RM Regional Management Corp

 

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): August 2, 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. ☐

 

 

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Item 2.02. Results of Operations and Financial Condition.

On August 2, 2023, the Company issued a press release announcing financial results for the three and six months ended June 30, 2023. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. On August 2, 2023, the Company will host a conference call to discuss financial results for the three and six months ended June 30, 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 August 2, 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 September 14, 2023 to stockholders of record as of the close of business on August 23, 2023.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.		Description
99.1		Press Release issued by Regional Management Corp. on August 2, 2023, announcing financial results for Regional Management Corp. for the three and six months ended June 30, 2023.
99.2		Presentation of Regional Management Corp., dated August 2, 2023.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

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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: August 2, 2023	By:		/s/ Harpreet Rana
	Name:		Harpreet Rana
	Title:		Executive Vice President and Chief Financial Officer

 

 

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Exhibit 99.1

 

 

 

Regional Management Corp. Announces Second Quarter 2023 Results

- Net income of $6.0 million and diluted earnings per share of $0.63 -

- 30+ day contractual delinquencies of 6.9% as of June 30, 2023, an improvement of 30 basis points compared to March 31, 2023 -

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

Greenville, South Carolina – August 2, 2023 – Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the second quarter ended June 30, 2023.

 

“We are pleased with our second quarter results, which exceeded our expectations on both the top and bottom lines,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “We produced $6.0 million of net income and $0.63 of diluted earnings per share. Loan demand remained strong in the quarter, allowing us to generate high-quality portfolio growth and near-record quarterly revenue while simultaneously maintaining a conservative credit posture. We also continued to closely manage our expenses while investing in our business, driving our annualized operating expense ratio down to 13.6% in the quarter. Our focus on portfolio quality, expense management, and strong execution of our core business has enabled us to deliver consistent, predictable, and superior results quarter after quarter.”

“Our portfolio’s early-stage delinquencies continue to benefit from several quarters of tightened underwriting criteria,” added Mr. Beck. “Overall, we ended the quarter with a 30+ day delinquency rate of 6.9%, a sequential improvement of 30 basis points from the first quarter. Looking ahead, while we have been encouraged by recent economic data indicating a strong labor market, moderating inflation, and real wage growth, we continue to be comfortable prioritizing higher credit quality over more rapid portfolio growth. However, we remain prepared to lean back into growth when justified by the economic conditions and the overall performance of our portfolio. As always, we look forward to continuing our delivery of controlled growth and profitability, sustainable returns, and long-term value to our shareholders.”

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Second Quarter 2023 Highlights

 

 

 

- Large loan net finance receivables of $1.2 billion increased $178.5 million, or 16.8%, from the prior-year period and represented 73.3% of the total loan portfolio, compared to 69.4% in the prior-year period.

 

- Small loan net finance receivables were $444.6 million, a decrease of 2.3% from the prior-year period.

 

- Total loan originations were $399.0 million in the second quarter of 2023, a decrease of $27.3 million, or 6.4%, from the prior-year period.

 

 

- Interest and fee income increased $8.3 million, or 7.6%, primarily due to higher average net finance receivables.

 

- Insurance income, net increased $1.0 million, or 9.6%, driven by portfolio growth.

 

 

- Annualized net credit losses as a percentage of average net finance receivables for the second quarter of 2023 were 13.1%, compared to 10.0% in the prior-year period.

 

- The provision for credit losses for the second quarter of 2023 included a reserve reduction of $2.4 million primarily due to changes in estimated future macroeconomic impacts on credit losses, partially offset by portfolio growth during the quarter.

 

- Allowance for credit losses was $181.4 million as of June 30, 2023, or 10.7% of net finance receivables.

