| Item 1.01. | Entry into a Material Definitive Agreement. |
Second Amendment to Warehouse Facility Credit Agreement
On August 30, 2018, Regional Management Corp. (the “Company”) and its wholly-owned subsidiary, Regional Management Receivables II, LLC (the “Borrower”), entered into Amendment No. 2 (the “Amendment”) to the Credit Agreement, dated June 20, 2017, as upsized on May 23, 2018 and amended on June 28, 2018, by and among the Company, as servicer, the Borrower, the lenders from time to time parties thereto, the agents from time to time parties thereto, Wells Fargo Bank, National Association, as account bank, image file custodian, and backup servicer, Wells Fargo Bank, National Association, as administrative agent, and Credit Suisse AG, New York Branch (“Credit Suisse”), as structuring and syndication agent (the “Credit Agreement”). The Credit Agreement was previously filed with the Securities and Exchange Commission by the Company as Exhibit 10.1 to the Current Report on Form8-K dated June 20, 2017. The Credit Agreement, as amended, provides for a revolving $125 million warehouse facility (the “Warehouse Facility”), which is expandable to $150 million and is secured by certain consumer loan receivables (the “Receivables”) that were directly originated by certain of the Company’s subsidiaries.
The Amendment amends certain defined terms and provisions of the Credit Agreement, including the following:
| | • | | extends the “Scheduled Commitment Termination Date” from December 19, 2018 to February 28, 2020; |
| | • | | increases the Class A advance rate; |
| | • | | increases the concentration limits applicable to certain types of Receivables, including based on the aggregate eligible receivables principal balance and/or the applicable FICO® Score of the related obligors; |
| | • | | deletes certain defined terms relating to the full system conversion of the Company’s third-party underwriting, servicing, and collection technology platform; |
| | • | | increases the percentage associated with the average annualizedcharge-off ratio trigger within the definitions of “Level I Trigger Event,” “Level II Trigger Event,” and “Level III Trigger Event”; |
| | • | | in the case of the liquidity facility related to the Class A loans provided by a Class A lender with respect to a conduit lender under the Warehouse Facility, increases the required rating from at least “A” to “AA” from DBRS or an equivalent rating from another nationally recognized statistical rating organization, and in the case of the liquidity facility related to the Class B loans provided by a Class B lender with respect to a conduit lender under the Warehouse Facility, increases the required rating from at least “A(low)” to “A(high)” from DBRS or an equivalent rating from another nationally recognized statistical rating organization, in each case selected by the required lenders and reasonably acceptable to the Borrower; and |
| | • | | amends and restates SchedulesA-1 andA-2 to the Credit Agreement, and decreases the total commitment of the Credit Suisse lender group by $25,000,000. |
For a complete description of the terms of the Amendment, see Exhibit 10.1 hereto. The foregoing description is only a summary and is qualified in its entirety by reference to the full text of the Amendment, which is incorporated by reference herein.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant. |
The information set forth under Item 1.01 of this Current Report on Form8-K is incorporated herein by reference.
