Business Wire | Oct 29, 2020 04:15PM EDT

Regional Management Corp. Announces Third Quarter 2020 Results

Oct. 29, 2020

GREENVILLE, S.C.--(BUSINESS WIRE)--Oct. 29, 2020--Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the third quarter ended September 30, 2020.

"I am delighted with our third quarter performance, which is a validation of our sustainable operating model, our team's ability to execute in a challenging environment, and the fundamental resilience of our customers," said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. "Our omni-channel strategy, including our implementation of remote loan closings, enabled us to grow our loan portfolio by $37 million in the third quarter despite macroeconomic headwinds. We accomplished this growth while continuing to maintain our underwriting standards and our portfolio's stable credit profile."

"Thanks in part to solid execution on our most recent securitization transaction in September, we also continue to maintain ample liquidity, including $208 million of immediately available liquidity as of October 23, 2020, which positions us well to withstand any additional economic challenges," added Mr. Beck. "To that end, based on our consistently strong performance, liquidity profile, excess capital, and confidence in our future prospects, we are very pleased that our Board of Directors has authorized a new $30 million share repurchase program and initiated a quarterly dividend of $0.20 per common share beginning in the fourth quarter of 2020. We are confident in our business model's ability to generate excess capital to return to our shareholders on a regular basis. The recurring dividend and repurchase programs allow us to return significant value to our shareholders, while retaining ample capital to continue our investment in omni-channel and digital initiatives that will expand our market share and generate sustainable long-term profitable growth."

Third Quarter 2020 Highlights

* Net income for the third quarter of 2020 was $11.2 million and diluted earnings per share was $1.01, compared to net income of $12.6 million and diluted earnings per share of $1.08 in the prior-year period. * Net finance receivables as of September 30, 2020 were $1.1 billion, an increase of 3.6%, or $36.9 million, from June 30, 2020, and a decrease of 0.7%, or $7.5 million, from the prior-year period. Total core small and large loan net finance receivables increased $9.8 million, or 0.9%, compared to the prior-year period. Large loan net finance receivables of $655.9 million increased $80.9 million, or 14.1%, from the prior-year period and represented 61.9% of the total loan portfolio. Small loan net finance receivables were $382.8 million, a decrease of 15.7% from the prior-year period. * Total revenue for the third quarter of 2020 was $90.5 million, a decrease of $1.2 million, or 1.3%, from the prior-year period. Interest and fee income decreased $1.8 million, or 2.1%, primarily attributable to the intended product mix shift toward large loans and the portfolio composition shift toward higher credit quality customers with slightly lower interest rates due to enhanced credit standards during the pandemic. Insurance income, net increased $1.8 million, or 34.9%, driven by an increase in premium revenue and a decrease in non-file insurance claims expense. * Provision for credit losses for the third quarter of 2020 was $22.1 million, a decrease of $2.4 million, or 9.9%, from the prior-year period. The provision for credit losses includes a release in the allowance for credit losses of $1.5 million related to the expected economic impact of the COVID-19 pandemic and a $3.5 million incremental build in reserves related to portfolio growth. Allowance for credit losses was $144.0 million as of September 30, 2020, including a $31.9 million allowance for credit losses associated with COVID-19. The company's macroeconomic model assumes elevated unemployment in 2020 with a gradual decline to 9% by the end of 2021. * Annualized net credit losses as a percentage of average net finance receivables for the third quarter of 2020 were 7.8%, a 30 basis point improvement compared to 8.1% in the prior-year period. * 30+ day contractual delinquencies as of September 30, 2020 totaled $49.9 million, or 4.7% of net finance receivables, compared to 6.5% in the prior-year period. As of September 30, 2020, approximately 40% of the company's total portfolio had been originated since April 2020, the vast majority of which was subject to enhanced credit standards deployed following the outset of the pandemic. * In September 2020, 2.1% of customer accounts were renewed or deferred under internal borrower assistance programs, which is lower than the average of 2.2% over the 12 months preceding the pandemic. * General and administrative expenses for the third quarter of 2020 were $43.8 million, an increase of $3.6 million, or 8.9%, from the prior-year period. The year-over-year increase in expenses was primarily due to the following: $0.8 million of non-operating severance expense to adjust the company's workforce and reposition the business for future growth; the savings will be used to fund the company's omni-channel and digital investments. $0.9 million less in deferred loan origination costs, which increased personnel expense from the prior-year period. $0.9 million in additional marketing expense to support growth initiatives. $0.8 million of incremental costs related to net new branches that opened since the prior-year period. * The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) for the third quarter of 2020 was 17.0%, an increase of 150 basis points compared to the prior-year period. The expenses identified above impacted the operating expense ratio by 130 basis points in the third quarter of 2020 compared to the prior-year period. * In September 2020, the company closed its fourth asset-backed securitization, a $180 million note issuance with a weighted-average coupon of 2.85%. * As of September 30, 2020, the company had total unused capacity on its revolving credit facilities of $507 million, subject to the borrowing base, and available liquidity of $193 million, including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities.

