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
Regional Management Corp. Announces First Quarter 2013 Results
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