Regional Management Corp. Announces Third Quarter 2022 Results

Rhea-AI Summary

Regional Management Corp. (NYSE: RM) reported a net income of $10.1 million and diluted earnings per share of $1.06 for Q3 2022, marking decreases of 54.7% and 49.8% year-over-year. Despite these declines, the company achieved 22.3% growth in net finance receivables, reaching an all-time high of $1.61 billion, and 17.9% revenue growth to $131.5 million. Delinquencies rose to 7.2%, but proactive measures and strong demand for loan products helped maintain credit quality. The company also expanded into California and Louisiana, indicating ongoing growth.

Positive

• Net finance receivables reached an all-time high of $1.61 billion, a 22.3% increase year-over-year.
• Revenue for Q3 2022 was $131.5 million, a 17.9% increase from the previous year.
• Digital loan originations hit record levels, showcasing effective growth strategies.

Negative

• Net income decreased by 54.7% year-over-year to $10.1 million.
• Diluted earnings per share declined by 49.8% compared to the prior year.
• 30+ day delinquencies increased to 7.2%, raising concerns about credit risk.

- Net income of $10.1 million and diluted earnings per share of $1.06 -

- 22.3% year-over-year net finance receivables growth and 17.9% year-over-year revenue growth -

- 30+ day contractual delinquencies of 7.2% as of September 30, 2022 -

GREENVILLE, S.C.--(BUSINESS WIRE)-- Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the third quarter ended September 30, 2022.

“We’re pleased with our third quarter results, as we continued to grow our account base and portfolio in a controlled and profitable manner, while also maintaining a tightened credit box,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “Demand for our loan products remained strong in the quarter. We expanded our operations to California and Louisiana, increased our account base by 16% from the prior year to more than 500,000 accounts, and grew our loan portfolio to an all-time high of $1.6 billion. For the sixth straight quarter, we logged double-digit year-over-year growth in our net finance receivables and quarterly revenue, which were up 22% and 18%, respectively, and we produced $10.1 million of net income and $1.06 of diluted EPS. Notably, we are achieving our growth principally through geographic expansion, not from credit box expansion. Our team has consistently demonstrated its ability to execute on our long-term strategic plans and deliver sustainable returns to our shareholders, despite the challenging macroeconomic environment.”

“We continue to take a cautious approach as we monitor the health of the consumer,” added Mr. Beck. “Our 30+ day delinquency rate rose to 7.2% at the end of the quarter, but our 1 to 29 day delinquency rate continues to perform 120 basis points better than 2019 pre-pandemic levels, an encouraging sign that our credit tightening actions and collections strategies are benefiting our more recent 2022 vintages. With a reserve rate of 11.2%, including $19 million of macro-related reserves, we feel very comfortable with our current credit posture. Our primary focus remains on maintaining the credit quality of our loan portfolio, supporting our customers, and controlling expenses, and we stand ready to adapt our underwriting models quickly whenever we observe either risks or opportunities in the market based on changing economic conditions. At the same time, we will continue to execute on our long-term strategies of geographic expansion and digital innovation that will drive controlled, sustainable growth and profitability.”

Third Quarter 2022 Highlights

• Net income for the third quarter of 2022 was $10.1 million and diluted earnings per share was $1.06, decreases of 54.7% and 49.8%, respectively, compared to the prior-year period.
  
  
• Net finance receivables as of September 30, 2022 hit an all-time high of $1.61 billion, an increase of $293.4 million, or 22.3%, from the prior-year period.
  
  
  • Large loan net finance receivables of $1.1 billion increased $232.2 million, or 26.3%, from the prior-year period and represented 69.4% of the total loan portfolio. Small loan net finance receivables were $480.2 million, an increase of 14.4% from the prior-year period.
  • Digitally sourced and direct mail loan originations were both at record levels for a third quarter.
  • Total loan originations of $418.7 million in the third quarter of 2022, a decrease of $2.0 million, or 0.5%, from the prior-year period.
  • Record digitally sourced loan originations of $56.3 million in the third quarter of 2022, an increase of $8.2 million, or 17.0%, from the prior-year period.
    
    
• Total revenue for the third quarter of 2022 was a record $131.5 million, an increase of $20.0 million, or 17.9%, from the prior-year period.
  
