Regional Management Corp. Announces First Quarter 2013 Results
Regional Management Corp. Announces First Quarter 2013 Results
GREENVILLE, S.C.--(BUSINESS WIRE)-- Regional Management Corp. (NYS: RM) , a diversified specialty consumer finance company, today announced results for the first quarter ended March 31, 2013.
First Quarter 2013 Highlights
Total first quarter 2013 revenue was $38.6 million, a 22.3% increase from the prior-year period.
Net income for the first quarter of 2013 was $6.9 million, a 35.3% increase from GAAP net income in the prior-year period and a 2.4% increase from pro forma net income - excluding one-time initial public offering expenses and applying proceeds from the IPO to reduce outstanding debt - in the prior-year period. Diluted earnings per share was $0.54 based on a diluted share count of 12.8 million.
Finance receivables as of March 31, 2013 were $430.4 million, an increase of 35.6% from the prior-year period. Annualized net charge-offs as a percentage of average finance receivables for the first quarter of 2013 were 6.5%, an increase from 6.4% in the prior-year period.
Same-store revenue growth1 for the first quarter of 2013 was 14.4%.
Opened 11 new branches in the first quarter of 2013, including its first branch in Georgia in January 2013; as of March 31, 2013, Regional Management's branch network consisted of 232 locations.
"We were pleased with our first quarter performance, as we continue to see double-digit top line and same-store sales growth," said Thomas Fortin, Chief Executive Officer of Regional Management Corp. "We conducted our first-ever first quarter live check campaign and were encouraged by the overall response we achieved. Further, we saw finance receivables growth in our automobile and RMC Retail segments, while we expanded our operations into Georgia - our eighth state. We continue to keep an eye on our net charge-offs as a percentage of average finance receivables and our efficiency ratio to ensure they do not get ahead of our overall growth strategy."
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1 Defined as stores open for at least 13 months.
First Quarter 2013 Results
For the first quarter ended March 31, 2013, Regional Management reported total revenue of $38.6 million, a 22.3% increase from $31.5 million in the prior-year period. Interest and fee income revenue for the first quarter of 2013 was $34.0 million, a 25.8% increase from $27.1 million in the prior-year period, primarily due to a 35.6% year-over-year increase in finance receivables. Insurance and other income for the first quarter of 2013 was $4.5 million, a 1.2% increase from the prior-year period. Same-store revenue growth for the first quarter of 2013 was 14.4%.
Finance receivables outstanding at March 31, 2013 were $430.4 million, a 35.6% increase from $317.5 million in the prior-year period. Finance receivables increased primarily due to the addition of 38 de novo branches since March 31, 2012. Same-store finance receivables (stores open at least 13 months) grew 28.7%.
Provision for credit losses in the first quarter of 2013 was $8.1 million versus $5.6 million in the prior-year period, primarily due to the increase in loan volume. Annualized net charge-offs as a percentage of average finance receivables for the first quarter of 2013 was 6.5%, an increase from 6.4% in the prior-year period.
General and administrative expenses for the first quarter of 2013 were $16.4 million, an increase of 28.4% from $12.8 million in the prior-year period, primarily due to increased personnel costs from opening an additional 38 branches since March 31, 2012. During the first quarter of 2013, Regional Management opened 11 new branches. Regional Management's efficiency ratio - the percentage of general and administrative expenses compared to total revenue - in the first quarter of 2013 was 42.6%, an increase of 200 basis points from 40.6% in the prior-year period.
Net income for the first quarter of 2013 was $6.9 million, a 35.3% increase compared to GAAP net income of $5.1 million in the prior-year period, and diluted earnings per share for the first quarter of 2013 was $0.54. On a pro forma basis, excluding one-time IPO expenses in the first quarter of 2012 and applying the proceeds from the IPO to reduce outstanding debt, net income for the first quarter of 2012 was $6.8 million and diluted earnings per share was $0.53 based on a diluted share count of 12.7 million.
Liquidity and Capital Resources
As of March 31, 2013, Regional Management had finance receivables of $430.4 million and outstanding debt of $273.1 million on its $325.0 million senior revolving credit facility and on its $1.5 million other notes payable line of credit.
Conference Call Information
The Company will host a conference call and webcast today at 5:00 PM Eastern. Both the call and webcast are open to the general public.
