RM - Earnings call transcript Q1 2021 | Regional Management Corp.

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Operator

Welcome to the Regional Management First Quarter 2021 Earnings Conference Call.

As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Garrett Edson of ICR. Please go ahead.

Garrett Edson

afternoon. good and you Thank regionalmanagement.com. By now, and this our announcement website access and should presentation, which have at our supplemental on to be to was may earnings found everyone released call prior

and upon CEO and regionalmanagement.com. Management reconciliation now reliance of earnings not the the presentation be our to Regional to Management based to discussion that statements, future recent Before we begin These our I looking management's at measures looking other important cause statement. about those found of for forward-looking to financial to our of or our earnings with therefore today formal guarantees on certain measures. President Also, Rob remarks, and differ various these should discussion statements contains business our condition today refer assumptions, impact which Beck, and financial statements supplemental like forward predict. to which that posted detailed presentation, We announcement statements Regional press include expressed may concerning performance to of of not today discussion actual The Corp. Page non-GAAP Part results or of include place and uncertainties, most to more estimates, prospects. could direct presentation, financial would you expectations, factors speak I on our and of and only introduce disclosures and measures. X measure Company's will that within from as the of comparable non-GAAP and filings website the of risks, subject Corp. These the and undue materially the are our are you looking gap can forward-looking forward in are the and are references release implied and may risks SEC performance, statements current our use could of all future projections future you them. difficult forward And uncertainties operating results

Rob Beck

Thanks, Garrett, Chief Financial welcome call. earnings I'm Harp first our XXXX to and joined Rana, by today our Officer. quarter,

our In momentum quarter, second record of the first last we forward XXXX. bottom diluted Following net into in of half XX.X year, we the the line income generated carried of performance strong EPS. and $X.XX million results of

typical are same Our we loans implemented quarter our first initiatives the perform first from quarter, that XXXX quarter, $XX and large in low our historically revenue million $XXX driven plus $XX maintained with over the period new day core to initiatives. X% quarter $XX strong retained stimulus profile delinquencies, XXXX, of up XX the growth effectively. which continuing in with over X% the to liquidation At strong and a funding of from in payments impact continued million which originated tight growth up of We our the tax initiatives loans year very year to that derived thanks new And portfolio in time, the we part originated result and was or or turn down grew on a This strong million growth quarter. year credit helped in grip seasonal markets. loan the quarter payments, X.X% new drove reduce million over only performance. securitization was and small two to prior execution Despite by pressure from by low strategies. the and and initiatives a expenses digital of combination while in costs stimulus superior refunds invest our experienced in growth X%

The spent second to round been of $XXX stimulus have appeared quickly. checks relatively

payment activity, some demand. period higher led loan to checks weakening of temporary of stimulus $X,XXX of round third with loan along The a

liquidation portfolio credit lower our on experienced. stimulus the result, expected in the and demand, seasonal quarter in while industry typical payments prime the impact first loan others and what overall than than our space much lower much some a was first we impacted As quarter

Our as rate grew in remaining loan remained with large first stimulus loan portfolio impacted due distribution actually X.X% payments the of stimulus of April million refunds. sequentially demand higher small the our disproportionately portfolio. measures Loan $X tax in of relatively the impact quarter additional the by soft XX% to the or along

June, the demand latter the saw and to up second expect However, continue in the May we enable pick to to we growth in in generate us quarter. of modest demand and April, start which part should rebound loan to

as of very We continued continue solid sheet more strong fully the robust. balance will and to remains the reopens. believe that be in Credit quarter the half in economy year second quality remain the loan demand our to

March the during from basis rate of rate loss a credit a end of net And points was the quarter XXX the of quarter XX X.X%, ended period. the points improvement with low we a prior from basis Our XXXX. X.X%, year plus delinquency record day XXX improvement

delinquency our contractual further X.X%. As day rate approximately XXth, April to plus of XX improved

expect occur XXXX delinquency losses throughout stimulus anticipate late that net that dissipate. federal rate begin the will at performance to to balance strong the as benefits of will in COVID credit credit earliest, year We the will continue related our of Any the our normalize be we throughout XXXX. though

seasonal reserves million first of of additional credit COVID-XX Given quarter $X.X reserves result in performance, portfolio. in the we a released and as superior the runoff $X.X the our million in continued

allowance compare plus Our to losses, day of to of XXst, for million. quite XX.X credit our continues XXX.X million XX favorably as delinquency contractual March

