $53.4 million of long-term debt on its $75.7 million amortizing loan).

Conference Call Information

Regional Management Corp. will host a conference call and webcast today at 5:00 PM ET to discuss these results.

The dial-in number for the conference call is (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 also be available on Regional Management’s website at www.RegionalManagement.com.

A replay will be available following the end of the call through Tuesday, February 20, 2018, by telephone at (844) 512-2921 (toll-free) or (412) 317-6671 (international), passcode 10004186. A webcast replay of the call will be available at http://www.RegionalManagement.com for one year following the call.

Forward-Looking Statements

This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which represent Regional Management Corp.’s expectations or beliefs concerning future events. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “outlook,” and similar expressions may be used to identify these forward-looking statements. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties, many of which are outside of the control of Regional Management. Factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include, but are not limited to, the following: 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 repayment risks and value of collateral, which risks may increase in light of adverse or recessionary economic conditions; 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 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 providing a broad array of loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other traditional lenders. Regional Management began operations in 1987 with four branches in South Carolina and has since expanded its branch network across South Carolina, Texas, North Carolina, Tennessee, Alabama, Oklahoma, New Mexico, Georgia, and Virginia. Each of its loan products is structured on a fixed rate, fixed term basis with fully amortizing equal monthly installment payments and is repayable at any time without penalty. Regional Management’s loans are sourced through its multiple channel platform, including in its branches, through direct mail campaigns, independent and franchise automobile dealerships, online credit application networks, retailers, and its consumer website. For more information, please visit www.RegionalManagement.com.

                                 

Regional Management Corp. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

(in thousands, except per share amounts)

 
Better (Worse) Better (Worse)
4Q 17 4Q 16 $ % YTD 17 YTD 16 $ %
Revenue
Interest and fee income $ 66,377 $ 59,654 $ 6,723 11.3 % $ 249,034 $ 220,963 $ 28,071 12.7 %
Insurance income, net 3,076 1,570 1,506 95.9 % 13,061 9,456 3,605 38.1 %
Other income   2,654     2,797     (143 ) (5.1 ) %   10,364     10,099     265   2.6 %
Total revenue   72,107     64,021     8,086   12.6 %   272,459     240,518     31,941   13.3 %
Expenses
Provision for credit losses 19,464 19,427 (37 ) (0.2 ) % 77,339 63,014 (14,325 ) (22.7 ) %
 
Personnel 19,903 16,998 (2,905 ) (17.1 ) % 75,992 68,979 (7,013 ) (10.2 ) %
Occupancy 5,346 5,251 (95 ) (1.8 ) % 21,530 20,059 (1,471 ) (7.3 ) %
Marketing 1,841 1,474 (367 ) (24.9 ) % 7,128 6,837 (291 ) (4.3 ) %
Other   6,929     5,103     (1,826 ) (35.8 ) %   26,305     22,757     (3,548 ) (15.6 ) %
Total general and administrative 34,019 28,826 (5,193 ) (18.0 ) % 130,955 118,632 (12,323 ) (10.4 ) %
 
Interest expense   6,816     5,287     (1,529 ) (28.9 ) %   23,908     19,924     (3,984 ) (20.0 ) %
Income before income taxes 11,808 10,481 1,327 12.7 % 40,257 38,948 1,309 3.4 %
Income taxes   923     4,014     3,091   77.0 %   10,294     14,917     4,623   31.0 %
Net income $ 10,885   $ 6,467   $ 4,418   68.3 % $ 29,963   $ 24,031   $ 5,932   24.7 %
Net income per common share:
Basic $ 0.94   $ 0.57   $ 0.37   64.9 % $ 2.59   $ 2.03   $ 0.56   27.6 %
Diluted $ 0.92   $ 0.55   $ 0.37   67.3 % $ 2.54   $ 1.99   $ 0.55   27.6 %
Weighted-average shares outstanding:
Basic   11,592     11,408     (184 ) (1.6 ) %   11,551     11,824     273   2.3 %
Diluted   11,875     11,763     (112 ) (1.0 ) %   11,783     12,085     302   2.5 %
 
Return on average assets (annualized)   5.4 %   3.7 %   4.0 %   3.7 %
Return on average equity (annualized)   18.7 %   12.7 %   13.5 %   12.0 %

 

                 

Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value amounts)