 

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Third Quarter 2023 Dividend

 

The company’s Board of Directors has declared a dividend of $0.30 per common share for the third quarter of 2023. The dividend will be paid on September 14, 2023 to shareholders of record as of the close of business on August 23, 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 June 30, 2023, the company had net finance receivables of $1.7 billion and debt of $1.3 billion. The debt consisted of:

 

 

As of June 30, 2023, the company’s unused capacity to fund future growth on its revolving credit facilities (subject to the borrowing base) was $641 million, or 80.6%, and the company had available liquidity of [$147.2 million], including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities. As of June 30, 2023, the company’s fixed-rate debt as a percentage of total debt was 88%, with a weighted-average coupon of 3.6% and a weighted-average revolving duration of 1.6 years.

 

The company had a funded debt-to-equity ratio of 4.2 to 1.0 and a stockholders’ equity ratio of 18.7%, each as of June 30, 2023. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 4.4 to 1.0, as of June 30, 2023. Please refer to the reconciliations of non-GAAP measures to comparable GAAP measures included at the end of this press release.

 

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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.

 

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

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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.

 

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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

 

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Regional Management Corp. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

(dollars in thousands, except per share amounts)

 

										Better (Worse)																Better (Worse)
		2Q 23				2Q 22				$				%				YTD 23				YTD 22				$				%
Revenue
Interest and fee income		$	118,083			$	109,771			$	8,312				7.6	%		$	238,490			$	217,402			$	21,088				9.7	%
Insurance income, net			11,203				10,220				983				9.6	%			22,162				20,764				1,398				6.7	%
Other income			4,198				2,880				1,318				45.8	%			8,210				5,553				2,657				47.8	%
Total revenue			133,484				122,871				10,613				8.6	%			268,862				243,719				25,143				10.3	%
Expenses
Provision for credit losses			52,551				45,400				(7,151	)			(15.8	)%			100,219				76,258				(23,961	)			(31.4	)%
Personnel			36,419				33,941				(2,478	)			(7.3	)%			75,016				69,595				(5,421	)			(7.8	)%
Occupancy			6,158				6,156				(2	)			0.0	%			12,446				11,964				(482	)			(4.0	)%
Marketing			3,844				4,108				264				6.4	%			7,223				7,199				(24	)			(0.3	)%
Other			10,475				9,916				(559	)			(5.6	)%			21,534				20,463				(1,071	)			(5.2	)%
Total general and administrative			56,896				54,121				(2,775	)			(5.1	)%			116,219				109,221				(6,998	)			(6.4	)%
Interest expense			16,224				7,564				(8,660	)			(114.5	)%			33,006				7,505				(25,501	)			(339.8	)%
Income before income taxes			7,813				15,786				(7,973	)			(50.5	)%			19,418				50,735				(31,317	)			(61.7	)%
Income taxes			1,790				3,804				2,014				52.9	%			4,706				11,970				7,264				60.7	%
Net income		$	6,023			$	11,982			$	(5,959	)			(49.7	)%		$	14,712			$	38,765			$	(24,053	)			(62.0	)%
Net income per common share:
Basic		$	0.64			$	1.29			$	(0.65	)			(50.4	)%		$	1.57			$	4.13			$	(2.56	)			(62.0	)%
Diluted		$	0.63			$	1.24			$	(0.61	)			(49.2	)%		$	1.53			$	3.94			$	(2.41	)			(61.2	)%
Weighted-average common shares outstanding:
Basic			9,399				9,261				(138	)			(1.5	)%			9,363				9,396				33				0.4	%
Diluted			9,566				9,669				103				1.1	%			9,595				9,845				250				2.5	%
Return on average assets (annualized)			1.4	%			3.2	%											1.7	%			5.2	%
Return on average equity (annualized)			7.6	%			16.0	%											9.3	%			26.3	%

 

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Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(dollars in thousands, except par value amounts)

 

