GREENVILLE, SC – (BUSINESS WIRE) – Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today released an update on its business and financial condition.
August 2020, our credit profile remains stable, demand for our credit products continues to recover, our balance sheet remains strong, and we still have sufficient liquidity to fund our operations and growth. Our proven operating model and financial strength allow us to continue providing responsible and affordable credit solutions to our customers as the COVID-19 pandemic continues.
Stable credit profile
As of August 31, 2020, our 30-day backorder rate was 4.6% compared to 4.5% on July 31, 2020 and 4.8% on June 30, 2020. Our 30-day penalty totaled August $ 47.8 million as of July 31, 2020 compared to $ 46.3 million as of July 31, 2020 and $ 49.5 million as of June 30, 2020.
Approximately 1.6% of the loans in our portfolio as of August 31, 2020 were deferred or extended during the month under our borrower assistance programs.
Recovering credit demand
Demand for our credit products continued to recover, with total loans increasing to $ 105.8 million in August, a 34% increase from $ 79.0 million in June. Our store startups increased 21% to $ 80.8 million from $ 67.0 in August Millions in June. Our direct mail marketing campaigns and digital channels produced $ 24.9 million in submissions in August, an increase of $ 12.9 million, or 108%, from June. Since September is usually a slower month for originations, we expect fewer branch, direct mail and digital originations in September than in August.
As of August 31, 2020, we had net financial receivables outstanding of $ 1.04 billion, an increase of $ 19.3 million since June 30, 2020. We expect the outstanding net financial receivables as of September 30, 2020 with the outstanding amount as of January 31, 2020.
Strong balance sheet and liquidity
We continue to work with a conservative leverage ratio. As of August 31, 2020, we had a financed leverage ratio of 2.5x.
Our $ 142.0 million allowance for loan losses as of Jan.
As of August 31, 2020, we had $ 173 million in cash and immediately available to draw cash on our revolving credit facilities and $ 472 million of unused capacity on our various credit facilities (depending on our credit bases). We continue to believe that we have more than adequate liquidity to support the basic operations of our business during the COVID-19 pandemic.
Other updates for the third quarter
We are currently marketing a new securitization transaction (RMIT 2020-1) that we expect to close before the end of September. We intend to use a portion of the proceeds from the 2020-1 securitization to repay and meet all outstanding commitments related to our first securitization transaction completed in 2018 (RMIT 2018-1). As a result, we will have interest expense of $ 0.7 million in September 2020 due to accelerated amortization of bond issuance costs related to the RMIT 2018-1 securitization. Including this charge and the interest expense attributable to our recent loan portfolio growth, we expect interest expense to be approximately $ 9.8 million in the third quarter.
About Regional Management Corp.
Regional Management Corp. (NYSE: RM) is a diversified consumer finance company serving primarily customers with limited access to consumer credit from banks, savings banks, credit card companies and other lenders attractive, easy-to-understand installment loan products. As of June 30, 2020, Regional Management will operate under the name “Regional Finance” in 368 offices in 11 states in the Southeast, Southwest, Central Atlantic and Midwest of the USA. Most of its loan products are collateralized, and each one is fixed rate, limited in time with fully amortizing equal monthly payments that are repayable at any time with no penalty. Regional Management raises credit through its multi-channel platform, which includes branch offices, centrally managed direct mail campaigns, digital partners, retailers and its consumer website. For more information, please visit www.RegionalManagement.com.
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 express the expectations or beliefs of Regional Management Corp. in terms of future events again. . Forward-looking statements include, without limitation, statements about future plans, goals, objectives, projections, strategies, events, or performance, as well as underlying assumptions and other related statements. Words like “can”, “will”, “should”, “likely”, “expected”, “expected”, “intends”, “planet”, “projected”, “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 are made and address matters that are inherently subject to risks and uncertainties, many of which are beyond the control of regional management. As a result, actual performance and results could differ materially from those anticipated in these forward-looking statements. Investors should therefore not place undue reliance on forward-looking statements.
Factors that could cause actual results or performance to differ from expectations expressed or implied in forward-looking statements include, but are not limited to: changes in general economic conditions, including unemployment and bankruptcies; the impact of the recent novel coronavirus (COVID-19) outbreak, including regional management’s access to liquidity and the credit risk of regional management’s financial claims portfolio; Risks related to the regional management’s ability to timely and effectively implement, switch and maintain the information technology systems, infrastructures, processes and controls necessary to support its operations and initiatives; Risks associated with the Regional Management’s lending and services software system, including the risk of prolonged system outages; Risks associated with opening new stores, including the ability or inability to open new stores as planned; Risks associated with lending, including credit risk, repayment risk and collateral value, which risks may increase in the face of adverse or recessive economic conditions; Risks associated with implementing new underwriting models and processes, including the effectiveness of new custom scorecards; Risks associated with regional management’s asset-backed securitization transactions; Changes in interest rates; the risk that the regional management’s existing sources of liquidity will not be sufficient to meet its needs or that its access to these sources will be unexpectedly restricted; Changes in state, state, or local laws, regulations, or government policies and practices, and risks associated with the way laws and regulations are interpreted, implemented, and enforced; Changes in accounting standards, rules and interpretations, as well as the failure of related assumptions and estimates, including those associated with the implementation of current expected credit loss accounting (CECL); the effects of changes in tax laws, guidelines and interpretations; Time and amount of income that can be recognized by regional management; Changes in current revenue and spending trends (including trends affecting defaults and credit losses); Changes in the markets of regional management and general changes in the economy (particularly in the markets served by regional management); Changes in the competitive landscape in which Regional Management operates or a decline in demand for its products; Risks associated with acquisitions; Changes in operating and administrative costs; and the departure, transfer or replacement of key personnel. The COVID-19 pandemic can also exacerbate many of these risks and uncertainties.
The foregoing and other factors are discussed in more detail in Regional Management’s filings with the Securities and Exchange Commission. Regional Management will not update or revise any forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unexpected events or the non-occurrence of expected events, whether as a result of new information, future developments, or otherwise because this is required by law. Regional management is not responsible for changes made to this document by wire services or internet services.