The dial-in number for the conference call is (866) 515-2910, passcode 76636042 - please dial the number 10 minutes prior to the scheduled start time. A live webcast of the conference call will also be available on Regional Management's website at www.RegionalManagement.com.
A replay of the call will be available two hours following the end of the call through midnight Eastern on Thursday, May 9 at www.RegionalManagement.com and by telephone at (888) 286-8010, passcode 32504678.
Forward-Looking Statements
This press release may contain various "forward-looking statements" within the meaning of Section 27A of the Securities Exchange Act of 1934, as amended, which represent Regional Management's expectations or beliefs concerning future events. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties, many of which are outside of the control of Regional Management. Factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include, but are not limited to, the following: the continuation or worsening of adverse conditions in the global and domestic credit markets and uncertainties regarding, or the impact of governmental responses to those conditions; changes in interest rates; risks related to acquisitions and new branches; risks inherent in making loans, including repayment risks and value of collateral, which risks may increase in light of adverse or recessionary economic conditions; recently-enacted or proposed legislation; the timing and amount of revenues that may be recognized by Regional Management; changes in current revenue and expense trends (including trends affecting delinquencies and charge-offs); changes in Regional Management's markets and general changes in the economy (particularly in the markets served by Regional Management). Such factors are discussed in greater detail in Regional Management's filings with the Securities and Exchange Commission. Regional Management Corp. will not and is not responsible for updating the information contained in this press release beyond the publication date, or for changes made to this document by wire services or Internet services.
About Regional Management Corp.
Regional Management Corp. (NYS: RM) is a diversified specialty consumer finance company providing a broad array of loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies and other traditional lenders. Regional Management began operations in 1987 with four branches in South Carolina and has expanded its branch network to 232 locations with over 244,000 active accounts across South Carolina, Texas, North Carolina, Tennessee, Alabama, Oklahoma, New Mexico and Georgia as of March 31, 2013. Each of its loan products is structured on a fixed rate, fixed term basis with fully amortizing equal monthly installment payments and is repayable at any time without penalty. Regional Management's loans are sourced through its multiple channel platform, including in its branches, through direct mail campaigns, independent and franchise automobile dealerships, online credit application networks, furniture and appliance retailers and its consumer website. For more information, please visit http://www.RegionalManagement.com.
Regional Management Corp. and Subsidiaries Consolidated Statements of Income For the Three Months Ended March 31, 2013 and 2012 (Unaudited) ($ in thousands except per share amounts) | ||||||||
2013 | 2012 | |||||||
Revenue | ||||||||
Interest and fee income | $ | 34,046 | $ | 27,069 | ||||
Insurance income, net | 2,933 | 2,635 | ||||||
Other income | 1,590 | 1,836 | ||||||
Total revenue | 38,569 | 31,540 | ||||||
Expenses | ||||||||
Provision for credit losses | 8,071 | 5,627 | ||||||
General and administrative expenses | ||||||||
Personnel | 10,033 | 7,997 | ||||||
Occupancy | 2,516 | 1,894 | ||||||
Advertising | 505 | 593 | ||||||
Other | 3,366 | 2,308 | ||||||
Consulting and advisory fees | — | 1,451 | ||||||
Interest expense | ||||||||
Senior revolving credit facility and other debt | 3,081 | 2,510 | ||||||
Mezzanine debt-related parties | — | 1,030 | ||||||
Total interest expense | 3,081 | 3,540 | ||||||
Total expenses | 27,572 | 23,410 | ||||||
Income before income taxes | 10,997 | 8,130 | ||||||
Income taxes | 4,069 | 3,008 | ||||||