maintenance reserves allowance from XX.X yet pandemic. fully Our million not recovered overall in the COVID losses for has additional economy a the associated We COVID-XX. reserved includes as with our conservative credit remain of

strengthen our to capacity April, and facility warehouse In by warehouse by balance enhanced JPMorgan. our a on third continue Suisse facilities liquidity warehouse new further we lender, position. with sheet our Credit facility new also current overall Fargo and Wells We two lenders, closing adding a and with

types, and including multiple loans, loans, small While our fund checks, convenience collateral large prior originated loans, facility facilities the loans. only funded large new digitally

capacity another this return ambitious our increase yet of and our XX represents and program. funding that our our with happy to share. capital we are are step It pursue plans support announce cents We end, of evolution the to avenues in structure XX% in pleased growth additional per new capital we continue as diversification very to by quarterly an dividend to outcome. To

per program, we In weighted new May, of XXXX. a began commence plan stock total addition, our in we directors price XXX,XXX quarter $XX repurchased fourth later shares recently of to our repurchase that authorized of program in which $XX stock repurchase month. Board million completed the at in this million $XX.XX a share, average Having

over past attractive enabled have maintain to for the year return our program performance and an us expand outstanding results Our financial capital and shareholders.

We digital In booked sourced quarter in to for represented discussed the a and XXXX our remain to customers. development As we last we on new and originations completed our originations our XX% long-term March. first new our XX% Digitally our development complete total borrower product of focused omni-channel model, our is in on States quarter, prequalification new branch digital channel all of of investment remotely first the in geographic in experience into of investing testing growth. we buying drive capabilities long-term call, expansion began growth. and our additional improved and year branch

lead second expanding integrating see we roll digital of customers. and new success pleased omni-channel In and all investments by digital affiliates new functionality new to and the third to of generators. prequalification our very out expect our and with to the the are to model technological experience our our and We begin quarters, our States the and existing adoption the

an within addition, guaranteed ACH funding next which check is the In we loan new few begin will convenience bank testing months, to into customer's offers product fulfillment and alternative our our offer a online program, loan account. with

end-to-end origination improved mobile customers to later of expect rollout product for on testing year. begin customer online we remain and also this by app. existing new the portal digital to XXXX, an first our We track And a quarter and

As XXXX. we new products to in excited branches to our open of entered Illinois, communicated our begin to and plan the offering new State. valuable to XX state millions in mid consumers XXth loan in are XX we April, We previously,

to XX We also XXXX the enter additional of six four to to by two States months. and an States next the up expect additional end over

will our branches. fewer maintain a branches receivables geographic digital in to these reach, higher expansion need resulting our supported geographic States by wider average initiatives, for in Our the allowing growth and new per and be branch

out and product, investments geographic customers, our offer expansion the digital will we which our the end roll of third all by new first Our States secured in to products to we auto to quarter. also our expect testing new quarter and the began including

very about and franchise. We of the what year holds our this future excited rest are for the

capabilities. focus our our will additions quality to and optimizing throughout year maintaining continue overall We in our underwriting growth invest on credit the while

was the our that XXXX. of XX% vast since approximately pandemic. credit to subject The been standards enhanced the outset of of XXst, majority portfolio March of following deployed originated As which total April, had we

to Our is entire capabilities we prime to and credit our in to path testament our not and team. provide growth we line happier the the with be remain performance forward growth are operational confidence continue our and to and the customers be bottom first strength We regional for position and year. top generate a as our performance, underwriting success pursue strategies. our could with us and long-term quarter foundational which a dedication strong to of full We committed fully

we our also are ahead on XXXX year, As beyond. we execute looking priorities and this to

strategic key initiatives of development innovation, and of and geographic our on the channels. digital focused are new We expansion, products

long-term us and All market share to turn to shareholders. now color financials. sustainable will our Harp our over value to of on create I'll additional which gain the provide allow call for

