Regional Management Corp. Announces First Quarter 2013 Results

  Regional Management Corp. Announces First Quarter 2013 Results

Business Wire

GREENVILLE, S.C. -- 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 growth^1 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.

                                               
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          3,081            2,510
debt
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,              (85,413  )         (92,024   )
insurance premiums, and commissions
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               5,585               5,111
accumulated depreciation
Repossessed assets at net realizable         659                 711
value
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           1,258               1,249
31, 2012
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’       $  421,848        $   434,991   
equity
                                                             

                                                              
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            964             (188    )        776   
purchase loans
Total increase in interest       $  10,384        $  (3,407  )       $ 6,977 
income
                                                                     

                                        
                                           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                   Percentage
                                    of                             of
                                    Average                        Average
                                    Finance                        Finance
                                    Receivables                    Receivables
                      Amount        (Annualized)     Amount        (Annualized)
Net charge-offs
as a percentage
of average            $ 7,057       6.5     %        $ 5,067       6.4     %
finance
receivables
                                                                   
                                    Percentage                     Percentage
                      Amount        of               Amount        of
                                    Total                          Total
                                    Revenue                        Revenue
Provision for         $ 8,071       20.9    %        $ 5,627       17.8    %
credit losses
General and
administrative        $ 16,420      42.6    %        $ 12,792      40.6    %
expenses
                                                                   
                      Amount        Growth Rate      Amount        Growth Rate
Same store
finance
receivables at        $ 373,563     28.7    %        $ 251,767     6.9     %
period-end/Growth
rate
Same store
revenue growth                      14.4    %                      9.4     %
rate
                                                                           

                                                      
                                           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
                                  Percentage of                  Percentage of
                     Amount       Total Finance     Amount       Total Finance
                                  Receivables                    Receivables
Allowance for        $ 24,630     5.7     %         $ 19,860     6.3     %
credit losses
Over 90 days
contractually        $ 11,093     2.6     %         $ 7,429      2.3     %
delinquent
Over 180 days
contractually        $ 2,986      0.7     %         $ 1,712      0.5     %
delinquent
Number of
branches at            232                            194
period end
                                                                 

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

                                                           
Unaudited Pro Forma Consolidated Statements of Income

For the Three Months Ended March31, 2012

($ in thousands except per share amounts)
                                                                  
                              Actual          Pro Forma           Pro Forma
                                              Adjustments
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            5,627           —                   5,627
losses
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         1,451           (1,451 ) ^(2)       —
fees
Interest expense
Senior revolving credit         2,510           (247   ) ^(3)       2,263
facility and other debt
Mezzanine debt-related         1,030          (1,030 ) ^(4)      —
parties
Total interest expense         3,540          (1,277 )          2,263
Total expenses                 23,410         (2,588 )          20,822
Income before income            8,130           2,588               10,718
taxes
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.
          Represents a termination fee of $1,125, combined with the $326 we
          paid our former majority stockholders and sponsors for the three
    (2)   months ended March 31, 2012. The agreements with the former majority
          stockholders and sponsors terminated with the completion of the
          initial public offering.
          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
    (3)   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%.
          Reflects reduction in interest expense as a result of the repayment
    (4)   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.

Contact:

For Regional Management Corp.
Investor Relations:
Garrett Edson, 203-682-8331
or
Media Relations:
Kim Paone, 646-277-1216