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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 3, 2023

 

Regional Management Corp.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

001-35477

 

57-0847115

(State or other jurisdiction of incorporation)

 

(Commission File Number)

 

(IRS Employer Identification No.)

 

979 Batesville Road, Suite B

Greer, South Carolina 29651

(Address of principal executive offices) (zip code)

(864) 448-7000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

Trading Symbol

 

Name of Each Exchange on Which Registered

Common Stock, $0.10 par value

 

RM

 

New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 


Item 2.02. Results of Operations and Financial Condition.

On May 3, 2023, the Company issued a press release announcing financial results for the three months ended March 31, 2023. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. On May 3, 2023, the Company will host a conference call to discuss financial results for the three months ended March 31, 2023. A copy of the presentation to be used during the conference call is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

All information in the press release and the presentation is furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition,” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 8.01. Other Events.

On May 3, 2023, the Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.30 per share of outstanding common stock, payable on June 14, 2023 to stockholders of record as of the close of business on May 24, 2023.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.

 

Description

99.1

 

Press Release issued by Regional Management Corp. on May 3, 2023, announcing financial results for Regional Management Corp. for the three months ended March 31, 2023.

99.2

 

Presentation of Regional Management Corp., dated May 3, 2023.

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Regional Management Corp.

 

 

 

 

Date: May 3, 2023

By:

 

/s/ Harpreet Rana

 

Name:

 

Harpreet Rana

 

Title:

 

Executive Vice President and Chief Financial Officer

 

 


EX-99 2 rm-ex99_1.htm EX-99.1 EX-99

Exhibit 99.1

 

img126415946_0.jpg 

 

Regional Management Corp. Announces First Quarter 2023 Results

- Net income of $8.7 million and diluted earnings per share of $0.90 -

- 30+ day contractual delinquencies of 7.2% as of March 31, 2023 -

- Continued early indications of improved credit performance in the first quarter -

Greenville, South Carolina – May 3, 2023 – Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the first quarter ended March 31, 2023.

 

“We had a strong start to 2023, as our team skillfully navigated a challenging economic environment,” said Robert W. Beck, President and Chief Executive Officer of Regional

Management Corp. “We earned $8.7 million of net income and $0.90 of diluted EPS in the first quarter by maintaining our focus on portfolio quality, expense management, and strong execution of our core business. Due to our conservative underwriting and first quarter seasonality, we liquidated our portfolio by $23 million in the quarter, intentionally slowing our year-over-year portfolio growth rate to 16%. In this macroeconomic environment, we continue to be comfortable trading loan growth for credit quality, but we are well-positioned to lean back into growth when warranted by the economic conditions and overall performance of our portfolio.”

“Our tightening actions over the past several quarters have improved our credit profile, which has benefited early-stage delinquencies,” added Mr. Beck. “We continued to see significant improvements in first payment default rates in the first quarter compared to the same period in 2019. In addition, the delinquency rate of accounts 1 to 59 days past due was 8.6% at the end of the first quarter, a 230 basis point improvement from year-end and 270 basis points better than the first quarter of 2019. Our 30+ day delinquency rate at the end of the first quarter was 7.2%, up 10 basis points from the end of the year and only 30 basis points, or 4%, higher than the first quarter of 2019. After adjusting for our fourth quarter non-performing loan sale, our first quarter 30+ day delinquency rate was 80 basis points better compared to year-end. We are encouraged by the green shoots that we are observing in our early delinquency buckets and the performance of our more recent loan vintages.”

 

“Looking ahead, we are optimistic that tightened underwriting, a declining inflation rate, and continued strength in the labor market, particularly for our customer base, will drive further credit improvement in our portfolio,” continued Mr. Beck. “We remain focused on strong execution of our core business, including originating high-quality loans within our tightened credit box, closely managing expenses, and maintaining a strong balance sheet.

1


 

This straightforward approach allows us to concentrate our efforts on the key drivers of our results. At the same time, we are continuing to advance our long-term strategies of geographic expansion and key investments in technology, digital initiatives, and data and analytics. We expect to emerge from this economic cycle as a stronger company with a larger, higher-quality portfolio and improved operating efficiencies, well-positioned to deliver attractive returns to our shareholders.”

 

Adjusted 30+ day delinquency is a non-GAAP measure. Please refer to the reconciliations of non-GAAP measures to comparable GAAP measures included at the end of this press release.

 

First Quarter 2023 Highlights

 

Net income for the first quarter of 2023 was $8.7 million and diluted earnings per share was $0.90.

 

Net finance receivables as of March 31, 2023 were $1.7 billion, an increase of $230.2 million, or 15.9%, from the prior-year period.

 

- Large loan net finance receivables of $1.2 billion increased $214.6 million, or 21.5%, from the prior-year period and represented 72.3% of the total loan portfolio, compared to 69.0% in the prior-year period.

 

- Small loan net finance receivables were $456.3 million, an increase of 4.1% from the prior-year period.

 

- Total loan originations were $303.2 million in the first quarter of 2023, a decrease of $22.8 million, or 7.0%, from the prior-year period.

