Regional Management Corp. Provides Business Update
Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today provided an update on its business operations and financial position as of May 31, 2020.
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(1) Percentage of accounts that utilized borrower assistance programs during the month (Graphic: Business Wire)
Our top priority continues to be the health and well-being of our customers and team members as states relax their stay-at-home orders and reopen their economies. Our branch personnel and centralized collections team, aided by our digital capabilities, have provided largely uninterrupted support to our customers throughout this challenging time. With a proven operating model, a strong balance sheet, and ample liquidity, we remain well-positioned to further navigate through the current environment and continue to provide our customers with access to responsible and affordable credit solutions.
Stable Credit Profile
- Positive Credit Trends – Our borrower assistance programs and the government stimulus have served as an important bridge for our customers. Positive credit trends continued into May, with our 30+ day contractual delinquency rate decreasing to 5.0% as of May 31, 2020, an improvement of 40 basis points from April 30, 2020, 160 basis points from March 31, 2020, and 120 basis points from May 31, 2019. As of May 31, 2020, 30+ day contractual delinquency totaled $51.5 million, compared to $57.3 million as of April 30, 2020, $72.4 million as of March 31, 2020, and $60.2 million as of May 31, 2019. We expect that our 30+ day contractual delinquency rate will be below 6.0% as of June 30, 2020, and will increase throughout the balance of the year due to the impact of COVID-19 and normal seasonality. Given the recent low delinquency levels, we expect COVID-19 related credit losses to be pushed back to the fourth quarter of 2020 and into 2021. The overall level of losses will depend on, among other things, the pace at which state economies rebound, the unemployment rate, and whether federal and state governments enact further stimulus measures.
- Effective Borrower Assistance Programs – We leveraged our past experience in managing through natural disasters to design and implement programs that have been effective in supporting our customers throughout this crisis, while at the same time keeping them engaged and active in making payments on their accounts. Approximately 3.2% of the loans in our portfolio at the end of May had been deferred or renewed under our borrower assistance programs during the month, down from 5.6% in April. By comparison, for the 12 months prior to April 2020, the average monthly rate was 2.2%. We expect that our customers’ reliance on our borrower assistance programs will continue to decrease in June, though we remain well-positioned to continue operating these programs, as conditions warrant.