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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period ended

Commission File Number: 001-35477

 

Regional Management Corp.

(Exact name of registrant as specified in its charter)

 

 

Delaware

57-0847115

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

979 Batesville Road, Suite B

Greer, South Carolina

29651

(Address of principal executive offices)

(Zip Code)

(864) 448-7000

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

 

Trading Symbol

 

 

Name of Each Exchange on Which Registered

 

Common Stock, $0.10 par value

 

RM

 

New York Stock Exchange

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes       No   

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No   

As of August 3, 2022, the registrant had outstanding 9,582,094 shares of Common Stock, $0.10 par value.

 

 


 

 

 

 

Page No.

PART  I.

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheets Dated June 30, 2022 and December 31, 2021

3

 

 

 

 

Consolidated Statements of Income for the Three and Six Months Ended June 30, 2022 and 2021

4

 

 

 

 

Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2022 and 2021

5

 

 

 

 

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021

7

 

 

 

 

Notes to Consolidated Financial Statements

9

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

29

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

47

 

 

 

Item 4.

Controls and Procedures

48

 

 

 

PART II.

OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

49

 

 

 

Item 1A.

Risk Factors

49

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

49

 

 

 

Item 6.

Exhibits

50

 

 

SIGNATURE

51

 

2


 

ITEM 1.

FINANCIAL STATEMENTS.

Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except par value amounts)

 

 

June 30, 2022

 

 

 

 

 

 

 

(Unaudited)

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

 

 

Cash

 

$

7,928

 

 

$

10,507

 

Net finance receivables

 

 

1,525,659

 

 

 

1,426,257

 

Unearned insurance premiums

 

 

(48,986

)

 

 

(47,837

)

Allowance for credit losses

 

 

(167,500

)

 

 

(159,300

)

Net finance receivables, less unearned insurance premiums and

allowance for credit losses

 

 

1,309,173

 

 

 

1,219,120

 

Restricted cash

 

 

144,802

 

 

 

138,682

 

Lease assets

 

 

28,555

 

 

 

28,721

 

Deferred tax assets, net

 

 

19,798

 

 

 

18,420

 

Property and equipment

 

 

12,808

 

 

 

12,938

 

Intangible assets

 

 

10,312

 

 

 

9,517

 

Other assets

 

 

14,568

 

 

 

21,757

 

Total assets

 

$

1,547,944

 

 

$

1,459,662

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Debt

 

$

1,194,570

 

 

$

1,107,953

 

Unamortized debt issuance costs

 

 

(10,819

)

 

 

(11,010

)

Net debt

 

 

1,183,751

 

 

 

1,096,943

 

Accounts payable and accrued expenses

 

 

34,492

 

 

 

49,283

 

Lease liabilities

 

 

31,117

 

 

 

30,700

 

Total liabilities

 

 

1,249,360

 

 

 

1,176,926

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

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, 14,390 shares issued and 9,584 shares outstanding at June 30, 2022 and 14,157 shares issued and 9,788 shares outstanding at December 31, 2021)

 

 

1,439

 

 

 

1,416

 

Additional paid-in capital

 

 

108,345

 

 

 

104,745

 

Retained earnings

 

 

338,943

 

 

 

306,105

 

Treasury stock (4,807 shares at June 30, 2022 and 4,370 shares at December 31, 2021)

 

 

(150,143

)

 

 

(129,530

)

Total stockholders’ equity

 

 

298,584

 

 

 

282,736

 

Total liabilities and stockholders’ equity

 

$

1,547,944

 

 

$

1,459,662

 

The following table presents the assets and liabilities of our consolidated variable interest entities:

Assets

 

 

 

 

 

 

 

 

Cash

 

$

362

 

 

$

364

 

Net finance receivables

 

 

1,118,925

 

 

 

1,004,954

 

Allowance for credit losses

 

 

(120,462

)

 

 

(109,898

)

Restricted cash

 

 

123,714

 

 

 

118,818

 

Other assets

 

 

86

 

 

 

4

 

Total assets

 

$

1,122,625

 

 

$

1,014,242

 

Liabilities

 

 

 

 

 

 

 

 

Net debt

 

$

1,106,594

 

 

$

986,223

 

Accounts payable and accrued expenses

 

 

103

 

 

 

71

 

Total liabilities

 

$

1,106,697

 

 

$

986,294

 

See accompanying notes to consolidated financial statements.

3


Regional Management Corp. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

(in thousands, except per share amounts)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fee income

 

$

109,771

 

 

$

88,793

 

 

$

217,402

 

 

$

176,072

 

Insurance income, net

 

 

10,220

 

 

 

8,656

 

 

 

20,764

 

 

 

16,641

 

Other income

 

 

2,880

 

 

 

2,227

 

 

 

5,553

 

 

 

4,694

 

Total revenue

 

 

122,871

 

 

 

99,676

 

 

 

243,719

 

 

 

197,407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

45,400

 

 

 

20,549

 

 

 

76,258

 

 

 

31,911

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

 

33,941

 

 

 

28,370

 

 

 

69,595

 

 

 

57,221

 

Occupancy

 

 

6,156

 

 

 

5,568

 

 

 

11,964

 

 

 

11,588

 

Marketing

 

 

4,108

 

 

 

4,776

 

 

 

7,199

 

 

 

7,486

 

Other

 

 

9,916

 

 

