Regional Management Corp
For the period ended Jun 30, 2024. Filed Aug 2, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 2, 2024
RM$36.25-3.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-03.
0000950170-24-052963
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0000950170-24-090023
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 105 previous paragraphs and 129 current paragraphs.
60 unchanged; 42 reworded; 16 added; 3 removed; 0 previous and 11 current paragraphs rearranged.
Tables are not compared: 12 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
As inflation accelerated and geopolitical stability began to deteriorate in the fourth quarter of 2021, we began to proactively tighten our credit models. Ongoing inflationary pressures, higher interest rates, and geopolitical events outside of the U.S. continue to create economic uncertainty. We have therefore continued to maintain tighter underwriting guidelines. More recently, due to moderating inflation and expectations for an improving economic environment, we have increased the growth in our higher-margin, small loan portfolio. We grew the small loan portfolio by $61 million, or 14%, year-over-year. To balance the risk associated with the growth in our higher-margin small loan portfolio, we also continue to deploy a barbell strategy of originating larger amounts of high-quality, auto-secured loans. However, we continue to thoughtfully manage our growth and our portfolio in this economic environment.
Current report
Other Income. Other income increased $0.4 million, or 10.1%, to $4.6 million during the three months ended June 30, 2024, from $4.2 million during the prior-year period, primarily due to higher late charges of $0.2 million associated with portfolio growth and an increase in sales of our auto club product of $0.1 million.
Current report
Net Credit Losses. Net credit losses increased $0.6 million, or 1.0%, to $55.5 million during the three months ended June 30, 2024, from $55.0 million during the prior-year period. The increase was primarily due to higher average net finance receivables. Annualized net credit losses as a percentage of average net finance receivables were 12.7% during the three months ended June 30, 2024, compared to 13.1% during the prior-year period.
Current report
Occupancy. Occupancy expenses were $6.1 million during the three months ended June 30, 2024, comparable to $6.2 million during the prior-year period.
Current report
Operating Expense Ratio. Our annualized operating expense ratio increased by 0.2% to 13.8% during the three months ended June 30, 2024, from 13.6% during the prior-year period. The prior-year period included insurance settlement proceeds of $1.0 million, which decreased the ratio by 0.2%.
Current report
Comparison of the Six Months Ended June 30, 2024, Versus the Six Months Ended June 30, 2023
Current report
Net Income. Net income increased $8.9 million, or 60.8%, to $23.7 million during the six months ended June 30, 2024, from $14.7 million during the prior-year period. The increase was due to an increase in revenue of $18.5 million, partially offset by an increase in general and administrative expenses of $4.4 million, an increase in income taxes of $2.8 million and an increase in interest expense of $2.4 million.
Current report
Revenue. Total revenue increased $18.5 million, or 6.9%, to $287.3 million during the six months ended June 30, 2024, from $268.9 million during the prior-year period. The components of revenue are explained in greater detail below.
Current report
Provision for Credit Losses. Our provision for credit losses remained consistent at $100.2 million during the six months ended June 30, 2024, from the prior-year period. Net credit losses increased $4.6 million, offset by a decrease of $4.6 million in the allowance for credit losses, in each case compared to the prior-year period. The provision for credit losses is explained in greater detail below.
Current report
Delinquency Performance. Our contractual delinquency as a percentage of net finance receivables remained consistent at 6.9% as of both June 30, 2024 and the prior-year period.
Current report
General and Administrative Expenses. Our general and administrative expenses increased $4.4 million, or 3.8%, to $120.6 million during the six months ended June 30, 2024, from $116.2 million during the prior-year period. The absolute dollar increase in general and administrative expenses is explained in greater detail below.
Current report
Occupancy. Occupancy expenses were $12.5 million during the six months ended June 30, 2024, comparable to $12.4 million during the prior-year period.
Current report
Marketing. Marketing expenses increased $1.9 million, or 26.7%, to $9.2 million during the six months ended June 30, 2024, from $7.2 million during the prior-year period. The increase was primarily due to increased activity in our direct mail campaigns to support growth.
Current report
Other Expenses. Other expenses increased $2.5 million, or 11.4%, to $24.0 million during the six months ended June 30, 2024, from $21.5 million during the prior-year period. The prior-year period included insurance settlement proceeds of $1.0 million which reduced other expenses. The remaining increase was primarily due to our investment in digital and technological capabilities of $0.7 million, compared to the prior-year period. Additionally, we often experience increases in other expenses including legal expenses, collections expense, bank fees, and certain professional expenses as we grow our loan portfolio and expand our market footprint.
Current report
Operating Expense Ratio. Our annualized operating expense ratio remained consistent at 13.8% during the six months ended June 30, 2024 and the prior-year period.
Current report
Income Taxes. Income taxes increased $2.8 million, or 59.5%, to $7.5 million during the six months ended June 30, 2024, from $4.7 million during the prior-year period. The increase was primarily due to a $11.7 million increase in income before income taxes compared to the prior-year period. Our effective tax rates were 24.1% and 24.2% for the six months ended June 30, 2024 and the prior-year period, respectively.