										Increase (Decrease)
		2Q 23				2Q 22				$				%
Assets
Cash		$	10,330			$	7,928			$	2,402				30.3	%
Net finance receivables			1,688,937				1,525,659				163,278				10.7	%
Unearned insurance premiums			(49,059	)			(48,986	)			(73	)			(0.1	)%
Allowance for credit losses			(181,400	)			(167,500	)			(13,900	)			(8.3	)%
Net finance receivables, less unearned insurance premiums and allowance for credit losses			1,458,478				1,309,173				149,305				11.4	%
Restricted cash			131,132				144,802				(13,670	)			(9.4	)%
Lease assets			34,996				28,555				6,441				22.6	%
Restricted available-for-sale investments			20,298				—				20,298				100.0	%
Deferred tax assets, net			15,278				19,798				(4,520	)			(22.8	)%
Property and equipment			14,689				12,808				1,881				14.7	%
Intangible assets			13,949				10,312				3,637				35.3	%
Other assets			24,466				14,568				9,898				67.9	%
Total assets		$	1,723,616			$	1,547,944			$	175,672				11.3	%
Liabilities and Stockholders’ Equity
Liabilities:
Debt		$	1,344,855			$	1,194,570			$	150,285				12.6	%
Unamortized debt issuance costs			(6,923	)			(10,819	)			3,896				36.0	%
Net debt			1,337,932				1,183,751				154,181				13.0	%
Lease liabilities			37,150				31,117				6,033				19.4	%
Accounts payable and accrued expenses			27,032				34,492				(7,460	)			(21.6	)%
Total liabilities			1,402,114				1,249,360				152,754				12.2	%
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, 14,636 shares issued and 9,829 shares outstanding at June 30, 2023 and 14,390 shares issued and 9,584 shares outstanding at June 30, 2022)			1,464				1,439				25				1.7	%
Additional paid-in capital			116,202				108,345				7,857				7.3	%
Retained earnings			354,346				338,943				15,403				4.5	%
Accumulated other comprehensive loss			(367	)			—				(367	)			(100.0	)%
Treasury stock (4,807 shares at June 30, 2023 and 4,807 shares at June 30, 2022)			(150,143	)			(150,143	)			-				—
Total stockholders’ equity			321,502				298,584				22,918				7.7	%
Total liabilities and stockholders’ equity		$	1,723,616			$	1,547,944			$	175,672				11.3	%

 

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Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(dollars in thousands, except per share amounts)

 

		Net Finance Receivables by Product
		2Q 23				1Q 23				QoQ $ Inc (Dec)				QoQ % Inc (Dec)				2Q 22				YoY $ Inc (Dec)				YoY % Inc (Dec)
Small loans		$	444,590			$	456,313			$	(11,723	)			(2.6	)%		$	455,253			$	(10,663	)			(2.3	)%
Large loans			1,238,031				1,211,836				26,195				2.2	%			1,059,523				178,508				16.8	%
Retail loans			6,316				8,081				(1,765	)			(21.8	)%			10,883				(4,567	)			(42.0	)%
Total net finance receivables		$	1,688,937			$	1,676,230			$	12,707				0.8	%		$	1,525,659			$	163,278				10.7	%
Number of branches at period end			347				344				3				0.9	%			334				13				3.9	%
Net finance receivables per branch		$	4,867			$	4,873			$	(6	)			(0.1	)%		$	4,568			$	299				6.5	%

 

 

		Averages and Yields
		2Q 23								1Q 23								2Q 22
		Average Net Finance Receivables				Average Yield (1)				Average Net Finance Receivables				Average Yield (1)				Average Net Finance Receivables				Average Yield (1)
Small loans		$	443,601				34.5	%		$	467,851				35.0	%		$	437,226				35.8	%
Large loans			1,223,339				26.0	%			1,215,547				26.0	%			1,023,546				27.4	%
Retail loans			7,191				16.6	%			8,954				18.6	%			10,828				18.3	%
Total interest and fee yield		$	1,674,131				28.2	%		$	1,692,352				28.5	%		$	1,471,600				29.8	%
Total revenue yield		$	1,674,131				31.9	%		$	1,692,352				32.0	%		$	1,471,600				33.4	%

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

 

 