 

Total revenue for the first quarter of 2023 was $135.4 million, an increase of $14.5 million, or 12.0%, from the prior-year period.

 

- Interest and fee income increased $12.8 million, or 11.9%, primarily due to higher average net finance receivables.

 

- Insurance income, net increased $0.4 million, or 3.9%, driven by portfolio growth.

 

Provision for credit losses for the first quarter of 2023 was $47.7 million, an increase of $16.8 million, or 54.5%, from the prior-year period.

 

- Annualized net credit losses as a percentage of average net finance receivables for the first quarter of 2023 were 10.1%, compared to 8.7% in the prior-year period.

 

2


 

- The provision for credit losses for the first quarter of 2023 included incremental reserves of $5.0 million primarily related to the composition of the portfolio as compared to the fourth quarter of 2022, which included our non-performing loan sale, partially offset by portfolio liquidation.

 

- Allowance for credit losses was $183.8 million as of March 31, 2023.

 

As of March 31, 2023, 30+ day contractual delinquencies totaled $121.2 million, or 7.2% of net finance receivables, an increase of 10 basis points compared to December 31, 2022. On a non-GAAP basis, adjusting for the fourth quarter non-performing loan sale, the first quarter 30+ day contractual delinquency rate improved 80 basis points from December 31, 2022. The 30+ day contractual delinquency compares favorably to the company’s $183.8 million allowance for credit losses as of March 31, 2023.

 

General and administrative expenses for the first quarter of 2023 were $59.3 million, an increase of $4.2 million, or 7.7%, from the prior-year period.

 

The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) for the first quarter of 2023 was 14.0%, a 140 basis point improvement compared to the prior-year period.

 

Interest expense for the first quarter of 2023 was $16.8 million, an increase of $16.8 million from the prior-year period, primarily due to a $10.2 million mark-to-market benefit to interest expense from interest rate caps in the prior-year period.

 

The company expanded its operations to the state of Arizona in March.

 

Second Quarter 2023 Dividend

 

The company’s Board of Directors has declared a dividend of $0.30 per common share for the second quarter of 2023. The dividend will be paid on June 14, 2023 to shareholders of record as of the close of business on May 24, 2023. 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 March 31, 2023, the company had net finance receivables of $1.7 billion and debt of $1.3 billion. The debt consisted of:

 

$105.3 million on the company’s $420 million senior revolving credit facility,
$35.2 million on the company’s aggregate $300 million revolving warehouse credit facilities, and $1.2 billion through the company’s asset-backed securitizations.

3


 

 

As of March 31, 2023, the company’s unused capacity to fund future growth on its revolving credit facilities (subject to the borrowing base) was $581 million, or 80.6%, and the company had available liquidity of $182.0 million, including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities. As of March 31, 2023, the company’s fixed-rate debt as a percentage of total debt was 89%, with a weighted-average coupon of 3.6% and a weighted-average revolving duration of 1.8 years.

 

The company had a funded debt-to-equity ratio of 4.2 to 1.0 and a stockholders’ equity ratio of 18.6%, each as of March 31, 2023. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 4.4 to 1.0, as of March 31, 2023. 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 19 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, and its consumer website. For more information, please visit www.RegionalManagement.com.

 

4


 

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 evolving underwriting models and processes, including as to the effectiveness of Regional Management's 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; any future public health crises (including the resurgence of COVID-19), including the impact of such crisis on our operations and financial condition; 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; the impact of changes in tax laws and guidance, 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.

5


 

 

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.

 

Contact

Investor Relations

Garrett Edson, (203) 682-8331

investor.relations@regionalmanagement.com

 

6


 

Regional Management Corp. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

(dollars in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

Better (Worse)

 

 

 

1Q 23

 

 

1Q 22

 

 

$

 

 

%

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

Interest and fee income

 

$

120,407

 

 

$

107,631

 

 

$

12,776

 

 

 

11.9

%

Insurance income, net

 

 

10,959

 

 

 

10,544

 

 

 

415

 

 

 

3.9

%

Other income

 

 

4,012

 

 

 

2,673

 

 

 

1,339

 

 

 

50.1

%

Total revenue

 

 

135,378

 

 

 

120,848

 

 

 

14,530

 

 

 

12.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

47,668

 

 

 

30,858

 

 

 

(16,810

)

 

 

(54.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

 

38,597

 

 

 

35,654

 

 

 

(2,943

)

 

 

(8.3

)%

Occupancy

 

 

6,288

 

 

 

5,808

 

 

 

(480

)

 

 

(8.3

)%

Marketing

 

 

3,379

 

 

 

3,091

 

 

 

(288

)

 

 

(9.3

)%

Other

 

 

11,059

 

 

 

10,547

 

 

 

(512

)

 

 

(4.9

)%

Total general and administrative

 

 

59,323

 

 

 

55,100

 

 

 

(4,223

)

 

 

(7.7

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

16,782

 

 

 

(59

)

 

 

(16,841

)

 

NM

 

Income before income taxes

 

 

11,605

 

 

 

34,949

 

 

 

(23,344

)

 

 

(66.8

)%

Income taxes

 

 

2,916

 

 

 