Removed paragraphs (3)
Previous report
Ongoing inflationary pressures and interest rate trends have continued to create economic uncertainty. Recent geopolitical events outside of the U.S. have also contributed to volatility in U.S. markets. As inflation accelerated and geopolitical stability began to deteriorate in the fourth quarter of 2021, we began to proactively tighten our credit models. We have maintained a tighter credit box and our advanced underwriting models have performed well. We have focused on higher quality originations and a better credit risk borrower profile as we manage through an uncertain macroeconomic environment.
Previous report
Occupancy. Occupancy expenses increased by $0.1 million, or 1.4%, to $6.4 million during the three months ended March 31, 2024, from $6.3 million during the prior-year period. The increase was primarily due to increased rent of $0.2 million.
Previous report
Operating Expense Ratio. Our annualized operating expense ratio decreased by 0.3% to 13.7% during the three months ended March 31, 2024, from 14.0% during the prior-year period. Our operating expense ratio has improved as we have grown our loan portfolio and controlled expense growth.
Reworded paragraphs (42)
Previous wording
The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by reference to, our unaudited consolidated financial statements and the related notes that appear elsewhere in this Quarterly Report on Form 10-Q. These discussions contain forward-looking statements that reflect our current expectations and that include, but are not limited to, statements concerning our strategies, future operations, future financial position, future revenues, projected costs, expectations regarding demand and acceptance for our financial products, growth opportunities and trends in the market in which we operate, prospects, and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “predicts,” “will,” “would,” “should,” “could,” “potential,” “continue,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements involve risks and uncertainties that could cause actual results, events, and/or performance to differ materially from the plans, intentions, and expectations disclosed in the forward-looking statements. Such risks and uncertainties include, without limitation, the risks set forth in our filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (which was filed with the SEC on February 22, 2024) and this Quarterly Report on Form 10-Q. The forward-looking information we have provided in this Quarterly Report on Form 10-Q pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 should be evaluated in the context of these factors. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update or revise such statements, except as required by the federal securities laws.
Current wording
The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by reference to, our unaudited consolidated financial statements and the related notes that appear elsewhere in this Quarterly Report on Form 10-Q. These discussions contain forward-looking statements that reflect our current expectations and that include, but are not limited to, statements concerning our strategies, future operations, future financial position, future revenues, projected costs, expectations regarding demand and acceptance for our financial products, growth opportunities and trends in the market in which we operate, prospects, and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “predicts,” “will,” “would,” “should,” “could,” “potential,” “continue,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements involve risks and uncertainties that could cause actual results, events, and/or performance to differ materially from the plans, intentions, and expectations disclosed in the forward-looking statements. Such risks and uncertainties include, without limitation, the risks set forth in our filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (which was filed with the SEC on February 22, 2024), our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024 (which was filed with the SEC on May 3, 2024), and this Quarterly Report on Form 10-Q. The forward-looking information we have provided in this Quarterly Report on Form 10-Q pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 should be evaluated in the context of these factors. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update or revise such statements, except as required by the federal securities laws.
Previous wording
We are a diversified consumer finance company that provides installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders. As of March 31, 2024, we operate under the name “Regional Finance” online and in 343 branch locations in 19 states across the United States, serving 540,600 active accounts. Most of our 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. We source our loans through our omni-channel platform, which includes our branches, centrally-managed direct mail campaigns, digital partners, and our consumer website. We operate an integrated branch model in which nearly all loans, regardless of origination channel, are serviced through our branch network with the support of centralized sales, underwriting, service, collections, and administrative teams. This model provides us with frequent contact with our customers, which we believe improves our credit performance and customer loyalty. Our goal is to consistently grow our finance receivables and to soundly manage our portfolio risk, while providing our customers with attractive and easy-to-understand loan products that serve their varied financial needs.
Current wording
We are a diversified consumer finance company that provides installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders. As of June 30, 2024, we operate under the name “Regional Finance” online and in 343 branch locations in 19 states across the United States, serving 545,900 active accounts. Most of our 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. We source our loans through our omni-channel platform, which includes our branches, centrally-managed direct mail campaigns, digital partners, and our consumer website. We operate an integrated branch model in which nearly all loans, regardless of origination channel, are serviced through our branch network with the support of centralized sales, underwriting, service, collections, and administrative teams. This model provides us with frequent contact with our customers, which we believe improves our credit performance and customer loyalty. Our goal is to consistently grow our finance receivables and to soundly manage our portfolio risk, while providing our customers with attractive and easy-to-understand loan products that serve their varied financial needs.
Previous wording
Large Loans (>$2,500) – As of March 31, 2024, we had 245.7 thousand large installment loans outstanding, representing $1.3 billion in net finance receivables. This included 63.6 thousand large loan convenience checks, representing $193.3 million in net finance receivables.
Current wording
Large Loans (>$2,500) – As of June 30, 2024, we had 247.4 thousand large installment loans outstanding, representing $1.3 billion in net finance receivables. This included 63.5 thousand large loan convenience checks, representing $186.4 million in net finance receivables.
Previous wording
Small Loans (≤$2,500) – As of March 31, 2024, we had 292.9 thousand small installment loans outstanding, representing $490.8 million in net finance receivables. This included 154.2 thousand small loan convenience checks, representing $227.5 million in net finance receivables.
Current wording
Small Loans (≤$2,500) – As of June 30, 2024, we had 296.9 thousand small installment loans outstanding, representing $505.6 million in net finance receivables. This included 156.7 thousand small loan convenience checks, representing $236.9 million in net finance receivables.