  
  • Interest and fee income increased $16.7 million, or 16.8%, primarily due to higher average net finance receivables.
  • Insurance income, net increased $2.6 million, or 27.3%, driven by portfolio growth.
    
    
• Provision for credit losses for the third quarter of 2022 was $48.1 million, an increase of $22.0 million, or 84.2%, from the prior-year period. The provision for credit losses for the third quarter of 2022 included incremental reserves of $8.2 million primarily for the $81.9 million in sequential portfolio growth and $4.1 million based on the macroeconomic model.
  
  
  • Allowance for credit losses was $179.8 million as of September 30, 2022, including a $19.0 million allowance for credit losses reserve associated with estimated future macroeconomic impacts on credit losses.
    
    
• Annualized net credit losses as a percentage of average net finance receivables for the third quarter of 2022 were 9.1%, a 410 basis point increase compared to 5.0% in the prior-year period and a 100 basis point increase compared to pre-pandemic levels of 8.1% in the third quarter of 2019.
  
  
• As of September 30, 2022, 30+ day contractual delinquencies totaled $116.0 million, or 7.2% of net finance receivables, an increase of 100 basis points compared to June 30, 2022, and a 70 basis point increase from pre-pandemic levels as of September 30, 2019. The 30+ day contractual delinquency compares favorably to the company’s $179.8 million allowance for credit losses as of September 30, 2022.
  
  
• General and administrative expenses for the third quarter of 2022 were $58.2 million, an increase of $10.4 million, or 21.8%, from the prior-year period due to ongoing investment in personnel, marketing, and digital capabilities to support the company’s growth.
  
  
• The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) for the third quarter of 2022 was 14.9%, a 50 basis point improvement compared to the prior-year period.
  
  
• The company expanded its operations to the states of California and Louisiana in July and September, respectively. The company continues to plan expansion into one to two states over the next four months.

Fourth Quarter 2022 Dividend

The company’s Board of Directors has declared a dividend of $0.30 per common share for the fourth quarter of 2022. The dividend will be paid on December 14, 2022 to shareholders of record as of the close of business on November 23, 2022. The declaration and payment of any future dividend is subject to the discretion of the Board of Directors and will depend on a variety of factors, including the company’s financial condition and results of operations.

Liquidity and Capital Resources

As of September 30, 2022, the company had net finance receivables of $1.6 billion and debt of $1.2 billion. The debt consisted of:

• $113.4 million on the company’s $500 million senior revolving credit facility,
  
  
• $122.7 million on the company’s aggregate $300 million revolving warehouse credit facilities, and
  
  
• $1.0 billion through the company’s asset-backed securitizations.

As of September 30, 2022, the company’s unused capacity to fund future growth on its revolving credit facilities (subject to the borrowing base) was $565 million, or 70.6%, and the company had available liquidity of $181.2 million, including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities. As of September 30, 2022, the company’s fixed-rate debt as a percentage of total debt was 81%, with a weighted-average coupon of 2.9% and a weighted-average revolving duration of 2.4 years.

In October 2022, the company closed a $200 million asset-backed securitization with a two-year revolving period. The class A notes received an “AAA” rating by Standard & Poor’s Ratings Services, the first time a senior class of notes in a Regional Management securitization has received S&P’s top rating. Following the transaction, the company’s fixed-rate debt as a percentage of total debt increased to nearly 100%, with a weighted-average coupon of 3.6% and a weighted-average revolving duration of 2.3 years.

During the third quarter, the company held interest rate caps to manage the risk associated with variable rate debt. The interest rate caps were based on one-month LIBOR and reimbursed the company for the difference when one-month LIBOR exceeded the strike rate. The company sold its remaining $100 million of interest rate caps in the third quarter, realizing $2.3 million in lifetime market value gains on the rate caps. As of September 30, 2022, the company no longer maintained interest rate cap protection.