8,166

 

 

 

5,250

 

 

 

64.3

%

Net income

 

$

8,689

 

 

$

26,783

 

 

$

(18,094

)

 

 

(67.6

)%

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.93

 

 

$

2.81

 

 

$

(1.88

)

 

 

(66.9

)%

Diluted

 

$

0.90

 

 

$

2.67

 

 

$

(1.77

)

 

 

(66.3

)%

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

9,325

 

 

 

9,533

 

 

 

208

 

 

 

2.2

%

Diluted

 

 

9,622

 

 

 

10,022

 

 

 

400

 

 

 

4.0

%

Return on average assets (annualized)

 

 

2.0

%

 

 

7.3

%

 

 

 

 

 

 

Return on average equity (annualized)

 

 

11.0

%

 

 

36.7

%

 

 

 

 

 

 

NM - Not Meaningful

7


 

Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(dollars in thousands, except par value amounts)

 

 

 

 

 

 

 

 

Increase (Decrease)

 

 

 

1Q 23

 

 

1Q 22

 

 

$

 

 

%

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

7,108

 

 

$

17,635

 

 

$

(10,527

)

 

 

(59.7

)%

Net finance receivables

 

 

1,676,230

 

 

 

1,446,071

 

 

 

230,159

 

 

 

15.9

%

Unearned insurance premiums

 

 

(49,126

)

 

 

(47,075

)

 

 

(2,051

)

 

 

(4.4

)%

Allowance for credit losses

 

 

(183,800

)

 

 

(158,800

)

 

 

(25,000

)

 

 

(15.7

)%

Net finance receivables, less unearned insurance premiums and allowance for credit losses

 

 

1,443,304

 

 

 

1,240,196

 

 

 

203,108

 

 

 

16.4

%

Restricted cash

 

 

127,178

 

 

 

138,919

 

 

 

(11,741

)

 

 

(8.5

)%

Lease assets

 

 

34,507

 

 

 

28,087

 

 

 

6,420

 

 

 

22.9

%

Restricted available-for-sale investments

 

 

22,489

 

 

 

 

 

 

22,489

 

 

 

100.0

%

Property and equipment

 

 

14,999

 

 

 

13,036

 

 

 

1,963

 

 

 

15.1

%

Deferred tax assets, net

 

 

14,690

 

 

 

18,093

 

 

 

(3,403

)

 

 

(18.8

)%

Intangible assets

 

 

12,972

 

 

 

9,475

 

 

 

3,497

 

 

 

36.9

%

Other assets

 

 

23,867

 

 

 

32,230

 

 

 

(8,363

)

 

 

(25.9

)%

Total assets

 

$

1,701,114

 

 

$

1,497,671

 

 

$

203,443

 

 

 

13.6

%

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Debt

 

$

1,329,677

 

 

$

1,134,377

 

 

$

195,300

 

 

 

17.2

%

Unamortized debt issuance costs

 

 

(8,215

)

 

 

(12,001

)

 

 

3,786

 

 

 

31.5

%

Net debt

 

 

1,321,462

 

 

 

1,122,376

 

 

 

199,086

 

 

 

17.7

%

Lease liabilities

 

 

36,905

 

 

 

30,251

 

 

 

6,654

 

 

 

22.0

%

Accounts payable and accrued expenses

 

 

26,054

 

 

 

46,302

 

 

 

(20,248

)

 

 

(43.7

)%

Total liabilities

 

 

1,384,421

 

 

 

1,198,929

 

 

 

185,492

 

 

 

15.5

%

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, 14,385 shares issued and 9,578 shares outstanding at March 31, 2023 and 14,360 shares issued and 9,806 shares outstanding at March 31, 2022)

 

 

1,438

 

 

 

1,436

 

 

 

2

 

 

 

0.1

%

Additional paid-in capital

 

 

114,452

 

 

 

105,989

 

 

 

8,463

 

 

 

8.0

%

Retained earnings

 

 

351,324

 

 

 

329,878

 

 

 

21,446

 

 

 

6.5

%

Accumulated other comprehensive loss

 

 

(378

)

 

 

 

 

 

(378

)

 

 

(100.0

)%

Treasury stock (4,807 shares at March 31, 2023 and 4,554 shares at March 31, 2022)

 

 

(150,143

)

 

 

(138,561

)

 

 

(11,582

)

 

 

(8.4

)%

Total stockholders’ equity

 

 

316,693

 

 

 

298,742

 

 

 

17,951

 

 

 

6.0

%

Total liabilities and stockholders’ equity

 

$

1,701,114

 

 

$

1,497,671

 

 

$

203,443

 

 

 

13.6

%

 

8


 

Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(dollars in thousands, except per share amounts)

 

 

 

Net Finance Receivables by Product

 

 

 

1Q 23

 

 

4Q 22

 

 

QoQ $
Inc (Dec)

 

 

QoQ %
Inc (Dec)

 

 

1Q 22

 

 

YoY $
Inc (Dec)

 

 

YoY %
Inc (Dec)

 

Small loans

 

$

456,313

 

 

$

481,605

 

 

$

(25,292

)

 

 

(5.3

)%

 