		Components of Increase in Interest and Fee Income
		2Q 23 Compared to 2Q 22
		Increase (Decrease)
		Volume				Rate				Volume & Rate				Total
Small loans		$	571			$	(1,409	)		$	(21	)		$	(859	)
Large loans			13,691				(3,617	)			(706	)			9,368
Retail loans			(166	)			(46	)			15				(197	)
Product mix			1,011				(901	)			(110	)			—
Total increase in interest and fee income		$	15,107			$	(5,973	)		$	(822	)		$	8,312

 

 

		Loans Originated (1)
		2Q 23				1Q 23				QoQ $ Inc (Dec)				QoQ % Inc (Dec)				2Q 22				YoY $ Inc (Dec)				YoY % Inc (Dec)
Small loans		$	149,460			$	109,484			$	39,976				36.5	%		$	171,244			$	(21,784	)			(12.7	)%
Large loans			249,514				193,571				55,943				28.9	%			252,572				(3,058	)			(1.2	)%
Retail loans			—				146				(146	)			(100.0	)%			2,471				(2,471	)			(100.0	)%
Total loans originated		$	398,974			$	303,201			$	95,773				31.6	%		$	426,287			$	(27,313	)			(6.4	)%

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

 

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		Other Key Metrics
		2Q 23				1Q 23				2Q 22
Net credit losses		$	54,951			$	42,668			$	36,700
Percentage of average net finance receivables (annualized)			13.1	%			10.1	%			10.0	%
Provision for credit losses		$	52,551			$	47,668			$	45,400
Percentage of average net finance receivables (annualized)			12.6	%			11.3	%			12.3	%
Percentage of total revenue			39.4	%			35.2	%			36.9	%
General and administrative expenses		$	56,896			$	59,323			$	54,121
Percentage of average net finance receivables (annualized)			13.6	%			14.0	%			14.7	%
Percentage of total revenue			42.6	%			43.8	%			44.0	%
Same store results (1):
Net finance receivables at period-end		$	1,636,131			$	1,619,407			$	1,466,300
Net finance receivable growth rate			7.2	%			12.3	%			24.7	%
Number of branches in calculation			329				325				310

(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
		2Q 23								1Q 23								2Q 22
Allowance for credit losses		$	181,400				10.7	%		$	183,800				11.0	%		$	167,500				11.0	%
Current			1,433,787				84.9	%			1,438,354				85.8	%			1,306,183				85.6	%
1 to 29 days past due			138,810				8.2	%			116,723				7.0	%			124,810				8.2	%
Delinquent accounts:
30 to 59 days			33,676				2.0	%			27,428				1.6	%			26,785				1.8	%
60 to 89 days			24,931				1.5	%			25,178				1.5	%			24,420				1.6	%
90 to 119 days			20,041				1.1	%			23,148				1.4	%			18,557				1.2	%
120 to 149 days			18,087				1.1	%			22,263				1.3	%			12,528				0.8	%
150 to 179 days			19,605				1.2	%			23,136				1.4	%			12,376				0.8	%
Total contractual delinquency		$	116,340				6.9	%		$	121,153				7.2	%		$	94,666				6.2	%
Total net finance receivables		$	1,688,937				100.0	%		$	1,676,230				100.0	%		$	1,525,659				100.0	%
1 day and over past due		$	255,150				15.1	%		$	237,876				14.2	%		$	219,476				14.4	%

 

 

		Contractual Delinquency by Product
		2Q 23								1Q 23								2Q 22
Small loans		$	40,894				9.2	%		$	45,600				10.0	%		$	41,984				9.2	%
Large loans			74,637				6.0	%			74,606				6.2	%			51,763				4.9	%
Retail loans			809				12.8	%			947				11.7	%			919				8.4	%
Total contractual delinquency		$	116,340				6.9	%		$	121,153				7.2	%		$	94,666				6.2	%

 