Harp Rana

everyone. and hello Thank Rob you,

branch comparable share prior initiatives, strong expenses, XX.X net Let provide We earnings quarter on Page illustrated stable in were diluted costs detail. me operating the year. X we resulting our growth take funding and of from million generated quarter Page supplemental our per more our highlights. of income originations lower financial credit X, first and first of you through as On results $X.XX presentation, to

and by first we Meanwhile, mail As ended $XX.X X% origination of digital year grew to originating, million. loans. we over year direct $XXX.X quarter million

billion total million XXXX. prior than quarter year $XXX.X origination. in drove receivables to first Despite continue two a displays and first X% successfully up $X.X the through index rounds Page a on Our initiatives March our quarter $XX net XXst, period, marketing with $X the new higher year new quarter for from X and higher efforts. finance of stimulus we million year first our as portfolio on originations payments of the we of over execute million, the growth growth X% growth her closed government basis trends initiatives quarter,

quarter portfolio, over loan decreased liquidation. disproportionate seasonal normal stimulus. the slightly Despite as a rebound stimulus large due to by core $XX and third the second million the fourth loans grew government tax and quarter the from portfolio due Rob only of two for line the payments the April, to Small impact tax trailing we grew demand month versus prior a X% in some the year end overall. noted, X.X% on of quarter, this of with in from from at fourth refunds loans decreased next season or extended of expect of this Our and stimulus followed and the quarter the round impact the XXXX X.X% quarter rounds X.X%

meeting We our modest the first our customers XX% our finance another Page quarter us. our which Omni-channel quarter, show volume Board needs through in to them originations, on in second high demonstrates receivables over quarter watermark to serving This expect were our our and digitally commitment for in X, of see sourced new strategy. portfolio of the we growth quarter

yield During the XX% basis X% to grew points improve our total of first due performance the across year Page X year, interest XX digitally $XX.X turning steam originations increased primarily loans million in portfolio. revenue with quarter the to credit large over sourced

credit As reversals building during shift tightened small to lowering due fewer loans. loan, total And and and our the government stimulus towards XX quarter. off are resulted to non-accrual by noted respectively larger in had payment, in of the days and yield the run shift the interesting, and continued first mix impact a higher product disproportionate the yield This quality seasonality customers. the our overall combination a previously mix shift XX continued of a stimulus offset fewer second loans in or portfolio and which mix interest is on result decreased pandemic loan revenue underwriting margin points towards cruel status part

of yield points total basis XX% portfolio. our As largest an of higher on to due have were portfolio be a XX%. that lower in our small and the and approximately XX% March XXst to the loans our loan approximately APR be stimulus In quarter to is or below had than revenue first quarter, basis yield lower our portfolio large the XX field interest to XX payment we second and points the third at, expected impact expect

a is of X, levels, Moving XXX the roughly first late X. basis net of rate Page our and our quarter seasonal appropriate XX over first our during of criteria, first portfolio to MCLs the occur improving including we we due stimulus, credit loss the historically low the XX while approximately the scorecards in as pandemic, Page in at economic and stimulus. to year our to of basis net point and governance a respectively XXXX points This levels. increases seasonal our our quarter, of improvement quality of rate X.X% net XXXX credit fourth remained of but increase earliest and expected the that the conditions performance will basis normal increases tightening The at credit impact adaptability X% basis of delinquencies from flipping year full in was customer to strong will COVID is XXX and XXX points the due thanks the loss lower result, the to delinquency points loss Any losses year experienced related XXXX for very credit quarter. underwriting in be remain quality below government quarter, the

April, than XXX XXst. delinquency At record point to levels. Our record points the lower XX plus of low end X.X% XX-plus March and day forward, levels year XXst a a of to from a XX day XXX to further we more low delinquencies of expect drop moving December basis gradually rise the saw day delinquencies the the approximately basis was plus prior X.X%, normal April off improvement as

fourth or receivables. for XX. Turning to million losses quarter of XX.X% allowance credit net ended of the We an with XXX finance Page

million receivables. a COVID-XX During the first release XX.X% reserve in from to net the allowance included the X.X of of quarter XXXX, and finance million. by decrease base decreased million X.X liquidation reserves XX.X released The reserve portfolio of

conditions and As we a the assumptions will the the to growth or economy support new macro change million reflect the toward that below remain be assumptions will the contractual including reminder, operating we We reserve delinquency XXX.X reserved in grows, for and our million build of reserves in these technological with and marketing year prior At our for quarter as initiatives forward XX.X our of expenses investment costs as flipping Page of March strategy. relatively at remain of of every an fourth to period, expenses, remain capabilities XX%. growth severity this we're going X.X and expenses quarter as the new executive the unemployment to COVID-XX omni-channel by moment, costs additional XX, an offset duration first million. favorably quarter to portfolio plus model, rebound partially credit the reductions we related consistent XX begins support that primarily driven our allowance compare day from end transition increase rate review XXXX by improvement sufficiently XXXX, confident to XX.X personnel and will very in in and of to macro losses to X.X% GNA digital continues XXst assumption million

period the first the expense second quarter. be to line ratio quarter a the million Seasonal first in loan loan was to originations quarter our our as quarter expect prior basis, of Our approximately lower XX.X% we for compared XX.X% rose in X.X first the operating to on expectations compared GNA higher in the to fourth X origination expense the Regina due year quarter, overall, with costs. million XXXX, than in sequential expenses deferred

