Regional Management Corp. [RM] Filings

10-Q 1 rm-20230630.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, 2023


☐	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 31, 2023, the registrant had outstanding 9,837,180 shares of Common Stock, $0.10 par value.


		Page No.
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets Dated June 30, 2023 and December 31, 2022	3

	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2023 and 2022	4

	Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022	5

	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022	7

	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49

Item 4.	Controls and Procedures	50

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	51

Item 1A.	Risk Factors	51

Item 5.	Other Information	51

Item 6.	Exhibits	52

SIGNATURE		54

ITEM 1. FINANCIAL STATEMENTS.

Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except par value amounts)


	June 30, 2023
	(Unaudited)			December 31, 2022
Assets
Cash	$	10,330		$	3,873
Net finance receivables		1,688,937			1,699,393
Unearned insurance premiums		(49,059	)		(51,008	)
Allowance for credit losses		(181,400	)		(178,800	)
Net finance receivables, less unearned insurance premiums and allowance for credit losses		1,458,478			1,469,585
Restricted cash		131,132			127,926
Lease assets		34,996			34,521
Restricted available-for-sale investments		20,298			20,416
Deferred tax assets, net		15,278			13,810
Property and equipment		14,689			14,526
Intangible assets		13,949			12,122
Other assets		24,466			28,208
Total assets	$	1,723,616		$	1,724,987
Liabilities and Stockholders’ Equity
Liabilities:
Debt	$	1,344,855		$	1,355,359
Unamortized debt issuance costs		(6,923	)		(9,512	)
Net debt		1,337,932			1,345,847
Lease liabilities		37,150			36,712
Accounts payable and accrued expenses		27,032			33,795
Total liabilities		1,402,114			1,416,354
Commitments and contingencies (Note 12)
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, 14,636 shares issued and 9,829 shares outstanding at June 30, 2023 and 14,330 shares issued and 9,523 shares outstanding at December 31, 2022)		1,464			1,433
Additional paid-in capital		116,202			112,384
Retained earnings		354,346			345,545
Accumulated other comprehensive loss		(367	)		(586	)
Treasury stock (4,807 shares at June 30, 2023 and December 31, 2022)		(150,143	)		(150,143	)
Total stockholders’ equity		321,502			308,633
Total liabilities and stockholders’ equity	$	1,723,616		$	1,724,987

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


Assets
Cash	$	404		$	439
Net finance receivables		1,311,107			1,296,078
Allowance for credit losses		(138,343	)		(134,708	)
Restricted cash		128,161			126,017
Other assets		3,417			1,706
Total assets	$	1,304,746		$	1,289,532
Liabilities
Net debt	$	1,233,509		$	1,199,404
Accounts payable and accrued expenses		187			167
Total liabilities	$	1,233,696		$	1,199,571

See accompanying notes to consolidated financial statements.

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,
	2023			2022		2023			2022
Revenue
Interest and fee income	$	118,083		$	109,771	$	238,490		$	217,402
Insurance income, net		11,203			10,220		22,162			20,764
Other income		4,198			2,880		8,210			5,553
Total revenue		133,484			122,871		268,862			243,719

Expenses
Provision for credit losses		52,551			45,400		100,219			76,258

Personnel		36,419			33,941		75,016			69,595
Occupancy		6,158			6,156		12,446			11,964
Marketing		3,844			4,108		7,223			7,199
Other		10,475			9,916		21,534			20,463
Total general and administrative expenses		56,896			54,121		116,219			109,221

Interest expense		16,224			7,564		33,006			7,505
Income before income taxes		7,813			15,786		19,418			50,735
Income taxes		1,790			3,804		4,706			11,970

Net income	$	6,023		$	11,982	$	14,712		$	38,765
Net income per common share:
Basic	$	0.64		$	1.29	$	1.57		$	4.13
Diluted	$	0.63		$	1.24	$	1.53		$	3.94
Weighted-average common shares outstanding:
Basic		9,399			9,261		9,363			9,396
Diluted		9,566			9,669		9,595			9,845

Other comprehensive income, net of tax
Unrealized income on restricted available-for-sale investments		14			—		277			—
Other comprehensive income, before tax		14			—		277			—
Income taxes related to items of other comprehensive income		(3	)		—		(58	)		—
Other comprehensive income, net of tax		11			—		219			—
Total comprehensive income	$	6,034		$	11,982	$	14,931		$	38,765

See accompanying notes to consolidated financial statements.

Regional Management Corp. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands)


	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


	Three Months Ended June 30, 2022
													Accumulated
	Common Stock						Additional Paid-In			Retained			Other Comprehensive		Treasury
	Shares			Amount			Capital			Earnings			Income (Loss)		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

Regional Management Corp. [RM] Filings
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]