10

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		Income Statement Quarterly Trend
		2Q 22				3Q 22				4Q 22				1Q 23				2Q 23				QoQ $ B(W)				YoY $ B(W)
Revenue
Interest and fee income		$	109,771			$	116,020			$	117,432			$	120,407			$	118,083			$	(2,324	)		$	8,312
Insurance income, net			10,220				11,987				10,751				10,959				11,203				244				983
Other income			2,880				3,445				3,833				4,012				4,198				186				1,318
Total revenue			122,871				131,452				132,016				135,378				133,484				(1,894	)			10,613
Expenses
Provision for credit losses			45,400				48,071				60,786				47,668				52,551				(4,883	)			(7,151	)
Personnel			33,941				36,979				34,669				38,597				36,419				2,178				(2,478	)
Occupancy			6,156				5,848				5,997				6,288				6,158				130				(2	)
Marketing			4,108				3,940				4,239				3,379				3,844				(465	)			264
Other			9,916				11,397				10,238				11,059				10,475				584				(559	)
Total general and administrative			54,121				58,164				55,143				59,323				56,896				2,427				(2,775	)
Interest expense			7,564				11,863				14,855				16,782				16,224				558				(8,660	)
Income before income taxes			15,786				13,354				1,232				11,605				7,813				(3,792	)			(7,973	)
Income taxes			3,804				3,286				(1,159	)			2,916				1,790				1,126				2,014
Net income		$	11,982			$	10,068			$	2,391			$	8,689			$	6,023			$	(2,666	)		$	(5,959	)
Net income per common share:
Basic		$	1.29			$	1.09			$	0.26			$	0.93			$	0.64			$	(0.29	)		$	(0.65	)
Diluted		$	1.24			$	1.06			$	0.25			$	0.90			$	0.63			$	(0.27	)		$	(0.61	)
Weighted-average shares outstanding:
Basic			9,261				9,195				9,199				9,325				9,399				(74	)			(138	)
Diluted			9,669				9,526				9,411				9,622				9,566				56				103
		Balance Sheet Quarterly Trend
		2Q 22				3Q 22				4Q 22				1Q 23				2Q 23				QoQ $ Inc (Dec)				YoY $ Inc (Dec)
Total assets		$	1,547,944			$	1,606,550			$	1,724,987			$	1,701,114			$	1,723,616			$	22,502			$	175,672
Net finance receivables		$	1,525,659			$	1,607,598			$	1,699,393			$	1,676,230			$	1,688,937			$	12,707			$	163,278
Allowance for credit losses		$	167,500			$	179,800			$	178,800			$	183,800			$	181,400			$	(2,400	)		$	13,900
Debt		$	1,194,570			$	1,241,039			$	1,355,359			$	1,329,677			$	1,344,855			$	15,178			$	150,285
		Other Key Metrics Quarterly Trend
		2Q 22				3Q 22				4Q 22				1Q 23				2Q 23				QoQ Inc (Dec)				YoY Inc (Dec)
Interest and fee yield (annualized)			29.8	%			29.6	%			28.5	%			28.5	%			28.2	%			(0.3	)%			(1.6	)%
Efficiency ratio (1)			44.0	%			44.2	%			41.8	%			43.8	%			42.6	%			(1.2	)%			(1.4	)%
Operating expense ratio (2)			14.7	%			14.9	%			13.4	%			14.0	%			13.6	%			(0.4	)%			(1.1	)%
30+ contractual delinquency			6.2	%			7.2	%			7.1	%			7.2	%			6.9	%			(0.3	)%			0.7	%
Net credit loss ratio (3)			10.0	%			9.1	%			15.0	%			10.1	%			13.1	%			3.0	%			3.1	%
Book value per share		$	31.15			$	32.18			$	32.41			$	33.06			$	32.71			$	(0.35	)		$	1.56