$

438,153

 

 

$

18,160

 

 

 

4.1

%

Large loans

 

 

1,211,836

 

 

 

1,208,185

 

 

 

3,651

 

 

 

0.3

%

 

 

997,226

 

 

 

214,610

 

 

 

21.5

%

Retail loans

 

 

8,081

 

 

 

9,603

 

 

 

(1,522

)

 

 

(15.8

)%

 

 

10,692

 

 

 

(2,611

)

 

 

(24.4

)%

Total net finance receivables

 

$

1,676,230

 

 

$

1,699,393

 

 

$

(23,163

)

 

 

(1.4

)%

 

$

1,446,071

 

 

$

230,159

 

 

 

15.9

%

Number of branches at period end

 

 

344

 

 

 

345

 

 

 

(1

)

 

 

(0.3

)%

 

 

354

 

 

 

(10

)

 

 

(2.8

)%

Net finance receivables per branch

 

$

4,873

 

 

$

4,926

 

 

$

(53

)

 

 

(1.1

)%

 

$

4,085

 

 

$

788

 

 

 

19.3

%

 

 

 

Averages and Yields

 

 

 

1Q 23

 

 

4Q 22

 

 

1Q 22

 

 

 

Average Net Finance Receivables

 

 

Average
Yield (1)

 

 

Average Net Finance Receivables

 

 

Average
Yield (1)

 

 

Average Net Finance Receivables

 

 

Average
Yield (1)

 

Small loans

 

$

467,851

 

 

 

35.0

%

 

$

479,777

 

 

 

33.5

%

 

$

440,936

 

 

 

36.0

%

Large loans

 

 

1,215,547

 

 

 

26.0

%

 

 

1,155,629

 

 

 

26.6

%

 

 

982,881

 

 

 

27.5

%

Retail loans

 

 

8,954

 

 

 

18.6

%

 

 

10,563

 

 

 

16.3

%

 

 

10,620

 

 

 

18.4

%

Total interest and fee yield

 

$

1,692,352

 

 

 

28.5

%

 

$

1,645,969

 

 

 

28.5

%

 

$

1,434,437

 

 

 

30.0

%

Total revenue yield

 

$

1,692,352

 

 

 

32.0

%

 

$

1,645,969

 

 

 

32.1

%

 

$

1,434,437

 

 

 

33.7

%

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

 

 

 

 

Components of Increase in Interest and Fee Income

 

 

 

1Q 23 Compared to 1Q 22

 

 

 

Increase (Decrease)

 

 

 

Volume

 

 

Rate

 

 

Volume & Rate

 

 

Total

 

Small loans

 

$

2,421

 

 

$

(1,034

)

 

$

(63

)

 

$

1,324

 

Large loans

 

 

15,975

 

 

 

(3,600

)

 

 

(852

)

 

 

11,523

 

Retail loans

 

 

(77

)

 

 

7

 

 

 

(1

)

 

 

(71

)

Product mix

 

 

1,033

 

 

 

(947

)

 

 

(86

)

 

 

 

Total increase in interest and fee income

 

$

19,352

 

 

$

(5,574

)

 

$

(1,002

)

 

$

12,776

 

 

 

 

 

Loans Originated (1)

 

 

 

1Q 23

 

 

4Q 22

 

 

QoQ $
Inc (Dec)

 

 

QoQ %
Inc (Dec)

 

 

1Q 22

 

 

YoY $
Inc (Dec)

 

 

YoY %
Inc (Dec)

 

Small loans

 

$

109,484

 

 

$

171,511

 

 

$

(62,027

)

 

 

(36.2

)%

 

$

137,131

 

 

$

(27,647

)

 

 

(20.2

)%

Large loans

 

 

193,571

 

 

 

297,447

 

 

 

(103,876

)

 

 

(34.9

)%

 

 

186,279

 

 

 

7,292

 

 

 

3.9

%

Retail loans

 

 

146

 

 

 

1,390

 

 

 

(1,244

)

 

 

(89.5

)%

 

 

2,590

 

 

 

(2,444

)

 

 

(94.4

)%

Total loans originated

 

$

303,201

 

 

$

470,348

 

 

$

(167,147

)

 

 

(35.5

)%

 

$

326,000

 

 

$

(22,799

)

 

 

(7.0

)%

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

9


 

 

 

 

Other Key Metrics

 

 

 

1Q 23

 

 

4Q 22

 

 

1Q 22

 

Net credit losses

 

$

42,668

 

 

$

61,786

 

 

$

31,358

 

Percentage of average net finance receivables (annualized)

 

 

10.1

%

 

 

15.0

%

 

 

8.7

%

Provision for credit losses

 

$

47,668

 

 

$

60,786

 

 

$

30,858

 

Percentage of average net finance receivables (annualized)

 

 

11.3

%

 

 

14.8

%

 

 

8.6

%

Percentage of total revenue

 

 

35.2

%

 

 

46.0

%

 

 

25.5

%

General and administrative expenses

 

$

59,323

 

 

$

55,143

 

 

$

55,100

 

Percentage of average net finance receivables (annualized)

 

 

14.0

%

 