The company had a funded debt-to-equity ratio of 4.0 to 1.0 and a stockholders’ equity ratio of 19.2%, each as of September 30, 2022. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 4.2 to 1.0, as of September 30, 2022. 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 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” online and in branch locations in 17 states across the 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 financial outlooks or 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: managing growth effectively, implementing Regional Management’s growth strategy, and opening new branches as planned; Regional Management’s convenience check strategy; Regional Management’s policies and procedures for underwriting, processing, and servicing loans; Regional Management’s ability to collect on its loan portfolio; Regional Management’s insurance operations; exposure to credit risk and repayment risk, which risks may increase in light of adverse or recessionary economic conditions; the implementation of new underwriting models and processes, including as to the effectiveness of new custom scorecards; changes in the competitive environment in which Regional Management operates or a decrease in the demand for its products; the geographic concentration of Regional Management’s loan portfolio; the failure of third-party service providers, including those providing information technology products; changes in economic conditions in the markets Regional Management serves, including levels of unemployment and bankruptcies; the ability to achieve successful acquisitions and strategic alliances; the ability to make technological improvements as quickly as competitors; security breaches, cyber-attacks, failures in information systems, or fraudulent activity; the ability to originate loans; reliance on information technology resources and providers, including the risk of prolonged system outages; changes in current revenue and expense trends, including trends affecting delinquencies and credit losses; changes in operating and administrative expenses; the departure, transition, or replacement of key personnel; the ability to timely and effectively implement, transition to, and maintain the necessary information technology systems, infrastructure, processes, and controls to support Regional Management’s operations and initiatives; changes in interest rates; existing sources of liquidity may become insufficient or access to these sources may become unexpectedly restricted; exposure to financial risk due to asset-backed securitization transactions; risks related to regulation and legal proceedings, including changes in laws or regulations or in the interpretation or enforcement of laws or regulations; changes in accounting standards, rules, and interpretations and the failure of related assumptions and estimates, including those associated with CECL accounting; the impact of changes in tax laws, guidance, and interpretations, including the timing and amount of revenues that may be recognized; risks related to the ownership of Regional Management’s common stock, including volatility in the market price of shares of Regional Management’s common stock; the timing and amount of future cash dividend payments; and anti-takeover provisions in Regional Management’s charter documents and applicable state law. The COVID-19 pandemic may impact Regional Management’s operations and financial condition and may also magnify many of the existing risks and uncertainties.

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) (dollars in thousands, except per share amounts)
										Better (Worse)																Better (Worse)
		3Q 22				3Q 21				$				%				YTD 22				YTD 21				$				%
Revenue
Interest and fee income		$	116,020			$	99,355			$	16,665				16.8	%		$	333,422			$	275,427			$	57,995				21.1	%
Insurance income, net			11,987				9,418				2,569				27.3	%			32,751				26,059				6,692				25.7	%
Other income			3,445				2,687				758				28.2	%			8,998				7,381				1,617				21.9	%
Total revenue			131,452				111,460				19,992				17.9	%			375,171				308,867				66,304				21.5	%
Expenses
Provision for credit losses			48,071				26,096				(21,975	)			(84.2	)%			124,329				58,007				(66,322	)			(114.3	)%
Personnel			36,979				29,299				(7,680	)			(26.2	)%			106,574				86,520				(20,054	)			(23.2	)%
Occupancy			5,848				6,027				179				3.0	%			17,812				17,615				(197	)			(1.1	)%
Marketing			3,940				2,488				(1,452	)			(58.4	)%			11,139				9,974				(1,165	)			(11.7	)%
Other			11,397				9,936				(1,461	)			(14.7	)%			31,860				25,873				(5,987	)			(23.1	)%
Total general and administrative			58,164				47,750				(10,414	)			(21.8	)%			167,385				139,982				(27,403	)			(19.6	)%
Interest expense			11,863				8,816				(3,047	)			(34.6	)%			19,368				23,752				4,384				18.5	%
Income before income taxes			13,354				28,798				(15,444	)			(53.6	)%			64,089				87,126				(23,037	)			(26.4	)%
Income taxes			3,286				6,577				3,291				50.0	%			15,256				19,217				3,961				20.6	%
Net income		$	10,068			$	22,221			$	(12,153	)			(54.7	)%		$	48,833			$	67,909			$	(19,076	)			(28.1	)%
Net income per common share:
Basic		$	1.09			$	2.25			$	(1.16	)			(51.6	)%		$	5.23			$	6.66			$	(1.43	)			(21.5	)%
Diluted		$	1.06			$	2.11			$	(1.05	)			(49.8	)%		$	5.01			$	6.29			$	(1.28	)			(20.3	)%
Weighted-average common shares outstanding:
Basic			9,195				9,861				666				6.8	%			9,329				10,199				870				8.5	%
Diluted			9,526				10,544				1,018				9.7	%			9,738				10,800				1,062				9.8	%
Return on average assets (annualized)			2.5	%			7.1	%											4.3	%			7.8	%
Return on average equity (annualized)			13.1	%			31.6	%											21.7	%			32.4	%