Previous wording
Retail Loans – As of March 31, 2024, we had 2.0 thousand retail purchase loans outstanding, representing $2.8 million in net finance receivables.
Current wording
Retail Loans – As of June 30, 2024, we had 1.6 thousand retail purchase loans outstanding, representing $2.1 million in net finance receivables.
Previous wording
We continually assess the macroeconomic environment in which we operate in order to appropriately and timely adapt to current market conditions. Macroeconomic factors, including, but not limited to, inflationary pressures, rising interest rates, and impacts from current geopolitical events outside the U.S., may affect our business, liquidity, financial condition, and results of operations.
Current wording
We continually assess the macroeconomic environment in which we operate in order to appropriately and timely adapt to current market conditions. Macroeconomic factors, including, but not limited to, inflationary pressures, higher interest rates, and impacts from current geopolitical events outside the U.S., may affect our business, liquidity, financial condition, and results of operations.
Previous wording
Our allowance for credit losses was 10.7% of net finance receivables as of March 31, 2024. Our contractual delinquency as a percentage of net finance receivables was 7.1% as of March 31, 2024, down from 7.2% as of March 31, 2023. Going forward, we may experience changes to the macroeconomic assumptions within our forecast and to our credit loss performance outlook, either of which could lead to further changes in our allowance for credit losses, reserve rate, and provision for credit losses expense.
Current wording
Our allowance for credit losses was 10.5% of net finance receivables as of June 30, 2024. Our contractual delinquency as a percentage of net finance receivables was 6.9% as of June 30, 2024, consistent with the prior-year period. Going forward, macroeconomic conditions may necessitate changes to the macroeconomic assumptions within our forecast and to our credit loss performance outlook, either of which could lead to further changes in our allowance for credit losses, reserve rate, and provision for credit losses expense.
Previous wording
We proactively diversified our funding over the past few years and continue to maintain a strong liquidity profile. As of March 31, 2024, we had $169.4 million of available liquidity, comprised of unrestricted cash on hand and immediate availability to draw down cash from our revolving credit facilities. In addition, we had $478.4 million of unused capacity on our revolving credit facilities (subject to the borrowing base) as of March 31, 2024. We believe our liquidity position provides substantial runway to support the fundamental operations of our business and to fund future growth.
Current wording
We proactively diversified our funding over the past few years and continue to maintain a strong liquidity profile. As of June 30, 2024, we had $149.4 million of available liquidity, comprised of unrestricted cash on hand and immediate availability to draw down cash from our revolving credit facilities. In addition, we had $564.4 million of unused capacity on our revolving credit facilities (subject to the borrowing base) as of June 30, 2024. We believe our liquidity position provides substantial runway to support the fundamental operations of our business and to fund future growth.
Previous wording
Growth in Loan Portfolio. The revenue that we derive from interest and fees is largely driven by the balance of loans that we originate. Average net finance receivables were $1.8 billion for the first three months of 2024 and $1.7 billion for the prior-year period. We source our loans through our branches, centrally-managed direct mail program, digital partners, and our consumer website. The majority of our loans, regardless of origination channel, are serviced through our branches. Increasing the number of loans per branch and growing our state footprint allows us to increase the number of customers we are able to serve. We continue to assess our legacy branch network for clear opportunities to consolidate operations into larger branches within close geographic proximity. This branch optimization is consistent with our omni-channel strategy and builds upon our recent successes in entering new states with a lighter branch footprint, while still providing customers with best-in-class service. We plan to add additional branches in new and existing states where it is favorable for us to conduct business.
Current wording
Growth in Loan Portfolio. The revenue that we generate from interest and fees is largely driven by the balance of loans that we originate. Average net finance receivables were $1.8 billion for the first six months of 2024 and $1.7 billion for the prior-year period. We source our loans through our branches, centrally-managed direct mail program, digital partners, and our consumer website. The majority of our loans, regardless of origination channel, are serviced through our branches. Increasing the number of loans per branch and growing our state footprint allows us to increase the number of customers we are able to serve. We continue to assess our branch network for clear opportunities to add additional branches in new and existing states where it is favorable for us to conduct business or consolidate operations into larger branches within close geographic proximity. This branch optimization is consistent with our omni-channel strategy and builds upon our recent successes in entering new states with a lighter branch footprint, while still providing customers with best-in-class service.
Previous wording
Interest Rates. Our costs of funds are affected by changes in interest rates, as the interest rates that we pay on certain of our credit facilities are variable. As a component of our strategy to manage the interest rate risk associated with future interest payments on our variable-rate debt, a majority of our funding was held at a fixed rate as of March 31, 2024, representing 81% of total debt.
Current wording
Interest Rates. Our costs of funds are affected by changes in interest rates, as the interest rates that we pay on certain of our credit facilities are variable. As a component of our strategy to manage the interest rate risk associated with future interest payments on our variable-rate debt, a majority of our funding was held at a fixed rate as of June 30, 2024, representing 88% of our total debt.
Previous wording
As reinsurer, we maintain restricted reserves comprised of restricted cash and restricted available-for-sale investments for life insurance claims in an amount determined by the unaffiliated insurance company. As of March 31, 2024, the restricted reserves consisted of $21.6 million of unearned premium reserves and $1.3 million of unpaid claims reserves. The unaffiliated insurance company maintains the reserves for non-life claims.