Quarterly Dividend and Share Repurchase Program

Regional's Board of Directors has approved the initiation of a quarterly dividend of $0.20 per common share. The initial dividend will be paid on December 4, 2020 to shareholders of record as of the close of business on November 17, 2020. The declaration and payment of any future dividend will be subject to the discretion of Regional's Board of Directors and will depend on a variety of factors, including the company's financial condition and results of operations.

Regional's Board of Directors has also authorized a new share repurchase program allowing for the repurchase of up to $30 million of its outstanding common stock. The authorization is effective immediately and will continue through October 22, 2022.

Stock repurchases under the share repurchase program may be made in the open market at prevailing market prices, through privately negotiated transactions, or through other structures in accordance with applicable federal securities laws, at times and in amounts as management deems appropriate. The timing and the amount of any common stock repurchases will be determined by the company's management based on its evaluation of market conditions, the company's liquidity needs, legal and contractual requirements and restrictions (including covenants in the company's credit agreements), share price, and other factors. Repurchases of common stock may be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when the company might otherwise be precluded from doing so under insider trading laws. The repurchase program does not obligate the company to purchase any particular number of shares and may be suspended, modified, or discontinued at any time without prior notice.

Liquidity and Capital Resources

As of September 30, 2020, the company had net finance receivables of $1.1 billion and outstanding long-term debt of $700.1 million ($698.3 million of outstanding debt and $1.8 million of interest payable), consisting of:

* $228.5 million on its $640.0 million senior revolving credit facility, * $31.0 million on its $125.0 million revolving warehouse credit facility, and * $440.6 million through its asset-backed securitizations.

The company's unused capacity on its revolving credit facilities (subject to the borrowing base) was $507 million, or 66.2%, as of September 30, 2020.

The company had a funded debt-to-equity ratio of 2.6 to 1.0 and a stockholders' equity ratio of 26.3%, each as of September 30, 2020. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 2.7 to 1.0, as of September 30, 2020. Please refer to the reconciliations of non-GAAP measures to comparable GAAP measures included at the end of this press release.

Branch Network

As of September 30, 2020, the company's branch network consisted of 368 locations. During the fourth quarter of 2020, subject to the changing economic environment, the company plans to open one de novo branch.

Conference Call Information

Regional Management Corp. will host a conference call and webcast today at 5:00 PM ET to discuss these results.

The dial-in number for the conference call is (855) 327-6837 (toll-free) or (631) 891-4304 (direct). Please dial the number 10 minutes prior to the scheduled start time.

*** A supplemental slide presentation will be made available on Regional's website prior to the earnings call at www.RegionalManagement.com. ***

In addition, a live webcast of the conference call will be available on Regional's website at www.RegionalManagement.com.

A webcast replay of the call will be available at www.RegionalManagement.com for one year following the call.

About Regional Management Corp.

Regional Management Corp. (NYSE: RM) is a diversified consumer finance company that provides attractive, easy-to-understand installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders. Regional Management operates under the name "Regional Finance" in 368 branch locations across 11 states in the Southeastern, Southwestern, Mid-Atlantic, and Midwestern United States, as of September 30, 2020. Most of its 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. Regional Management sources loans through its multiple channel platform, which includes branches, centrally-managed direct mail campaigns, digital partners, retailers, and its consumer website. For more information, please visit www.RegionalManagement.com.

Forward-Looking Statements

This press release may contain various "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact but instead represent Regional Management Corp.'s expectations or beliefs concerning future events. Forward-looking statements include, without limitation, statements concerning future plans, objectives, goals, projections, strategies, events, or performance, and underlying assumptions and other statements related thereto. Words such as "may," "will," "should," "likely," "anticipates," "expects," "intends," "plans," "projects," "believes," "estimates," "outlook," and similar expressions may be used to identify these forward-looking statements. Such forward-looking statements speak only as of the date on which they were made and are about matters that are inherently subject to risks and uncertainties, many of which are outside of the control of Regional Management. As a result, actual performance and results may differ materially from those contemplated by these forward-looking statements. Therefore, investors should not place undue reliance on forward-looking statements.

Factors that could cause actual results or performance to differ from the expectations expressed or implied in forward-looking statements include, but are not limited to, the following: changes in general economic conditions, including levels of unemployment and bankruptcies; the impact of the recent outbreak of a novel coronavirus (COVID-19), including on Regional Management's access to liquidity and the credit risk of Regional Management's finance receivable portfolio; risks associated with Regional Management's ability to timely and effectively implement, transition to, and maintain the necessary information technology systems, infrastructure, processes, and controls to support its operations and initiatives; risks associated with Regional Management's loan origination and servicing software system, including the risk of prolonged system outages; risks related to opening new branches, including the ability or inability to open new branches as planned; risks inherent in making loans, including credit risk, repayment risk, and value of collateral, which risks may increase in light of adverse or recessionary economic conditions; risks associated with the implementation of new underwriting models and processes, including as to the effectiveness of new custom scorecards; risks relating to Regional Management's asset-backed securitization transactions; changes in interest rates; the risk that Regional Management's existing sources of liquidity become insufficient to satisfy its needs or that its access to these sources becomes unexpectedly restricted; changes in federal, state, or local laws, regulations, or regulatory policies and practices, and risks associated with the manner in which laws and regulations are interpreted, implemented, and enforced; changes in accounting standards, rules, and interpretations, and the failure of related assumptions and estimates, including those associated with the implementation of current expected credit loss (CECL) accounting; the impact of changes in tax laws, guidance, and interpretations; 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 credit losses); changes in Regional Management's markets and general changes in the economy (particularly in the markets served by Regional Management); changes in the competitive environment in which Regional Management operates or a decrease in the demand for its products; the timing and amount of future cash dividend payments; risks related to acquisitions; changes in operating and administrative expenses; and the departure, transition, or replacement of key personnel. The COVID-19 pandemic may also magnify many of these risks and uncertainties.

