Regional Management Corp. [RM] Filings

10-Q 1 rm-20240630.htm 10-Q 10-Q

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, 2024


☐	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 July 30, 2024, the registrant had outstanding 10,155,600 shares of Common Stock, $0.10 par value.

Regional Management Corp.

QUARTERLY Report on Form 10-Q

Fiscal Quarter Ended June 30, 2024

Table of Contents


	Page
GLOSSARY	3
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets Dated June 30, 2024 and December 31, 2023	4
Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2024 and 2023	5
Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2024 and 2023	6
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	8
Notes to Consolidated Financial Statements	10
Note 1. Nature of Business	10
Note 2. Basis of Presentation and Significant Accounting Policies	10
Note 3. Finance Receivables, Credit Quality Information, and Allowance for Credit Losses	13
Note 4. Restricted Available-for-Sale Investments	20
Note 5. Debt	22
Note 6. Stockholders’ Equity	25
Note 7. Disclosure About Fair Value of Financial Instruments	25
Note 8. Income Taxes	26
Note 9. Earnings Per Share	27
Note 10. Share-Based Compensation	27
Note 11. Commitments and Contingencies	30
Note 12. Subsequent Events	31
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3. Quantitative and Qualitative Disclosures About Market Risk	46
Item 4. Controls and Procedures	47
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	48
Item 1A. Risk Factors	48
Item 5. Other Information	48
Item 6. Exhibits	49
SIGNATURE	51

Table of Contents

GLOSSARY

Terms and abbreviations used in this report are defined below:


Term or Abbreviation		Definition
2007 Plan		2007 Management Incentive Plan
2011 Plan		2011 Stock Incentive Plan
2015 Plan		2015 Long-Term Incentive Plan
2024 Plan		2024 Long-Term Incentive Plan
ASU		Accounting Standards Update
Board		the Company's Board of Directors
CFPB		Consumer Financial Protection Bureau
Company		Regional Management Corp.
Consent Agreement		Consent Agreement between the CFPB and the Company dated January 4, 2024
CSPU		cash-settled performance unit
Efficiency ratio		annualized general and administrative expenses as a percentage of total revenue
Exchange Act		the Securities Exchange Act of 1934, as amended
FASB		Financial Accounting Standard Board
FICO		Fair Isaac Corporation
GAAP		U.S. Generally Accepted Accounting Principles
KTIP		key team member incentive program
LGD		loss given default
LTIP		long-term incentive program
Net credit loss ratio		annualized net credit losses as a percentage of average net finance receivables
Notice		notice provided by the CFPB to the Company dated March 7, 2023
NQSO		nonqualified stock option
Operating expense ratio		annualized general and administrative expenses as a percentage of average net finance receivables
PD		probability of default
PRSU		performance restricted stock unit
RMIT		Regional Management Issuance Trust
RMR		Regional Management Receivables
RMR II		Regional Management Receivables II, LLC
RMR III		Regional Management Receivables III, LLC
RMR IV		Regional Management Receivables IV, LLC
RMR V		Regional Management Receivables V, LLC
RMR VI		Regional Management Receivables VI, LLC
RMR VII		Regional Management Receivables VII, LLC
RSA		restricted stock award
RSU		restricted stock unit
SEC		Securities and Exchange Commission
SOFR		secured overnight financing rate
SPE		wholly owned, bankruptcy-remote, special purpose entity
VIE		variable interest entity

Table of Contents

Part I – financial information

ITEM 1. FINANCIAL STATEMENTS.

Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except par value amounts)