Current wording
As reinsurer, we maintain restricted reserves comprised of restricted cash and restricted available-for-sale investments for life insurance claims in an amount determined by the unaffiliated insurance company. As of June 30, 2024, the restricted reserves consisted of $21.8 million of unearned premium reserves and $1.2 million of unpaid claims reserves. The unaffiliated insurance company maintains the reserves for non-life claims.
Previous wording
Large Loans (>$2,500)– Large loans outstanding increased by $38.8 million, or 3.2%, to $1.3 billion at March 31, 2024, from $1.2 billion at March 31, 2023. The increase was due to the growth of receivables in branches opened during 2023, increased marketing, and the transition of small loan customers to large loans, partially offset by credit tightening for disciplined growth.
Current wording
Large Loans (>$2,500)– Large loans outstanding increased by $28.0 million, or 2.3%, to $1.3 billion at June 30, 2024, from $1.2 billion at June 30, 2023. The increase was due to increased marketing, the growth of receivables in branches opened during 2023 and 2024, and the transition of small loan customers to large loans, partially offset by credit tightening for disciplined growth.
Previous wording
Small Loans (≤$2,500)– Small loans outstanding increased by $34.5 million, or 7.6%, to $490.8 million at March 31, 2024, from $456.3 million at March 31, 2023. The increase was due to growth of receivables in branches opened during 2023 and increased marketing, partially offset by credit tightening for disciplined growth and the transition of small loan customers to large loans.
Current wording
Small Loans (≤$2,500)– Small loans outstanding increased by $61.1 million, or 13.7%, to $505.6 million at June 30, 2024, from $444.6 million at June 30, 2023. The increase was due to increased marketing and growth of receivables in branches opened during 2023 and 2024, partially offset by credit tightening for disciplined growth and the transition of small loan customers to large loans.
Previous wording
Retail Loans– Retail loans outstanding decreased $5.3 million, or 65.2%, to $2.8 million at March 31, 2024, from $8.1 million at March 31, 2023. We ceased accepting applications for our retail loan product offering as of November 2022 to focus on growing our core loan portfolio.
Current wording
Retail Loans– Retail loans outstanding decreased $4.2 million, or 67.2%, to $2.1 million at June 30, 2024, from $6.3 million at June 30, 2023. We ceased accepting applications for our retail loan product offering as of November 2022 to focus on growing our core loan portfolio.
Previous wording
Net Income. Net income increased $6.5 million, or 75.0%, to $15.2 million during the three months ended March 31, 2024, from $8.7 million during the prior-year period. The increase was due to an increase in revenue of $8.9 million and a decrease in provision for credit losses of $1.2 million, partially offset by an increase in income taxes of $1.8 million, an increase in general and administrative expenses of $1.1 million, and an increase in interest expense of $0.7 million.
Current wording
Net Income. Net income increased $2.4 million, or 40.2%, to $8.4 million during the three months ended June 30, 2024, from $6.0 million during the prior-year period. The increase was due to an increase in revenue of $9.5 million, partially offset by an increase in general and administrative expenses of $3.2 million, an increase in interest expense of $1.6 million, an increase in provision for credit losses of $1.3 million, and an increase in income taxes of $1.0 million.
Previous wording
Revenue. Total revenue increased $8.9 million, or 6.6%, to $144.3 million during the three months ended March 31, 2024, from $135.4 million during the prior-year period. The components of revenue are explained in greater detail below.
Current wording
Revenue. Total revenue increased $9.5 million, or 7.1%, to $143.0 million during the three months ended June 30, 2024, from $133.5 million during the prior-year period. The components of revenue are explained in greater detail below.
Previous wording
Total originations increased to $326.4 million during the three months ended March 31, 2024, from $303.2 million during the prior-year period. Quarterly origination volume was higher than the prior-year period primarily due to an increase in small loan convenience checks. The following table represents the principal balance of loans originated and refinanced:
Current wording
Total originations increased to $426.1 million during the three months ended June 30, 2024, from $399.0 million during the prior-year period. Quarterly origination volume was higher than the prior-year period primarily due to an increase in small loan convenience checks. The following table represents the principal balance of loans originated and refinanced:
Previous wording
Insurance Income, Net. Insurance income, net remained constant at $11.0 million during both the three months ended March 31, 2024, and the prior-year period. During both the three months ended March 31, 2024 and the prior-year period, personal property insurance premiums represented the largest component of aggregate earned insurance premiums, and life insurance claims expense represented the largest component of direct insurance expenses.
Current wording
Insurance Income, Net. Insurance income, net decreased $0.7 million, or 6.2% to $10.5 million during the three months ended June 30, 2024, from $11.2 million during the prior-year period. During both the three months ended June 30, 2024 and the prior-year period, personal property insurance premiums represented the largest component of aggregate earned insurance premiums, and life insurance claims expense represented the largest component of direct insurance expenses.
Previous wording
Earned premiums decreased by $0.9 million, and claims, reserves, and certain direct expenses decreased by $0.9 million compared to the prior year period. The decrease in earned premiums was primarily due to fewer active policies. The decrease in claims, reserves, and certain direct expenses was primarily due to a decrease in claims expense.