The foregoing factors and others are discussed in greater detail in Regional Management's filings with the Securities and Exchange Commission. Regional Management will not update or revise forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events or the non-occurrence of anticipated events, whether as a result of new information, future developments, or otherwise, except as required by law. Regional Management is not responsible for changes made to this document by wire services or Internet services.

Regional Management Corp. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

(in thousands, except per share amounts)



Better (Worse) Better (Worse)

3Q 20 3Q 19 $ % YTD 20 YTD 19 $ %

Revenue

Interest and $ 81,306 $ 83,089 $ (1,783 ) (2.1 ) $ 248,370 $ 233,385 $ 14,985 6.4 %fee income %

Insurance 6,861 5,087 1,774 34.9 % 20,460 14,266 6,194 43.4 %income, net

Other income 2,371 3,531 (1,160 ) (32.9 ) 7,632 10,078 (2,446 ) (24.3 ) % %

Total revenue 90,538 91,707 (1,169 ) (1.3 ) 276,462 257,729 18,733 7.3 % %



Expenses

Provision for 22,089 24,515 2,426 9.9 % 99,110 73,572 (25,538 ) (34.7 )credit losses %



Personnel 26,207 23,791 (2,416 ) (10.2 ) 82,581 68,695 (13,886 ) (20.2 ) % %

Occupancy 6,851 6,367 (484 ) (7.6 ) 18,875 18,742 (133 ) (0.7 ) % %

Marketing 3,249 2,397 (852 ) (35.5 ) 6,373 6,309 (64 ) (1.0 ) % %

Other 7,447 7,612 165 2.2 % 23,693 22,347 (1,346 ) (6.0 ) %

Total general ) )and 43,754 40,167 (3,587 ) (8.9 % 131,522 116,093 (15,429 ) (13.3 %administrative



Interest 9,300 10,348 1,048 10.1 % 28,596 29,840 1,244 4.2 %expense

Income before 15,395 16,677 (1,282 ) (7.7 ) 17,234 38,224 (20,990 ) (54.9 )income taxes % %

Income taxes 4,157 4,105 (52 ) (1.3 ) 4,851 9,175 4,324 47.1 % %



Net income $ 11,238 $ 12,572 $ (1,334 ) (10.6 ) $ 12,383 $ 29,049 $ (16,666 ) (57.4 ) % %

Net income per common share:

Basic $ 1.02 $ 1.11 $ (0.09 ) (8.1 ) $ 1.13 $ 2.51 $ (1.38 ) (55.0 ) % %

Diluted $ 1.01 $ 1.08 $ (0.07 ) (6.5 ) $ 1.11 $ 2.44 $ (1.33 ) (54.5 ) % %

Weightedaverage common sharesoutstanding:

Basic 10,977 11,302 325 2.9 % 10,945 11,572 627 5.4 %

Diluted 11,092 11,677 585 5.0 % 11,117 11,924 807 6.8 %

Return onaverage assets 4.4 % 4.7 % 1.6 % 3.9 % (annualized)

Return onaverage equity 16.9 % 17.2 % 6.2 % 13.4 % (annualized)

Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value amounts)

Increase (Decrease)

3Q 20

3Q 19

$

%

Assets

Cash

$

4,292

$

2,044

$

2,248

110.0

%

Net finance receivables

1,059,554

1,067,086

(7,532

)

(0.7

)%

Unearned insurance premiums

(30,024

)

(24,900

)

(5,124

)

(20.6

)%

Allowance for credit losses

(144,000

)

(60,900

)

(83,100

)

(136.5

)%

Net finance receivables, less unearned insurance premiums and allowance for credit losses

885,530

981,286

(95,756

)

(9.8

)%

Restricted cash

58,219

43,659

14,560

33.3

%

Lease assets

27,855

25,688

2,167

8.4

%

Property and equipment

15,054

14,512

542

3.7

%

Intangible assets

8,677

9,574

(897

)

(9.4

)%

Deferred tax asset

22,960

1,445

21,515

1488.9

%

Other assets

14,972

7,964

7,008

88.0

%

Total assets

$

1,037,559

$

1,086,172

$

(48,613

)

(4.5

)%

Liabilities and Stockholders' Equity

Liabilities:

Long-term debt

$

700,139

$

743,835

$

(43,696

)

(5.9

)%

Unamortized debt issuance costs

(8,603

)

(7,828

)

(775

)

(9.9

)%

Net long-term debt

691,536

736,007

(44,471

)

(6.0

)%

Accounts payable and accrued expenses

43,576

25,764

17,812

69.1

%

Lease liabilities

29,983

27,714

2,269

8.2

%

Total liabilities

765,095

789,485

(24,390

)