 

13.4

%

 

 

15.4

%

Percentage of total revenue

 

 

43.8

%

 

 

41.8

%

 

 

45.6

%

Same store results (1):

 

 

 

 

 

 

 

 

 

Net finance receivables at period-end

 

$

1,619,407

 

 

$

1,625,008

 

 

$

1,406,904

 

Net finance receivable growth rate

 

 

12.3

%

 

 

14.8

%

 

 

27.3

%

Number of branches in calculation

 

 

325

 

 

 

320

 

 

 

331

 

(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

 

 

 

1Q 23

 

 

4Q 22

 

 

1Q 22

 

Allowance for credit losses

 

$

183,800

 

 

 

11.0

%

 

$

178,800

 

 

 

10.5

%

 

$

158,800

 

 

 

11.0

%


Current

 

 

1,438,354

 

 

 

85.8

%

 

 

1,431,502

 

 

 

84.2

%

 

 

1,268,367

 

 

 

87.7

%

1 to 29 days past due

 

 

116,723

 

 

 

7.0

%

 

 

148,048

 

 

 

8.7

%

 

 

95,689

 

 

 

6.6

%

Delinquent accounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30 to 59 days

 

 

27,428

 

 

 

1.6

%

 

 

36,208

 

 

 

2.2

%

 

 

19,818

 

 

 

1.4

%

60 to 89 days

 

 

25,178

 

 

 

1.5

%

 

 

31,352

 

 

 

1.8

%

 

 

16,390

 

 

 

1.1

%

90 to 119 days

 

 

23,148

 

 

 

1.4

%

 

 

24,293

 

 

 

1.4

%

 

 

15,636

 

 

 

1.1

%

120 to 149 days

 

 

22,263

 

 

 

1.3

%

 

 

16,257

 

 

 

1.0

%

 

 

15,322

 

 

 

1.1

%

150 to 179 days

 

 

23,136

 

 

 

1.4

%

 

 

11,733

 

 

 

0.7

%

 

 

14,849

 

 

 

1.0

%

Total contractual delinquency

 

$

121,153

 

 

 

7.2

%

 

$

119,843

 

 

 

7.1

%

 

$

82,015

 

 

 

5.7

%

Total net finance receivables

 

$

1,676,230

 

 

 

100.0

%

 

$

1,699,393

 

 

 

100.0

%

 

$

1,446,071

 

 

 

100.0

%

1 day and over past due

 

$

237,876

 

 

 

14.2

%

 

$

267,891

 

 

 

15.8

%

 

$

177,704

 

 

 

12.3

%

 

 

 

 

Contractual Delinquency by Product

 

 

 

1Q 23

 

 

4Q 22

 

 

1Q 22

 

Small loans

 

$

45,600

 

 

 

10.0

%

 

$

43,703

 

 

 

9.1

%

 

$

34,861

 

 

 

8.0

%

Large loans

 

 

74,606

 

 

 

6.2

%

 

 

75,349

 

 

 

6.2

%

 

 

46,375

 

 

 

4.7

%

Retail loans

 

 

947

 

 

 

11.7

%

 

 

791

 

 

 

8.2

%

 

 

779

 

 

 

7.3

%

Total contractual delinquency

 

$

121,153

 

 

 

7.2

%

 

$

119,843

 

 

 

7.1

%

 

$

82,015

 

 

 

5.7

%

 

10


 

 

 

Income Statement Quarterly Trend

 

 

 

1Q 22

 

 

2Q 22

 

 

3Q 22

 

 

4Q 22

 

 

1Q 23

 

 

QoQ $
B(W)

 

 

YoY $
B(W)

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fee income

 

$

107,631

 

 

$

109,771

 

 

$

116,020

 

 

$

117,432

 

 

$

120,407

 

 

$

2,975

 

 

$

12,776

 

Insurance income, net

 

 

10,544

 

 

 

10,220

 

 

 

11,987

 

 

 

10,751

 

 

 

10,959

 

 

 

208

 

 

 

415

 

Other income

 

 

2,673

 

 

 

2,880

 

 

 

3,445

 

 

 

3,833

 

 

 

4,012

 

 

 

179

 

 

 

1,339

 

Total revenue

 

 

120,848

 

 

 

122,871

 

 

 

131,452

 

 

 

132,016

 

 

 

135,378

 

 

 

3,362

 

 

 

14,530

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

30,858

 

 

 

45,400

 

 

 

48,071

 

 

 

60,786

 

 

 

47,668

 

 

 

13,118

 

 

 

(16,810

)


Personnel

 

 

35,654

 

 

 

33,941

 

 

 

36,979

 

 

 

34,669

 

 

 

38,597

 

 

 

(3,928

)

 

 

(2,943

)

Occupancy

 

 

5,808

 

 

 

6,156

 

 

 

5,848

 

 

 

5,997

 

 

 

6,288

 

 

 

(291

)

 

 

(480

)

Marketing

 

 

3,091

 

 

 

4,108

 

 

 

3,940

 

 

 

4,239

 

 

 

3,379

 

 

 

860

 

 

 

(288

)

Other

 

 