Current wording
Earned premiums decreased by $0.8 million, and claims, reserves, and certain direct expenses decreased by $0.1 million compared to the prior-year period. The decrease in earned premiums was primarily due to our strategic shifts in product and geographic mix which resulted in fewer active policies. The decrease in claims, reserves, and certain direct expenses was primarily due to a decrease in claims expense.
Previous wording
Provision for Credit Losses. Our provision for credit losses decreased $1.2 million, or 2.6%, to $46.4 million during the three months ended March 31, 2024, from $47.7 million during the prior-year period. The decrease was due to a change in provision expense of $5.3 million, partially offset by an increase in net credit losses of $4.1 million, in each case compared to the prior-year period. The decrease in the provision for credit losses is explained in greater detail below.
Current wording
Provision for Credit Losses. Our provision for credit losses increased $1.3 million, or 2.4%, to $53.8 million during the three months ended June 30, 2024, from $52.6 million during the prior-year period. The increase was due to a change in provision expense of $0.7 million and an increase in net credit losses of $0.6 million, in each case compared to the prior-year period. The increase in the provision for credit losses is explained in greater detail below.
Previous wording
Allowance for Credit Losses. We evaluate delinquency and losses in each of our loan products in establishing the allowance for credit losses. During the three months ended March 31, 2024, and the prior-year period, the allowance for credit losses included a release of $0.3 million and build of $5.0 million, respectively. The allowance for credit losses as a percentage of finance receivables decreased to 10.7% as of March 31, 2024, from 11.0% as of the prior-year period due to changes in estimated future macroeconomic impacts on credit losses.
Current wording
Allowance for Credit Losses. We evaluate delinquency and losses in each of our loan products in establishing the allowance for credit losses. During the three months ended June 30, 2024, and the prior-year period, the allowance for credit losses included releases of $1.7 million and $2.4 million, respectively. The allowance for credit losses as a percentage of finance receivables decreased to 10.5% as of June 30, 2024, from 10.7% as of the prior-year period due to changes in estimated future macroeconomic impacts on credit losses, partially offset by portfolio growth.
Previous wording
Delinquency Performance. Our contractual delinquency as a percentage of net finance receivables improved to 7.1% as of March 31, 2024, from 7.2% in the prior-year period.
Current wording
Delinquency Performance. Our contractual delinquency as a percentage of net finance receivables remained consistent at 6.9% as of both June 30, 2024 and the prior-year period.
Previous wording
General and Administrative Expenses. Our general and administrative expenses increased $1.1 million, or 1.9%, to $60.4 million during the three months ended March 31, 2024, from $59.3 million during the prior-year period. The absolute dollar increase in general and administrative expenses is explained in greater detail below.
Current wording
General and Administrative Expenses. Our general and administrative expenses increased $3.2 million, or 5.7%, to $60.1 million during the three months ended June 30, 2024, from $56.9 million during the prior-year period. The absolute dollar increase in general and administrative expenses is explained in greater detail below.
Previous wording
Personnel. The largest component of general and administrative expenses was personnel expense, which decreased $0.8 million, or 2.0%, to $37.8 million during the three months ended March 31, 2024, from $38.6 million during the prior-year period. The decrease was driven by lower incentive costs of $1.3 million and higher capitalized loan origination costs, which reduce personnel expenses, of $0.4 million. This decrease was partially offset by higher labor expenses of $0.9 million compared to the prior-year period.
Current wording
Personnel. The largest component of general and administrative expenses was personnel expense, which increased $0.7 million, or 1.9%, to $37.1 million during the three months ended June 30, 2024, from $36.4 million during the prior-year period. The increase was driven by higher incentive costs of $1.1 million. This increase was partially offset by higher capitalized loan origination costs, which reduce personnel expenses, of $0.5 million compared to the prior-year period.
Previous wording
Marketing. Marketing expenses increased $0.9 million, or 27.7%, to $4.3 million during the three months ended March 31, 2024, from $3.4 million during the prior-year period due to increased activity in our direct mail campaigns of $1.0 million to support growth.
Current wording
Marketing. Marketing expenses increased $1.0 million, or 25.8%, to $4.8 million during the three months ended June 30, 2024, from $3.8 million during the prior-year period due to increased activity in our direct mail campaigns to support growth.
Previous wording
Other Expenses. Other expenses increased $0.9 million, or 7.9%, to $11.9 million during the three months ended March 31, 2024, from $11.1 million during the prior-year period. The increase was due to increases in professional services of $0.5 million and our investment in digital and technological capabilities of $0.3 million compared to the prior-year period.
Current wording
Other Expenses. Other expenses increased $1.6 million, or 15.1%, to $12.1 million during the three months ended June 30, 2024, from $10.5 million during the prior-year period. The prior-year period included insurance settlement proceeds of $1.0 million which reduced other expenses. The remaining increase was primarily due to investment in digital and technological capabilities of $0.4 million and collections expense of $0.3 million compared to the prior-year period.