(3.1

)%

Stockholders' equity:

Preferred stock ($0.10 par value, 100,000 shares authorized, none issued or outstanding)

-

-

-

-

Common stock ($0.10 par value, 1,000,000 shares authorized, 13,821 shares issued and 11,337 shares outstanding at September 30, 2020 and 13,513 shares issued and 11,409 shares outstanding at September 30, 2019)

1,382

1,351

31

2.3

%

Additional paid-in-capital

105,866

101,682

4,184

4.1

%

Retained earnings

215,290

233,146

(17,856

)

(7.7

)%

Treasury stock (2,484 shares at September 30, 2020 and 2,104 shares at September 30, 2019)

(50,074

)

(39,492

)

(10,582

)

(26.8

)%

Total stockholders' equity

272,464

296,687

(24,223

)

(8.2

)%

Total liabilities and stockholders' equity

$

1,037,559

$

1,086,172

$

(48,613

)

(4.5

)%

Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value amounts)



Increase (Decrease)

3Q 20 3Q 19 $ %

Assets

Cash $ 4,292 $ 2,044 $ 2,248 110.0 %

Net finance 1,059,554 1,067,086 (7,532 ) (0.7 )receivables %

Unearned insurance (30,024 ) (24,900 ) (5,124 ) (20.6 )premiums %

Allowance for credit (144,000 ) (60,900 ) (83,100 ) (136.5 )losses %

Net financereceivables, lessunearned insurance 885,530 981,286 (95,756 ) (9.8 )premiums and %allowance for creditlosses

Restricted cash 58,219 43,659 14,560 33.3 %

Lease assets 27,855 25,688 2,167 8.4 %

Property and 15,054 14,512 542 3.7 %equipment

Intangible assets 8,677 9,574 (897 ) (9.4 ) %

Deferred tax asset 22,960 1,445 21,515 1488.9 %

Other assets 14,972 7,964 7,008 88.0 %

Total assets $ 1,037,559 $ 1,086,172 $ (48,613 ) (4.5 ) %

Liabilities and Stockholders' Equity

Liabilities:

Long-term debt $ 700,139 $ 743,835 $ (43,696 ) (5.9 ) %

Unamortized debt (8,603 ) (7,828 ) (775 ) (9.9 )issuance costs %

Net long-term debt 691,536 736,007 (44,471 ) (6.0 ) %

Accounts payable and 43,576 25,764 17,812 69.1 %accrued expenses

Lease liabilities 29,983 27,714 2,269 8.2 %

Total liabilities 765,095 789,485 (24,390 ) (3.1 ) %

Stockholders' equity:

Preferred stock($0.10 par value,100,000 shares - - - - authorized, noneissued oroutstanding)

Common stock ($0.10par value, 1,000,000shares authorized,13,821 shares issuedand 11,337 sharesoutstanding at 1,382 1,351 31 2.3 %September 30, 2020and 13,513 sharesissued and 11,409shares outstandingat September 30,2019)

Additional 105,866 101,682 4,184 4.1 %paid-in-capital

Retained earnings 215,290 233,146 (17,856 ) (7.7 ) %

Treasury stock(2,484 shares at )September 30, 2020 (50,074 ) (39,492 ) (10,582 ) (26.8 %and 2,104 shares atSeptember 30, 2019)

Total stockholders' 272,464 296,687 (24,223 ) (8.2 )equity %

Total liabilities )and stockholders' $ 1,037,559 $ 1,086,172 $ (48,613 ) (4.5 %equity

Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(in thousands, except per share amounts)

Net Finance Receivables by Product

3Q 20

2Q 20

QoQ $

Inc (Dec)

QoQ %

Inc (Dec)

3Q 19

YoY $

Inc (Dec)

YoY %

Inc (Dec)

Small loans

$

382,785

$

380,083

$

2,702

0.7

%

$

453,969

$

(71,184

)

(15.7

)%

Large loans

655,932

618,134

37,798

6.1

%

574,988

80,944

14.1

%

Total core loans

1,038,717

998,217

40,500

4.1

%

1,028,957

9,760

0.9

%

Automobile loans

4,892

6,059

(1,167

)

(19.3

)%

12,144

(7,252

)

(59.7

)%

Retail loans

15,945

18,359

(2,414

)

(13.1

)%

25,985

(10,040

)

(38.6

)%

Total net finance receivables

$

1,059,554

$

1,022,635

$

36,919

3.6

%

$

1,067,086

$

(7,532

)

(0.7

)%

Number of branches at period end

368

368

-

0.0

%

358

10

2.8

%

Average net finance receivables per branch

$

2,879

$

2,779

$

100

3.6

%

$

2,981

$

(102

)

(3.4

)%

Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(in thousands, except per share amounts)



Net Finance Receivables by Product

QoQ $ QoQ % YoY $ YoY % 3Q 20 2Q 20 3Q 19 Inc Inc Inc (Dec) Inc (Dec) (Dec) (Dec)