Regional Management Corp. and Subsidiaries Consolidated Balance Sheets (Unaudited) (dollars in thousands, except par value amounts)
										Increase (Decrease)
		3Q 22				3Q 21				$				%
Assets
Cash		$	3,140			$	8,146			$	(5,006	)			(61.5	)%
Net finance receivables			1,607,598				1,314,233				293,365				22.3	%
Unearned insurance premiums			(49,789	)			(44,142	)			(5,647	)			(12.8	)%
Allowance for credit losses			(179,800	)			(150,100	)			(29,700	)			(19.8	)%
Net finance receivables, less unearned insurance premiums and allowance for credit losses			1,378,009				1,119,991				258,018				23.0	%
Restricted cash			113,865				103,999				9,866				9.5	%
Restricted available-for-sale investments			20,290				—				20,290				100.0	%
Lease assets			30,153				28,891				1,262				4.4	%
Deferred tax assets, net			16,836				12,535				4,301				34.3	%
Property and equipment			12,370				12,495				(125	)			(1.0	)%
Intangible assets			11,305				9,184				2,121				23.1	%
Other assets			20,582				18,317				2,265				12.4	%
Total assets		$	1,606,550			$	1,313,558			$	292,992				22.3	%
Liabilities and Stockholders’ Equity
Liabilities:
Debt		$	1,241,039			$	978,803			$	262,236				26.8	%
Unamortized debt issuance costs			(9,647	)			(10,110	)			463				4.6	%
Net debt			1,231,392				968,693				262,699				27.1	%
Accounts payable and accrued expenses			34,237				36,114				(1,877	)			(5.2	)%
Lease liabilities			32,468				31,285				1,183				3.8	%
Total liabilities			1,298,097				1,036,092				262,005				25.3	%
Stockholders’ equity:
Preferred stock ($0.10 par value, 100,000 shares authorized, none issued or outstanding)			—				—				—				—
Common stock ($0.10 par value, 1,000,000 shares authorized, 14,391 shares issued and 9,584 shares outstanding at September 30, 2022 and 14,177 shares issued and 10,007 shares outstanding at September 30, 2021)			1,439				1,418				21				1.5	%
Additional paid-in capital			111,530				106,319				5,211				4.9	%
Retained earnings			346,083				287,825				58,258				20.2	%
Accumulated other comprehensive loss			(456	)			—				(456	)			(100.0	)%
Treasury stock (4,807 shares at September 30, 2022 and 4,170 shares at September 30, 2021)			(150,143	)			(118,096	)			(32,047	)			(27.1	)%
Total stockholders’ equity			308,453				277,466				30,987				11.2	%
Total liabilities and stockholders’ equity		$	1,606,550			$	1,313,558			$	292,992				22.3	%

Regional Management Corp. and Subsidiaries Selected Financial Data (Unaudited) (dollars in thousands, except per share amounts)
		Net Finance Receivables by Product
		3Q 22				2Q 22				QoQ $ Inc (Dec)				QoQ % Inc (Dec)				3Q 21				YoY $ Inc (Dec)				YoY % Inc (Dec)
Small loans		$	480,199			$	455,253			$	24,946				5.5	%		$	419,602			$	60,597				14.4	%
Large loans			1,116,455				1,059,523				56,932				5.4	%			884,271				232,184				26.3	%
Retail loans			10,944				10,883				61				0.6	%			10,360				584				5.6	%
Total net finance receivables		$	1,607,598			$	1,525,659			$	81,939				5.4	%		$	1,314,233			$	293,365				22.3	%
Number of branches at period end			338				334				4				1.2	%			372				(34	)			(9.1	)%
Net finance receivables per branch		$	4,756			$	4,568			$	188				4.1	%		$	3,533			$	1,223				34.6	%