Previous wording
Interest Expense. Interest expense increased $0.7 million, or 4.3%, to $17.5 million during the three months ended March 31, 2024, from $16.8 million during the prior-year period. The increase was primarily due to an increase in our average cost of debt as well as an increase in the average balance of our debt facilities. An increase in variable rate funding costs increased our annualized average cost of debt 0.04% to 5.10% during the three months ended March 31, 2024, from 5.06% as of the prior-year period. The average balance of our debt facilities increased to $1.4 billion during the three months ended March 31, 2024, from $1.3 billion during the prior-year period.
Current wording
Interest Expense. Interest expense increased $1.6 million, or 10.1%, to $17.9 million during the three months ended June 30, 2024, from $16.2 million during the prior-year period. The increase was primarily due to an increase in our average cost of debt as well as an increase in the average balance of our debt facilities. An increase in variable rate funding costs increased our annualized average cost of debt 0.35% to 5.25% during the three months ended June 30, 2024, from 4.90% as of the prior-year period. The average balance of our debt facilities increased to $1.4 billion during the three months ended June 30, 2024, from $1.3 billion during the prior-year period.
Previous wording
Income Taxes. Income taxes increased $1.8 million, or 62.1%, to $4.7 million during the three months ended March 31, 2024, from $2.9 million during the prior-year period. The increase was primarily due to a $8.3 million increase in income before income taxes compared to the prior-year period. Our effective tax rates were 23.7% and 25.1% for the three months ended March 31, 2024 and the prior-year period, respectively. The decrease in the effective tax rate relates primarily to improved state tax mix and an increase in discrete tax benefits related to share-based compensation.
Current wording
Income Taxes. Income taxes increased $1.0 million, or 55.1%, to $2.8 million during the three months ended June 30, 2024, from $1.8 million during the prior-year period. The increase was primarily due to a $3.4 million increase in income before income taxes compared to the prior-year period. Our effective tax rates were 24.7% and 22.9% for the three months ended June 30, 2024 and the prior-year period, respectively. The increase in the effective tax rate was primarily related to a favorable state earnings mix in the prior year period.
Previous wording
Interest and Fee Income. Interest and fee income increased $8.4 million, or 7.0%, to $128.8 million during the three months ended March 31, 2024, from $120.4 million during the prior-year period. The increase was primarily due to a 3.9% increase in average net finance receivables and a 0.8% increase in annualized average yield. The increase in yield was due to price increases and product mix, partially offset by the credit impact from macroeconomic conditions on revenue reversals and non-accrual loans. The three months ended March 31, 2024 and March 31, 2023 included reductions in revenue reversals of an estimated $1.7 million and $1.9 million attributable to the loan sales that occurred during the fourth quarters of 2023 and 2022, respectively.
Current wording
Interest and Fee Income. Interest and fee income increased $18.2 million, or 7.6%, to $256.7 million during the six months ended June 30, 2024, from $238.5 million during the prior-year period. The increase was primarily due to a 4.2% increase in average net finance receivables and a 1.0% increase in annualized average yield. The increase in yield was due to price increases and product mix to higher-rate small loan business. The six months ended June 30, 2024 and June 30, 2023 included reductions in revenue reversals of an estimated $1.7 million and $1.9 million attributable to the loan sales that occurred during the fourth quarters of 2023 and 2022, respectively.
Previous wording
Other Income. Other income increased $0.5 million, or 12.6%, to $4.5 million during the three months ended March 31, 2024, from $4.0 million during the prior-year period, primarily due to higher late charges of $0.2 million associated with portfolio growth and higher interest income of $0.2 million from cash reserves.
Current wording
Other Income. Other income increased $0.9 million, or 11.3%, to $9.1 million during the six months ended June 30, 2024, from $8.2 million during the prior-year period, primarily due to higher late charges of $0.4 million associated with portfolio growth, higher interest income of $0.2 million from cash reserves, and an increase in sales of our auto club product of $0.1 million.
Previous wording
Net Credit Losses. Net credit losses increased $4.1 million, or 9.5%, to $46.7 million during the three months ended March 31, 2024, from $42.7 million during the prior-year period. The increase was primarily due to higher average net finance receivables and the macroeconomic environment. Annualized net credit losses as a percentage of average net finance receivables were 10.6% during the three months ended March 31, 2024, compared to 10.1% during the prior-year period. Our net credit loss ratios during the three months ended March 31, 2024 and March 31, 2023 were inclusive of estimated 270 basis point and 280 basis point benefits from accelerated charge-offs in the fourth quarters of 2023 and 2022, respectively, attributable to the loan sales.
Current wording
Net Credit Losses. Net credit losses increased $4.6 million, or 4.7%, to $102.2 million during the six months ended June 30, 2024, from $97.6 million during the prior-year period. The increase was primarily due to higher average net finance receivables. Annualized net credit losses as a percentage of average net finance receivables were 11.7% during the six months ended June 30, 2024, compared to 11.6% during the prior-year period. Our net credit loss ratios during the six months ended June 30, 2024 and June 30, 2023 were inclusive of estimated 130 basis point and 140 basis point benefits from accelerated charge-offs in each of the fourth quarters of 2023 and 2022, respectively, attributable to the loan sales.