Small loans $ 382,785 $ 380,083 $ 2,702 0.7 % $ 453,969 $ (71,184 ) (15.7 ) %

Large loans 655,932 618,134 37,798 6.1 % 574,988 80,944 14.1 %

Total core 1,038,717 998,217 40,500 4.1 % 1,028,957 9,760 0.9 %loans

Automobile 4,892 6,059 (1,167 ) (19.3 ) 12,144 (7,252 ) (59.7 )loans % %

Retail loans 15,945 18,359 (2,414 ) (13.1 ) 25,985 (10,040 ) (38.6 ) % %

Total net )finance $ 1,059,554 $ 1,022,635 $ 36,919 3.6 % $ 1,067,086 $ (7,532 ) (0.7 %receivables

Number ofbranches at 368 368 - 0.0 % 358 10 2.8 %period end

Average netfinance $ 2,879 $ 2,779 $ 100 3.6 % $ 2,981 $ (102 ) (3.4 )receivables %per branch

Averages and Yields

3Q 20

2Q 20

3Q 19

Average Net Finance Receivables

Average Yield (Annualized)

Average Net Finance Receivables

Average Yield (Annualized)

Average Net Finance Receivables

Average Yield (Annualized)

Small loans

$

377,390

37.7

%

$

404,019

36.2

%

$

446,621

38.4

%

Large loans

632,106

28.3

%

618,860

27.3

%

546,582

28.1

%

Automobile loans

5,492

13.5

%

6,820

14.8

%

13,834

14.9

%

Retail loans

17,145

18.9

%

20,114

18.0

%

26,902

19.1

%

Total interest and fee yield

$

1,032,133

31.5

%

$

1,049,813

30.5

%

$

1,033,939

32.1

%

Total revenue yield

$

1,032,133

35.1

%

$

1,049,813

34.2

%

$

1,033,939

35.5

%

Averages and Yields

3Q 20 2Q 20 3Q 19

Average Net Average Average Net Average Average Net Average Finance Yield Finance Yield Finance Yield Receivables (Annualized) Receivables (Annualized) Receivables (Annualized)

Small $ 377,390 37.7 % $ 404,019 36.2 % $ 446,621 38.4 %loans

Large 632,106 28.3 % 618,860 27.3 % 546,582 28.1 %loans

Automobile 5,492 13.5 % 6,820 14.8 % 13,834 14.9 %loans

Retail 17,145 18.9 % 20,114 18.0 % 26,902 19.1 %loans

Totalinterest $ 1,032,133 31.5 % $ 1,049,813 30.5 % $ 1,033,939 32.1 %and feeyield

Totalrevenue $ 1,032,133 35.1 % $ 1,049,813 34.2 % $ 1,033,939 35.5 %yield

Components of Decrease in Interest and Fee Income

3Q 20 Compared to 3Q 19

Increase (Decrease)

Volume

Rate

Volume & Rate

Total

Small loans

$

(6,646

)

$

(724

)

$

113

$

(7,257

)

Large loans

6,011

233

37

6,281

Automobile loans

(312

)

(48

)

29

(331

)

Retail loans

(466

)

(16

)

6

(476

)

Product mix

1,268

(1,086

)

(182

)

-

Total decrease in interest and fee income

$

(145

)

$

(1,641

)

$

3

$

(1,783

)

Components of Decrease in Interest and Fee Income

3Q 20 Compared to 3Q 19

Increase (Decrease)

Volume Rate Volume Total & Rate

Small loans $ (6,646 ) $ (724 ) $ 113 $ (7,257 )

Large loans 6,011 233 37 6,281

Automobile loans (312 ) (48 ) 29 (331 )

Retail loans (466 ) (16 ) 6 (476 )

Product mix 1,268 (1,086 ) (182 ) -

Total decrease in interest $ (145 ) $ (1,641 ) $ 3 $ (1,783 )and fee income

Net Loans Originated (1) (2)

3Q 20

2Q 20

QoQ $

Inc (Dec)

QoQ %

Inc (Dec)

3Q 19

YoY $

Inc (Dec)

YoY %

Inc (Dec)

Small loans

$

144,132

$

79,265

$

64,867

81.8

%

$

177,629

$

(33,497

)

(18.9

)%

Large loans

162,120

90,980

71,140

78.2

%

166,835

(4,715

)

(2.8

)%

Retail loans

1,835

1,907

(72

)

(3.8

)%

4,421

(2,586

)

(58.5

)%

Total net loans originated

$

308,087

$

172,152

$

135,935

79.0

%

$

348,885

$

(40,798

)

(11.7

)%

(1) Represents the balance of loan origination and refinancing net of unearned finance charges. (2) The company ceased originating automobile loans in November 2017.

Net Loans Originated (1) (2)

QoQ $ QoQ % YoY $ YoY % 3Q 20 2Q 20 3Q 19 Inc (Dec) Inc Inc (Dec) Inc (Dec) (Dec)

Small loans $ 144,132 $ 79,265 $ 64,867 81.8 % $ 177,629 $ (33,497 ) (18.9 ) %

Large loans 162,120 90,980 71,140 78.2 % 166,835 (4,715 ) (2.8 ) %

Retail loans 1,835 1,907 (72 ) (3.8 ) 4,421 (2,586 ) (58.5 ) % %

Total net loans $ 308,087 $ 172,152 $ 135,935 79.0 % $ 348,885 $ (40,798 ) (11.7 )originated %

(1) Represents the balance of loan origination and refinancing net of unearned finance charges. (2) The company ceased originating automobile loans in November 2017.

