EX-99.1 2 d528957dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

Regional Management Corp. Announces First Quarter 2013 Results

Greenville, South Carolina – May 2, 2013 – Regional Management Corp. (NYSE: 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.”

 

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. (NYSE: 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.

Contacts:

Investor Relations

Garrett Edson, (203) 682-8331

Media Relations

Kim Paone, (646) 277-1216

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
Three Months Ended  March 31, 2013
Compared to Three Months Ended March 31, 2012
Increase (Decrease)		  
     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  
     Amount      Percentage of
Average Finance
Receivables
(Annualized)		     Amount      Percentage of
Average Finance
Receivables
(Annualized)		  

Net charge-offs as a percentage of average finance receivables

    $ 7,057         6.5 %    $ 5,067         6.4 % 
     Amount      Percentage of
Total Revenue		     Amount      Percentage of
Total Revenue		  

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 % 

 

    

Finance Receivables

As of March 31,

  
     2013     2012  

Small installment loans

    $ 182,465      $ 109,970   

Large installment loans

      51,895        57,594   

Automobile purchase loans

      165,812        135,848   

Furniture and appliance purchase loans

      30,259        14,088   
  

 

 

    

 

 

  

Total finance receivables

    $ 430,431      $ 317,500   
  

 

 

    

 

 

  

Composite yield

      35.3 %      39.6 % 
  

 

 

    

 

 

  

 

     As of March 31,  
     2013     2012  
     Amount      Percentage of
Total Finance
Receivables		     Amount      Percentage of
Total Finance
Receivables		  

Allowance for credit losses

    $ 24,630         5.7 %    $ 19,860         6.3 % 

Over 90 days contractually delinquent

    $ 11,093         2.6 %    $ 7,429         2.3 % 

Over 180 days contractually delinquent

    $ 2,986         0.7 %    $ 1,712         0.5 % 

Number of branches at period end

      232           194      

 

(1) Represents gross balance of loan originations, including unearned finance charges

Unaudited Pro Forma Consolidated Statements of Income

For the Three Months Ended March 31, 2012

($ in thousands except per share amounts)

 

     Actual      Pro Forma
Adjustments		     Pro Forma  

Revenue

        

Interest and fee income

    $ 27,069       $ —       $ 27,069   

Insurance income

      2,635         —         2,635   

Other income

      1,836         —         1,836   
  

 

 

     

 

 

    

 

 

  

Total revenue

      31,540         —         31,540   
  

 

 

     

 

 

    

 

 

  

Expenses

        

Provision for credit losses

      5,627         —         5,627   

General and administrative expenses

        

Personnel

      7,997         140 (1)      8,137   

Occupancy

      1,894         —         1,894   

Advertising

      593         —         593   

Other

      2,308         —         2,308   

Consulting and advisory fees

      1,451         (1,451 )(2)      —    

Interest expense

        

Senior revolving credit facility and other debt

      2,510         (247 )(3)      2,263   

Mezzanine debt-related parties

      1,030         (1,030 )(4)      —    
  

 

 

     

 

 

    

 

 

  

Total interest expense

      3,540         (1,277 )      2,263   
  

 

 

     

 

 

    

 

 

  

Total expenses

      23,410         (2,588 )      20,822   
  

 

 

     

 

 

    

 

 

  

Income before income taxes

      8,130         2,588        10,718   

Income taxes

      3,008         942 (5)      3,950   
  

 

 

     

 

 

    

 

 

  

Net income

    $ 5,122       $ 1,646      $ 6,768   
  

 

 

     

 

 

    

 

 

  

Net income per common share

        

Basic

    $ 0.55         $ 0.54   
  

 

 

       

 

 

  

Diluted

    $ 0.53         $ 0.53   
  

 

 

       

 

 

  

Weighted average shares outstanding:

        

Basic

      9,336,727           12,486,727   
  

 

 

       

 

 

  

Diluted

      9,616,497           12,654,647   
  

 

 

       

 

 

  

 

(1) Represents additional compensation expense associated with the grant of options upon consummation of the initial public offering.
(2) Represents a termination fee of $1,125, combined with the $326 we paid our former majority stockholders and sponsors for the three months ended March 31, 2012. The agreements with the former majority stockholders and sponsors terminated with the completion of the initial public offering.
(3) Reflects reduction in interest expense as a result of payment of $13,229 in aggregate principal amount of our senior revolving credit facility, offset in part by an unused line fee of 0.50%. Also reflects a reduction in the interest rate under our senior revolving credit facility from one month LIBOR (with a LIBOR floor of 1.00%) plus 3.25% to one month LIBOR (with a LIBOR floor of 1.00%) plus 3.00%.
(4) Reflects reduction in interest expense as a result of the repayment of the $25,814 in aggregate principal amount of our mezzanine debt, which accrued interest at a rate of 15.25% per annum.
(5) Reflects an increase in income taxes as a result of the increase in income before taxes.