 
Increase (Decrease)
4Q 17 4Q 16 $ %
Assets
Cash $ 5,230 $ 4,446 $ 784 17.6 %
Gross finance receivables 1,066,650 916,954 149,696 16.3 %
Unearned finance charges and insurance premiums   (249,187 )   (199,179 )   (50,008 ) (25.1 ) %
Finance receivables 817,463 717,775 99,688 13.9 %
Allowance for credit losses   (48,910 )   (41,250 )   (7,660 ) (18.6 ) %
Net finance receivables 768,553 676,525 92,028 13.6 %
Restricted cash 16,787 8,297 8,490 102.3 %
Property and equipment 12,294 11,693 601 5.1 %
Intangible assets 10,607 6,448 4,159 64.5 %
Deferred tax asset 33 (33 ) (100.0 ) %
Other assets   16,012     4,782     11,230   234.8 %
Total assets $ 829,483   $ 712,224   $ 117,259   16.5 %
Liabilities and Stockholders’ Equity
Liabilities:
Long-term debt $ 571,496 $ 491,678 $ 79,818 16.2 %
Unamortized debt issuance costs   (4,950 )   (2,152 )   (2,798 ) (130.0 ) %
Net long-term debt 566,546 489,526 77,020 15.7 %
Accounts payable and accrued expenses 18,565 15,223 3,342 22.0 %
Deferred tax liability   4,961         4,961   100.0 %
Total liabilities 590,072 504,749 85,323 16.9 %
Commitments and Contingencies
Stockholders’ equity:

Preferred stock ($0.10 par value, 100,000 shares authorized, no shares

issued or outstanding)

Common stock ($0.10 par value, 1,000,000 shares authorized, 13,205

shares issued and 11,659 shares outstanding at December 31, 2017

and 12,996 shares issued and 11,450 shares outstanding at

December 31, 2016)

1,321 1,300 21 1.6 %
Additional paid-in-capital 94,384 92,432 1,952 2.1 %
Retained earnings 168,752 138,789 29,963 21.6 %
Treasury stock (1,546 shares at December 31, 2017 and 2016)   (25,046 )   (25,046 )     0.0 %
Total stockholders’ equity   239,411     207,475     31,936   15.4 %
Total liabilities and stockholders’ equity $ 829,483   $ 712,224   $ 117,259   16.5 %
 
                         

Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(in thousands, except per share amounts)

 
Averages and Yields
4Q 17 3Q 17 4Q 16
Average Finance
Receivables
Average Yield

(Annualized)

Average Finance
Receivables
Average Yield

(Annualized)

Average Finance
Receivables
Average Yield

(Annualized)

Small loans $ 369,241 41.5 % $ 358,380 42.7 % $ 354,276 42.6 %
Large loans 328,759 29.1 % 288,684 29.0 % 225,786 29.0 %
Automobile loans 66,664 15.6 % 75,984 16.2 % 93,866 17.0 %
Retail loans   32,243 19.9 %   30,788 17.8 %   33,013 19.0 %
Total interest and fee yield $ 796,907 33.3 % $ 753,836 33.8 % $ 706,941 33.8 %
Total revenue yield $ 796,907 36.2 % $ 753,836 36.7 % $ 706,941 36.2 %
 
                 
Components of Increase in Interest and Fee Income

4Q 17 Compared to 4Q 16

Increase (Decrease)

Volume Rate Volume & Rate Net
Small loans $ 1,594 $ (1,011 ) $ (42 ) $ 541
Large loans 7,457 54 25 7,536
Automobile loans (1,159 ) (333 ) 97 (1,395 )
Retail loans (36 ) 79 (2 ) 41
Product mix   (264 )   440     (176 )    
 
Total increase in interest and fee income $ 7,592   $ (771 ) $ (98 ) $ 6,723  
 
                             
Net Loans Originated (1)
4Q 17 3Q 17 QoQ $

Inc (Dec)

QoQ %

Inc (Dec)

4Q 16 YoY $

Inc (Dec)

YoY %

Inc (Dec)

Small loans $ 149,299 $ 148,820 $ 479 0.3 % $ 152,868 $ (3,569 ) (2.3 ) %
Large loans 106,680 105,460 1,220 1.2 % 67,273 39,407 58.6 %
Automobile loans 1,927 3,787 (1,860 ) (49.1 ) % 8,099 (6,172 ) (76.2 ) %
Retail loans   8,363   7,905   458   5.8 %   8,043   320   4.0 %
 
Total net loans originated $ 266,269 $ 265,972 $ 297   0.1 % $ 236,283 $ 29,986   12.7 %
 

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

 
             
Other Key Metrics
4Q 17 3Q 17 4Q 16
Net credit losses $ 17,954 $ 14,752 $ 17,277
Percentage of average finance receivables (annualized) 9.0 % 7.8 % 9.8 %
 
Provision for credit losses (1) $ 19,464 $ 20,152 $ 19,427
Percentage of average finance receivables (annualized) 9.8 % 10.7 % 11.0 %
Percentage of total revenue 27.0 % 29.1 % 30.3 %
 
General and administrative expenses $ 34,019 $ 33,840 $ 28,826
Percentage of average finance receivables (annualized) 17.1 % 18.0 % 16.3 %
Percentage of total revenue 47.2 % 48.9 % 45.0 %
 