Other Key Metrics

3Q 20 2Q 20 3Q 19

Net credit losses $ 20,089 $ 27,899 $ 20,815

Percentage of average netfinance receivables 7.8 % 10.6 % 8.1 %(annualized)

Provision for loan losses (1) $ 22,089 $ 27,499 $ 24,515

Percentage of average netfinance receivables 8.6 % 10.5 % 9.5 %(annualized)

Percentage of total revenue 24.4 % 30.6 % 26.7 %

General and administrative $ 43,754 $ 41,525 $ 40,167 expenses (2)

Percentage of average netfinance receivables 17.0 % 15.8 % 15.5 %(annualized)

Percentage of total revenue 48.3 % 46.2 % 43.8 %

Same store results (3):

Net finance receivables at $ 1,049,327 $ 1,016,776 $ 1,053,166 period-end

Net finance receivable growth (1.5 ) 2.2 % 17.1 %rate %

Number of branches in 347 349 332 calculation

(1) Includes COVID-19 pandemic impacts to provision for credit losses of $(1,500) and $9,500 for 3Q 20 and 2Q 20, respectively. (2) Includes non-operating severance costs of $778 for 3Q 20. (3) Same store sales reflect the change in year-over-year sales for the comparable branch base. The comparable branch base includes those branches open for at least one year.

Contractual Delinquency by Aging

3Q 20 2Q 20 3Q 19

Allowance forcredit losses $ 144,000 13.6 % $ 142,000 13.9 % $ 60,900 5.7 %(1)

929,778 87.8 % 896,928 87.8 % 896,051 83.9 %Current

1 to 29 days 79,838 7.5 % 76,172 7.4 % 102,120 9.6 %past due

Delinquent accounts:

30 to 59 days 16,105 1.5 % 15,277 1.4 % 23,058 2.2 %

60 to 89 days 11,014 1.0 % 9,764 1.0 % 16,240 1.5 %

90 to 119 8,375 0.8 % 7,014 0.7 % 11,797 1.1 %days

120 to 149 7,967 0.8 % 8,081 0.8 % 9,728 0.9 %days

150 to 179 6,477 0.6 % 9,399 0.9 % 8,092 0.8 %days

Totalcontractual $ 49,938 4.7 % $ 49,535 4.8 % $ 68,915 6.5 %delinquency

Total netfinance $ 1,059,554 100.0 % $ 1,022,635 100.0 % $ 1,067,086 100.0 %receivables

1 day and $ 129,776 12.2 % $ 125,707 12.2 % $ 171,035 16.1 %over past due

Contractual Delinquency by Product

3Q 20

2Q 20

3Q 19

Small loans

$

22,904

6.0

%

$

24,465

6.4

%

$

36,719

8.1

%

Large loans

25,489

3.9

%

23,660

3.8

%

28,852

5.0

%

Automobile loans

337

6.9

%

291

4.8

%

1,153

9.5

%

Retail loans

1,208

7.6

%

1,119

6.1

%

2,191

8.4

%

Total contractual delinquency

$

49,938

4.7

%

$

49,535

4.8

%

$

68,915

6.5

%

(1) Includes incremental COVID-19 allowance for credit losses of $31,900 and $33,400 in 3Q 20 and 2Q 20, respectively.

Contractual Delinquency by Product

3Q 20 2Q 20 3Q 19

Small loans $ 22,904 6.0 % $ 24,465 6.4 % $ 36,719 8.1 %

Large loans 25,489 3.9 % 23,660 3.8 % 28,852 5.0 %

Automobile loans 337 6.9 % 291 4.8 % 1,153 9.5 %

Retail loans 1,208 7.6 % 1,119 6.1 % 2,191 8.4 %

Total contractual $ 49,938 4.7 % $ 49,535 4.8 % $ 68,915 6.5 %delinquency

(1) Includes incremental COVID-19 allowance for credit losses of $31,900 and $33,400 in 3Q 20 and 2Q 20, respectively.

Income Statement Quarterly Trend

QoQ $ YoY $ 3Q 19 4Q 19 1Q 20 2Q 20 3Q 20 B(W) B(W)

Revenue

Interest and fee income $ 83,089 $ 87,784 $ 86,997 $ 80,067 $ 81,306 $ 1,239 $ (1,783 )

Insurance income, net 5,087 6,551 5,949 7,650 6,861 (789 ) 1,774

Other income 3,531 3,649 3,128 2,133 2,371 238 (1,160 )

Total revenue 91,707 97,984 96,074 89,850 90,538 688 (1,169 )

Expenses

Provision for credit losses 24,515 26,039 49,522 27,499 22,089 5,410 2,426

23,791 25,305 29,511 26,863 26,207 656 (2,416 )Personnel

Occupancy 6,367 5,876 5,771 6,253 6,851 (598 ) (484 )

Marketing 2,397 1,897 1,686 1,438 3,249 (1,811 ) (852 )