(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

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		Averages and Yields
		YTD 23								YTD 22
		Average Net Finance Receivables				Average Yield (Annualized)				Average Net Finance Receivables				Average Yield (Annualized)
Small loans		$	455,659				34.8	%		$	439,070				35.9	%
Large loans			1,219,464				26.0	%			1,003,326				27.4	%
Retail loans			8,068				17.7	%			10,725				18.3	%
Total interest and fee yield		$	1,683,191				28.3	%		$	1,453,121				29.9	%
Total revenue yield		$	1,683,191				31.9	%		$	1,453,121				33.5	%

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

 

 

		Components of Increase in Interest and Fee Income
		YTD 23 Compared to YTD 22
		Increase (Decrease)
		Volume				Rate				Volume & Rate				Total
Small loans		$	2,977			$	(2,421	)		$	(92	)		$	464
Large loans			29,648				(7,204	)			(1,552	)			20,892
Retail loans			(244	)			(33	)			9				(268	)
Product mix			2,040				(1,852	)			(188	)			—
Total increase in interest and fee income		$	34,421			$	(11,510	)		$	(1,823	)		$	21,088

 

 

		Loans Originated (1)
		YTD 23				YTD 22				YTD $ Inc (Dec)				YTD % Inc (Dec)
Small loans		$	258,944			$	308,375			$	(49,431	)			(16.0	)%
Large loans			443,085				438,851				4,234				1.0	%
Retail loans			146				5,061				(4,915	)			(97.1	)%
Total loans originated		$	702,175			$	752,287			$	(50,112	)			(6.7	)%

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

 

 

		Other Key Metrics
		YTD 23				YTD 22
Net credit losses		$	97,619			$	68,058
Percentage of average net finance receivables (annualized)			11.6	%			9.4	%
Provision for credit losses		$	100,219			$	76,258
Percentage of average net finance receivables (annualized)			11.9	%			10.5	%
Percentage of total revenue			37.3	%			31.3	%
General and administrative expenses		$	116,219			$	109,221
Percentage of average net finance receivables (annualized)			13.8	%			15.0	%
Percentage of total revenue			43.2	%			44.8	%

 

12

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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.

		2Q 23
Debt		$	1,344,855
Total stockholders' equity			321,502
Less: Intangible assets			13,949
Tangible equity (non-GAAP)		$	307,553
Funded debt-to-equity ratio			4.2	x
Funded debt-to-tangible equity ratio (non-GAAP)			4.4	x

 

13

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2Q 2023 Earnings Presentation August 2nd, 2023 Exhibit 99.2

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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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2Q 2023 Financial Highlights Net income of $6.0 million and diluted EPS of $0.63 Total revenue increased $10.6 million, or 8.6% Interest and fee income up 7.6% due to a 13.8% increase in ANR Insurance income, net increased by 9.6% due to portfolio growth Provision for credit losses increased $7.2 million, or 15.8%  Net credit losses up $18.3 million from higher ANR and macro conditions Decrease in provision of $11.1 million from a reserve release in 2Q 23 of $2.4 million compared to a reserve build in 2Q 22 of $8.7 million Operating expense ratio improved 1.1%   Revenue growth outpaced G&A expense growth by 3.8x from the prior-year period Interest expense increased $8.7 million, or 114.5%  Favorable market value increase of $3.0 million on interest rate caps in 2Q 22 Increase of $5.6 million on higher interest rates and ANR growth of $202.5 million 3

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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 2Q 23 direct mail originations are up year-over-year 1.7% and digital and branch originations are down 18.9% and 6.8%, 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 volume represented 34.0% of our total new borrower volume in 2Q 23 Large loans represented 75.0% of new borrower digitally sourced loans booked in 2Q 23 96% of 2Q 23 digital originations were 600+ FICO vs. 84% in 2Q 19 Digitally Sourced Origination Volume Trend 5 ($ in millions) Digitally Sourced Originations