Same store results:
Finance receivables at period-end $ 806,921 $ 768,794 $ 697,004
Finance receivable growth rate 12.7 % 10.4 % 11.0 %
Number of branches in calculation 331 333 321
 

(1) 3Q 17 includes $3,000 for incremental hurricane allowance for credit losses

 
                             
Finance Receivables by Product
4Q 17 3Q 17 QoQ $

Inc (Dec)

QoQ %

Inc (Dec)

4Q 16 YoY $

Inc (Dec)

YoY %

Inc (Dec)

Small loans $ 375,772 $ 363,262 $ 12,510 3.4 % $ 358,471 $ 17,301 4.8 %
Large loans   347,218   308,642   38,576   12.5 %   235,349   111,869   47.5 %
Total core loans 722,990 671,904 51,086 7.6 % 593,820 129,170 21.8 %
Automobile loans 61,423 71,666 (10,243 ) (14.3 ) % 90,432 (29,009 ) (32.1 ) %
Retail loans   33,050   31,286   1,764   5.6 %   33,523   (473 ) (1.4 ) %
Total finance receivables $ 817,463 $ 774,856 $ 42,607   5.5 % $ 717,775 $ 99,688   13.9 %
 
Number of branches at period end 342 344 (2 ) (0.6 ) % 339 3 0.9 %
Average finance receivables per branch $ 2,390 $ 2,252 $ 138   6.1 % $ 2,117 $ 273   12.9 %
 
                         
Contractual Delinquency by Aging
4Q 17 3Q 17 4Q 16
Allowance for credit losses (1) $ 48,910 6.0 % $ 47,400 6.1 % $ 41,250 5.7 %
 
Current 669,451 81.9 % 638,696 82.5 % 587,202 81.9 %
1 to 29 days past due   86,533 10.6 %   83,230 10.7 %   77,106 10.7 %
Delinquent accounts:
30 to 59 days 18,728 2.2 % 18,621 2.4 % 16,727 2.3 %
60 to 89 days 15,297 1.9 % 11,631 1.5 % 11,641 1.6 %
90 to 119 days 11,339 1.4 % 9,653 1.2 % 10,021 1.4 %
120 to 149 days 8,865 1.1 % 6,799 0.9 % 8,205 1.1 %
150 to 179 days   7,250 0.9 %   6,226 0.8 %   6,873 1.0 %
Total contractual delinquency (2) $ 61,479 7.5 % $ 52,930 6.8 % $ 53,467 7.4 %
Total finance receivables $ 817,463 100.0 % $ 774,856 100.0 % $ 717,775 100.0 %
 
1 day and over past due $ 148,012 18.1 % $ 136,160 17.5 % $ 130,573 18.1 %
 
     
Contractual Delinquency by Product
4Q 17     3Q 17     4Q 16
Small loans $ 35,246     9.4 % $ 30,328     8.3 % $ 32,955     9.2 %
Large loans 18,540 5.3 % 15,578 5.0 % 12,114 5.1 %
Automobile loans 4,896 8.0 % 5,280 7.4 % 6,300 7.0 %
Retail loans   2,797 8.5 %   1,744 5.6 %   2,098 6.3 %
Total contractual delinquency (2) $ 61,479 7.5 % $ 52,930 6.8 % $ 53,467 7.4 %
 

(1) Includes incremental hurricane allowance for credit losses of $2,760 and $3,000 for 4Q 17 and 3Q 17, respectively.

(2) 4Q 17 delinquency impacted 0.2% by the hurricane-affected branches.

 
                             
Quarterly Trend
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 QoQ $

B(W)

YoY $

B(W)

Revenue
Interest and fee income $ 59,654 $ 59,255 $ 59,787 $ 63,615 $ 66,377 $ 2,762 $ 6,723
Insurance income, net 1,570 3,805 3,085 3,095 3,076 (19 ) 1,506
Other income   2,797   2,760   2,466   2,484   2,654   170     (143 )
Total revenue   64,021   65,820   65,338   69,194   72,107   2,913     8,086  
Expenses
Provision for credit losses 19,427 19,134 18,589 20,152 19,464 688 (37 )
 
Personnel 16,998 18,168 18,387 19,534 19,903 (369 ) (2,905 )
Occupancy 5,251 5,285 5,419 5,480 5,346 134 (95 )
Marketing 1,474 1,205 1,779 2,303 1,841 462 (367 )
Other   5,103   6,796   6,057   6,523   6,929   (406 )   (1,826 )
Total general and administrative 28,826 31,454 31,642 33,840 34,019 (179 ) (5,193 )
 