		Averages and Yields
		3Q 22								2Q 22								3Q 21
		Average Net Finance Receivables				Average Yield (1)				Average Net Finance Receivables				Average Yield (1)				Average Net Finance Receivables				Average Yield (1)
Small loans		$	466,087				35.5	%		$	437,226				35.8	%		$	394,888				38.9	%
Large loans			1,089,225				27.2	%			1,023,546				27.4	%			836,506				28.9	%
Retail loans			10,935				18.5	%			10,828				18.3	%			10,291				18.8	%
Total interest and fee yield		$	1,566,247				29.6	%		$	1,471,600				29.8	%		$	1,241,685				32.0	%
Total revenue yield		$	1,566,247				33.6	%		$	1,471,600				33.4	%		$	1,241,685				35.9	%

(1) Annualized interest and fee income as a percentage of average net finance receivables.

		Components of Increase in Interest and Fee Income
		3Q 22 Compared to 3Q 21
		Increase (Decrease)
		Volume				Rate				Volume & Rate				Total
Small loans		$	6,930			$	(3,360	)		$	(606	)		$	2,964
Large loans			18,259				(3,518	)			(1,063	)			13,678
Retail loans			30				(7	)			—				23
Product mix			751				(492	)			(259	)			—
Total increase in interest and fee income		$	25,970			$	(7,377	)		$	(1,928	)		$	16,665

		Loans Originated (1)
		3Q 22				2Q 22				QoQ $ Inc (Dec)				QoQ % Inc (Dec)				3Q 21				YoY $ Inc (Dec)				YoY % Inc (Dec)
Small loans		$	173,269			$	171,244			$	2,025				1.2	%		$	173,390			$	(121	)			(0.1	)%
Large loans			243,259				252,572				(9,313	)			(3.7	)%			245,062				(1,803	)			(0.7	)%
Retail loans			2,145				2,471				(326	)			(13.2	)%			2,206				(61	)			(2.8	)%
Total loans originated		$	418,673			$	426,287			$	(7,614	)			(1.8	)%		$	420,658			$	(1,985	)			(0.5	)%

(1) Represents the principal balance of loan originations and refinancings.

		Other Key Metrics
		3Q 22				2Q 22				3Q 21
Net credit losses		$	35,771			$	36,700			$	15,396
Percentage of average net finance receivables (annualized)			9.1	%			10.0	%			5.0	%
Provision for credit losses		$	48,071			$	45,400			$	26,096
Percentage of average net finance receivables (annualized)			12.3	%			12.3	%			8.4	%
Percentage of total revenue			36.6	%			36.9	%			23.4	%
General and administrative expenses		$	58,164			$	54,121			$	47,750
Percentage of average net finance receivables (annualized)			14.9	%			14.7	%			15.4	%
Percentage of total revenue			44.2	%			44.0	%			42.8	%
Same store results (1):
Net finance receivables at period-end		$	1,552,740			$	1,466,300			$	1,296,746
Net finance receivable growth rate			19.2	%			24.7	%			22.7	%
Number of branches in calculation			315				310				359

(1)

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 22								2Q 22								3Q 21
Allowance for credit losses (1)		$	179,800				11.2	%		$	167,500				11.0	%		$	150,100				11.4	%
Current			1,356,134				84.4	%			1,306,183				85.6	%			1,156,475				88.0	%
1 to 29 days past due			135,468				8.4	%			124,810				8.2	%			96,477				7.3	%
Delinquent accounts:
30 to 59 days			32,295				2.0	%			26,785				1.8	%			20,162				1.6	%
60 to 89 days			25,375				1.6	%			24,420				1.6	%			15,075				1.1	%
90 to 119 days			21,720				1.3	%			18,557				1.2	%			11,202				0.9	%
120 to 149 days			17,503				1.1	%			12,528				0.8	%			8,176				0.6	%
150 to 179 days			19,103				1.2	%			12,376				0.8	%			6,666				0.5	%
Total contractual delinquency		$	115,996				7.2	%		$	94,666				6.2	%		$	61,281				4.7	%
Total net finance receivables		$	1,607,598				100.0	%		$	1,525,659				100.0	%		$	1,314,233				100.0	%
1 day and over past due		$	251,464				15.6	%		$	219,476				14.4	%		$	157,758				12.0	%