Previous wording
Our primary cash needs relate to the funding of our lending activities and, to a lesser extent, expenditures relating to improving our technology infrastructure and expanding and maintaining our branch locations. We have historically financed, and plan to continue to finance, our short-term and long-term operating liquidity and capital needs through a combination of cash flows from operations and borrowings under our debt facilities, including our senior revolving credit facility, revolving warehouse credit facilities, and asset-backed securitization transactions, all of which are described below. We continue to seek ways to diversify our funding sources. As of March 31, 2024, we had a funded debt-to-equity ratio (debt divided by total stockholders’ equity) of 4.0 to 1.0 and a stockholders’ equity ratio (total stockholders’ equity as a percentage of total assets) of 19.2%.
Current wording
Our primary cash needs relate to the funding of our lending activities and, to a lesser extent, expenditures relating to improving our technology infrastructure and expanding and maintaining our branch locations. We have historically financed, and plan to continue to finance, our short-term and long-term operating liquidity and capital needs through a combination of cash flows from operations and borrowings under our debt facilities, including our senior revolving credit facility, revolving warehouse credit facilities, and asset-backed securitization transactions, all of which are described below. We continue to seek ways to diversify our funding sources. As of June 30, 2024, we had a funded debt-to-equity ratio (debt divided by total stockholders’ equity) of 4.0 to 1.0 and a stockholders’ equity ratio (total stockholders’ equity as a percentage of total assets) of 19.3%.
Previous wording
Cash and cash equivalents decreased to $4.2 million as of March 31, 2024, from $7.1 million as of the prior year-end. We had immediate availability to draw down cash from our revolving credit facilities of $165.1 million and $108.1 million as of March 31, 2024 and the prior year-end, respectively. Our unused capacity on our revolving credit facilities (subject to the borrowing base) was $478.4 million and $551.5 million as of March 31, 2024, and the prior year-end, respectively. Our total debt was $1.4 billion as of both March 31, 2024, and the prior year-end, respectively.
Current wording
Cash and cash equivalents decreased to $4.3 million as of June 30, 2024, from $4.5 million as of the prior year-end. We had immediate availability to draw down cash from our revolving credit facilities of $145.1 million and $108.1 million as of June 30, 2024 and the prior year-end, respectively. Our unused capacity on our revolving credit facilities (subject to the borrowing base) was $564.4 million and $551.5 million as of June 30, 2024, and the prior year-end, respectively. Our total debt was $1.4 billion as of both June 30, 2024, and the prior year-end, respectively.
Previous wording
The Board may in its discretion declare and pay cash dividends on our common stock. The following table sets forth the dividends declared and paid for the three months ended March 31, 2024:
Current wording
The Board may in its discretion declare and pay cash dividends on our common stock. The following table sets forth the dividends declared and paid for the six months ended June 30, 2024:
Previous wording
The Board declared and paid $3.0 million of cash dividends on our common stock during the three months ended March 31, 2024. See Note 12, “Subsequent Events” of the Notes to Consolidated Financial Statements in Part I, Item 1, “Financial Statements,” for information regarding our cash dividend following the end of the quarter.
Current wording
The Board declared and paid $6.0 million of cash dividends on our common stock during the six months ended June 30, 2024. See Note 12, “Subsequent Events” of the Notes to Consolidated Financial Statements in Part I, Item 1, “Financial Statements,” for information regarding our cash dividend following the end of the quarter.
Previous wording
Operating Activities. Net cash provided by operating activities during the three months ended March 31, 2024 was $58.5 million, compared to $52.6 million during the prior-year period, a net increase of $5.8 million. The increase was primarily due to the growth of our loan portfolio.
Current wording
Operating Activities. Net cash provided by operating activities during the six months ended June 30, 2024 was $130.0 million, compared to $114.7 million during the prior-year period, a net increase of $15.2 million. The increase in net cash provided was primarily due to the growth of our loan portfolio.
Previous wording
Investing Activities. Investing activities consist of originations and repayments of finance receivables, purchases of intangible assets, and purchases of property and equipment for new and existing branches. Net cash used in investing activities during the three months ended March 31, 2024 was $20.3 million, compared to $20.2 million during the prior-year period, a net increase in cash used of $0.1 million. The increase was primarily driven by increased originations as we grow our loan portfolio, partially offset by increased repayments of finance receivables.
Current wording
Investing Activities. Investing activities consist of originations and repayments of finance receivables, purchases of intangible assets, and purchases of property and equipment for new and existing branches. Net cash used in investing activities during the six months ended June 30, 2024 was $84.6 million, compared to $84.8 million during the prior-year period, a net decrease in cash used of $0.2 million. The decrease in net cash used was primarily driven by increased repayments of finance receivables and proceeds from maturities of restricted available-for-sale investments, partially offset by increased originations as we grow our loan portfolio.
Previous wording
Financing Activities. Financing activities consist of borrowings and payments on our outstanding indebtedness. Net cash used in financing activities during the three months ended March 31, 2024 was $44.4 million, compared to $30.0 million during the prior-year period, a net increase in cash used of $14.4 million. The net increase in cash used was primarily due to an increase in the net payments on debt instruments of $15.4 million.
Current wording
Financing Activities. Financing activities consist of borrowings and payments on our outstanding indebtedness. Net cash used in financing activities during the six months ended June 30, 2024 was $30.9 million, compared to $20.3 million during the prior-year period, a net increase in cash used of $10.6 million. The net increase in cash used was primarily due to an increase in the net payments on debt instruments of $10.6 million.