Interest expense   5,287   5,213   5,221   6,658   6,816   (158 )   (1,529 )
Income before income taxes 10,481 10,019 9,886 8,544 11,808 3,264 1,327
Income taxes   4,014   2,385   3,751   3,235   923   2,312     3,091  
Net income $ 6,467 $ 7,634 $ 6,135 $ 5,309 $ 10,885 $ 5,576   $ 4,418  
Net income per common share:
Basic $ 0.57 $ 0.66 $ 0.53 $ 0.46 $ 0.94 $ 0.48   $ 0.37  
Diluted $ 0.55 $ 0.65 $ 0.52 $ 0.45 $ 0.92 $ 0.47   $ 0.37  
Weighted-average shares outstanding:
Basic   11,408   11,494   11,554   11,563   11,592   (29 )   (184 )
Diluted   11,763   11,715   11,730   11,812   11,875   (63 )   (112 )
 
Net interest margin $ 58,734 $ 60,607 $ 60,117 $ 62,536 $ 65,291 $ 2,755   $ 6,557  
Net credit margin $ 39,307 $ 41,473 $ 41,528 $ 42,384 $ 45,827 $ 3,443   $ 6,520  
 
4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 QoQ $

Inc (Dec)

YoY $

Inc (Dec)

Total assets $ 712,224 $ 690,432 $ 727,533 $ 779,850 $ 829,483 $ 49,633   $ 117,259  
Finance receivables $ 717,775 $ 695,004 $ 726,767 $ 774,856 $ 817,463 $ 42,607   $ 99,688  
Allowance for credit losses $ 41,250 $ 41,000 $ 42,000 $ 47,400 $ 48,910 $ 1,510   $ 7,660  
Long-term debt $ 491,678 $ 462,994 $ 497,049 $ 538,351 $ 571,496 $ 33,145   $ 79,818  
 
     
General & Administrative Expenses Trend
4Q 16     1Q 17     2Q 17     3Q 17     4Q 17     QoQ $

B(W)

    YoY $

B(W)

Legacy operations expenses $ 19,238 $ 20,583 $ 19,413 $ 20,856 $ 21,338 $ (482 ) $ (2,100 )
2017 new branch expenses     190   294   411   377   34     (377 )
Total operations expenses 19,238 20,773 19,707 21,267 21,715 (448 ) (2,477 )
Marketing expenses 1,474 1,205 1,779 2,303 1,841 462 (367 )
Home office expenses   8,114   9,476   10,156   10,270   10,463   (193 )   (2,349 )
Total G&A expenses $ 28,826 $ 31,454 $ 31,642 $ 33,840 $ 34,019 $ (179 ) $ (5,193 )
 
                 
Averages and Yields
YTD 17 YTD 16
Average Finance
Receivables
Average Yield Average Finance
Receivables
Average Yield
Small loans $ 355,826 42.2 % $ 334,152 42.5 %
Large loans 278,397 28.8 % 190,855 28.8 %
Automobile loans 78,317 16.3 % 102,023 17.7 %
Retail loans   31,660 18.8 %   30,321 19.2 %
Total interest and fee yield $ 744,200 33.5 % $ 657,351 33.6 %
Total revenue yield $ 744,200 36.6 % $ 657,351 36.6 %
 
                 
Components of Increase in Interest and Fee Income

YTD 17 Compared to YTD 16

Increase (Decrease)

Volume Rate Volume & Rate Net
Small loans $ 9,215 $ (1,165 ) $ (75 ) $ 7,975
Large loans 25,220 54 24 25,298
Automobile loans (4,205 ) (1,480 ) 344 (5,341 )
Retail loans 257 (113 ) (5 ) 139
Product mix   (1,293 )   1,712     (419 )    
Total increase in interest and fee income $ 29,194   $ (992 ) $ (131 ) $ 28,071  
 
                 
Net Loans Originated (1)
YTD 17 YTD 16 YTD $

Inc (Dec)

YTD %

Inc (Dec)

Small loans $ 573,858 $ 580,936 $ (7,078 ) (1.2 ) %
Large loans 355,931 250,862 105,069 41.9 %
Automobile loans 20,331 37,038 (16,707 ) (45.1 )%
Retail loans   28,885   34,629   (5,744 ) (16.6 ) %
Total net loans originated $ 979,005 $ 903,465 $ 75,540   8.4 %
 

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

 
         
Other Key Metrics
YTD 17 YTD 16
Net credit losses $ 69,679 $ 59,216
Percentage of average finance receivables 9.4 % 9.0 %
 
Provision for credit losses (1) $ 77,339 $ 63,014
Percentage of average finance receivables 10.4 % 9.6 %
Percentage of total revenue 28.4 % 26.2 %
 
General and administrative expenses $ 130,955 $ 118,632
Percentage of average finance receivables 17.6 % 18.0 %
Percentage of total revenue 48.1 % 49.3 %
 

(1) YTD 17 includes $3,000 for incremental hurricane allowance for credit losses

 

Source: Regional Management Corp.

Regional Management Corp.
Investor Relations
Garrett Edson, 203-682-8331