We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Regional Management (RM) Down 10.8% Despite Q4 Earnings Beat
Read MoreHide Full Article
Shares of Regional Management Corp. (RM - Free Report) have declined 10.8% since it reported fourth-quarter 2023 earnings. Despite announcing better-than-expected fourth-quarter results, investors might have been concerned due to the increasing expense guidance and a net loss being recorded in the fourth quarter.
The better-than-expected fourth-quarter results were supported by an increase in interest and fee income due to increased average net finance receivables. The positives were partly offset by higher expenses and setting aside more money as a rainy-day fund. Also, a restructuring charge and the sale of non-performing loans affected its earnings.
It reported fourth-quarter 2023 adjusted earnings per share (EPS) of 54 cents, which beat the Zacks Consensus Estimate by 46%. The bottom line remained flat year over year.
RM's total revenues climbed 7.3% year over year to $141.7 million. The top line beat the consensus mark by 0.7%.
Regional Management Corp. Price, Consensus and EPS Surprise
Interest and fee income increased 7.5% year over year to $126.2 million, which marginally beat the Zacks Consensus Estimate. Although net insurance income of almost $11 million grew 2.2% in the fourth quarter, it missed the consensus mark by 3.1%.
Provision for credit losses rose by 13.3% year over year to $68.9 million.
Total general and administrative expenses rose by 17.5% in the fourth quarter due to higher personnel, occupancy, marketing and other costs. The efficiency ratio, which depicts the general and administrative expenses as a percentage of revenues, was at 45.7% in the fourth quarter, up from 41.8% a year ago. It was in line with the Zacks Consensus Estimate.
Interest expenses increased 17.9% year over year to $17.5 million in the quarter under review. Regional Management recorded a net loss of $7.6 million in the fourth quarter of 2023 compared to the net income of $2.4 million a year ago.
At the end of the fourth quarter, net finance receivables were at $1.8 billion, up 4.2% from a year ago. While small loans rose 2.5% year over year to $493.5 million, large loans jumped 5.5% to $1.3 billion. It had 346 branches at the fourth-quarter end, with net finance receivables per branch at $5.1 million, up 3.9% year over year. This indicates rising efficiency in its branches.
The company recorded total loan originations of $407.8 million during the December quarter, which fell 13.3% year over year because of credit-tightening actions.
Financial Position (as of Dec 31, 2023)
Regional Management exited the fourth quarter with total assets of $1.8 billion, higher than $1.7 billion at 2022-end. The cash amount rose to $4.5 million from $3.9 million at 2022-end.
Net debt increased from $1.35 billion at 2022-end to $1.4 billion. Total liabilities of $1.47 billion at the fourth-quarter end were higher than $1.42 billion at 2022-end. Total shareholders’ equity rose from $308.6 million at 2022-end to $322.3 million.
Dividend Update
For the first quarter of 2024, Regional Management announced a dividend of 30 cents per share, which will be paid on Mar 14 as of record on Feb 22.
Full-Year Results
In 2023, total revenues increased 8.7% to $551.4 million due to higher interest and fee income, net insurance income and other income. The adjusted earnings per share of $2.98 fell 45.9% year over year.
Future View
Based on the ongoing improvement in the economy, Management expects funding costs to decline and receivables to grow in the coming days. These are expected to improve earnings in 2024. Ending Net Finance Receivables are expected to grow around 5-7% in 2024, while the first quarter is likely to see a decline of $25 million. It expects general and administrative expenses for 2024 to be around $256-$258 million, up from $243.1 million in 2023. For the first quarter, the metric is expected to be around $65.5 million.
RM foresees about 40-50 basis points year-over-year growth in total revenue yield for 2024. It anticipates the effective tax rate to be within 24-25% for the full year.
Zacks Rank & Key Picks
Regional Management currently has a Zacks Rank #5 (Strong Sell).
The consensus mark for Alerus Financial’s 2024 full-year earnings is pegged at $1.53 per share, which improved 11.7% over the past month. ALRS beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 14.4%.
The Zacks Consensus Estimate for World Acceptance’s current-year earnings is pegged at $12.71 per share, indicating a significant increase from $3.60 a year ago. It has witnessed two upward estimate revisions against none in the opposite direction during the past month. WRLD beat earnings estimates in each of the past four quarters, with an average surprise of 59.8%.
The Zacks Consensus Estimate for Primis Financial’s 2024 full-year earnings is pegged at $1.57 per share, which indicates 68.8% year-over-year growth. FRST has witnessed three upward estimate revisions against none in the opposite direction during the past month.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Regional Management (RM) Down 10.8% Despite Q4 Earnings Beat
Shares of Regional Management Corp. (RM - Free Report) have declined 10.8% since it reported fourth-quarter 2023 earnings. Despite announcing better-than-expected fourth-quarter results, investors might have been concerned due to the increasing expense guidance and a net loss being recorded in the fourth quarter.