10,547

 

 

 

9,916

 

 

 

11,397

 

 

 

10,238

 

 

 

11,059

 

 

 

(821

)

 

 

(512

)

Total general and administrative

 

 

55,100

 

 

 

54,121

 

 

 

58,164

 

 

 

55,143

 

 

 

59,323

 

 

 

(4,180

)

 

 

(4,223

)


Interest expense

 

 

(59

)

 

 

7,564

 

 

 

11,863

 

 

 

14,855

 

 

 

16,782

 

 

 

(1,927

)

 

 

(16,841

)

Income before income taxes

 

 

34,949

 

 

 

15,786

 

 

 

13,354

 

 

 

1,232

 

 

 

11,605

 

 

 

10,373

 

 

 

(23,344

)

Income taxes

 

 

8,166

 

 

 

3,804

 

 

 

3,286

 

 

 

(1,159

)

 

 

2,916

 

 

 

(4,075

)

 

 

5,250

 

Net income

 

$

26,783

 

 

$

11,982

 

 

$

10,068

 

 

$

2,391

 

 

$

8,689

 

 

$

6,298

 

 

$

(18,094

)

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.81

 

 

$

1.29

 

 

$

1.09

 

 

$

0.26

 

 

$

0.93

 

 

$

0.67

 

 

$

(1.88

)

Diluted

 

$

2.67

 

 

$

1.24

 

 

$

1.06

 

 

$

0.25

 

 

$

0.90

 

 

$

0.65

 

 

$

(1.77

)

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

9,533

 

 

 

9,261

 

 

 

9,195

 

 

 

9,199

 

 

 

9,325

 

 

 

(126

)

 

 

208

 

Diluted

 

 

10,022

 

 

 

9,669

 

 

 

9,526

 

 

 

9,411

 

 

 

9,622

 

 

 

(211

)

 

 

400

 

 

 

 

Balance Sheet Quarterly Trend

 

 

 

1Q 22

 

 

2Q 22

 

 

3Q 22

 

 

4Q 22

 

 

1Q 23

 

 

QoQ $
Inc (Dec)

 

 

YoY $
Inc (Dec)

 

Total assets

 

$

1,497,671

 

 

$

1,547,944

 

 

$

1,606,550

 

 

$

1,724,987

 

 

$

1,701,114

 

 

$

(23,873

)

 

$

203,443

 

Net finance receivables

 

$

1,446,071

 

 

$

1,525,659

 

 

$

1,607,598

 

 

$

1,699,393

 

 

$

1,676,230

 

 

$

(23,163

)

 

$

230,159

 

Allowance for credit losses

 

$

158,800

 

 

$

167,500

 

 

$

179,800

 

 

$

178,800

 

 

$

183,800

 

 

$

5,000

 

 

$

25,000

 

Debt

 

$

1,134,377

 

 

$

1,194,570

 

 

$

1,241,039

 

 

$

1,355,359

 

 

$

1,329,677

 

 

$

(25,682

)

 

$

195,300

 

 

 

 

Other Key Metrics Quarterly Trend

 

 

 

1Q 22

 

 

2Q 22

 

 

3Q 22

 

 

4Q 22

 

 

1Q 23

 

 

QoQ
Inc (Dec)

 

 

YoY
Inc (Dec)

 

Interest and fee yield (annualized)

 

 

30.0

%

 

 

29.8

%

 

 

29.6

%

 

 

28.5

%

 

 

28.5

%

 

 

 

 

 

(1.5

)%

Efficiency ratio (1)

 

 

45.6

%

 

 

44.0

%

 

 

44.2

%

 

 

41.8

%

 

 

43.8

%

 

 

2.0

%

 

 

(1.8

)%

Operating expense ratio (2)

 

 

15.4

%

 

 

14.7

%

 

 

14.9

%

 

 

13.4

%

 

 

14.0

%

 

 

0.6

%

 

 

(1.4

)%

30+ contractual delinquency

 

 

5.7

%

 

 

6.2

%

 

 

7.2

%

 

 

7.1

%

 

 

7.2

%

 

 

0.1

%

 

 

1.5

%

Net credit loss ratio (3)

 

 

8.7

%

 

 

10.0

%

 

 

9.1

%

 

 

15.0

%

 

 

10.1

%

 

 

(4.9

)%

 

 

1.4

%

Book value per share

 

$

30.47

 

 

$

31.15

 

 

$

32.18

 

 

$

32.41

 

 

$

33.06

 

 

$

0.65

 

 

$

2.59

 

(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.

 

 

11


 

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. Adjusted delinquency and adjusted delinquency rate are non-GAAP measures that adjust GAAP measures to exclude the impacts of the non-performing loan sale. Management uses these adjusted measures to evaluate and manage the company's performance by excluding certain material items that may not be representative of the company's financial results. As a result, the company also believes that these adjusted measures will aid users of its financial statements in the evaluation of its operating performance.

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.