Other 7,612 7,813 9,275 6,971 7,447 (476 ) 165

Total general and 40,167 40,891 46,243 41,525 43,754 (2,229 ) (3,587 )administrative

10,348 10,285 10,159 9,137 9,300 (163 ) 1,048 Interest expense

Income (loss) before income 16,677 20,769 (9,850 ) 11,689 15,395 3,706 (1,282 )taxes

Income taxes 4,105 5,086 (3,525 ) 4,219 4,157 62 (52 )

Net income (loss) $ 12,572 $ 15,683 $ (6,325 ) $ 7,470 $ 11,238 $ 3,768 $ (1,334 )

Net income (loss) per common share:

Basic $ 1.11 $ 1.44 $ (0.58 ) $ 0.68 $ 1.02 $ 0.34 $ (0.09 )

Diluted $ 1.08 $ 1.38 $ (0.56 ) $ 0.68 $ 1.01 $ 0.33 $ (0.07 )

Weighted-average shares outstanding:

Basic 11,302 10,893 10,897 10,962 10,977 (15 ) 325

Diluted 11,677 11,327 11,253 11,013 11,092 (79 ) 585

$ 81,359 $ 87,699 $ 85,915 $ 80,713 $ 81,238 $ 525 $ (121 )Net interest margin

Net credit margin $ 56,844 $ 61,660 $ 36,393 $ 53,214 $ 59,149 $ 5,935 $ 2,305

Balance Sheet Quarterly Trend

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

QoQ $

Inc (Dec)

YoY $

Inc (Dec)

Total assets

$

1,086,172

$

1,158,540

$

1,078,890

$

1,000,225

$

1,037,559

$

37,334

$

(48,613

)

Net finance receivables

$

1,067,086

$

1,133,404

$

1,102,285

$

1,022,635

$

1,059,554

$

36,919

$

(7,532

)

Allowance for credit losses

$

60,900

$

62,200

$

142,400

$

142,000

$

144,000

$

2,000

$

83,100

Long-term debt

$

743,835

$

808,218

$

777,847

$

683,865

$

700,139

$

16,274

$

(43,696

)

Balance Sheet Quarterly Trend

QoQ $ YoY $ 3Q 19 4Q 19 1Q 20 2Q 20 3Q 20 Inc Inc (Dec) (Dec)

Total assets $ 1,086,172 $ 1,158,540 $ 1,078,890 $ 1,000,225 $ 1,037,559 $ 37,334 $ (48,613 )

Net finance $ 1,067,086 $ 1,133,404 $ 1,102,285 $ 1,022,635 $ 1,059,554 $ 36,919 $ (7,532 )receivables

Allowance for credit $ 60,900 $ 62,200 $ 142,400 $ 142,000 $ 144,000 $ 2,000 $ 83,100 losses

Long-term debt $ 743,835 $ 808,218 $ 777,847 $ 683,865 $ 700,139 $ 16,274 $ (43,696 )

Other Key Metrics Quarterly Trend

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

QoQ

Inc (Dec)

YoY

Inc (Dec)

Interest and fee yield (annualized)

32.1

%

32.0

%

31.0

%

30.5

%

31.5

%

1.0

%

(0.6

)%

Efficiency ratio (1)

43.8

%

41.7

%

48.1

%

46.2

%

48.3

%

2.1

%

4.5

%

Operating expense ratio (2)

15.5

%

14.9

%

16.5

%

15.8

%

17.0

%

1.2

%

1.5

%

30+ contractual delinquency

6.5

%

7.0

%

6.6

%

4.8

%

4.7

%

(0.1

)%

(1.8

)%

Net credit loss ratio (3)

8.1

%

9.0

%

10.5

%

10.6

%

7.8

%

(2.8

)%

(0.3

)%

Book value per share

$

26.00

$

27.49

$

22.49

$

23.11

$

24.03

$

0.92

$

(1.97

)

(1) General and administrative expenses as a percentage of total revenue. (2) Annualized general and administrative expenses as a percentage of average net finance receivables. (3) Annualized net credit losses as a percentage of average net finance receivables.

Other Key Metrics Quarterly Trend

QoQ YoY 3Q 19 4Q 19 1Q 20 2Q 20 3Q 20 Inc Inc (Dec) (Dec)

Interest and )fee yield 32.1 % 32.0 % 31.0 % 30.5 % 31.5 % 1.0 % (0.6 %(annualized)

Efficiency 43.8 % 41.7 % 48.1 % 46.2 % 48.3 % 2.1 % 4.5 %ratio (1)

Operatingexpense 15.5 % 14.9 % 16.5 % 15.8 % 17.0 % 1.2 % 1.5 %ratio (2)

30+ ) )contractual 6.5 % 7.0 % 6.6 % 4.8 % 4.7 % (0.1 % (1.8 %delinquency

Net credit ) )loss ratio 8.1 % 9.0 % 10.5 % 10.6 % 7.8 % (2.8 % (0.3 %(3)

Book value $ 26.00 $ 27.49 $ 22.49 $ 23.11 $ 24.03 $ 0.92 $ (1.97 )per share

(1) General and administrative expenses as a percentage of total revenue. (2) Annualized general and administrative expenses as a percentage of average net finance receivables. (3) Annualized net credit losses as a percentage of average net finance receivables.