Previous wording
As of March 31, 2024, we had five credit facilities outstanding and, from time to time, engaged in the private offering and sale of asset-backed notes. As part of our overall funding strategy, we have transferred certain finance receivables to affiliated VIEs for asset-backed financing transactions. Our debt arrangements described below, other than our senior revolving credit facility, are issued by each of our RMR and RMIT SPEs, which are considered VIEs under GAAP. These debts are supported by the expected cash flows from the underlying collateralized finance receivables. Collections on these finance receivables are remitted to restricted cash collection accounts, which totaled $103.7 million and $109.9 million as of March 31, 2024 and December 31, 2023, respectively. Our debt arrangements also contain various debt covenants. We were in compliance with all such debt covenants as of March 31, 2024.
Current wording
As of June 30, 2024, we had five credit facilities outstanding and, from time to time, engaged in the private offering and sale of asset-backed notes. As part of our overall funding strategy, we have transferred certain finance receivables to affiliated VIEs for asset-backed financing transactions. Our debt arrangements described below, other than our senior revolving credit facility, are issued by each of our RMR and RMIT SPEs, which are considered VIEs under GAAP. These debts are supported by the expected cash flows from the underlying collateralized finance receivables. Collections on these finance receivables are remitted to restricted cash collection accounts, which totaled $103.4 million and $109.9 million as of June 30, 2024 and December 31, 2023, respectively. Our debt arrangements also contain various debt covenants. We were in compliance with all such debt covenants as of June 30, 2024.
Previous wording
(1) RMR III retained $16.3 million of Class C fixed-rate, asset-backed notes that may be sold in whole or in part on the closing date.
Current wording
(1) RMR III retained $16.3 million of Class C fixed-rate, asset-backed notes that may be sold in whole or in part.
Showing the first 40 of 42 pairs. Open the source sections for the rest.
Rearranged current paragraphs (11)
Current report — wording carried from elsewhere
Interest and Fee Income. Interest and fee income increased $9.8 million, or 8.3%, to $127.9 million during the three months ended June 30, 2024, from $118.1 million during the prior-year period. The increase was primarily due to a 4.5% increase in average net finance receivables and a 1.1% increase in annualized average yield. The increase in yield was due to price increases and product mix to higher-rate small loan business.
Current report — wording carried from elsewhere
The following table sets forth the average net finance receivables balance and average yield for our loan products:
Current report — wording carried from elsewhere
Annualized interest and fee income as a percentage of average net finance receivables.
Current report — wording carried from elsewhere
Total originations increased to $752.4 million during the six months ended June 30, 2024, from $702.2 million during the prior-year period. Origination volume increased during the six months ended June 30, 2024 compared to the prior-year period due to an increase in small loan convenience checks. The following table represents the principal balance of loans originated and refinanced:
Current report — wording carried from elsewhere
The following table summarizes the components of the increase in interest and fee income:
Current report — wording carried from elsewhere
Insurance Income, Net. Insurance income, net decreased $0.7 million, or 3.1%, to $21.5 million during the six months ended June 30, 2024, from $22.2 million during the prior-year period. During both the six months ended June 30, 2024 and the prior-year period, personal property insurance premiums represented the largest component of aggregate earned insurance premiums. Life insurance claims expense represented the largest component of direct insurance expenses for both the six months ended June 30, 2024 and the prior-year period.
Current report — wording carried from elsewhere
The following table summarizes the components of insurance income, net:
Current report — wording carried from elsewhere
Earned premiums decreased by $1.8 million and claims, reserves, and certain direct expenses decreased by $1.1 million compared to the prior-year period. The decrease in earned premiums was primarily due to our strategic shifts in product and geographic mix which resulted in fewer active policies. The decrease in claims, reserves, and certain direct expenses was primarily due to a decrease in claims expense.
Current report — wording carried from elsewhere
Allowance for Credit Losses. We evaluate delinquency and losses in each of our loan products in establishing the allowance for credit losses. During the six months ended June 30, 2024, and the prior-year period, the allowance for credit losses included a release of $2.0 million and a build of $2.6 million, respectively. The allowance for credit losses as a percentage of finance receivables decreased to 10.5% as of June 30, 2024, from 10.7% as of the prior-year period. The decrease was primarily due to changes in estimated future macroeconomic impacts on credit losses, partially offset by portfolio growth.
Current report — wording carried from elsewhere
Personnel. The largest component of general and administrative expenses was personnel expense, which decreased $0.1 million, or 0.1%, to $74.9 million during the six months ended June 30, 2024, from $75.0 million during the prior-year period. The decrease was primarily due to higher capitalized loan origination costs, which reduce personnel expenses, of $0.9 million, and lower incentives of $0.2 million, compared to the prior-year period. These decreases were partially offset by increased labor expenses of $0.9 million.
Current report — wording carried from elsewhere
Interest Expense. Interest expense increased $2.4 million, or 7.2%, to $35.4 million during the six months ended June 30, 2024, compared to $33.0 million during the prior-year period. The increase was primarily due to an increase in our average cost of debt as well as an increase in the average balance of our debt facilities. The annualized average cost of debt increased 0.19% to 5.17% during the six months ended June 30, 2024, from 4.98% as of the prior-year-period. The average balance of our debt facilities increased to $1.4 billion during the six months ended June 30, 2024, from $1.3 billion during the prior-year period.