Net income | $ | 6,928 | $ | 5,122 | ||||
Net income per common share: | ||||||||
Basic | $ | 0.55 | $ | 0.55 | ||||
Diluted | $ | 0.54 | $ | 0.53 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 12,502,378 | 9,336,727 | ||||||
Diluted | 12,780,508 | 9,616,497 | ||||||
Regional Management Corp. and Subsidiaries Consolidated Balance Sheets March 31, 2013 (unaudited) and December 31, 2012 ($ in thousands except per share amounts) | ||||||||||
March 31, 2013 | December 31, 2012 | |||||||||
(Unaudited) | ||||||||||
Assets | ||||||||||
Cash | $ | 857 | $ | 3,298 | ||||||
Gross finance receivables | 515,844 | 529,583 | ||||||||
Less unearned finance charges, insurance premiums, and commissions | (85,413 | ) | (92,024 | ) | ||||||
Finance receivables | 430,431 | 437,559 | ||||||||
Allowance for credit losses | (24,630 | ) | (23,616 | ) | ||||||
Net finance receivables | 405,801 | 413,943 | ||||||||
Property and equipment, net of accumulated depreciation | 5,585 | 5,111 | ||||||||
Repossessed assets at net realizable value | 659 | 711 | ||||||||
Goodwill | 363 | 363 | ||||||||
Intangible assets, net | 1,813 | 1,815 | ||||||||
Other assets | 6,770 | 9,750 | ||||||||
Total assets | $ | 421,848 | $ | 434,991 | ||||||
Liabilities and Stockholders' Equity | ||||||||||
Liabilities: | ||||||||||
Deferred tax liability, net | $ | 5,736 | $ | 5,947 | ||||||
Accounts payable and accrued expenses | 4,387 | 6,096 | ||||||||
Senior revolving credit facility | 273,037 | 292,379 | ||||||||
Other notes payable | 68 | — | ||||||||
Total liabilities | 283,228 | 304,422 | ||||||||
Commitments and Contingencies | ||||||||||
Stockholders' equity: | ||||||||||
Preferred stock, $0.10 par value, 100,000,000 shares authorized, no shares issued and | ||||||||||
outstanding at March 31, 2013 and December 31, 2012 | — | — | ||||||||
Common stock, $0.10 par value, 1,000,000,000 shares authorized, 12,584,942 shares issued | ||||||||||
and outstanding at March 31, 2013; 1,000,000,000 shares authorized, 12,486,727 shares | ||||||||||
issued and outstanding at December 31, 2012 | 1,258 | 1,249 | ||||||||
Additional paid-in-capital | 81,272 | 80,158 | ||||||||
Retained earnings | 56,090 | 49,162 | ||||||||
Total stockholders' equity | 138,620 | 130,569 | ||||||||
Total liabilities and stockholders' equity | $ | 421,848 | $ | 434,991 | ||||||
Regional Management Corp. Selected Financial Data As of and for the Three Months Ended March 31, 2013 and 2012 (Unaudited) (Dollars in thousands) | ||||||||||||||
Components of Increase in Interest Income | ||||||||||||||
Volume | Rate | Net | ||||||||||||
Small installment loans | $ | 7,782 | $ | (2,276 | ) | $ | 5,506 | |||||||
Large installment loans | 24 | (431 | ) | (407 | ) | |||||||||
Automobile purchase loans | 1,614 | (512 | ) | 1,102 | ||||||||||
Furniture and appliance purchase loans | 964 | (188 | ) | 776 | ||||||||||
Total increase in interest income | $ | 10,384 | $ | (3,407 | ) | $ | 6,977 | |||||||
Loans Originated (1) Three Months Ended March 31, | ||||||||
2013 | 2012 | |||||||
Small installment loans | $ | 101,710 | $ | 56,811 | ||||
Large installment loans | 14,736 | 12,517 | ||||||
Automobile purchase loans | 32,706 | 30,140 | ||||||
Furniture and appliance purchase loans | 8,923 | 6,733 | ||||||
Total finance receivables | $ | 158,075 | $ | 106,201 | ||||
Three Months Ended March 31, | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Percentage of | Percentage of | |||||||||||||||
Average Finance | Average Finance | |||||||||||||||
Receivables | Receivables | |||||||||||||||
Amount | (Annualized) | Amount | (Annualized) | |||||||||||||
Net charge-offs as a percentage of average finance receivables | $ | 7,057 | 6.5 | % | $ | 5,067 | 6.4 | % | ||||||||
Amount | Percentage of | Amount | Percentage of | |||||||||||||
Provision for credit losses | $ | 8,071 | 20.9 | % | $ | 5,627 | 17.8 | % | ||||||||
General and administrative expenses | $ | 16,420 | 42.6 | % | $ | 12,792 | 40.6 | % | ||||||||
Amount | Growth Rate | Amount | Growth Rate | |||||||||||||
Same store finance receivables at period-end/Growth rate | $ | 373,563 | 28.7 | % | $ | 251,767 | 6.9 | % | ||||||||
Same store revenue growth rate | 14.4 | % | 9.4 | % | ||||||||||||