		Contractual Delinquency by Product
		3Q 22								2Q 22								3Q 21
Small loans		$	49,906				10.4	%		$	41,984				9.2	%		$	27,928				6.7	%
Large loans			64,922				5.8	%			51,763				4.9	%			32,666				3.7	%
Retail loans			1,168				10.7	%			919				8.4	%			687				6.6	%
Total contractual delinquency		$	115,996				7.2	%		$	94,666				6.2	%		$	61,281				4.7	%

(1)

Includes estimated macroeconomic allowance for credit losses of $19,000, $14,900, and $18,100 in 3Q 22, 2Q 22, and 3Q 21, respectively.

		Income Statement Quarterly Trend
		3Q 21				4Q 21				1Q 22				2Q 22				3Q 22				QoQ $ B(W)				YoY $ B(W)
Revenue
Interest and fee income		$	99,355			$	107,117			$	107,631			$	109,771			$	116,020			$	6,249			$	16,665
Insurance income, net			9,418				9,423				10,544				10,220				11,987				1,767				2,569
Other income			2,687				2,944				2,673				2,880				3,445				565				758
Total revenue			111,460				119,484				120,848				122,871				131,452				8,581				19,992
Expenses
Provision for credit losses			26,096				31,008				30,858				45,400				48,071				(2,671	)			(21,975	)
Personnel			29,299				33,313				35,654				33,941				36,979				(3,038	)			(7,680	)
Occupancy			6,027				6,511				5,808				6,156				5,848				308				179
Marketing			2,488				4,431				3,091				4,108				3,940				168				(1,452	)
Other			9,936				11,277				10,547				9,916				11,397				(1,481	)			(1,461	)
Total general and administrative			47,750				55,532				55,100				54,121				58,164				(4,043	)			(10,414	)
Interest expense			8,816				7,597				(59	)			7,564				11,863				(4,299	)			(3,047	)
Income before income taxes			28,798				25,347				34,949				15,786				13,354				(2,432	)			(15,444	)
Income taxes			6,577				4,569				8,166				3,804				3,286				518				3,291
Net income		$	22,221			$	20,778			$	26,783			$	11,982			$	10,068			$	(1,914	)		$	(12,153	)
Net income per common share:
Basic		$	2.25			$	2.18			$	2.81			$	1.29			$	1.09			$	(0.20	)		$	(1.16	)
Diluted		$	2.11			$	2.04			$	2.67			$	1.24			$	1.06			$	(0.18	)		$	(1.05	)
Weighted-average shares outstanding:
Basic			9,861				9,545				9,533				9,261				9,195				66				666
Diluted			10,544				10,177				10,022				9,669				9,526				143				1,018

		Balance Sheet Quarterly Trend
		3Q 21				4Q 21				1Q 22				2Q 22				3Q 22				QoQ $ Inc (Dec)				YoY $ Inc (Dec)
Total assets		$	1,313,558			$	1,459,662			$	1,497,671			$	1,547,944			$	1,606,550			$	58,606			$	292,992
Net finance receivables		$	1,314,233			$	1,426,257			$	1,446,071			$	1,525,659			$	1,607,598			$	81,939			$	293,365
Allowance for credit losses		$	150,100			$	159,300			$	158,800			$	167,500			$	179,800			$	12,300			$	29,700
Debt		$	978,803			$	1,107,953			$	1,134,377			$	1,194,570			$	1,241,039			$	46,469			$	262,236

		Other Key Metrics Quarterly Trend
		3Q 21				4Q 21				1Q 22				2Q 22				3Q 22				QoQ Inc (Dec)				YoY Inc (Dec)
Interest and fee yield (annualized)			32.0	%			31.4	%			30.0	%			29.8	%			29.6	%			(0.2	)%			(2.4	)%
Efficiency ratio (1)			42.8	%			46.5	%			45.6	%			44.0	%			44.2	%			0.2	%			1.4	%
Operating expense ratio (2)			15.4	%			16.3	%			15.4	%			14.7	%			14.9	%			0.2	%			(0.5	)%
30+ contractual delinquency			4.7	%			6.0	%			5.7	%			6.2	%			7.2	%			1.0	%			2.5	%
Net credit loss ratio (3)			5.0	%			6.4	%			8.7	%			10.0	%			9.1	%			(0.9	)%			4.1	%
Book value per share		$	27.73			$	28.89			$	30.47			$	31.15			$	32.18			$	1.03			$	4.45

(1)		General and administrative expenses as a percentage of total revenue.
(2)		Annualized general and administrative expenses as a percentage of average net finance receivables.
(3)		Annualized net credit losses as a percentage of average net finance receivables.