We in the back expected XXXX. for the of ramp up half investments

will a to operating As to geographic continue digital channels products we These longer new leverage expansion and omni-channel growth. additional capabilities lead help to over and invest the drive investments new improved states model drive long-term our term. growth in and to receivables complete into

the of environment. to of our library Page receivables, year of lower with rate price driven net beginning was of rate as normalizing funds a prior period. or looking of costs strike basis rising purchased our XX% by million first X.X% marked expect year of XX first caps be quarter the environment, quarter the million in with to take point hedge increase improved market basis We The lower securitization of hedges price cost in since quarter average improvement favorable our rate a of range to million. rates rate expense variable interest the market to cap, a rates year and XXXX value the fluctuate, million purchased favorable first to this totaled XX million in to the XX, the rate interest than the these and the any rate value for end and the interest quarter, mark interest $X Turning interest $X.X quarter be $XXX total interest pandemic over in quarter additional of will on first impact expense $X.X million protect against the of second cap in the ahead $XXX XXX $XXX,XXX improved this $XXX from approximately have points We interest advantage recent funding of transactions, accordingly, funding, currently we we in which as million. at caps of on of to $XXX us our

is strong XX rate a profile. XX%. we quarter XX% effective tax approximately XXXX, year a our reminder an tax prior in rate rate effective to during first period was funding the expect for the Our of Page of of XX% compared tax

a to funded very conservative equity ratio X.X:X. quarter debt remained at first Our

low sheet reserves. million leverage a in $XXX loss We continue loan maintain very strong and to with balance

had we on and $XXX facilities. as of facilities million XXst, and consisting And we in of it availability available noted JPMorgan draw unrestricted to Rob our our to down facilities earlier, million unused and on of current add $XXX with March of our recently warehouse our credit capacity and credit cash Wells liquidity Fargo lenders. capacity, As credit lenders, enhanced close facility roster three new our warehouse of squeeze immediate

XXX capacity facility. And on million. million warehouse a months, roughly term expanded by X-month the warehouse has XXX total new the prior from extension the Our to is approximately XX average

unused operations, $XXX capacity In and a providing capacity its fund As of Company weighted XX return first April XXX,XXX average stock at weighted plans the completed our share. total program share growth in we Company common ambitious its even XXX,XXX common The stock million price $XX.XX XXth, our shares is credit under $XX our stock facilities, capital a at of of to we our shares million on of price us average stock having more the Company's program. had quarter, $XX.XX repurchased million of the with per program. repurchased the in repurchase purchased May, per

earlier, Company, Board a noted of May as share quarter dividend XX, the and the second quarter's record, for be directors Rob XXXX of XX, the dividend As prior of close than XXXX. of declared will of of higher XX% is common on business $X.XX the dividend The on shareholders XXXX. per the June has to paid

announce That ability to her we're top remarks. directors happy and over with approved turn as our Rob to addition, for a I'll Rob. now our strong the In to balance shareholders concludes resilient bottom program. Board $XX prospects capital stock and turn Overall, call line growth. back mentioned pleased my are repurchase sheet to excess performance, our very has we of million new earlier, that

Rob Beck

developing record to business to our our sustainably new first that in which regional the In channels. quarter operating grow long-term growth contributed entering key ensure excellent continue it come they and come performance. class We're innovation, for years for excited superior and our model, will initiatives on harp. us experience profile our credit execute initiatives, and new digital have position products first expect our summary, markets customers through to was receive to and strategic new Thanks to to an as investments omni-channel

again and create I'll for expand the We please market now shareholders. your call and for line. could Operator, to for you open additional are our our time share value Thank positioned open interest. questions. you the up

Operator

you. Thank

[Operator John Hecht, Instructions] question now first will Hecht go question-and-answer the from We is with please ahead. Our begin Jefferies. Mr. session.

