Regional Management (RM) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $8.4 million, with diluted EPS of $0.86, up between 36.5% and 40.2% year-over-year, driven by higher revenue and disciplined expense management.

• Revenue reached $143 million, up 7.1% year-over-year, with growth in both large and small loan portfolios and improved revenue yield.

• Portfolio grew by $29 million sequentially to $1.8 billion, a 5% increase from the prior year, led by small loans up 13.7%-14%.

• Customer accounts increased 7.4% year-over-year to 545,900, with digital originations representing 30.5% of new borrower volume.

• Continued investment in growth initiatives, including 10 new branches planned before year-end.

Financial highlights

• Total originations increased 6.8%-7% year-over-year, with customer accounts also up 7%.

• Small loan portfolio grew $61 million (14% year-over-year), representing over 70% of portfolio growth; loans with APR >36% rose from 14% to 17% of the portfolio.

• Auto-secured loan portfolio increased to $180 million (10.1% of total), up from 7.6% a year ago, with 30+ day delinquency at 2.4%.

• Net credit loss (NCL) rate improved by 40 basis points year-over-year to 12.7%; Q2 NCL was $55.5 million.

• Allowance for credit losses reserve rate at 10.5% of net finance receivables.

Outlook and guidance

• Ending net receivables expected to grow by 6% for full year 2024, with average net receivables up 4%-4.5%.

• Full-year NCL rate guidance increased to 11.1%-11.2% due to inflation and small loan growth.

• Total revenue yield guidance raised to 32.8%-32.9%, up 60-70 basis points year-over-year.

• G&A expense guidance lowered by $7 million to $250 million for the year.

• Net income guidance for 2024 set at $41 million-$44 million.

• Loan loss reserve rate guidance narrowed to 10.2%-10.3% for year-end 2024.

• Third quarter expectations: $48 million sequential increase in net receivables, $64.5 million G&A expense, $19.8 million interest expense, and $47.5 million net credit losses.