 

 

1Q 23

 

Debt

 

$

1,329,677

 

Total stockholders' equity

 

 

316,693

 

Less: Intangible assets

 

 

12,972

 

Tangible equity (non-GAAP)

 

$

303,721

 

Funded debt-to-equity ratio

 

 

4.2

x

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

 

 

4.4

x

 

 

 

4Q 22 Non-GAAP Reconciliation

 

 

 

GAAP

 

 

Adjustments

 

 

Non-GAAP

 

30+ day contractual delinquency ($) (1)

 

$

119,843

 

 

$

17,454

 

 

$

137,297

 

Net finance receivables (2)

 

$

1,699,393

 

 

$

17,454

 

 

$

1,716,847

 

30+ day contractual delinquency (%) (1)

 

 

7.1

%

 

 

0.9

%

 

 

8.0

%

(1) 30+ day contractual delinquency adjustments (in dollars and percentage) include delinquencies pertaining to the non-performing loan sale.

(2) Net finance receivables adjustments include delinquent receivables pertaining to the non-performing loan sale.

12


EX-99 3 rm-ex99_2.htm EX-99.2

Slide 1

1Q 2023 Earnings Presentation May 3rd, 2023 Exhibit 99.2


Slide 2

Legal Disclosures This document contains summarized information concerning Regional Management Corp. (the “Company”) and the Company’s business, operations, financial performance, and trends. No representation is made that the information in this document is complete. For additional financial, statistical, and business information, please see the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the U.S. Securities and Exchange Commission (the “SEC”), as well as the Company’s other reports filed with the SEC from time to time. Such reports are or will be available on the Company’s website (www.regionalmanagement.com) and on the SEC’s website (www.sec.gov). The information and opinions contained in this document are provided as of the date of this presentation and are subject to change without notice. This document has not been approved by any regulatory or supervisory authority. This presentation, the related remarks, and the responses to various questions 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 the Company’s expectations or beliefs concerning future events. Forward-looking statements include, without limitation, statements concerning financial outlook 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 the Company. 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 such 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 evolving underwriting models and processes, including as to the effectiveness of Regional Management’s 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; any future public health crises (including the resurgence of COVID-19), including the impact of such crisis on our operations and financial condition; 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; the impact of changes in tax laws and guidance, 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 foregoing factors and others are discussed in greater detail in the Company's filings with the SEC. The Company will not update or revise forward-looking statements to reflect events or circumstances after the date of this presentation 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. This presentation also contains certain non-GAAP measures.  Please refer to the Appendix accompanying this presentation for a reconciliation of non-GAAP measures to the most comparable GAAP measures. 2


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1Q 2023 Financial Highlights Net income of $8.7 million and diluted EPS of $0.90 Total revenue increased $14.5 million, or 12.0% Interest and fee income up 11.9% due to an 18.0% increase in ANR Insurance income, net increased by $0.4 million due to portfolio growth Provision for credit losses increased $16.8 million, or 54.5%  Net credit losses up $11.3 million from higher ANR and macro conditions Increase in provision of $5.5 million from a reserve build in 1Q 23 of $5.0 million compared to a reserve release in 1Q 22 of $0.5 million Operating expense ratio improved 1.4%   Revenue growth outpaced G&A expense growth by 3.4x from the prior-year period Interest expense increased $16.8 million  Favorable market value increase of $10.2 million on interest rate caps in 1Q 22 Increase of $6.6 million on higher interest rates and ANR growth of $257.9 million 3 (1) NM – Not meaningful (1)


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Year-over-year growth rate reduced from credit tightening actions; originations were more concentrated on programs to present and former borrowers, which perform better than new borrowers 1Q 23 digital, direct mail, and branch originations are down year-over-year 14.9%, 12.1%, and 3.2%, respectively, from tightened credit and focus on present and former borrowers Quarterly Origination Trend 4 ($ in millions) Originations Trend


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Digital originations are sourced from either our affiliate partnerships or directly from our website, underwritten by our custom credit scorecards, and serviced by our branches Digital originations decreased sequentially in 1Q 23 due to seasonality and credit tightening; 96% of 1Q 23 digital originations were 600+ FICO vs. 82% in 1Q 19 Digital volume represented 32.1% of our total new borrower volume in 1Q 23 Large loans represented 73.0% of new borrower digitally sourced loans booked in 1Q 23 Digitally Sourced Origination Volume Trend 5 ($ in millions) Digitally Sourced Originations


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Controlled Portfolio Growth Year-Over-Year Achieved year-over-year loan growth of $230 million, or 15.9%, in 1Q 23, down from 30.8% in 1Q 22 as a result of credit tightening for disciplined growth Large loans increased $4 million sequentially in 1Q 23; small loans decreased $25 million from credit tightening and seasonal payments from tax refunds Continued the mix shift toward large loans As of March 31, 2023, 86% of net finance receivables were at or below 36% APR Product Mix 6


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Higher ENR Per Branch is Driving Efficiency (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. 7 ($ in thousands) Branch consolidations and our new state, lighter footprint strategy with larger branches, are driving higher ENR per branch Same store(1) year-over-year growth rate of 12.3% in 1Q 23 vs. 27.3% in the prior-year period