John Hecht

a good Rob, Harp, quarter. on congrats

but You guys your differentiating with are clearly growth. year pack the year had over you from year yourselves over year modest, or,

huge people new like that so of the lot activity? and So of given be give it customer contraction a portfolio, are equivalent much can maybe customer a the forth. recurring a you in details to any increase stimulus I'm line us how call seeing wondering, versus on would

Rob Beck

the that minus I roughly initiatives. John. at Thanks as a also out and the kind million the the joining. things down customers. Yes, we It's I combination think as growth with the I've way $XX growth origination's heard it's core appreciate having big existing that $XX of words various customers think looking you mentioned is, the on new quarter and in really saw we million for growth, us I plus, new from had we're the relationship or our X% deepening growth driver overall, said, of acquired, XX%, stood yet, or we that And of that's call was we things. a industry

tail that to We recall response larger really And new initiatives helped program. direct at some fuel you side. of year, particularly that We end the new we launched expanded on last brought customers. response mail if year-end the risk of in growth. a So segment, the our that

our customers we the geography FICO excellent But very our box in help a expanded year is existing new XXX. program, extended call going as propel direct branches. to the that mail best last with brought our end We of customers good states at also same the also, we that into we obviously capabilities new towards strategy, recall, you branches, are us and opened credit go up our which with our if and leverage around so time, and above fewer digital to footprint forward wider customers

that's growth those we large added kind saw helped first the So a additional we of in and what that customers, loan quarter. with also balances drive

for know, without think, initiatives, have And in would you really grow, net, I'll planning market. new happy like. the in So ever to since, the of this look in still loan our time growth call we've quarter would our and our that's it We last performance and pandemic than what, portfolio, at driving relative just, outsides to series the we better really X% executing the life I'll put even performed, initiatives postpaid been year market I opinion.

John Hecht

Okay. That's helpful.

second guys any change a your And effect the you regulatory to any the update curious this offer Just Did there's settled environment. collections a in kind we also Number one, has regulatory court an get you change chance know LNO, of CFP, And products I of is in they practices? kind the on guess earlier been understand get meaningful do the your the but had small I having see rule dollar way down, but on salt to year. then know opening your that toned that there? system. the

Rob Beck

Dollar we $XX.X at, to the market entering cap. sixth our they state attractive come it's our anything cap the to Small have way we're just to state, collection and or and population. already CFPB don't Program great anything regards knew below that to prior even portfolio pretty very of that see impact It's I Illinois, an that and of of a regards comes all elsewhere, on XX% put really positioned program obviously any de mean, in that the out it's so today the, that's that in by the a is practices, might XX%, I comfortable Yes, compliance out, XX% strong with which million think with to, feel we Lending APR. rate monitoring we're came minimis all XX% in largest we handle

And good so feel a there's opportunity really lot of put on we to there. business

naturally up what there's can any have rate doses, to. you state, a who tighten and that to lend Now, you when in cap

net where would is them. keep lend we want attractive an higher we than it's sure So score were to margins the willing credit market that states our FICO in to be it maybe some keep us. for in Illinois But make to

we go are great are there leaving scaling and to new with with, in is they there and a some leverage and of think thing branches operate I improving to opportunity digital others The branches. there's take market lot with because a that the share. the have back our lower capabilities cost have fewer

John Hecht

my to zero do think your And you last that's to enter a some you good that question will branches digital a have allow region you, at in? is initiatives you segue point,

Rob Beck

No, need I, value doesn't we I mean customer have relationship. many enabled that's feel there's a that to still it to maintain corner how on I of having a by would what that but is, that lot presence, characterize interaction brand's to think as that branches every we

a up next or branch, to end the process be might drive origination which this time, particularly once whether us, and want wherever year, we come So and that at new to deal bit allow enter farther feel branch we internally online, they with loan, they has little model used want entirely that a over to get us the the be however, got to year. can far markets evolve interact we to, running with, less of but to end density our with still the consumers

Operator

your is Scharf, next JMP from The question line Securities. open. with is David David Scharf

David Scharf

Actually but that much had, wondering tighter you next end covered disclosed better you year, more to had tail of has, of that on under most bit, since the was for growth, of stimulus. pre credit, And term, least than are about to entering what eyes I and credit the standards. think need or XX% return listen, the impact made I'm of are all lender delinquencies loan of year, of a XXXX in second, the more growth record and wanted pretty underwriting obviously where an the on we're of originated, a but comment by the every third the of of the one we pandemic color the see, documented the questions to been wide And of if of, losses signs low net current before underwriting get earning lack an magnitude sort a sort April quarter, at at there maybe season has aggressive Rob, some standards. little more I box not acceleration end portfolio as become