 

7,675

 

 

 

20,463

 

 

 

15,937

 

Total general and administrative expenses

 

 

54,121

 

 

 

46,389

 

 

 

109,221

 

 

 

92,232

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

7,564

 

 

 

7,801

 

 

 

7,505

 

 

 

14,936

 

Income before income taxes

 

 

15,786

 

 

 

24,937

 

 

 

50,735

 

 

 

58,328

 

Income taxes

 

 

3,804

 

 

 

4,771

 

 

 

11,970

 

 

 

12,640

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

11,982

 

 

$

20,166

 

 

$

38,765

 

 

$

45,688

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.29

 

 

$

1.98

 

 

$

4.13

 

 

$

4.41

 

Diluted

 

$

1.24

 

 

$

1.87

 

 

$

3.94

 

 

$

4.18

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

9,261

 

 

 

10,200

 

 

 

9,396

 

 

 

10,371

 

Diluted

 

 

9,669

 

 

 

10,797

 

 

 

9,845

 

 

 

10,931

 

See accompanying notes to consolidated financial statements.

4


Regional Management Corp. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands)

 

 

 

 

Three Months Ended June 30, 2022

 

 

 

Common Stock

 

 

Additional Paid-In

 

 

Retained

 

 

Treasury

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Stock

 

 

Total

 

Balance, March 31, 2022

 

 

14,360

 

 

$

1,436

 

 

$

105,989

 

 

$

329,878

 

 

$

(138,561

)

 

$

298,742

 

Cash dividends

 

 

 

 

 

 

 

 

 

 

 

(2,917

)

 

 

 

 

 

(2,917

)

Issuance of restricted stock awards

 

 

40

 

 

 

4

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,582

)

 

 

(11,582

)

Shares withheld related to net share settlement

 

 

(10

)

 

 

(1

)

 

 

(387

)

 

 

 

 

 

 

 

 

(388

)

Share-based compensation

 

 

 

 

 

 

 

 

2,747

 

 

 

 

 

 

 

 

 

2,747

 

Net income

 

 

 

 

 

 

 

 

 

 

 

11,982

 

 

 

 

 

 

11,982

 

Balance, June 30, 2022

 

 

14,390

 

 

$

1,439

 

 

$

108,345

 

 

$

338,943

 

 

$

(150,143

)

 

$

298,584

 

 

 

 

Three Months Ended June 30, 2021

 

 

 

Common Stock

 

 

Additional Paid-In

 

 

Retained

 

 

Treasury

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Stock

 

 

Total

 

Balance, March 31, 2021

 

 

14,063

 

 

$

1,406

 

 

$

105,493

 

 

$

250,659

 

 

$

(73,922

)

 

$

283,636

 

Cash dividends

 

 

 

 

 

 

 

 

 

 

 

(2,653

)

 

 

 

 

 

(2,653

)

Issuance of restricted stock awards

 

 

18

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

213

 

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

21

 

Repurchase of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,190

)

 

 

(22,190

)

Shares withheld related to net share settlement

 

 

(153

)

 

 

(14

)

 

 

(1,849

)

 

 

 

 

 

 

 

 

(1,863

)

Share-based compensation

 

 

 

 

 

 

 

 

1,866

 

 

 

 

 

 

 

 

 

1,866

 

Net income

 

 

 

 

 

 

 

 

 

 

 

20,166

 

 

 

 

 

 

20,166

 

Balance, June 30, 2021

 

 

14,141

 

 

$

1,414

 

 

$

105,509

 

 

$

268,172

 

 

$

(96,112

)

 

$

278,983

 

 

5


 

 

 

Six Months Ended June 30, 2022

 

 

 

Common Stock

 

 

Additional Paid-In

 

 

Retained

 

 

Treasury

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Stock

 

 

Total

 

Balance, December 31, 2021

 

 

14,157

 

 

$

1,416

 

 

$

104,745

 

 

$

306,105

 

 

$

(129,530

)

 

$

282,736

 

Cash dividends

 

 

 

 

 

 

 

 

 

 

 

(5,927

)

 

 

 

 

 

(5,927

)

Issuance of restricted stock awards

 

 

218

 

 

 

22

 

 

 

(22

)

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

61

 

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

6

 

Repurchase of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,613

)

 

 

(20,613

)

Shares withheld related to net share settlement

 

 

(46

)

 

 

(5

)

 

 

(1,231

)

 

 

 

 

 

 

 

 

(1,236

)

Share-based compensation

 

 

 

 

 

 

 

 

4,853

 

 

 

 

 

 

 

 

 

4,853

 

Net income

 

 

 

 

 

 

 

 

 

 

 

38,765

 

 

 

 

 

 

38,765

 

Balance, June 30, 2022

 

 

14,390

 

 

$

1,439

 

 

$

108,345

 

 

$

338,943

 

 

$

(150,143

)

 

$

298,584

 

 

 

 

Six Months Ended June 30, 2021

 

 

 

Common Stock

 

 

Additional Paid-In

 

 

Retained

 

 

Treasury

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Stock

 

 

Total

 

Balance, December 31, 2020

 

 

13,851

 

 

$

1,385

 

 

$

105,483

 

 

$

227,343

 

 

$

(62,088

)

 

$

272,123

 

Cash Dividends

 

 

 

 

 

 

 

 

 

 

 

(4,859

)