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Revenue grew 12.0% year-over-year to a record $135 million in 1Q 23 Total revenue yield decreased 1.7% year-over-year due to continued mix shift towards larger, higher-quality loans and the credit impact from macro conditions on revenue reversals and non-accrual loans, partially offset by price increases Loan sale decreased 4Q 22 total revenue by $2.2 million and is estimated to have increased 1Q 23 total revenue by a similar amount As of March 31, 2023, 86% of net finance receivables were at or below 36% APR  Total Revenue Average Net Finance Receivables Total Revenue and Interest & Fee Yield 8 ($ in millions) ($ in millions) Revenue Up 12.0% on Controlled Receivable Growth (1) Total revenue and interest and fee income each as annualized percentages of average net receivables


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Recent Credit Trends 1Q 23 delinquency was 7.2% compared to 7.1% in 4Q 22 (inclusive of a 0.9% reduction from the loan sale) Pre-pandemic delinquency was 6.9% in 1Q 19 30+ days past due of $121.2 million compares favorably to loan loss reserves of $183.8 million as of 1Q 23 4Q 22 net credit loss rate of 15.0% included 3.2% related to accelerated charge-offs from the loan sale; 1Q 23 rate of 10.1% was inclusive of an estimated benefit of 2.8% related to the 4Q 22 loan sale 30+ & 90+ Delinquency Rates ($ in millions) Net Credit Loss Rates 9


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Reserved For Stressed Credit Losses In 1Q 23, we increased our loan loss reserves by $5.0 million related to the combined impacts of the 4Q 22 loan sale, 1Q 23 ENR liquidation, and the potential future macroeconomic impacts on credit losses.​ 10 ($ in millions) Loan Loss Reserves


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Improving Operating Leverage While Investing in Our Business 1Q 23 operating expense ratio improved 140 basis points from the prior year 1Q 23 revenue growth year-over-year outpaced G&A expense growth by 3.4x Operating Expense Ratio (1) Annualized general and administrative expenses as a percentage of average net finance receivables ($ in millions) 11 Operating Expense Improvement


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12 1Q 23 interest expense as an annualized percentage of ANR increased 400 basis points year-over-year due to the following:  Favorable market value increases on interest rate caps in 1Q 22 (240 basis points)  Higher interest rates on ENR growth (150 basis points) Accelerated amortization of $0.6 million of debt issuance costs in 1Q 23 related to the early payoff of $75 million warehouse facility (10 basis points) Interest Expense ($ in millions) (1) Cost of Funds (1) Market value (increase) decrease on interest rate caps (“MTM” or mark-to-market value)


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As of March 31, 2023, total unused capacity was $581 million (subject to borrowing base)  Available liquidity of $182 million as of March 31, 2023 Fixed-rate debt represented 89% of total debt as of March 31, 2023, and had a weighted-average revolving duration of 1.8 years Strong Funding Profile Debt Capacity Fixed vs. Variable Debt Funded Debt Ratios 13 ($ in millions) (1) Weighted-average coupon (2) Private securitization that allows for fixed-rate funding of loans with APRs greater than 36%, resulting in a higher WAC than prior securitizations for funding of loans with APRs at or below 36% (3) This is a non-GAAP measure. Refer to the Appendix for a reconciliation to the most comparable GAAP measure (4) Annualized interest expense as a percentage of average net finance receivables (2) (1) ($ in millions)


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Appendix 14


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Significant Capacity to Absorb Losses (1)  Trailing twelve months (TTM) from 2Q 22 through 1Q 23 (2)  Pre-tax pre-provision income (PTPP) is a non-GAAP measure and is defined as net income, plus income taxes and provision for credit losses. Refer to the Appendix for a reconciliation to the most comparable GAAP measure. (3)  Net credit losses as a percentage of average net finance receivables 15


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Diversified Liquidity Profile Long history of liquidity support from a strong group of banking partners Diversified funding platform with a senior revolving facility, warehouse facilities, and securitizations 16 (1) Extended maturity date to May 2024 during April 2023 (2) Entered into warehouse facility agreement in April 2023


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Consolidated Income Statements 17


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Consolidated Balance Sheets 18


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Non-GAAP Financial Measures In addition to financial measures presented in accordance with generally accepted accounting principles (“GAAP”), this presentation 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. The company believes that these non-GAAP measures provide useful information by excluding certain material items that may not be indicative of our operating results. As a result, the company believes that the non-GAAP measures that it has presented will aid in the evaluation of the operating performance of the business. Pre-tax pre-provision income and absorption capacity including pre-tax pre-provision income are non-GAAP measures that adjust GAAP measures to exclude income taxes and provision for credit losses. Management uses these absorption measures to evaluate and manage the company’s position to absorb losses. The company also believes that these absorption measures provide useful information to users of the company’s financial statements in the evaluation of its capacity to absorb losses. Furthermore, 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.  As a result, the company also believes that these adjusted measures will aid users of its financial statements in the evaluation of its operating performance. 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 reconciliations of GAAP measures to non-GAAP measures. 19


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Non-GAAP Financial Measures (Cont’d) 20 (1) Trailing twelve months (TTM) from 2Q 22 through 1Q 23 (1)


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Non-GAAP Financial Measures (Cont’d) 21