The better-than-expected fourth-quarter results were supported by an increase in interest and fee income due to increased average net finance receivables. The positives were partly offset by higher expenses and setting aside more money as a rainy-day fund. Also, a restructuring charge and the sale of non-performing loans affected its earnings.
It reported fourth-quarter 2023 adjusted earnings per share (EPS) of 54 cents, which beat the Zacks Consensus Estimate by 46%. The bottom line remained flat year over year.
RM's total revenues climbed 7.3% year over year to $141.7 million. The top line beat the consensus mark by 0.7%.
Regional Management Corp. Price, Consensus and EPS Surprise
Regional Management Corp. price-consensus-eps-surprise-chart | Regional Management Corp. Quote
Operational Update
Interest and fee income increased 7.5% year over year to $126.2 million, which marginally beat the Zacks Consensus Estimate. Although net insurance income of almost $11 million grew 2.2% in the fourth quarter, it missed the consensus mark by 3.1%.
Provision for credit losses rose by 13.3% year over year to $68.9 million.
Total general and administrative expenses rose by 17.5% in the fourth quarter due to higher personnel, occupancy, marketing and other costs. The efficiency ratio, which depicts the general and administrative expenses as a percentage of revenues, was at 45.7% in the fourth quarter, up from 41.8% a year ago. It was in line with the Zacks Consensus Estimate.
Interest expenses increased 17.9% year over year to $17.5 million in the quarter under review. Regional Management recorded a net loss of $7.6 million in the fourth quarter of 2023 compared to the net income of $2.4 million a year ago.
At the end of the fourth quarter, net finance receivables were at $1.8 billion, up 4.2% from a year ago. While small loans rose 2.5% year over year to $493.5 million, large loans jumped 5.5% to $1.3 billion. It had 346 branches at the fourth-quarter end, with net finance receivables per branch at $5.1 million, up 3.9% year over year. This indicates rising efficiency in its branches.
The company recorded total loan originations of $407.8 million during the December quarter, which fell 13.3% year over year because of credit-tightening actions.
Financial Position (as of Dec 31, 2023)
Regional Management exited the fourth quarter with total assets of $1.8 billion, higher than $1.7 billion at 2022-end. The cash amount rose to $4.5 million from $3.9 million at 2022-end.
Net debt increased from $1.35 billion at 2022-end to $1.4 billion. Total liabilities of $1.47 billion at the fourth-quarter end were higher than $1.42 billion at 2022-end. Total shareholders’ equity rose from $308.6 million at 2022-end to $322.3 million.
Dividend Update
For the first quarter of 2024, Regional Management announced a dividend of 30 cents per share, which will be paid on Mar 14 as of record on Feb 22.
Full-Year Results
In 2023, total revenues increased 8.7% to $551.4 million due to higher interest and fee income, net insurance income and other income. The adjusted earnings per share of $2.98 fell 45.9% year over year.
Future View
Based on the ongoing improvement in the economy, Management expects funding costs to decline and receivables to grow in the coming days. These are expected to improve earnings in 2024. Ending Net Finance Receivables are expected to grow around 5-7% in 2024, while the first quarter is likely to see a decline of $25 million. It expects general and administrative expenses for 2024 to be around $256-$258 million, up from $243.1 million in 2023. For the first quarter, the metric is expected to be around $65.5 million.
RM foresees about 40-50 basis points year-over-year growth in total revenue yield for 2024. It anticipates the effective tax rate to be within 24-25% for the full year.
Zacks Rank & Key Picks
Regional Management currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the broader Finance space are Alerus Financial Corporation (ALRS - Free Report) , World Acceptance Corporation (WRLD - Free Report) and Primis Financial Corp. (FRST - Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus mark for Alerus Financial’s 2024 full-year earnings is pegged at $1.53 per share, which improved 11.7% over the past month. ALRS beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 14.4%.
The Zacks Consensus Estimate for World Acceptance’s current-year earnings is pegged at $12.71 per share, indicating a significant increase from $3.60 a year ago. It has witnessed two upward estimate revisions against none in the opposite direction during the past month. WRLD beat earnings estimates in each of the past four quarters, with an average surprise of 59.8%.
The Zacks Consensus Estimate for Primis Financial’s 2024 full-year earnings is pegged at $1.57 per share, which indicates 68.8% year-over-year growth. FRST has witnessed three upward estimate revisions against none in the opposite direction during the past month.