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Controlled Portfolio Growth Generated sequential portfolio growth of $13 million, or 0.8%, in 2Q 23 Achieved year-over-year loan growth of $163 million, or 10.7%, in 2Q 23, down from 30.8% in 1Q 22 as a result of credit tightening for disciplined growth Continued the mix shift toward large loans As of June 30, 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 7.2% in 2Q 23 vs. 24.7% in the prior-year period

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Revenue grew 8.6% year-over-year to $133 million in 2Q 23 Total revenue yield decreased 1.5% year-over-year due to continued mix shift towards larger, higher-quality loans and the credit impact from macro conditions on revenue reversals and non-accrual loans, partially offset by price increases Improving credit from tightening actions and price increases will increase yield in 2H 23 As of June 30, 2023, 86% of net finance receivables were at or below 36% APR Total Revenue Average Net Finance Receivables Total Revenue and Interest & Fee Yield 8 ($ in millions) ($ in millions) Revenue Up 8.6% 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 30+ days past due of 6.9% improved 30 basis points sequentially and was 60 basis points above 2Q 19 levels   Estimated 30 basis points impact related to slower portfolio growth from credit tightening in 2023 versus 2019 30+ days past due of $116.3 million compares favorably to loan loss reserves of $181.4 million as of 2Q 23 4Q 22 net credit loss rate of 15.0% included 3.2% related to accelerated charge-offs from the loan sale; 1Q 23 rate of 10.1% was inclusive of an estimated benefit of 2.8% related to the 4Q 22 loan sale​ 30+ & 90+ Delinquency Rates ($ in millions) Net Credit Loss Rates 9

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Reserved For Stressed Credit Losses In 2Q 23, we decreased our loan loss reserves by $2.4 million primarily due to changes in future macroeconomic impacts on credit losses, partially offset by portfolio growth during the quarter 10 ($ in millions) Loan Loss Reserves

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Improving Operating Leverage While Investing in Our Business 2Q 23 operating expense ratio improved 110 basis points from the prior-year period 2Q 23 includes an insurance settlement payment to us of $1.0 million, which decreased the ratio 20 basis points  2Q 23 year-over-year revenue growth outpaced G&A expense growth by 3.8x  Operating Expense Ratio (1) Annualized general and administrative expenses as a percentage of average net finance receivables ($ in millions) Operating Expense Improvement 11

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12 2Q 23 interest expense as an annualized percentage of ANR increased 170 basis points year-over-year due to the following:   Favorable market value increases on interest rate caps in 2Q 22 (80 basis points)  Higher interest rates on ENR growth (90 basis points) 1Q 23 includes accelerated debt issue costs amortization of $0.6MM, or 10 basis points, related to the early payoff of a $75 million warehouse facility Interest Expense ($ 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 June 30, 2023, total unused capacity was $641 million (subject to borrowing base)  Available liquidity of $147 million as of June 30, 2023 Fixed-rate debt represented 88% of total debt as of June 30, 2023, and had a weighted-average revolving duration of 1.6 years Strong Funding Profile Unused Debt Capacity Fixed vs. Variable Debt Funded Debt Ratios 13 ($ 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 3Q 22 through 2Q 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

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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 3Q 22 through 2Q 23 (1)

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Non-GAAP Financial Measures (Cont’d) 21

v3.23.2

Document and Entity Information	Aug. 02, 2023
Cover [Abstract]
Amendment Flag	false
Entity Central Index Key	0001519401
Document Type	8-K
Document Period End Date	Aug. 02, 2023
Entity Registrant Name	Regional Management Corp.
Entity Incorporation State Country Code	DE
Securities Act File Number	001-35477
Entity Tax Identification Number	57-0847115
Entity Address, Address Line One	979 Batesville Road, Suite B
Entity Address, City or Town	Greer
Entity Address, State or Province	SC
Entity Address, Postal Zip Code	29651
City Area Code	864
Local Phone Number	448-7000
Entity Information, Former Legal or Registered Name	Not Applicable
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.10 par value
Trading Symbol	RM
Security Exchange Name	NYSE
Entity Emerging Growth Company	false

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