		Averages and Yields
		YTD 22								YTD 21
		Average Net Finance Receivables				Average Yield (Annualized)				Average Net Finance Receivables				Average Yield (Annualized)
Small loans		$	448,175				35.8	%		$	383,208				38.2	%
Large loans			1,032,273				27.4	%			768,803				28.4	%
Retail loans			10,796				18.4	%			11,537				18.2	%
Total interest and fee yield		$	1,491,244				29.8	%		$	1,163,548				31.6	%
Total revenue yield		$	1,491,244				33.5	%		$	1,163,548				35.4	%

		Components of Increase in Interest and Fee Income
		YTD 22 Compared to YTD 21
		Increase (Decrease)
		Volume				Rate				Volume & Rate				Total
Small loans		$	18,632			$	(7,131	)		$	(1,210	)		$	10,291
Large loans			56,186				(6,250	)			(2,142	)			47,794
Retail loans			(101	)			12				(1	)			(90	)
Product mix			2,853				(1,904	)			(949	)			—
Total increase in interest and fee income		$	77,570			$	(15,273	)		$	(4,302	)		$	57,995

		Loans Originated (1)
		YTD 22				YTD 21				YTD $ Inc (Dec)				YTD % Inc (Dec)
Small loans		$	481,644			$	426,715			$	54,929				12.9	%
Large loans			682,110				600,871				81,239				13.5	%
Retail loans			7,206				5,645				1,561				27.7	%
Total loans originated		$	1,170,960			$	1,033,231			$	137,729				13.3	%

(1) Represents the principal balance of loan originations and refinancings.

		Other Key Metrics
		YTD 22				YTD 21
Net credit losses		$	103,829			$	57,907
Percentage of average net finance receivables (annualized)			9.3	%			6.6	%
Provision for credit losses		$	124,329			$	58,007
Percentage of average net finance receivables (annualized)			11.1	%			6.6	%
Percentage of total revenue			33.1	%			18.8	%
General and administrative expenses		$	167,385			$	139,982
Percentage of average net finance receivables (annualized)			15.0	%			16.0	%
Percentage of total revenue			44.6	%			45.3	%

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 the funded debt-to-tangible equity ratio are non-GAAP measures that adjust GAAP measures to exclude intangible assets. Management uses these equity measures to evaluate and manage the company’s capital and leverage position. The company also believes that these equity 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 tables provide a reconciliation of GAAP measures to non-GAAP measures.

		3Q 22
Debt		$	1,241,039
Total stockholders' equity			308,453
Less: Intangible assets			11,305
Tangible equity (non-GAAP)		$	297,148
Funded debt-to-equity ratio			4.0	x
Funded debt-to-tangible equity ratio (non-GAAP)			4.2	x

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221101006091/en/

Investor Relations

Garrett Edson, (203) 682-8331

investor.relations@regionalmanagement.com

Source: Regional Management Corp.

FAQ

What were Regional Management Corp.'s Q3 2022 earnings?

Regional Management Corp. reported a net income of $10.1 million and diluted earnings per share of $1.06 for Q3 2022.

How much did net finance receivables grow in Q3 2022 for RM?

Net finance receivables grew by 22.3% year-over-year, reaching an all-time high of $1.61 billion.

What was the revenue growth percentage for RM in Q3 2022?

Regional Management Corp. reported a revenue growth of 17.9%, totaling $131.5 million for Q3 2022.

What is the current delinquency rate for RM as of September 30, 2022?

The 30+ day contractual delinquency rate stood at 7.2% as of September 30, 2022.

What expansion plans does Regional Management Corp. have?

The company expanded its operations to California and Louisiana and plans further expansions into one to two additional states.