Averages and Yields

YTD 20 YTD 19

Average Net Average Average Net Average Finance Yield Finance Yield Receivables (Annualized) Receivables (Annualized)

Small $ 413,051 36.9 % $ 436,432 38.1 %loans

Large 628,173 27.7 % 494,880 27.6 %loans

Automobile 6,971 13.9 % 18,327 14.8 %loans

Retail 20,094 18.2 % 28,568 18.8 %loans

Totalinterest $ 1,068,289 31.0 % $ 978,207 31.8 %and feeyield

Totalrevenue $ 1,068,289 34.5 % $ 978,207 35.1 %yield

Components of Increase in Interest and Fee Income

YTD 20 Compared to YTD 19

Increase (Decrease)

Volume

Rate

Volume & Rate

Total

Small loans

$

(6,682

)

$

(3,982

)

$

213

$

(10,451

)

Large loans

27,631

317

85

28,033

Automobile loans

(1,260

)

(117

)

72

(1,305

)

Retail loans

(1,197

)

(135

)

40

(1,292

)

Product mix

3,000

(2,041

)

(959

)

-

Total increase in interest and fee income

$

21,492

$

(5,958

)

$

(549

)

$

14,985

Components of Increase in Interest and Fee Income

YTD 20 Compared to YTD 19

Increase (Decrease)

Volume Rate Volume Total & Rate

Small loans $ (6,682 ) $ (3,982 ) $ 213 $ (10,451 )

Large loans 27,631 317 85 28,033

Automobile loans (1,260 ) (117 ) 72 (1,305 )

Retail loans (1,197 ) (135 ) 40 (1,292 )

Product mix 3,000 (2,041 ) (959 ) -

Total increase in interest $ 21,492 $ (5,958 ) $ (549 ) $ 14,985 and fee income

Net Loans Originated (1) (2)

YTD 20

YTD 19

YTD $

Inc (Dec)

YTD %

Inc (Dec)

Small loans

$

343,421

$

481,314

$

(137,893

)

(28.6

)%

Large loans

358,748

420,276

(61,528

)

(14.6

)%

Retail loans

7,315

15,797

(8,482

)

(53.7

)%

Total net loans originated

$

709,484

$

917,387

$

(207,903

)

(22.7

)%

(1) Represents the balance of loan origination and refinancing net of unearned finance charges. (2) The company ceased originating automobile loans in November 2017.

Net Loans Originated (1) (2)

YTD $ YTD % YTD 20 YTD 19 Inc (Dec) Inc (Dec)

Small loans $ 343,421 $ 481,314 $ (137,893 ) (28.6 ) %

Large loans 358,748 420,276 (61,528 ) (14.6 ) %

Retail loans 7,315 15,797 (8,482 ) (53.7 ) %

Total net loans $ 709,484 $ 917,387 $ (207,903 ) (22.7 )originated %

(1) Represents the balance of loan origination and refinancing net of unearned finance charges. (2) The company ceased originating automobile loans in November 2017.

Other Key Metrics

YTD 20 YTD 19

Net credit losses $ 77,410 $ 70,972

Percentage of average net finance receivables 9.7 % 9.7 %(annualized)

Provision for loan losses (1) $ 99,110 $ 73,572

Percentage of average net finance receivables 12.4 % 10.0 %(annualized)

Percentage of total revenue 35.8 % 28.5 %

General and administrative expenses (2) (3) (4) $ 131,522 $ 116,093

Percentage of average net finance receivables 16.4 % 15.8 %(annualized)

Percentage of total revenue 47.6 % 45.0 %

(1) Includes COVID-19 pandemic impacts to provision for credit losses of $31,900 for YTD 20. (2) Includes non-operating executive transition costs of $3,066 for YTD 20. (3) Includes non-operating loan management system outage costs of $720 for YTD 20. (4) Includes non-operating severance costs of $778 for YTD 20.

Non-GAAP Financial Measures

In addition to financial measures presented in accordance with generally accepted accounting principles ("GAAP"), this press release contains certain non-GAAP financial measures. The company's management utilizes non-GAAP measures as additional metrics to aid in, and enhance, its understanding of the company's financial results. Tangible equity and funded debt-to-tangible equity ratio are non-GAAP measures that adjust GAAP measures to exclude intangible assets. Management uses these equity measures to evaluate and manage the company's capital and leverage position. The company also believes that these equity measures are commonly used in the financial services industry and provide useful information to users of the company's financial statements in the evaluation of its capital and leverage position.

This non-GAAP financial information should be considered in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. In addition, the company's non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies. The following tables provide a reconciliation of GAAP measures to non-GAAP measures.

3Q 20

Long-term debt $ 700,139

272,464 Total stockholders' equity

Less: Intangible assets 8,677

Tangible equity (non-GAAP) $ 263,787

2.6 xFunded debt-to-equity ratio

Funded debt-to-tangible equity ratio (non-GAAP) 2.7 x

View source version on businesswire.com: https://www.businesswire.com/news/home/20201029006159/en/

CONTACT: Investor Relations Garrett Edson, (203) 682-8331 investor.relations@regionalmanagement.com