Rob Beck

Yes, no I'm tail asking box the good our to started last and and customers. up David, credit thanks, end see excellent when we of the started stabilization open signs to at we year, of,

our best very customers. So

to opportunities getting to sense, for size we So we data looking customers year. this of started in larger up using ourselves. portfolio extending ahead get our forward as makes the we analytics, loan it without, into best Naturally, the where are open

where the One standpoint. are great things we of credit a about from

Now, been positive the obviously up pandemic. tightened the very started stimulus a our we last terrific, appropriately the at to We end the loosen of for but, at the customers of best start industry, year. has to

The thing last Well, our for the year. versus It's those size portfolio of south our increased large XX% time loans. are of we've is, higher portfolio customers. quality XX% this other at

we lot box doing And to And to normal course today, so does we that's of the achieve a have up at attractive can when then where it superior the on margin. we a gives you flexibility, stand would, net we're really business. credit of is determine profile. open look what you analysis, a do what And it credit where credit you

you can The I'd point key. this and out is this in the, the thing other is, in see

past one can XX-plus year, due, the You bucket release, dollars, in million delinquency $XX down prior from it's the miss paid versus due quarter in past delinquencies down also the days our it were million. days fourth aggregate see XX versus or $XX whether in

XX X.X% year. XX in one year, the bucket April. end here and March X% X.X% at quarter the of day So and And last plus the now X.X% it's was X.X% in it's last

got you've with credit, along when opportunity that going the the new growth we for solid of it you And, really with business have lot room So growth. talked initiatives, about I've head the underlying momentum flexibility gives of a forward. lots and

on growth You to put a second million last in when be volume think to year saw, rebound what there's we $XXX half, and the going similar half. the we strong second of

attractive our our new the be so strategies, our we standpoint, to we going but it's of taking do advantage loosening up things in box. where opportunity also If of, we're pregnant, lots appropriate, both and from see delivers, can returns. investment credit marketing of And

David Scharf

you And, you you know, environment, are digital No, with you're the, volume, it. the surfacing that the a like look more to of on pivoting Got using. third more some Lending the the, of visibly lenders I'm that's you seeing at as as competitors lastly, that of just curious, platforms would Tree originations, direct are, kind competitive helpful. characterize digital or Karma or are Credit partners you

when you're a the sense conversion have digital a environment, obviously whether get presence a branch physical customer to different application kind view network. trying Just local in acquisition for you with more versus of and of

Rob Beck

Yes. part I'll relationship additional our to say this, adding aggregators profile. lead that a our has been of big growth

share. we been existing have, maintaining we've the ones So

Now all still environment an the real think pre-qualification our branches. so get and opportunity the comes to about today and with digital closed the our branches leads process, referred our at

we're and process, with real with of the new eventually power us, end-to-end for up it's our the close prequalification our through what I'll we just in API. does be aggregators an give that an digital So And linking a But of capability, example. completely that the with digitally. obviously lead it, development going to and you can meantime, loans

one four five Let's other out branches unnamed one a make of the the of out approval, while that's to consuming. through or lead four go it said or applications only applications and applications, other three aggregator through time to say our from have

only effectiveness, lead prequalification that quarter. aggregators what's And bolted the do… going the to positive, we're get of our helps rolling the they the you going know that pre-qualification process real will, that approve, next be the and linking up With and onto to what and out applications is you the about if exciting are that to process, branches so a

David Scharf

of set channel It's depending a different you challenges competitive on the in. operate

Rob Beck

also You -- go up ahead. move sorry,

David Scharf

I'm sorry, go ahead.