	(Unaudited)
	June 30, 2024			December 31, 2023
Assets
Cash	$	4,323		$	4,509
Net finance receivables		1,773,743			1,771,410
Unearned insurance premiums		(46,081	)		(47,892	)
Allowance for credit losses		(185,400	)		(187,400	)
Net finance receivables, less unearned insurance premiums and allowance for credit losses		1,542,262			1,536,118
Restricted cash		138,891			124,164
Lease assets		35,144			34,303
Intangible assets		19,264			15,846
Property and equipment		13,411			13,787
Deferred tax assets, net		12,376			13,641
Restricted available-for-sale investments		2,157			22,740
Other assets		21,224			29,419
Total assets	$	1,789,052		$	1,794,527
Liabilities and Stockholders’ Equity
Liabilities:
Debt	$	1,378,449		$	1,399,814
Unamortized debt issuance costs		(5,616	)		(4,578	)
Net debt		1,372,833			1,395,236
Lease liabilities		37,286			36,576
Accounts payable and accrued expenses		34,030			40,442
Total liabilities		1,444,149			1,472,254
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, 14,962 shares issued and 10,156 shares outstanding at June 30, 2024 and 14,566 shares issued and 9,759 shares outstanding at December 31, 2023)		1,496			1,457
Additional paid-in capital		126,373			121,752
Retained earnings		367,216			349,579
Accumulated other comprehensive loss		(39	)		(372	)
Treasury stock (4,807 shares at June 30, 2024 and December 31, 2023)		(150,143	)		(150,143	)
Total stockholders’ equity		344,903			322,273
Total liabilities and stockholders’ equity	$	1,789,052		$	1,794,527

See accompanying notes to consolidated financial statements.

Table of Contents

Regional Management Corp. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

(in thousands, except per share amounts)


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenue
Interest and fee income	$	127,898		$	118,083		$	256,716		$	238,490
Insurance income, net		10,507			11,203			21,481			22,162
Other income		4,620			4,198			9,136			8,210
Total revenue		143,025			133,484			287,333			268,862

Expenses
Provision for credit losses		53,802			52,551			100,225			100,219

Personnel		37,097			36,419			74,917			75,016
Occupancy		6,149			6,158			12,524			12,446
Marketing		4,836			3,844			9,151			7,223
Other		12,054			10,475			23,992			21,534
Total general and administrative expenses		60,136			56,896			120,584			116,219

Interest expense		17,865			16,224			35,369			33,006
Income before income taxes		11,222			7,813			31,155			19,418
Income taxes		2,777			1,790			7,505			4,706

Net income	$	8,445		$	6,023		$	23,650		$	14,712
Net income per common share:
Basic	$	0.88		$	0.64		$	2.47		$	1.57
Diluted	$	0.86		$	0.63		$	2.41		$	1.53
Weighted-average common shares outstanding:
Basic		9,613			9,399			9,591			9,363
Diluted		9,863			9,566			9,805			9,595

Other comprehensive income, net of tax
Unrealized income on restricted available-for-sale investments		228			14			423			277
Other comprehensive income, before tax		228			14			423			277
Income taxes related to items of other comprehensive income		(48	)		(3	)		(90	)		(58	)
Other comprehensive income, net of tax		180			11			333			219
Total comprehensive income	$	8,625		$	6,034		$	23,983		$	14,931

See accompanying notes to consolidated financial statements.

Table of Contents

Regional Management Corp. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands)


	Three Months Ended June 30, 2024
													Accumulated
	Common Stock						Additional Paid-In			Retained			Other Comprehensive			Treasury
	Shares			Amount			Capital			Earnings			Income (Loss)			Stock			Total
Balance, March 31, 2024		14,675		$	1,468		$	123,563		$	361,791		$	(219	)	$	(150,143	)	$	336,460
Cash dividends		—			—			—			(3,020	)		—			—			(3,020	)
Issuance of restricted stock awards		304			30			(30	)		—			—			—			—
Shares withheld related to net share settlement		(17	)		(2	)		(428	)		—			—			—			(430	)
Share-based compensation		—			—			3,268			—			—			—			3,268
Net income		—			—			—			8,445			—			—			8,445
Other comprehensive income		—			—			—			—			180			—			180
Balance, June 30, 2024		14,962		$	1,496		$	126,373		$	367,216		$	(39	)	$	(150,143	)	$	344,903


	Three Months Ended June 30, 2023
													Accumulated
	Common Stock						Additional Paid-In			Retained			Other Comprehensive			Treasury
	Shares			Amount			Capital			Earnings			Income (Loss)			Stock			Total
Balance, March 31, 2023	$	14,385		$	1,438		$	114,452		$	351,324		$	(378	)	$	(150,143	)	$	316,693
Cash dividends		—			—			—			(3,001	)		—			—			(3,001	)
Issuance of restricted stock awards		266			27			(27	)		—			—			—			—
Exercise of stock options		18			2			287			—			—			—			289
Shares withheld related to net share settlement		(33	)		(3	)		(846	)		—			—			—			(849	)
Share-based compensation		—			—			2,336			—			—			—			2,336
Net income		—			—			—			6,023			—			—			6,023
Other comprehensive income		—			—			—			—			11			—			11
Balance, June 30, 2023		14,636		$	1,464		$	116,202		$	354,346		$	(367	)	$	(150,143	)	$	321,502

Table of Contents


	Six Months Ended June 30, 2024
													Accumulated
	Common Stock						Additional Paid-In			Retained			Other Comprehensive			Treasury
	Shares			Amount			Capital			Earnings			Income (Loss)			Stock			Total
Balance, December 31, 2023		14,566		$	1,457		$	121,752		$	349,579		$	(372	)	$	(150,143	)	$	322,273
Cash dividends		—			—			—			(6,013	)		—			—			(6,013	)
Issuance of restricted stock awards		414			41			(41	)		—			—			—			—
Exercise of stock options		—			—			—			—			—			—			—
Shares withheld related to net share settlement		(18	)		(2	)		(438	)		—			—			—			(440	)
Share-based compensation		—			—			5,100			—			—			—			5,100
Net income		—			—			—			23,650			—			—			23,650
Other comprehensive income		—			—			—			—			333			—			333
Balance, June 30, 2024		14,962		$	1,496		$	126,373		$	367,216		$	(39	)	$	(150,143	)	$	344,903


	Six Months Ended June 30, 2023
													Accumulated
	Common Stock						Additional Paid-In			Retained			Other Comprehensive			Treasury
	Shares			Amount			Capital			Earnings			Income (Loss)			Stock			Total
Balance, December 31, 2022		14,330		$	1,433		$	112,384		$	345,545		$	(586	)	$	(150,143	)	$	308,633
Cash dividends		—			—			—			(5,911	)		—			—			(5,911	)
Issuance of restricted stock awards		322			32			(32	)		—			—			—			—
Exercise of stock options		18			2			287			—			—			—			289
Shares withheld related to net share settlement		(34	)		(3	)		(877	)		—			—			—			(880	)
Share-based compensation		—			—			4,440			—			—			—			4,440
Net income		—			—			—			14,712			—			—			14,712
Other comprehensive income		—			—			—			—			219			—

Regional Management Corp. [RM] Filings
10-Q	[2024-08-02]
10-Q	[2024-05-03]
10-K	[2024-02-22]
10-Q	[2023-11-03]
10-Q	[2023-08-04]
10-Q	[2023-05-05]
10-K	[2023-02-24]
10-Q	[2022-11-04]
10-Q	[2022-08-05]
10-Q	[2022-05-06]
10-K	[2022-03-04]
10-Q	[2021-11-04]
10-Q	[2021-08-03]
10-Q	[2021-05-06]
10-K	[2021-02-25]
10-Q	[2020-11-05]
10-Q	[2020-08-07]
10-Q	[2020-05-08]
10-K	[2020-03-16]
10-Q	[2019-11-06]
10-Q	[2019-07-31]
10-Q	[2019-05-08]
10-K	[2019-03-08]
10-Q	[2018-11-08]
10-Q	[2018-08-06]
10-Q	[2018-05-01]
10-K	[2018-02-23]
10-Q	[2017-11-08]
10-Q	[2017-08-01]
10-Q	[2017-05-02]
10-K	[2017-02-10]
10-Q	[2016-10-27]
10-Q	[2016-07-26]
10-Q	[2016-04-28]
10-K	[2016-02-23]
10-Q	[2015-10-30]
10-Q	[2015-07-31]
10-Q	[2015-05-08]
10-K	[2015-03-16]
10-Q	[2014-11-10]
10-Q	[2014-08-07]
10-Q	[2014-05-08]
10-K	[2014-03-17]
10-Q	[2013-11-08]
10-Q	[2013-08-09]
10-Q	[2013-05-13]
10-K	[2013-03-18]
10-Q	[2012-11-14]
10-Q	[2012-08-13]
10-Q	[2012-05-10]