Rob Beck

that's helps a the relative move just these to I positive it of competitors you're prequalification, funnel of up capability. able kind can And the too if lot that you have through lead because approval, you funnel a up to aggregators. don't move said the move also with

Operator

your The line with Sanjay next KBW. Sanjay question from is is open. Sakhrani, Sakhrani

Steven Kwok

for Kwok in guys. actually is But This good Steven filling Sanjay. quarter

of The talk Can the in you with was I stronger that have you were, better what what the as perhaps came had than related is right? first the than better question a around much to drivers yield, expected, the guess. how about mixing just versus expectations that, of revenue it lot I yields

Harp Rana

that question. I'll Yes. take

to portfolio So larger X.X% which in year we and And driver $X.X was of accrual that loan, we had year, non-accrual primary over into meaning portfolio, our better At or same million year, better mix year status. the over we impacted then revenue time, came And had quality the yield. the loans better. reversals. interest the fewer shift had performance on credit that fewer went

overall, So yield benefits XX in those spoke interest basis the you of in because just versus at prior I flat all fairly better about. points when But looks the it you're year, that of of income. terms the look

Steven Kwok

it. of to at what's XX the that? yield mix come portfolio basis large it current the impact Got that? down points, guiding sequentially, the we Is for that's as looked you're going the And driver quarter, to

Harp Rana

impact to it's and It's supposed that's both largest which the stimulus also the affected loans, was refunds. by and to disproportionately small really the have with of the stimulus. impact stimulus the are It on last tax date, our

Steven Kwok

if place, there? Got follow-up think funding does the rate implications you've on we it. caps rise? that in side, rates then protection just interest put that how as about that as a these And so, And should the offer given

Harp Rana

rise. No, they definitely provide interest a benefit as rates

rates than a So rising hedge. is interest of L as hedge and capital them how rather against think perfect I would a P probably

that had we the of So adjustment and mark-to-market those increase quarter, $XXX,XXX, in or as decrease. happens of the a hedges roughly value

prices, will from we points points. increase. $XXX strike of beginning And and the of fairly value start pandemic have basis put since hedges rates low rise, on to range the basis XX they about XX million As those they the to

our they're risk. much funding interest strategy of forward part very a move rate manage So help us as and we that

Steven Kwok

it. Got

expect roll So as ahead through into to proceed these would year? next to you we continue

Harp Rana

what to specifically them want roll through, understand mean. I you say you When make I sure

will rates as to us. of benefit the continue them rise benefit interest So

of the of rates terms In really cap, cap, thinking thought of going through and the strike further price would be the interest the price go. to the were upon where that rate dependent we cap,

Operator

from Rowan John Janney. is line is with Rowan, John question your next open. The

John Rowan

one is COVID-XX point? Or good a that use going question. could rate, at or see macroeconomic The I we other that forward? allowance have quick some allowance any rate just are reserves released to there

Harp Rana

All right.

is So reserve factors. at given our released got We've million $X.X of reserve improving COVID books now. $XX.X million XX.X%. reserve macroeconomic that, on currently $XXX.X the million, a that's got We of right in rate

volumes. to you think as quarter. in future would on just impact And this improving economic the like about reserve, in when BAU then think really pieces, and I conditions have So we what XXX, would which more reserving we we the is at build that XX.X, of And at had put about is on beginning that CECL at used same between we began probably look the COVID we it two would and corresponding reserve, about as we which build the XXXX. when a that would that rate, this for did XX.X

So that's that. how I'd about think

John Rowan

Okay.

out the So then million released I and you $XX.X quarter, before there's million? $XX.X this, that was of sure just understand make million $X.X COVID, that

Harp Rana

the had today that today, million released… beginning of the we of million is of we have quarter, COVID. the $XX At $XXX.X So out which million $XX.X we

John Rowan

All if I Okay. the right. six okay. I got was you. was -- of net interested

Operator

the for the back question, over conference turn Rob any and Beck to the closing that's to I'd concludes This session. remarks. like

Rob Beck

look Again, by good momentum our said, the out new really expand industry, of by and build credit, focus to secured, aggregators, including operator. a stimulus. digital omnichannel innovation all I well the in performance is with really business, Thank new that I initiatives. our mentioned, headroom what on geographic on lots as auto Yes. great and strategy, the as products, underlying so supported digital new lead and quarter, business before things to net all you, for Like I've growth our really underwriting out including mix including And initiatives. both growth superior the our foundationally we just evidenced as expansion growth government based new think tightened we investing relative and is to channels to as of summarize,

in the take up. of and to opens year we'll things already to So, beyond. for And the be we're we're investing as opportunities next strong poised advantage continue XXXX thinking about into growth additional a economy

pleased really return the front of the we've shareholders. us, also So capital state overall of the been opportunities with and able that to business, to in

So look forward time speaking again to today, soon. and to for your thanks you again

Operator

today's conference This call. concludes

you Thank lines. participating pleasant your day. disconnect for may have and You a

Regional Management (RM) 8 May 212021 Q1 Earnings call transcript